A Resource on Corporate Sustainability

One of the many challenges facing sustainable businesses is the need for reliable, comprehensive information about sustainable business practices.  Too often, folks in the sustainasphere are left to recreate the wheel when it comes to implementing a new sustainable enterprise.  One of the aims of this blawg is to fill those gaps.

In that spirit, here is a link to "Sustainable Business" section of The Guardian, a media news outlet in the United Kingdom.

Click, and you will find a vast collection of articles on sustainable businesses and sustainable business practices.

Enjoy!

Guardian Sustainable Businesses

Breaking News: Navy Makes Big Purchase from Tyson Foods' Biofuel Venture - ArkansasBusiness.com

Despite the fact that it is one of the biggest consumers of fuel and energy in the United States, the US military is one consistently under-rated player in the Arkansas sustainasphere and in the sustainasphere in general. We can expect that to change as renewable energy technologies advance and become more reliable, efficient, and affordable. Arkansas has significant renewable and sustainable energy potential, and is poised to be a beneficiary of innovation and investment spurred by the armed forces. Read here for an overview of the latest bioventure between an Arkansas company - Tyson Foods - and the U.S. Navy:

Navy Makes Big Purchase from Tyson Foods' Biofuel Venture - ArkansasBusiness.com

Sustainable Business Practices and Social Media Policies

One of the leading trends in sustainable business practices is the “paperless” office.  Given this preference for paperless, it is not surprising the owners of sustainable business are making substantial investments in technology, and can expect to have tech savvy employees who maintain a consistent and thorough electronic persona using social media resources like Facebook, YouTube, Twitter, LinkedIn, and Blogger – to name a few.

This means that in addition to the normal panoply of employee policies, sustainable business are going to need a “Social Media” policy – that is, a policy that defines when and how employees can use social media.  An example of a social media policy might be, “Employees are prohibited from using employer’s computers to access social media websites, and are prohibited from referring to the employer in any private use of social media web sites.

These policies the equivalent of a hidden pit lined with pointy sticks.  This is because they implicate employee privacy rights, free speech rights, and an employee’s right to engage in “concerted activity.”  (Department of Legal De-Mystification: “Concerted activity” is a phrase drawn from the National Labor Relations Act.  In broad, general strokes, it refers to an employee’s right to organize and to air grievances regarding the workplace.)

The first, and perhaps most important rule of social media policies is that best policies are narrowly drawn.  Here are some examples of policies found to be overbroad and unenforceable: 

• A policy prohibiting “inappropriate discussions about the company, management, and/or coworkers.”
• A policy prohibiting “revealing, including through the use of photographs, personal information regarding coworkers, company clients, partners, or customers without their consent.”
• A policy prohibiting social media posts constituting “embarrassment, harassment or defamation of the [employer] or of any . . . employee, officer, board member, representative, or staff member.”
• A policy prohibiting employees from “making disparaging comments when discussing the company or the employee’s superiors, coworkers and/or competitors.”
• A policy prohibiting disclosure of “inappropriate or sensitive information” about the employer.
• A policy prohibiting “using the company name, address, or [similar] information” on the employee’s social media profile.
• A policy prohibiting use of “the Employer’s logos and photographs of the Employer’s store, brand, or product, without written authorization.”
• A policy prohibiting employees from “posting pictures of themselves in any media . . . which depict the Company in any way, including company uniform [or] corporate logo.”

So what can an employer prohibit?  The answer lies less in substance of the prohibition, but in the way in which it is communicated.  This leads to the second rule of social media policies: if you are an employer covered by the National Labor Relations Act, then your policy must inform employees that it does not prohibit criticism of workplace conditions or of the terms and conditions of employment and does not otherwise prohibit conduct protected under the National Labor Relations Act.

One good measure of whether a social media policy is overbroad is whether it subjects the employer to the temptation of disparate enforcement.  If the policy is so broad that if enforced all employees would be in violation, it is probably overbroad.  Likewise, if you, as the employer, are tempted to enforce the policy against one employee but not another, your policy is probably overbroad.

A corollary of the second rule is that social media policies should state and emphasize the legitimate business objectives that they seek to achieve.  Consider the following business justifications for limiting employee conduct through social media:

• Preventing and protecting employees from harassment and discrimination
• Protecting company confidential and proprietary information, including trade secrets, IP systems, and proprietary processes
• Protecting a company’s goodwill and reputation
• Prohibiting illegal conduct, including slanderous or libelous content

A social media policy accompanied by a “Purpose Statement” making plain that the policy is intended to achieve some or all of these objectives is much more likely to pass muster.

What about using employee social media postings as the basis for an adverse employment decision?  This gives us a fourth rule of social media policies, which is that employee posts that are made on the employee’s (as opposed to the employer’s) social media page, outside of working hours, and using private equipment, that refer to the employer or workplace, and are either aimed at or involve multiple employees are most likely protected and should not be used as the basis for either disciplinary action or termination.

One problem with social media is that employees can, and usually will, say just about anything online.  As a result, and not surprisingly, employers are generally tempted to use a social media policy as a sort of “do right rule” – that is, as a tool for getting the employee to use good judgment and to simply “act right.”  This leads to a fifth rule of social media policies: every social media policy should be accompanied by a set of guidelines that encourage employee behavior valued by the employer.  An example would be a guideline that encourages employees to be professional, polite, honest, and respectful in social media postings.  Such a guideline avoids the risk of an overbroad post while at the same time putting the employee on notice of the employer’s expectations.

A sixth, and, for the purposes of this post, final rule of social media policies is to that the policy should be publicly available on the employer’s website.  This is another means of clearly communicating the employer’s values, and it protects the employer from being attacked for enforcing a secret policy. 

This post is not intended to cover the waterfront regarding social media policies. Consider that at one time – albeit a time that now seems to have been shortly after the invention of dirt – employers did not have anti-harassment or anti-discrimination policies.  Now they are commonplace.  We are at a similar point in the evolution of social media policies, and the law regarding social media policies is evolving so quickly that employers must proceed, but with caution.  That leads to a final point, which I make at the risk of invoking the Attorney’s Full Employment Act: avoid “form” or “stock” policies.  Every employer is different, and every employer is going to have a different set of needs and justifications for a policy.  

SolarWorld v. The World (or at least China)

On November 9, 2011, the U.S. Department of Commerce announced that it will investigate claims advanced by a coalition of silicon solar manufacturers into whether Chinese solar manufacturers are engaged in illegal trade practices. The complaint, filed with the International Trade Commission, is commonly identified with the only known member of the coalition, SolarWorld. (According to the “Coalition for American Solar Manufacturing,” SolarWorld Industries America Inc., is “the largest U.S. producer of crystalline silicon solar cells and panels”.)

What, exactly, is the SolarWorld Complaint? Here is the summary found in the International Trade Commission’s Notice of Investigation:

The Commission hereby gives notice of the institution of investigations and commencement of preliminary phase antidumping and countervailing duty investigations . . . to determine whether there is reasonable indication that an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports from China of crystalline silicon photovoltaic cells and modules . . . that are alleged to be sold in the United States at less than fair value and alleged to be subsidized by the Government of China.

Okay, so even without the statutory citations (which I omitted), that is a bona fide mouthful, and you are probably regretting your decision to read it. In plain language, SolarWorld complains that:

• The Chinese government heavily subsidizes the production of photovoltaic solar cells and panels;
• Those subsidized Chinese PV cells and panels have been illegally “dumped” on the U.S. market, which means they have been offered for sale in the U.S. at prices that are both below the cost of manufacture and so low that it is impossible for U.S. solar manufacturers to compete; and,
• China has done this intentionally.

