Not Every Lease Is a Green Lease!

This week’s Little Rock Downtown Partnership Weekly Update contained the following item:

“The K-Lofts at 315 Main are coming along and Scott Reed expects to turn the space downstairs over to Porter’s Jazz Café in March 2011. He has a waiting list of 24 for the apartments above!”

If all goes as planned, the building at 315 Main in downtown Little Rock will be a combination of historical preservation, LEED-certification, and commercial and residential use.

In addition to being a sustainable showcase, 315 Main showcases another problem unique to “green buildings”: the lease. A green building, by definition, is sustainably constructed and sustainably operated. Likewise, the lease for a green building needs to be careful written to preserve and advance the sustainable nature of the building.

In this sense, a traditional lease falls woefully short. Consider:

 

• The tenant who wishes to make “improvements” or “alterations” to a LEED-certified building;
• The landlord of a sustainable building who needs special access rights to leased units to be sure that tenants are observing sustainable building operations and waste management practices; 
• The need to allocate operating expenses and credits – such as additional insurance and taxes and the benefits of green tax credits – between landlord and tenant;
• The tenant who contracts to lease a unit in a LEED-certified building that is subsequently decertified; and,
• The landlord of a sustainable building who is confronted with a tenant whose business or use of the leased premises threatens the building’s green certification.

These are just a few of the areas where a traditional lease is going to fail a green building. I expect that as green and sustainable buildings become more common in Arkansas, these lease issues will become less novel. But make no mistake about it: right now they are novel, and they are important. Developers, financers, landlords, and tenants should all take notice.

 

(Department of Shameless Self-Promotion: So, am I suggesting that you need to hire a lawyer (like the author of this blawg) to draft that new and unique green lease? Absolutely.)

 

Will Arkansas Ban Plastic Shopping Bags?

Late last week a bill proposing a ban of “single-use carryout” plastic shopping bags hit the wire and lit up the Arkansas sustainablawgasphere. The proposed law, HB 1043, would make it illegal for “supermarkets,” convenience stores, and retailers having “over ten thousand square feet . . . of contiguous retail space that generates sales or use tax payable to the State of Arkansas and has a licensed pharmacy on site” to provide a “single-use carryout bag” to a customer. If passed, the ban would be effective January 1, 2012.

A “single-use carryout bag” is defined as a bag that is made of plastic, provided to the customer at the point of sale, and designed to be used between 1 and 100 times.

The proposed ban illustrates the conundrum faced by Arkansas’ green-minded citizenry, by sustainability proponents, and by lawmakers. On the one hand, if it passes, HB 1043 can be seen as an important recognition of sustainable values (a section of the bill entitled “findings and legislative intent” states that the bill is necessary “for the environmental, public health, and societal burdens created by single-use carryout bags”), and that some sustainable goals and benchmarks can be achieved through legislative action.

On the other hand, HB 1043 illustrates the difficulty in legislating sustainability. It is a proverbial paper tiger. There is no enforcement mechanism. No penalty provision. No incentive for compliance. What good is a ban if retailers have no incentive to comply and if violations carry no consequence? This type of approach requires both a carrot and a stick, and HB 1043 has neither.

And HB 1043 raises interesting issues of fairness. How is a covered retailer to know whether or not a plastic bag is “designed” for more or less than 100 uses? Will retailers who rely on the representations of a manufacturer find safe harbor from the ban? Is it really appropriate to group convenience stores and food marts – businesses that traditionally operating on thin margins – with businesses having gross annual sales in excess of $2,000,000? And why are large retailers with a licensed pharmacy on site, such as WalMart, distinguished from large retailers without a licensed pharmacy on site, such as Dillards? These sorts of ambiguities and apparently arbitrary distinctions are fodder for legislative challenges and litigation.

Of course, all of this may be for naught, since HB 1043 could easily die on the vine. I’ll be tracking the journey. Stay tuned.

(Department of Documents: HB 1043 can be found here: http://www.arkleg.state.ar.us/assembly/2011/2011R/Bills/HB1043.pdf)

Health Care Reform and the Small Sustainable Business

There has been much discussion this year about “pee-paca,” formally known as the Patient Protection and Affordable Care Act of 2010 (“PPACA”), and, perhaps depending on where which way you lean politically, informally known as “health care reform” and “Obamacare.”  Regardless of your political views, providing employees with health insurance squares nicely with the sustainable business values of promoting social welfare, equality, and opportunity.