As this sustainablawger has previously written, Arkansas is poised to emerge as a leader in renewable energy – both on the development side and on the manufacturing side. The Arkansas-specific question is what impact the SolarWorld Complaint, if successful, will have on our emerging renewable energy industry.

The answer is a decidedly mixed bag. On the one hand, and as vividly illustrated by the Solyndra bankruptcy, it is beyond debate that the price of silicon-based PV products has dropped precipitously. The price decline – some 40% over the course of a year – is widely attributed to an influx of Chinese solar panels. While this decline is devastating to manufacturers, it does have the effect of increasing the availability of solar technology and solar energy to consumers, which in turn leads to the creation of “green” jobs for installers.

On the other hand, a combination of tariffs and government subsidies would protect and promote domestic solar manufacturers, and this is necessary if these manufacturers are going to compete on an international playing field. Arkansas has been particularly successful recently in attracting renewable energy manufacturers, so there is some reason to expect that Arkansas would benefit from emboldened domestic solar manufacturers.

What can we expect next? According to one of SolarWorld’s lawyers, Timothy Brightbil: “Within the next 45 days the International Trade Commission will decide whether, preliminarily, whether the U.S. industry has been injured in part due to the Chinese imports. The Commerce Department will calculate dumping and subsidy margins and try to come up with a number to offset the effects of those Chinese imports. And that margin could start to be applied about six months into the case. Then there will be a final determination.” The ITC will issue its preliminary determination by December 5, 2011.

 

(Department of Case Numbers: The SolarWorld Complaint can be found on the U.S. International Trade Commission’s website, www.usitc.gov, as the active investigation captioned, “Crystalline Silicon Photovoltaic Cells and Modules from China, Investigations Nos. 701-TA-481 and 731-TA-1190 (Preliminary).”)

 

The Solyndra Saga

There are some stories that have legs, and the Solyndra saga is one of them. But instead of triggering a genuine debate over the merits and mechanisms of government investment in clean energy innovation, Solyndra has become shorthand for everything that is allegedly wrong with green energy policy. As Florida Republican Cliff Stearns, the chair of the House committee leading the inquiry into the Department of Energy’s now ubiquitous loan to Solyndra recently declared, Solyndra’s downfall proves, “that green energy isn’t going to be the solution.”

Regardless of your politics, this is a sad and poor substitute for an actual analysis of why Solyndra failed, of what lessons can be drawn from that failure, and of what – if anything – that failure tells us about the future of green energy.

With that in mind, for your consideration a few brief thoughts on the most widely politicized peaks of the polemic:

First, with all due respect to Representative Stearns, the Solyndra bankruptcy does not mean that green energy is not “the solution.” For this to be true, we would have had to have had all of our eggs in the Solyndra basket, or at least all in the “alternative solar” (meaning non-silicon based) basket. No such luck. Just as the success of Solyndra would not have eliminated the need for traditional energy sources, the failure of Solyndra does not diminish the need for clean energy, the promise of clean energy technologies, or the tremendous diversity of clean energy options in the sustainasphere.

Second, the Solyndra bankruptcy does not expose some fatal flaw in non-silicon solar technologies. As many, including Washington Post blogger Brad Plummer and Westinghouse Solar CEO Barry Cinnamon, have observed, Solyndra distinguished itself from its competitors by inventing a solar panel that did not use silicon -- and then got crushed on costs after silicon prices plunged. The Solyndra bankruptcy is an important reminder that all start-ups, regardless of the strength of their technology and the high-profile of their supporters, are susceptible to marketplace forces that can be difficult, if not impossible, to predict.

Third, the Solyndra bankruptcy does not mean that government should not invest in clean energy technologies. As of September 12, 2011, the Department of Energy had closed or issued conditional loan commitments of $37.8 billion to projects around the country. Solyndra’s $535 million loan represented 1.3% of the DOE’s loan portfolio, and is the only loan known to be troubled. In other words, over 98% of the DOE’s loans remain poised for success. True, the DOE made a bad bet on Solyndra’s tubular-shaped technology. But all successful investment programs have bad bets, and I suggest that any bank, investor, shareholder, hedge fund manager, private equity shop, or Vegas gambler would welcome the opportunity for a 98% success rate.

Fourth, Solyndra’s failure does not mean that the DOE should not have restructured the Solyndra loan guarantee in February 2011 to put private investors ahead of the DOE in the event the loan failed. The DOE’s reported logic behind the restructuring is that it was better to attempt to salvage than to liquidate the company, since liquidation would have guaranteed significant losses. From a pure investment viewpoint, this is difficult logic to argue with, and it reveals a “Catch-22”: if the DOE had allowed Solyndra to fail at that point, the DOE would be criticized for not doing more to try and save the troubled company. If the restructuring had preferred the government over private investors, the DOE would be criticized for interfering with the private capital markets and for, well, preferring the government over private investors. It’s a no win situation for everyone involved.

So, with those thoughts in mind (and out of the way), over the next few posts I will attempt to unpack, analyze, and sus out what the Solyndra saga means for sustainable innovation and investment in Arkansas. Stay tuned.

Reflecting on the Greening America’s Cities: Little Rock Report

The Greening America’s Cities report for Little Rock has this sustainablawger thinking. The ideas in the Report are welcome and interesting, but they are also less than ambitious. Here are a few larger scale ideas for making Little Rock a more sustainable city.

River Power. The Arkansas River is literally a river of largely unharnessed energy. Consider using turbines seated on the riverbed to generate electricity – without damming or otherwise changing the River’s course.

Roof Power. The roofs of the buildings of downtown Little Rock are almost entirely underutilized. The obvious solution is to use them as platforms for conventional solar installations. But consider:

• Solar Hot Water. Rooftop tanks could provide solar-heated water to downtown’s living spaces.
• Green Roofs. A companion to the idea of downspout fountains into rain gardens, green roofs provide insulation, absorb storm water, and the potential for unique, urban public spaces.
• White Roofs. At a minimum, why not paint rooftops white? White roofs reflect heat, resulting in cooler buildings and reducing “heat island” effects.

Parking Power. Every parking structure in Little Rock could immediately be improved by installing solar panels on the top level. Not only would the panels generate electricity, but they would shade the normally uncovered top level of the structure, reducing heat island effect and reducing consumer fuel consumption. In addition:

• “Smart” Parking Meters. Savvy cities will begin taking creative advantage of the proliferation of smart phones. One such device is the smart parking meter – a digital, wireless device that that lets nearby drivers know when a parking space comes available, reducing the time and fuel spent “trolling” for a space.
• Smart Parking Signage. A less technologically advanced cousin to smart parking, Little Rock is in dire need of well-placed signs that tell people where to park.
• Charging Stations. More, better located, and better identified charging stations for the increasing number of smart cars sold in Arkansas and found downtown.
• Underground Parking. It is probably on the very fringe of the possible, but underground parking structures free ground level space for more productive uses and reduce heat island effect.

Underground Utilities. Little Rock is subject to annual ice storms, tornados, and severe thunderstorms. Yet most of our utilities lines remain above ground. Tunnels dedicated to utilities – electricity, water, cable, internet, fiber optics, and so on – minimize storm damage, make repairs easier, and provide a ready-made framework for smart building and expansion.

Using Sidewalks to Finance Sustainable Cities

One of the central themes of the Greening America’s Capitals Report for Little Rock, Arkansas, is that downtown sidewalks are extremely valuable.  Most of the Report’s recommendations focus on making greener uses of the sidewalk space along Main Street – rain gardens and sustainable plantings, downspout fountains, the use of permeable surfaces, and, of course, sidewalk cafés.

The focus on sidewalks is particularly interesting given that Little Rock’s sidewalk spaces are highly regulated.  For example:

• the Little Rock municipal code prohibits soliciting along the major and minor arterial streets of the city;
• with the exception of ice cream trucks, food carts and trucks (regulated as “mobile canteen units” in the municipal code), are absolutely prohibited from dispensing any food or drink when legally parked within the right-of-way of any public street in the city;
• food carts and trucks are also prohibited from dispensing any food or drink when parked on any other public property without prior approval of the city manager; 
• Under section 30-6 of the municipal code, “merchants occupying property in a business district may display in the sidewalk and/or walk areas in front of or on the side of their property, goods, wares, and merchandise for the purpose of sale, advertisement or giveaway,” but they must first obtain a permit from the city manager.  “No permit shall be issued for a display of goods, wares and merchandise less than six (6) feet from the curbline, or as approved by the city manager, of any given street.”

While the Report is brimming concepts, ideas, enthusiasm, and promise, it does not address the municipal regulatory issues.  It simply falls short when it comes to suggestions for implementation and financing.  This is a troubling problem, since this is the first place naysayers will go to find fodder for dismissing the Report as a portrait of an unattainable (and unneeded) sustainable utopia. 

But it is also a problem that reflects the reality of city management: as the recent debate over a proposed sales tax increase illustrates, Little Rock is in dire need of funds for public safety and the City’s coffers are far from flowing over.  Using public funds to build rain gardens along Main Street while allowing Little Rock’s police force to remain understaffed is an impossible proposition.

One way out of this box would be to “sell” – or, more accurately, lease – the City’s sidewalks.  Here’s how this could work:

• Using a standardized lease agreement, Little Rock would begin privatizing sections of downtown sidewalk. 
• The landowners or business adjacent a section of sidewalk would have a right of first refusal to enter into a lease.
• The lease would necessarily contain some basic requirements regarding maintenance, public health and safety, and walkability, but the arrangement would otherwise yield control over the leased space to the lessee.

The advantages are easy to see.  Because sidewalk space is unquestionably valuable,  (one commentator, Lawrence Solomon of the Urban Renaissance Institute, writes that the sidewalk space outside the New York Metropolitan Museum of Art generates more than $600,000 in rents annually from sidewalk vendors) sidewalk rents could be used to finance downtown sustainability improvements, such as those suggested by the Greening America’s Capitals Report for Little Rock.  Sidewalk leases could have other effects that go to the bottom line.  The revenues generated by products sold in these new retail spaces would be taxable, and lessees would be responsible for maintenance, taking that financial and administrative burden off of the city. 

Ultimately and most importantly, leasing sidewalks would actually return them to public spaces of expression, with the immediate effect of injecting street life, character, and vivacity back into downtown.  It could be a triple-bottom-line trifecta – the City benefits; local businesses benefit; and citizens benefit. 

The Greening America’s Capitals: Little Rock, Arkansas Report

Design concept showing streetside rain garden.

The Arkansas sustainsphere is fortunate to have a sustainability-minded steward for its capital.  Regardless of how you may feel about his politics, Little Rock Mayor Mark Stodola has a vision for a Little Rock that is both green and sustainable.  Back in 2010, in pursuit of this vision, Mayor Stodala led a successful campaign for Little Rock to be one of five communities to participate in the 2010 Greening America’s Capitals Program.

The Greening America’s Capitals Program is a collaboration between the EPA, the U.S. Department of Housing and Urban Development (aka, HUD), and the U.S. Department of Transportation.  Participants receive technical assistance from the EPA to “develop an implementable vision of distinctive, environmentally friendly neighborhoods that incorporate innovative green building and green infrastructure strategies.”

The report on Little Rock is now out and available to the public.  Not surprisingly, the focus of the design efforts and suggestions is the Main Street corridor.  The basic design strategies for Main Street are to divide Main Street into four “nodes” – a neighborhood park in the South of Main (“SOMA”) neighborhood; improvements to the 1-630 crossing; a new arts park at the intersection of Main Street and Capital Avenue; and improvements to the “Convention Center Gateway.”  Suggested green infrastructure techniques include street-side rain gardens, green roofs, parking areas with permeable pavement, downspouts linked to the rain gardens, as well as new crosswalks, expanding the trolley, improved downtown bike routes, and a shaded sidewalk on the 1-630 overpass.

The authors of the Report correctly observe that all of this will be accomplished, if at all, through in a collaborative framework:

Private property owners and the city could work together to enhance the public realm with café seating and rain gardens between parking lots and sidewalk.  City departments, such as Public Works, could begin improvements, such as converting some on-street parking to café seating or rain gardens in order to create inviting spaces.

City staff will need to coordinate necessary utility and street improvements with an overall, long-term vision for the street, which would include permeable parking lanes, rain gardens, and increased café space.

There is nothing the Report that will require a talisman to achieve.  The recommendations are straightforward, intuitive, and do not require new construction or ridiculous realignments of infrastructure.  They are not particularly expensive.  Given the leadership, the resources, and the will, each and every suggestion and recommendation in the Report can be achieved in three years, and probably less. 

Of course, it is relatively easy to gather designers, brainstorm ideas, and produce a glossy Report overflowing with pretty pictures and concept drawings.  Green roofs, rain gardens, new crosswalks, new bike routes, an expanded trolley line, and permeable pavement would represent a fundamental change in the infrastructure philosophy of downtown Little Rock.  This is going to require a focused and intentional marriage of state and local policy and private funding and development. 

It will also require a realignment of priorities.  For example, many of the suggested improvements – rain gardens and permeable pavement – are relatively inexpensive and could be funded with the proceeds from a tax-increment financing district.  But those who already receive piece of the property tax pie tend to have an attitude of entitlement to the proceeds of any property tax increase.  As a result past efforts to establish a TIF district for downtown Little Rock have flat-lined on arrival. 

Likewise, sidewalk café-seating holds the promise of creating immediate life and vibrancy downtown.  But there has been a movement afoot for years to make downtown more accessible to mobile food vendors (in the model of cities like Austin, Texas), and this has been unsuccessful because of local laws that make it illegal for vendors to use both street and sidewalk.  To this point, the regulatory and zoning attitude in downtown has been more restrictive and less permissive.  Assuming Little Rock wants to be greener, that is absolutely going to need to change.

The Greening America’s Capitals: Little Rock, Arkansas Report can be found here:

http://www.epa.gov/smartgrowth/greencapitals.htm#arkansas

LEEDigation Update: Gifford v. USGBC Dismissed

In October 2010, energy efficiency consultant Henry Gifford filed a salacious and potentially ground-breaking lawsuit challenging the U.S. Green Building Council’s LEED certification system. Gifford made a number of interesting (and, as it turns out, legally insignificant) claims against the USGBC, but the essence of Gifford’s complaint was this: he contended that the USGBC promoted LEED as resulting in more energy efficient buildings; that, as a result, consumers favored LEED-accredited professionals over non-LEED accredited professionals; that the USGBC’s claims connecting LEED certification with increased energy efficiency were, in fact, untrue; and, as a result, energy efficiency consultants like Gifford who refused to “drink the Kool Aid” were being damaged and driven out of business.