The PPACA includes an important incentive in the form of a tax credit for small employers who provide health insurance for their employees.  This credit is important to the small green business.  The credit is claimed on the businesses federal tax return, and it reduces general tax due.  Employers with no more than the equivalent of 25 full-time employees earning average wages of no more than $50,000 per year are eligible.

Here is how the tax credit works.  For the years 2010 through 2013, the credit is up to 35% of the employer’s contribution to health insurance premiums.  For 2014 through 2016, the credit can be as high as 50% of the employer’s contribution to health insurance premiums.  Since the tax credit is designed to encourage small businesses to provide health insurance, the smaller your business, the bigger the credit.

The last year has seen a proliferation of green businesses in Arkansas.  Many of these businesses are operating with a “seize the day” mentality and without much strategic or long-term planning – which means they are missing significant opportunities presented by tax incentives and credits. 

The PPACA small business tax credit is one of those opportunities.  The credit can impact the way a business grows, the size and compensation of a workforce, and the overall profitability of the business.  As the year comes to an end, green businesses need to be looking ahead not only to 2011, but strategically planning for the next five and ten years.  The PPACA small business tax credit can – and probably should – be an important consideration in these plans.  Take note!

(Department of Disclaimers: This sustainablawg posting is neither tax nor legal advice and is no substitute for the counsel of a qualified CPA or an experienced tax lawyer.)

(Department of Now-That-You-Mention-It:  I am privileged to practice law with several experienced tax lawyers.  I encourage anyone interested in discussing the PPACA small business tax credit, sustainable business planning, or the sustainasphere in general to give me a call at (501) 372-0800.)

(Department of Shameless Self-Promotion: See above!)

Five “Green Law” Issues to Look for in 2011

Green Leasing. Arkansas is a landlord-friendly state. Evictions are expensive due to the filing fees and because a lawyer is required, but they are also straight-forward proceedings, and the end result is generally clear: material lease violations mean eviction. Leases in green buildings, however, present new and unique issues. Consider the tenant who leases space in a LEED-certified building that is subsequently decertified, or the landlord of a LEED-certified building faced with a tenant who engages in conduct that threatens certification. In these situations, the tradition remedies of possession or money damages may not be appropriate. This means the parties, and their lawyers, will need to do some new thinking, and they will need to do it on the front end when they are drafting the lease.

LEED as the New Building Code. The City of Little Rock’s resolution that all new city buildings be LEED-certified raises interesting issues because it treats the LEED requirements as though they were building codes. But they are not. LEED standards are aspirational and were designed to codify best practices. Treating them as building codes means using them for an unanticipated purpose, likely with unanticipated consequences. What happens if a new building fails the standard? What is the mechanism of enforcement? Do we really mean to give the U.S. Green Building Council power over our local municipal buildings? Is LEED even the right standard? Why not Energy Star? What happens when the city refuses to pay a contractor who, despite best efforts, has failed to deliver a certified building? The LEED standard was not made for this type of duty. Send in the lawyers.

Green Washing and False Green Claims. Green Washing involves misrepresentations (or outright lies) regarding the “green” or “sustainable” characteristics of place, product, process, or service. Envision a granite countertop advertised as “recyclable.” All things being equal, green-conscious consumers will prefer this product over the granite countertop that is not advertised as “recyclable.” And yet, if there are no places where granite countertops can actually be recycled, then the “recyclable” claim is meaningless. Likewise, even if there are recycling opportunities for granite, if the countertop is made from virgin granite, the “recyclable” claim is misleading. These are examples of green washing, and they related directly to claims that I have seen made in 2010 in the Arkansas sustainasphere. In eight days, on December 9, 2010, the comment period for the FTC’s proposed green guidelines related to green claims will end, and the new guidelines will be final and go into effect sometime in 2011. All making green claims should take notice, and be prepared. And consider this: are those who make false green claims violating the Arkansas Deceptive Trade Practices Act?

Will LEED survive? The answer is yes, but it’s going to be an interesting journey because of a class-action lawsuit filed in federal court in New York in October, Gifford v. USGBC. The Gifford suit challenges the very essence of the LEED certification regime, contending that LEED lacks an empherical, scientific basis, does not result in buildings that are more energy efficient, and steers consumers away from energy efficiency certification programs that do achieve greater efficiency. This lawsuit has it all – allegations of fraud and wrongdoing, misrepresentations, anti-competitive and monopolistic behavior, deceptive trade practices, even criminal racketeering. It is sensational, and I predict that as the case progresses at least three things will happen. First, there will be copycat lawsuits. Second, the USGBC will make some interesting changes to the way in which is promotes and manages the LEED brand. And third, the alleged class will not be certified and the case will be dismissed before trial.

LEEDigation and the Arkansas Deceptive Trade Practices Act. To me, the allegations in the Gifford case with the greatest staying power are those that LEED constitutes a deceptive trade practice. Most states, including Arkansas, have a statute that prohibits businesses from engaging in deceptive, unlawful, and unconscionable practices in business, trade, and commerce. (For a classic example, think rolling back an odometer.) To date, there has not been much LEEDigation in Arkansas. But it is coming, and I predict it will come in 2011. Consider the energy efficiency guru who “guarantees” a certain level of LEED certification and then fails to deliver. The injured party will likely be able to swear out a complaint that the guru violated the Arkansas Deceptive Trade Practices Act. Likewise, many in the sustainable blogosphere are predicting that either (a) there is a wave of LEED-decertification coming or (b) that there are numerous buildings that should be decertified but, for a myriad of reasons, will not be. Either way, the end result is LEEDigation, and if there is actual injury a cause of action for violating the Arkansas Deceptive Trade Practices Act is a natural fit.

LEEDigation and the Arkansas Deceptive Trade Practices Act

Back in October, sustainblawgers were handed a gift in the form of a class action lawsuit against the U.S. Green Building Council, Henry Gifford, et al. v. U.S. Green Building Council et. al. The suit, filed in federal court in the Southern District of New York, broadly alleges that the USGBC’s “LEED” certification is a deceptive sham that does not result in greener buildings or greater energy efficiency, all the while steering consumers away from alternative certifications that actually work.

In this vein, one of the claims in Gifford is an allegation that the LEED program amounts to a deceptive trade practice under New York law. The New York law at issue provides simply that, “deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in the state of New York are hereby declared unlawful.”

There is an equivalent to this statute in Arkansas, the Arkansas Deceptive Trade Practices Act. The Arkansas Deceptive Trade Practices Act (or, for those of you who enjoy alphabet soup, the “ADTPA”), is Arkansas’s underused, all-purpose consumer protection statute. It makes a wide-range of behavior illegal, including knowingly making false representations as to the characteristics, uses, benefits, sponsorship, approval, or certification of goods or services, and engaging in any unconscionable, false, or deceptive act or practice in business, commerce, or trade.

Only the Arkansas Attorney General can seek an injunction under the Arkansas Deceptive Trade Practices Act, but private citizens actually injured by a deceptive trade practice can sue to recover their actual damages and, in a departure from the general rule in Arkansas, their attorneys’ fees.

While Arkansas has yet to see much, if any, LEEDigation, the conduct alleged in Gifford, if true, amounts to knowingly false representations as to the characteristics and benefits of LEED certification and arguably states a claim under the Arkansas Deceptive Trade Practices Act.

I expect that when LEEDigation hits the Natural State -- and it is coming -- plaintiffs (and their attorneys) will craft an ADTPA cause of action. All involved in the LEED-certification process – indeed, in any “green” certification process – should take notice.

(Department of Legal Citations: The ADTPA is codified at Ark. Code Ann. § 4-88-101 et seq.; a non-exhaustive list of the deceptive and unconscionable trade practices prohibited by the ADTPA can be found at Ark. Code Ann. § 4-88-107.)

It Ain’t Easy Claiming Green Part II: Know the Seven Sins of Greenwashing

The public comment period for the Federal Trade Commission’s new proposed guidance for green claims ends on December 10, 2010. I expect the guidance to become final sometime in early 2011. If you are in the business of making some kind of green claim, you need to be preparing.