Well, gadfly Gifford has been vanquished. In a nine-page opinion issued on August 15, 2011, the federal district court for the southern district of New York dismissed Gifford’s complaint in its entirety.

Given the aura of anticipation that surrounded this case and the occasional venom that pierced through the cold hard paper record (yes, the USGBC really did refer to Gifford as a “gadfly” in one of its filings), not to mention the fact that Gifford is one of those people who seems to have the uncanny ability to provoke strong feelings, even from those who do not know him, I suspect many will find the opinion both surprisingly bland and generally unintelligible.

So here, in a nutshell, is why Gifford’s complaint failed:

As I’ve discussed in previous posts, a basic concept of any lawsuit is the idea of “standing.” This means, quite literally, that the person or entity bringing the suit is the right person or entity to bring the suit. Generally, a plaintiff must identify two basic things: first, that he or she has suffered an injury that is discrete, real, and compensable by the payment of money; and, second, that there is a legally relevant connection between that injury and something that the defendant allegedly did.

Gifford brought his claims under the federal Lanham Act, which generally prohibits the false representation of goods or services in interstate commerce. The Gifford court recognized two ways of showing standing for a Lanham Act claim: either the plaintiff and the defendant are competitors, or the plaintiffs must allege a “reasonable commercial interest” that is likely to be damaged by the defendant’s alleged false statements.

Gifford failed to clear the basic hurdle of standing. Gifford and the USGBC are not competitors. The court found that the USGBC, through the LEED certification system, provides third-party verification that structures have been designed and built in a way that should make them more energy efficient. Gifford, in contrast, held himself out as an energy efficient building expert. Since the USGBC expressly disclaimed any energy efficiency expertise, and the since Gifford did not content he was in the certification business, the federal court found that they were not competitors.

Likewise, “Because there is no requirement that a builder hire LEED-accredited professionals at any level, let alone every level, to attain LEED certification it is not plausible that each customer who opts for LEED certification is a customer lost to Plaintiffs.” In other words, the fact that a building owner might aspire to LEED-certification does not mean that Gifford cannot work on the project.

I do not know Henry Gifford, or any of the other plaintiffs in the Gifford v. USGBC suit, and I have no desire to pass judgment on him or them. Gifford may have valid, meritorious complaints about the LEED system. Just as LEED seems to be creating jobs in some areas, it may well be the cause of the demise of others. And it seems likely that some consumers will indeed feel that through LEED the USGBC has promised exactly that which Gifford says LEED does not and cannot deliver: a building that is more energy efficient than one that is not LEED-certified. Indeed, the most recent appropriations bill for the U.S. Department of Defense charged the DOD with studying this very point.

The simple fact is that Gifford alleged that the USGBC was a major player in the sustainasphere, and that he believed that was having an adverse affect on him and people like him. But what Gifford could not allege is that the USGBC was actually doing something – anything – wrong. And a fancy way of saying that is, “case dismissed for lack of standing.”

Will Congress Ban LEED Gold and Platinum Certification for the Department of Defense?

The National Defense Authorization Act for Fiscal Year 2012, otherwise known as House Bill 1540, is a thousand page window into the manner in which military activities, personnel, construction, and operations will be funded in 2012.  And buried deep within that mess, on page 788, is Section 2831: “Report on Energy-Efficiency Standards and Prohibition on Use of Funds for Leadership in Energy and Environmental Design Gold or Platinum Certification.” 

Section 2831 is a proverbial double-edged sword.  On the one hand, if included in the final Department of Defense appropriations bill, the DOD would be required to analyze and report on the costs and benefits of adopting ASHRAE Standard 189.1: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings versus adopting ASHRAE Standard 90.1: Energy Standard for Buildings Except Low-Rise Residential Buildings for the sustainable design, development, construction, and renovation of DOD buildings and structures.  The report must include details of the energy-efficiency improvements achieved and long term payback (whatever that means) resulting from the adoption of ASHRAE Standard 189.1, and a cost benefit-analysis and return on investment for energy-efficiency attributes and sustainable design achieved through LEED gold or platinum certification.

On the other hand, Section 2831 clearly and unequivocally prohibits the use of DOD funds “for achieving any LEED gold or platinum certification.”  This does not mean that DOD buildings cannot be certified LEED gold or platinum certification, but it does mean the cost of obtaining gold or platinum certification cannot exceed the cost of obtaining LEED Silver or Certified certification.

From an empirical viewpoint, this is a sound framework for evaluating the expenditures associated with LEED-certification: audit existing certified buildings and identify any causal connections between certification and energy efficiency before devoting further funding to certification.

There is also a paucity of independent study in the actual effects and benefits of LEED certification.  As the now infamous Gifford v. USGBC lawsuit illustrates, there is a genuine debate as to whether LEED-certification results in buildings that are more energy efficient.  The DOD has a decent stock of certified buildings.  An empirical study of these buildings will help to bridge this information gap.

But the funding ban also appears somewhat arbitrary.  True, there is undoubtedly some additional cost associated with Gold or Platinum LEED certification over and above Silver or Certified certification, but, in the bigger picture, does this incremental savings really justify an outright ban?  And, at the risk of engaging in some proverbial nose-cutting for the sake of face spiting, what is the basis for drawing the line at Silver and Certified certification?  After, all, if the funding decision turns on whether LEED certification results in more energy efficient buildings, why study buildings at all levels of certification?

The ban also ignores that LEED certification serves purposes beyond achieving energy efficiency.  Per the USGBC, the LEED certification program is intended to provide a benchmark for evaluating whole buildings and to be a "definitive standard for what constitutes a green building in design, construction, and operation."  In the bigger picture, this implicates the triple bottom line of social, economic, and environmental responsibility, and that means far more than just energy efficiency.  The certification process also means that the government gets third-party confirmation that the "green" building it ordered is the "green" building that was delivered.

The effect of this ban on Arkansas remains to be seen.  There are DOD projects and properties in Arkansas, and some are well known for sustainable initiative (the Air Force Base in Jacksonville, Arkansas, comes to mind).  There is always the possibility that local municipalities will follow the federal example, and that would have widespread effects in cities like Little Rock, where all new municipal buildings must be LEED certified.

In the end, the folks at ASHRE report that the Senate is in the process of drafting its own funding bill.  This bill will undoubtedly be different from the House bill.  Whether there is agreement on the DOD LEED funding ban (or anything else, for that matter), remains to be seen. 

Update: The Compressed Natural Gas Conversion Rebate Program

Friday’s post detailed the Compressed Natural Gas Conversion Rebate Program.  Here is some additional information about the Program.

Program Guidelines can be found here: http://arkansasenergy.org/media/343368/compressed%20natural%20gas%20rebate%20program%20criteria.pdf

“Reservation Request” and Application Forms can be found here: http://arkansasenergy.org/ar-clean-cities/incentives-and-programs/compressed-natural-gas-(cng)-conversion-rebate-program.aspx

And the Arkansas Economic Development Commission’s Energy Office homepage can be found here: http://arkansasenergy.org/

Arkansas Announces the Compressed Natural Gas Conversion Rebate Program

One result of the increasing prevalence of natural gas “fracking” in Arkansas is increased debate about the environmental consequences of the practice, including whether natural gas should really be considered a “renewable” (and sustainable) fuel resource. This is an important debate, but it should not obscure the fact that natural gas is a part of the clean energy economy and appropriately considered part of a diverse energy portfolio.

This is the premise of the Compressed Natural Gas Conversion Rebate Program, announced today by Governor Beebe. According to a press release on the Program from the Arkansas Economic Development Commission Energy Office,

The CNG Conversion Rebate Program will decrease our dependence on foreign oil and decrease our greenhouse gas emissions by providing an incentive rebate program to accelerate the use of alternative transportation fuel for government vehicles, fleet vehicles, taxis and mass transit.

When he announced the Program, Governor Beebe was singing from the same hymn book, commenting, “One of the hurdles to increasing the use of alternative fuels is building or converting infrastructure to make these fuels economically feasible. This program will encourage the use of less-expensive American fuel and that helps Arkansas’s economy.”

The Program will be administered by the Arkansas Energy Office, which is a division of the Arkansas Economic Development Commission, and will make use of $2.2 million in stimulus funds. Here are the nuts and bolts of the Program:

• Eligible applicants are Arkansas state government agencies, institutions of higher education, cities, counties, school districts, and private fleets. A fleet is 10 or more vehicles.
• Eligible fleets must convert or purchase at least four vehicles.
• Program rebates will be 50% of the conversion cost or the incremental cost of purchasing new compressed natural gas vehicles. The rebates cannot exceed $25,000 per vehicle and will be paid directly to the fleet operators following the purchases or conversions.
• Conversion kits must be installed according to National Fire Protection Association standards and must be EPA certified.

The rebates are available on a first-come, first serve basis until December 31, 2011, or until the funds are depleted. This is a tight deadline, and those interested in a rebate should not sit on their hands.

The process is also a bit unusual. As opposed to simply applying for a rebate, interested parties must first submit a “reservation request form” to the Arkansas Energy Office. Once the form is received, and assuming it is in order, the Energy Office will reserve the requested funds for 45 days. The interested party must complete the conversion work or the purchase in that 45 day timeframe and then submit an application for the rebate. Funds will be reallocated if no application is received during the 45 day grace period.

In addition to the Compressed Natural Gas Conversion Rebate Program, the Arkansas Energy Office is dedicating $470,000 toward the development of at least two compressed natural gas refueling stations.

This is a step forward for the clean energy economy of Arkansas. The Rebate Program, particularly in tandem with the funds dedicated to the development of natural gas refueling stations, will contribute both to the emerging clean energy culture in Arkansas and to the development of long-needed clean energy infrastructure. The Program should also spur some job growth, even if temporary, since someone is going to need to actually do the conversions and build the refueling stations.

The Arkansas Energy Office will begin accepting Reservation Requests on August 19, 2011.

 

(Department of Deciphering Pictures: It's a natural gas molecule.)

“Greenwashing” and the Need for Third-Party Green Certification

In an interview published in the July/August 2011 issue of Green Building & Design, designer John Cantrell of HOK Atlanta comments,

“There’s more greenwashing than ever before because everyone’s trying to innovate.  As designers, we have to be knowledgeable about the compositions of these so-called “sustainable” products because people trust our opinions.  What’s starting to surface is the importance of third-party certifications.  I believe that verification is one of the most important parts of this process, and I am always pushing for third-party certification even in selection and specification of our materials and assemblies.”

Mr. Cantrell is most certainly too generous in his assessment that the rise in greenwashing is purely the result of a drive to innovate, particularly if you accept the pejorative definition of greenwashing as, “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.” 

Regardless, the point about the importance of third-party certification is dead on.  Consider this sign, observed in May 2011 at Riverfest in Little Rock, Arkansas:

Greenwashing?  It’s certainly a possibility, but since no one – not the state or local government, and not, to my knowledge, any private entity – is in the business of certifying and verifying these claims, they can be made at will and with little regard for accuracy or veracity. 

The problem is compounded by the fact that the proponents of false green claims do not have much to fear by way of liability.  The biggest stick against greenwashing in Arkansas is the Arkansas Deceptive Trade Practices Act, which generally prohibits false, deceptive, and unconscionable practices in business, commerce, or trade.  A green claim about a product or service, made with the intent of distinguishing the product or service from one not supported by a green claim, falls into this category.  But here’s the rub: as a private citizen, to bring a claim under the Arkansas Deceptive Trade Practices Act, you need to have suffered “actual injury.”  Generally, this means money damages, though there is good law suggesting that other types of injury – personal injury, for example – would also suffice.

Consider this hypothetical, suggested by the Riverfest ride photo: of all the rides at Riverfest, you are swayed by the green claim, part with a dollar or two, and ride the ride powered by vegetable oil.  The claim turns out to be false; the ride is diesel powered.  Have you been deceived in business, commerce or trade?  Absolutely.  Have you been actually injured?  Sure, to the tune of a dollar or two.  Are you really going to sue over that injury?  And, perhaps more importantly, are you going to be able to find a lawyer willing to take a case with almost no damages?  The choice is yours, but I suggest that your time, energy, and money are better spent elsewhere.  (There is also the possibility of a class action, but it suffers from the same problem of de minimis damages.) 

A lawsuit is simply an inefficient, and inelegant, solution to the greenwashing problem. 

This is not an improbable hypothetical.  Take a moment today – fifteen minutes is probably enough – and count the green claims you see during that time.  At the same time, count the number of those claims that also claim to be verified by an independent third party.  The gap will be obvious.  As will the solution. 

(The “third party verifications” may be false as well – but that is a subject for another day.)

(Department of Read this Cool ‘Zine: www.gbdmagazine.com)

(Department of Definitions: the quoted definition of “greenwashing,” and numerous other materials regarding greenwashing, can be found at www.sinsofgreenwashing.com)

The Case for Adopting the 2009 International Energy Conservation Code (IECC)

Last April, at the Little Rock Downtown Partnership annual luncheon, I heard “sustainability” referred to as the result of the process of thoughtful place-making.  In contrast, at least some local policy makers – for example, the members of the Little Rock Sustainability Commission – conceive of “sustainability” as a process.  Others distance themselves from the “true believers” and wade into the fray with a purely economic perspective. 

I appreciate this polemic because it is thought provoking, but the reality is these viewpoints are not mutually exclusive.

The question of whether Arkansas municipalities should take the next step in improving residential energy efficiency and adopt Chapter 4 of the 2009 International Energy Conservation Code (acronym alert: IECC) is a perfect example.

Arkansas currently operates under the 2003 IECC for residential construction.  (In this regard, it keeps company with Nebraska, Oklahoma, West Virginia, and the U.S. Virgin Islands.  With the exception of Vermont, which follows the 2004 IECC, all of the 42 states that have adopted the IECC use either the 2006 or the 2009 version.)  The 2009 IECC is substantially different from the 2003 IECC, and these differences are specifically intended to improve energy efficiency.  According to a 2009 study by the U.S. Department of Energy, “Impacts of the 2009 IECC for Residential Buildings at State Level,” “important new requirements” in the 2009 IECC include:

• A requirement that duct systems be tested and sealed, and air leakage minimized;
• Half of the lighting “lamps” in a building must be energy efficient;
• “Trade-off credits” are no longer available for high efficiency HVAC equipment.  For example, under the 2006 IECC, use of a high efficiency furnace could be traded for a reduction in wall insulation.  Such trade-offs are eliminated under the 2009 IECC;
• Vertical fenestration U-factor requirements and maximum allowable solar heat gain coefficients are reduced;
• Insulation requirements are improved and increased;
• Better air-sealing language;
• Controls for driveway/sidewalk snow melting systems; and,
• Pool covers are required for heated pools.