One way to begin preparing for the new FTC guidance is to get fluent with the “Seven Sins of Greenwashing.” The Seven Sins of Greenwashing are the product of several years of study by environmental marketing gurus Terrachoice Environmental Marketing. Starting way back in 2007, Terrachoice sent researchers into big-box stores throughout North America. The researchers wrote down every green claim on every product they encountered, along with supporting evidence and other stuff important and obvious to researchers.

Terrachoice found that there was a lot of “greenwashing” going on – that is, “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.”

It also turns out that, once identified, greenwashing practices were easily categorized. Hence, “The Seven Sins of Greenwashing.” So, without further ado, here they are:

Sin of the Hidden Trade-Off. A claim suggesting that a product is “green” based on a narrow set of attributes without attention to other important environmental issues. Paper for example, is not necessarily environmentally-preferable just because it comes from a sustainably-harvested forest. Other important environmental issues in the paper-making process, such as greenhouse gas emissions, or chlorine use in bleaching may be equally important.

Sin of No Proof. An environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are facial tissues or toilet tissue products that claim various percentages of post-consumer recycled content without providing evidence.

Sin of Vagueness. A claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. “All-natural” is an example. Arsenic, uranium, mercury, and formaldehyde are all naturally occurring, and poisonous. “All natural” isn’t necessarily “green”.

Sin of Worshiping False Labels. A product that, through either words or images, gives the impression of third-party endorsement where no such endorsement exists; fake labels, in other words.

Sin of Irrelevance. An environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. “CFC-free” is a common example, since it is a frequent claim despite the fact that CFCs are banned by law.

Sin of Lesser of Two Evils. A claim that may be true within the product category, but that risks distracting the consumer from the greater environmental impacts of the category as a whole. Organic cigarettes could be an example of this Sin, as might the fuel-efficient sport utility vehicle.

Sin of Fibbing. Environmental claims that are simply false. The most common examples were products falsely claiming to be Energy Star certified or registered.

Obviously, the Sins of Greenwashing represent a marketing, and not a legal, viewpoint. But, as we will see in future posts, they represent a useful tool for navigating through the new FTC guidelines and for analyzing whether a particular claim complies with state law – for example, the Arkansas Deceptive Trade Practices Act.

More information about the greenwashing and the Sins of Greenwashing can be found here:http://sinsofgreenwashing.org/

(Department of Authorized Use: Terrachoice requests that folks seeking to use the greenwashing studies get appropriate approval from Terrachoice. Accordingly, I sought, and received, permission to use and reproduce The Sins of Greenwashing.)

More Green Stimulus Funds For Arkansas

The American Recovery and Reinvestment Act – aka, “the stimulus funds” – was one of many political footballs in play in Arkansas during the November 2, 2010, election. So it is not without irony that the day following – depending on your personal politics either a sweeping victory or, to use President Obama’s phrase, a “shellacking” – one of those stimulus footballs landed in the arms of a very willing Arkansas receiver.

On November 3, 2010, the Arkansas Energy Office, a division of the Arkansas Economic Development Commission, announced that twelve Arkansas companies will receive $3.14 million in stimulus funding. The funds flow through the Arkansas Green Technology Grant program and will go toward assisting companies that make or sell products that contribute to renewable energy production or storage, energy efficiency or reduction of energy use in the state's economy.

Here are the companies that will be receiving the funds:

AERT - Lowell: $190,000 for replacement of high energy use recycling equipment.

AmerCable - El Dorado: $675,000 for installation of an additional product line for components used in solar panel construction.

LGW Inc. - Fayetteville: $290,496 for a pilot project to demonstrate battery-based storage systems.

EcoMembrane USA - North Little Rock: $315,000 to manufacture biomembranes for methane gas capture and utilization.

Phigenics - Fayetteville: $300,000 for build out of a water analysis facility in commercial and industrial cooling towers and heat exchangers that will directly save 15 to 25 percent per facility in utility costs.

NextGen Illumination - Fayetteville: $337,500 for a statewide demonstration of LED lighting.

Columbia Forest Products - Trumann: $100,047 for the retrofit of existing boilers to supply heating steam to three on-site buildings.

Cooper Power Systems - Fayetteville: $60,000 to replace an annealing oven with a high-efficiency oven.

Bekaert - Fayetteville: $100,000 for a facility lighting retrofit.