Obviously, more efficient sidewalk snow melting systems, basement insulation, and heated pools are not going to drive improved residential energy efficiency in Arkansas. The improvements in duct and HVAC efficiency, building envelope tightness and air sealing, and window and insulation requirements are the meat of the coconut for those in the Arkansas sustainasphere.

Against that background, lets dissect the case for adopting the 2009 IECC.

In 2009, the U.S. Department of Energy analyzed the impact of the 2009 IECC in Arkansas.  The DOE study found an average savings of $242.00 per house, per year for homes meeting the requirements of the 2009 IECC.  Here is a table summarizing the savings:

Annual savings of $242.00 might not, at first blush, blow your skirt up.  But consider: if the average life of a home is 30 years, not adopting the 2009 IECC will result in homeowners paying an additional $7,260.00 in energy costs over the life of the home. 

There are additional economic considerations.  First, the American Recovery and Reinvestment Act – commonly known as “the stimulus” – requires states that receive stimulus funding to adopt the 2009 IECC.

Second, adoption of the 2009 IECC will stimulate job creation and growth.  The new requirements for air duct testing and sealing, and for general building envelope tightness will translate directly into a need for quality third-party testing, inspection, and compliance professionals.  In simple terms, this means more home energy raters, auditors, inspectors, specialists, and consultants.  These are skilled positions.  Once created, they should become permanent parts of the sustainable economy.

But more than pure economics, adopting the 2009 IECC can be seen as an integral step on the path to sustainability.  Green building technology is rapidly evolving, and the only surefire way to ensure that Arkansans are provided with affordable, reliable, and sustainable energy is to adopt and enforce updated building standards based on current technology. 

In the final analysis, if Arkansas is going to become a true leader in sustainability, the state is going to need to make substantial improvements both in the quantity and quality of its sustainable systems and in the way in which those systems are coordinated.  A theme that unites both needs is the creation of a culture of sustainability.  In simple terms, Arkansans need to get into the habit of thinking and acting sustainably in all aspects of their lives.  As I’ve previously written, a compelling argument can be made that Arkansas public policy supports energy efficiency and sustainability, even if that policy lack cohesiveness.  Adopting the 2009 IECC is not only consistent with that public policy, but it pushes it down to a level that can have a real impact on the everyday lives of Arkansans.

Indeed, because Arkansas is not going to shun federal stimulus funds, adoption of the 2009 IECC is inevitable.  So the real question is this: why wait?

Certified Community Development Entities (CDEs) in Arkansas as of April 2011

Following up on my previous post, here are the 16 CDEs in Arkansas, organized by community:

Arkadelphia

• South Arkansas Community Development
• Southern Bancorp Bank
• Southern Bancorp Capital Partners
• Southern Bancorp, Inc.

Bentonville

•  Neighborhood Revitalization Development Corp.

College Station

•  College Station Community Federal Credit Union

Fayetteville

• Bank of  Fayetteville Community Ventures, Inc.
• Bankshares of Fayetteville Community Development Company, Inc.
• Community Resource Group, Inc.

Fort Smith

• Forth Smith Regional NMTC Facilitators, LLC

Little Rock

• ADFA Certified Development Corporation
• Heartland Renaissance Fund, LLC
• Pulaski Enterprise Community Alliance, Inc.

Marianna

• Employ America, LLC

North Little Rock

• Argenta Community Development Corporation

West Helena

• First National Bank of Phillips County

New Markets Tax Credit Program: Becoming a Community Development Entity

As I’ve previously discussed, the Community Development Entity (“CDE”) is the central investment mechanism of the New Markets Tax Credit Program.  Under the NMTC Program, certified CDEs apply the U.S. Treasury Department for an award of tax credits, solicit investments, and make loans and investments into qualified businesses and projects.  An organization becomes a CDE by applying to the U.S. Treasury Department.  The U.S. Treasury Department has certified hundreds of CDEs since the inception of the NMTC program, including 16 in Arkansas.

To become a CDE, an organization must meet three basic qualifications:

First, the organization must be legally organized under the laws of the state in which it is incorporated and be a domestic corporation or partnership for federal tax purposes.  In other words, the organization must exist and have a federal tax ID.  No surprises here.

Second, the CDE must have a primary mission of serving or providing investment capital for low-income communities or low-income persons.  The key part of this requirement is that the CDE must demonstrate that at least 60 percent of its products and services are directed to or will be directed to low-income persons, to individuals, businesses, or organizations that serve low-income persons, or to residents of low-income communities. 

Activities that meet this requirement include:

• investing in, lending to, or providing technical assistance to businesses located in low-income communities or owned by low-income persons
• investing in or providing loans to support commercial properties that are located in low-income communities
• lending to low-income persons or residents of low-income communities
• investing in, lending to or providing technical assistance to organizations engaged in activities that promote community development in low-income communities or for the benefit of low-income communities.

Third, the CDE or proposed CDE must designate a “service area” and maintain accountability to the residents of the low-income communities in that service area.  A CDE meets this requirement if at least 20 percent of its governing or advisory board is representative of the low-income communities within the designated service area.  In other words, board members must either reside in a low-income community within the designated service area, or otherwise represent the interest of residents of the low-income communities within the service area – for example, by owning a business in the community.

The deadline for submission of CDE applications for the current round of NMTC awards is June 22, 2011.  A link to the CDE application can be found here: http://www.cdfifund.gov/what_we_do/programs_id.asp?programid=5

Sustainability Law 101: The New Markets Tax Credits Program

The New Markets Tax Credits Program is a key, if somewhat unheralded, incentive for investment in the sustainasphere.  Found in Section 45D of the Internal Revenue Code, the NMTC Program rewards investment in low-income communities with federal income tax credits.  In simple terms, investors in “Community Development Entities” get a federal income tax credit equal to 39% of the investment.  The credit is claimed over seven years at a rate of 5% of the investment for the first three years and 6% of the investment for the remaining four years.  All told, the NMTC credits have an estimated present value of about 30% of the investment.

Here are the basic elements of the program: 

• The NMTC credits are awarded by the U.S. Treasury Department to certified “Community Development Entities,” or “CDEs.” 
• A CDE must meet various criteria, but the basic qualification is that the CDE must have the primary mission of community development. 
• The CDE is the entity that applies to the Treasury Department for an allocation of credits.
• $3.5 billion in credits will be allocated in 2011, and it is expected that several hundred CDEs will compete for allocations ranging from several thousand dollars to several million dollars.
• Once a CDE receives an allocation of new markets tax credits, the CDE solicits investments.  Investments must be in cash. 
• The CDE uses the capital raised to make equity investments and loans to “qualifying businesses.” 
• Eligible businesses include for-profit retail, manufacturing, and service businesses and non-profit businesses. 
• Residential rental housing is expressly excluded from NMTC eligibility and, while a NMTC can be combined with other federal tax benefits, it cannot be combined with low-income housing tax credits or tax-exempt bonds.

Some see the prohibition against NMTC investment in residential rental housing as limiting the utility of the NMTC program, particularly as current economic conditions seem to devalue home ownership and affordable housing communities experience constant 100% occupancy.  But Arkansas cities and communities are becoming increasingly focused on revitalizing long neglected downtowns and business districts.  State and local governments are slowly, but steadily, “greening” municipal buildings.  And the state, under Governor Beebe’s stewardship, has done a remarkable job of attracting major out of state and foreign renewable and clean energy businesses to the state.  Effective, and, in some instances, creative, use of the NMTC program can and should facilitate all of these activities.

(Department of Things to Come: CDEs will be discussed in more detail in a future post.)

The Practice of Sustainability Law and the “New Normal” for Lawyers, Part I: “Is There a Dark Side to Green?”

Earlier this year, University of Arkansas Professor of Law Carl Circo wrote and published an article called, “Is There a Dark Side to Green?”  The alarm raised by Professor Circo is that lawyers claiming expertise in sustainability law may be doing so for the wrong reasons.  As Professor Circo writes,

Green building literature often uses such pejorative phrases as “greenwashing,” “green marketing,” and “the sustainability bandwagon” to suggest that not everyone who promotes sustainable construction does so with entirely pure motives.  How common is it, and how objectionable, for professionals, including lawyers, to claim special expertise to garner more business as much as to advance sustainability?  For that matter, even a law professor might elect to write on green buildings in part because it is relatively easy to get a good law review placement for a green building article. 

My first impulse is to demur.  So what?  There are undoubtedly numerous businesses that have jumped on “the sustainability bandwagon” not out of an abiding sense of social responsibility, but to take advantage of an ever-growing market for sustainable products and services.  For example, consider the owner of an auto dealership who does not believe that auto emissions contribute to global warming – indeed, who does not believe in global warming at all.  But the dealership nonetheless markets and sells at a profit hybrid and energy efficient cars.  Do the owner’s personal beliefs somehow change the character or benefits of the product sold?  (Which is not to say that denizens of the sustainasphere would not find this proposition offensive or the owner morally corrupt.) 

But the bigger logical failure of Professor Circo’s premise is that he equates sustainability law with more traditional legal practice areas like corporate law, contracts, securities, real estate, environmental law, municipal finance, and construction law.  Sustainable law is not a traditional practice area.  True, certain issues – green leasing and the law governing net metering come to find – resemble traditional practice areas.  But few lawyers, if any, are going to be able to have a thriving law practice devoted solely to writing green leases or advising clients regarding compliance with net metering schemes. 

Much has been written recently on the “new normal” for lawyers, law firms, and law practices.  Much of this pontificating focuses on the shift from hourly rates to alternative and incentive based billing methods and on documenting the emergence in changes in how law firms operate – from a new emphasis on client service to identifying new ways to compensate and reward lawyers.  Likewise, a lawyer will probably not have a philosophical attachment to a bond issue, while a true sustainability lawyer will bring specific public policy and value judgments to the representation.

In a recent article in the American Bar Association Journal, Paul Lippe wrote, “In the New Normal . . . lawyers recognize law as a system of information and management, where the challenge is to impact the outcome for lots of distributed actors in a complex system where law is only one part.”  That’s pretty dense, but what it means is that if Lippe and his ilk are right, the future practice of law will be much more about relationships driven and defined by client values and goals and much less about having a body of specialized knowledge and charging an hourly rate that reflects that amount of gray in a lawyer’s hair and that is the highest the market will bear for access to that knowledge.

Because “sustainability” is both a process and a value-shaped result, the practice of sustainability law reflects this new normal.  It is far more than recognizing that the commercial lease of a LEED-certified building will need to contain numerous specialized provisions, or that certain tax credits or financing incentives may be available for “green” projects that are not available for “traditional” projects.  It is about practicing law in a way that lines up with the client’s values, and that means law offices that adhere to a “triple bottom line” philosophy and that follow other sustainable practices.  The simple fact is that if a lawyer wants to hold themselves out as practicing sustainability law, they are not only going to need the specialized knowledge to preach the practice, but also the dedication to practice the practice.

I want to make it clear that I do not know Professor Circo, and that I appreciate him giving voice to this issue under the masthead of a respected university publication.  And, criticism aside, the question he raises is a good one: how does one find and hire a true sustainability lawyer – that is, one who has not simply “jumped on the bandwagon” to garner business but who is invested in the process and the result?  Stay tuned for Part II….

(Department of Citation: “A Professional Renewal: Why Great Lawyers of the New Age May Be ‘System Designers’”, by Paul Lippe, June 8, 2011, can be read here: 

http://www.abajournal.com/legalrebels/article/professional_renewal_in_the_new_normal/)

(Department of I’m Not Picking on You: I have absolutely nothing against bond lawyers!  Several of my law partners practice municipal finance, and my father-in-law is a former bond lawyer.)  

New Markets Tax Credits: 2011 Allocation and Competition Announced

This past Friday, June 3, 2011, the U.S. Department of the Treasury, Community Development Financial Institutions Fund released its 2011 Notice of Allocation for the New Markets Tax Credit (“NMTC”) program.  There will be $3.5 billion in new markets tax credits available in 2011, and the Notice of Allocation serves to officially open competition for those credits. 

The NMTC program is designed to attract private investment to underserved, low-income communities.  In broad strokes, the NMTC program provides a tax credit to corporate or individual taxpayers who make qualified equity investments in designated “Community Development Entities” (known as “CDEs”).  The CDEs invest the capital raised into projects and businesses in the targeted communities.  In exchange for the investment, the investor gets a tax credit of 39% of the investment in the CDE.  The credit is allocated over a seven-year period.

The 2011 allocation of new markets tax credit is part of a recent extension of the NMTC program, and there are numerous CDEs in Arkansas poised to take advantage of the investment generated by the tax credits.  The NMTC program is also a significant tool for the Arkansas Sustainasphere, as the low-income and underserved communities that are the target of the program are the very places ripe for sustainable investment and development. The 2011 Arkansas General Assembly generally failed to pass much in the way of sustainalaws – such as the Property Assessed Clean Energy (PACE) Act and the Arkansas Clean Energy Act.  Those sustainalaws that did pass, primarily the Arkansas Central Business Improvement District Rehabilitation and Development Investment Tax Credit Act, have a limited reach and are probably under funded.  Given these deficiencies, look for savvy investors and developers to take advantage of the 39% tax credit for their community redevelopment projects, particularly in places like Little Rock, Helena, and Fort Smith.

The deadlines for the NMTC program are rapidly approaching.  CDE certification applications are due June 22, 2011, and NMTC program applications are due July 27, 2011. 

More information about the NMTC program can be found at www.cdfifund.gov/what_we_do/programs_id.asp?programID=5.  

Practical Applications of ASTM’s Building Energy Performance Assessment (BEPA) Standard E 2797-11

Building on my previous post, consider some potential practical applications of the ASTM’s new “BEPA” standard:

• Use with projects in connection with Arkansas’s Sustainable Buildings Design and Sustainable Energy-Efficient Buildings Design programs;
• Use by developers, lenders, borrowers, and investors as part of the due diligence into a commercial real estate deal;
• Use in connection with state and local laws that either mandate energy-efficiency performance or require disclosure of energy-efficiency performance information;
• Use in combination with energy audits (i.e., ASHRAE Level I) and other energy efficiency benchmarking efforts;
• Use by Energy Service Companies (ESCOs) for projects designed to improve the energy efficiency and maintenance costs of commercial buildings;
• Use in connection with loans or other financing for energy-efficiency projects and improvements;
• Use in connection with regulatory disclosure requirements for energy-use;
• Use in comparing similarly situated buildings in connection with the asset management of a portfolio or to evaluate potential investments;
• Use to identify potential energy efficiency retrofit opportunities to improve return on investment and to increase the value of commercial real estate;
• Use by lenders to evaluate a borrower’s ability to repay financing based on lower operating expenses due to improved energy efficiency, and to evaluate increases in the value of collateral due to energy efficiency improvements;
• Use in connection with governmental incentive programs linked to energy efficiency improvements and performance.

BEPA “best practices” will undoubtedly emerge. Stay tuned.