AP Fabrications - Stuttgart and Danville: $109,345 for a demonstration of their new economizer (an additional heat exchange that takes waste heat from a boiler to heat water or air) design.

Global Manufacturing - Little Rock: $315,000 for retrofit of a roof to allow conversion of the space to a year-round manufacturing facility.

Flexsteel - Harrison: $257,264 for a facility lighting and HVAC retrofit with significant energy savings.

Here’s Governor Mike Beebe’s take: "These grants will help Arkansans build renewable-energy companies, and will make existing companies more energy-efficient and cost-effective. The program is spread throughout the state, and will benefit both the current operations and future endeavors of these companies." This is another victory for sustainability in Arkansas, and Governor Beebe’s remarks are right on point.

This is not the first influx of green stimulus funds in to Arkansas, and it will not be the last. Likewise, the Arkansas Green Technology Grant Program is not the only grant program in the Arkansas sustainasphere. Stay tuned….

Information about the Green Technology Grant Program can be found here: www.arkansasenergy.org

Report from the Little Rock Sustainability Summit: Part II - Where Are We Going?

So where are we going?

Straight ahead! Mayor Stodola's remarks at the Little Rock Sustainability Summit reflected a commitment to continued investment in the Little Rock sustainasphere.

Among the plans:

Continued development of the Little Rock Sustainability Commission and the City of Little Rock “Green Team”;

Continued focus on sustainable city planning by managing city density and planning for sustainable growth and development;

Connecting all of the City’s pedestrian and bike trails so that they actually go somewhere;

Little Rock is one of 20 cities nationwide to have recently received a $200,000 Bloomberg competitive grant, and this funding will be used to hire a “chief service officer” to focus on sustainable issues and initiatives. This means the creation of at least one, full time city job focused on sustainability – that is, a position for at least one employee who does nothing but work on sustainability in Little Rock;

Creating a viable and comprehensive commercial recycling program;

Continuing to work with and to support local and national green builders and developers; and,

Developing a “Sustainability Ordinance,” that codifies the City’s commitment to sustainability, and provides direction and focus for the initiatives.

In other words, if you are a business, developer, inventor, venture capitalist, lawyer, or some other brand sustainability swami, are there opportunities for you in Little Rock (and in Arkansas)?

Absolutely.

Information on the City of Little Rock Sustainability Commission can be found here: http://www.littlerock.org/CityCommissions/Detail.aspx?ID=40

Report from the Little Rock Sustainability Summit: Part I - Where Are We?

The key questions of the Little Rock Sustainability Summit – what is Little Rock’s current profile in the sustainasphere and where is it going? – were framed and answered during Little Rock Mayor Mark Stodola’s opening remarks.

So here is where we are:

Mayor Stodola recently pledged Little Rock to reducing greenhouse gas emissions by signing the “Mayor’s Climate Protection Agreement.” (See: http://www.usmayors.org/climateprotection/revised/).

The City of Little Rock Board of Directors adopted a resolution calling for all newly constructed city buildings to be LEED-certified.

The city is in the process of retrofitting all street lights and buildings with LED lighting. The city is also replacing outdated HVAC systems on city buildings.

The Mayor formed a Sustainability Commission, which is comprised of 7 to 15 Little Rock residents. The Sustainability Commission is charged with providing educating, leadership, and vision for the Little Rock sustainasphere. Sustainability Commission action areas include organizing and promoting the Little Rock Sustainability Summit and sub-committees on Green City Operations, Sustainable Economic Development & Green Jobs, and Built Environment and Land Use.

The Mayor also recently formed a city “Green Team.” The Green Team is a group of city employees, one from each city department, charged with finding opportunities for sustainable initiatives in each department. The Green Team will also help coordinate sustainable efforts among and between city departments.