(Department of Credit Where Credit is Due: This list is largely drawn from a January 2011 presentation by Anthony j. Buonicore, the Chairman of the ASTM BEPA Task Group.)

ASTM E2797-11: A New Standard for Assessing Energy Performance in Commercial Buildings?

One of the dominant trends in the law of sustainability is that the regulations that govern green building construction and performance – think of them as “green building codes” – are not written by legislators or municipalities but by private, non-governmental organizations. The most visible example of this phenomenon is the U.S. Green Building Council’s LEED green building certification system.

Another key player in private green regulation is ASTM International. ASTM started life in 1898 as the American Society for Testing and Materials. It is an international standards organization that develops and publishes voluntary consensus technical standards for a wide range of materials, products, systems, and services. And in February of this year, ASTM published its “Building Energy Performance Assessment (BEPA) Standard,” known in shorthand as ASTM E2797-11 or as simply the ASTM BEPA standard.

A technical dissertation on BEPA’s provisions is beyond the scope of this post (and would likely put you to sleep). But here is the meat of the coconut:

• The BEPA standard is intended to “define a commercially useful practice for collecting, compiling, and analyzing building energy performance information associated with a building involved in a commercial real estate transaction”;
• The BEPA standard has five basic components – (1) a site visit; (2) collection of records, information, and data; (3) review and analysis of the collected materials; (4) interviews; and (5) preparation of a report; and,
• BEPA is designed to be used in connection with other design and ratings standards, such as LEED, ASHRAE, and Energy Star.

It will take some time for the practical effect of BEPA to become clear. Another “outside the scope” use of the BEPA standard is that it complements the Sustainable Buildings Design and Sustainable Energy-Efficient Buildings Programs already on the books in Arkansas. The guidelines associated with the programs recommend energy data measurement and collection, and BEPA could provide a uniform standard by which to do so.

Another reasonable expectation is that BEPA assessments will become part of the due diligence associated with commercial real estate transactions. There is a precedent for this, as the ASTM “Environment Site Assessment (Phase I) Standard” has become a standard point of due diligence.

We can also anticipate that the BEPA standard will be incorporated into state and local law regarding building “labeling” – i.e., regulations that require building owners to measure and disclose certain energy efficiency data about a building. Such requirements are vogue in places like New York City and Austin, Texas. While Arkansans do not take many cues from the Big Apple (at least, not that we admit to), there is a known close relationship between Little Rock Mayor Stodola and his counterpart in Austin.

A final consideration is the Gifford v. USGBC lawsuit, which, among other things, challenges the effectiveness of the LEED rating system in measuring a building’s energy efficiency. Despite the claims in Gifford, it seems that there is little debate that LEED is a system related to designing buildings, and not for measuring their performance. Indeed, part of the USGBC’s response to the Gifford suit is that “LEED is premised on identifying strategies intended to improve building design,” and that, with the exception of the “existing buildings program, the LEED certification process does not assess the actual environmental performance of any of the structures for which certification is sought or granted.”

Nonetheless, the LEED system has become the rock upon which the green castle is built as an increasing number of states and municipalities – Arkansas and the cities of Fayetteville and Little Rock included – have sought to green their building practices and to legislate sustainability and energy efficiency. While there is evidence that LEED-certified buildings are more energy efficient than their non-certified counterpart, the LEED system is not a building code and certification is not a substitute for a systematic analysis of a building’s performance. This means that in many cases, the LEED system is being but to a task for which it was never intended. The BEPA standard fills this gap.

In short, local governments, developers, energy raters, lawyers, investors, bankers, and deal-doers of all types who deal with green commercial real estate and who want to get ahead of the curve should add a new acronym to their vocabulary. Absent some “battle of the standards,” BEPA is here.

(Department of Citation: The material quoted from the USGBC’s response to the Gifford suit comes from the “U.S. Green Building Council’s Memorandum of Law in Support of Motion to Dismiss First Amended Complaint,” United States District Court for the Southern District of New York civil action no. 1:10-cv-07747, Docket No. 20 at p. 5.)

Sustainability Law 101: Net Metering in Arkansas

Net metering is the scheme under which power generated privately and using renewable energy sources is transfered back to the grid. The Arkansas legislature required utilities to offer net metering in 2001. The program is overseen by the Arkansas Public Service Commission.

The defining characteristic of net metering in Arkansas, as with many net metering schemes, is that private energy generators do not receive any actual cash for pushing power back into the grid. Instead, private generators receive “credits” toward future electricity bills. These credits last for 12 months; at the end of the 12 month period, excess generation is given to the customer’s utility.

Here are the basic elements of net metering in Arkansas:

• Solar power and systems generating power from wind, hydroelectric, geothermal, biomass and microturbines are eligible for net metering;
• Residential renewable electric generation systems up to 25 kW are eligible to enroll in net metering.
• Non-residential renewable energy systems up to 300 kW are eligible to enroll in net metering.
• Any utility under the jurisdiction of the PSC must allow eligible customers to net meter. However, municipal utilities are not covered by the net metering law.
• To participate, private energy generators must sign an interconnection agreement with their utility.
• Customers are responsible for the costs associated with interconnecting their system to the grid, including the cost of additional metering equipment needed to net meter. Utilities may also charge the private energy generators a tariff.
• There is no limit for the aggregate capacity of all net-metered systems.

As noted above, Arkansas’s net metering scheme does not allow private energy generators to actually “sell” power back to the grid. Instead, “net excess generation,” known counter intuitively as “NEG,” created by the private energy generator’s system is fed back into the electric grid, earning the private energy generator credits toward future energy use. These credits are known as renewable energy credits, or, for those of you who like acronyms, “RECs.” NEG is carried over to the customer’s following monthly bill at the utility’s retail rate. Any NEG remaining at the end of an annual billing cycle is granted to the utility. Customers, however, do own their RECs, and RECs can be bought and sold.

There are at least 37 net metering systems in Arkansas: 30 solar systems with a total of 97 kW installed capacity, and 7 wind systems with a total of 128 kW installed capacity.

Governor Beebe Promotes Renewable Energy

Over my last several postings, I have been slowly making a case that, as a matter of public policy, Arkansas supports renewable energy.  Last Thursday, in the course of introducing former Michigan Governor Jennifer Granholm at the Clinton Library, Governor Beebe made a few brief comments that suggest I’m not suffering from visions of a non-existent public policy. 

As reported by arkansasbusiness.com, Governor Beebe “called on audience members to ‘evangelize in the old Southern way’ about solar power, biofuels, and other forms of alternative energy,” and commented that renewable energy is “good for the environment, it’s good for our economy, and it’s good for our national security.”

Admittedly, these comments lack depth and could easily be no more than lip service in support of visiting speaker and colleague.  But consider: Arkansas has already implemented statutory programs promoting sustainable building design and energy efficiency in state facilities, and the legislature did appropriate significant funding to those programs. Arkansas is quietly but steadily supporting biofuel development and has successfully recruited several significant wind energy manufacturers to the state (i.e., Nordex).  And, as the Second Annual Renewable Energy Conference earlier in the week at ASU Jonesboro demonstrated, real and significant efforts to develop renewable solar, wind, biomass, and hydrogen energy sources and bring them to market are ongoing throughout the state. 

In the view of this sustainablawger, given the significant failure of our legislature to pass any significant clean energy legislation, citizens of the Arkansas sustainasphere need to stay focused on the areas where Arkansas is leading by example.  Renewable energy is shaping up as one of those areas.