The City of Little Rock also received federal stimulus funds. Whatever your political sentiments, there is no question that the funding helped stimulate the local sustainasphere. The funds provided capital to:

Develop a new, LEED-certified police substation on 12th Street in Little Rock;

Replace or add to midtown 2.5 miles of sidewalks to Little Rock’s Midtown community, making for a more walk able neighborhood;

Create Little Rock’s Green Building Financial Incentive Program. Under this Program, contractors and/or owners of qualifying new residential and commercial
construction are eligible to receive an incentive of up to $1500 to cover cost of LEED, Energy Star, “Green Built,” or similar nationally recognized green building certification;

Complete several cycling and pedestrian projects in Pulaski County, including The Arkansas River Trail and completion of the Clinton Bridge, and construction of a pedestrian bridge over the Little Maumelle River to Two Rivers Park, which connects an extensive network of existing walking and cycling trails;

Install specialized equipment at the Little Rock landfill to convert methane gas into other forms of usable energy, as opposed to releasing the gas into the atmosphere; and,

Purchase and install equipment at the Little Rock Zoo that transforms elephant waste (i.e., poop) into compost, which is then provided by the Little Rock landfill to
consumers at extremely low cost.

The Mayor also emphasized the mixing preservation and conservation by giving old buildings and neighborhoods new life. For example, one building at 315 Main Street in downtown Little Rock had been vacant for 30 years, much of the time with 8 feet of standing water in the basement. Engineers recommended the building be torn down, despite its place as part of the historic core of downtown. Through partnership with a local developer, Reed Realty Group, 315 Main will be renovated into a LEED certified combination of residential apartment and loft space and world-class jazz café and night club.

Likewise, in partnership with Greenmore Homes, the City has used Neighborhood Stabilization Program II funds to take a derelict inner-neighborhood homes and properties and turn them into Energy Star rated affordable homes. (This is sometimes referred to as the “Eyesores to Energy Stars” Project; see my previous post.)

That is a significant amount of activity for a city like Little Rock over the course of a year. The good thing, as I will cover in my next post, is that it appears that we can expect more of the same. Stay tuned.

Little Rock Green Builder Profiled in Green Building & Design Magazine

A prominent Little Rock developer denizen of the sustainasphere, Greenmore Homes, is profiled in the November issue of “Green Building & Design” (or, to those of you in the know, “gb&d”).

Greenmore Homes is the brainchild of Scott Reed, a transplant to Little Rock via the West Coast. The project profiled is referred to locally as “Eyesores to Energy Stars.” It’s a simple idea – purchase dilapidated homes and land in one of Little Rock’s depressed yet historic neighborhoods, renovate and revitalize the homes and the neighborhood using local labor, and Neighborhood Stabilization Program II (NSP II) grant funds, and with an emphasis on sustainability, and then return the homes back to first-time home buyers and young professionals in the neighborhood. The homes will be built according to innovative plans that use standardized “panels” to reduce waste, maximize the use of materials, and lower labor costs. And the homes feature finishes that normally bear much higher price points – granite countertops and stainless steel appliances, for example.

It may be cliché, but…um…if the shoe fits, wear it: it’s a win-win – a landmark advance for the Little Rock sustainasphere, a worthy use of public funding, a political darling, a boost for a neighborhood desperately in need, and, hopefully, a little bit of profit for the developer.

Yes, there is some risk involved. Quieting title on these old properties can be a nightmare. Getting NSP funding presents unique, and often daunting, challenges. These projects demand project leaders with insight, patience, political acumen, and charisma. And, of course, there’s no guarantee that the real estate market will support the project – or, indeed, that there will be a market.

But, in the end, the “Eyesores to Energy Stars” project embodies the potential just waiting to be tapped in the Little Rock, and Arkansas, sustainasphere. I’ll bet it’s kinetic.

Read the article here: http://gbdmagazine.com/digital-edition/, at page 89.

(Department of Full Disclosure: Greenmore Homes is a client of my firm, Williams & Anderson PLC, and we provide counsel to the Eyesores to Energy Stars Project.)

(Department of Blatant Awareness: See above!)

City of Little Rock Announces Sustainable Purchasing Policy

A few minutes ago at the Little Rock Sustainability Summit, the City of Little Rock announced adoption of a new “Sustainable Purchasing Policy.” In simple terms, the City has announced a commitment to promoting and encouraging sustainable purchasing practices throughout its departments and operations.

An excerpt from the Policy statement:

It will be the policy of the City of Little Rock and its various departments to implement purchasing practices that minimize negative impacts on human health and the environment while supporting a diverse and vibrant community and economy. This policy of the City will be to identify sustainability factors that can be incorporated into everyday purchasing practices, empower employees to be innovative in their purchasing practices, complement city-wide sustainability efforts and demonstrate the City’s commitment to sustainable procurement.

Whenever possible, city employees will purchase products and services that integrate fiscal responsibility, social equity and community and environmental stewardship.

City employees will consider the following factors in all purchasing practices to reduce the overall impact of the product or service on the organization and community: pollutant releases, toxicity, waste generation, greenhouse gas emissions, energy consumption, depletion of natural resources, human health impacts, use of local businesses, use of certified minority or women-owned businesses, product performance and quality, life-cycle cost assessment, impact on staff time and labor and long-term financial changes.

This Policy is the product of collaboration between the City and the Sustainability Commission. It is a concrete example of investment and commitment to sustainability in Little Rock, and should serve as notice of the tremendous opportunity in Little Rock, and in Arkansas, for folks in the business of sustainability and for investment in those business and practices.

October Renewable Energy Recap

It is not widely known, but Arkansas is poised to be a leader in green and renewable energy development, technology, and manufacturing. Consider:

• On October 4, 2010, German wind turbine manufacturer Nordex opened a 42-employee manufacturing plant in Jonesboro, Arkansas. The plant is Nordex’s sole manufacturing presence in the United States.

• Three days later, on October 7, 2010, Mitsubishi Power Systems broke ground on a $100 million wind turbine manufacturing plant in Fort Smith, Arkansas. The plant is expected to be operational in the fall of 2011 and will create 330 jobs.

• On October 23, 2010, one of the premier venture capital forums for emerging technologies, WBT 2011, announced that Arkansas technology start-up Silicon Solar Solutions will be one of 100 companies selected to present to interested investors and venture capitalists. (Silicon Solar Solutions is a Fayetteville-based company committed to making solar energy more accessible and affordable. If the Silicon Solar Solutions folks are right, they have invented the better mousetrap.)

And that’s just the news for October 2010 – so far. The end of this week will see the Little Rock Sustainability Summit, (see previous post) and I expect Arkansas’s emerging place in the sustainasphere to be on display. Stay tuned….

(Department of Full Disclosure: My firm, Williams & Anderson PLC, is outside general counsel for Silicon Solar Solutions.)

The Little Rock Sustainability Summit

The Little Rock Sustainability Summit will be held Thursday and Friday of next week (October 28th and 29th) at the Robinson Center in downtown Little Rock. The Summit is a collaboration between the City of Little Rock, the Little Rock Sustainability Commission, and private interests with an interest in sustainability. Here is the schedule:

October 28, 2010

8am-12pm CEU Class
• Introduction to Building Commissioning
• Optimizing Your Existing Building- A Plan for Action

12:30pm-5:30pm Sustainability Expo Hours

1:00pm-2:00pm Registration

2:00pm-2:30pm Welcome Address

2:30pm-3:15pm Sustainable Business Practices

3:30pm-4:15pm Breakouts
• Built Environment/Land Use
• Retrofitting Your Home

4:30pm-5:15pm Breakout
• Business Landscaping
• Sustainable Landscaping and Purchasing for your Home

5:30pm-7:00pm Reception hosted by Capital Hotel (must be registered for the Summit in order to attend)

Friday, October 29

9:00pm-10:15am Mayor Stodola Opening Remarks / Green Cities Committee

10:30am-11:45am Breakouts
• Sustainability Grants for Government and Non-Profits
• Sustainability Tax Incentives Panel

12pm-1:30pm Luncheon with Keynote Speaker (must be registered for the Summit in order to attend)

1:45pm-3:00pm Breakouts
• Landfill Development and Healthy Maintenance
• Recycling & more

I expect that the Summit will present the best and worst of sustainability in Little Rock and in Arkansas in that our strengths – a vibrant and devoted sustainability community, an unusually supportive Mayor and local government, and a core group of creative, innovative, and motivated entrepreneurs – will be front and center, while our weaknesses – for example, lack of a cohesive commercial recycling program, lack of coordination, and plain old inertia – will be exposed.

The Summit is free to the public, and I will be attending and blogging about it. And here’s an insider tip: go online and register. Registration is free, and if you register you can attend the Thursday evening meet, greet, and cocktail reception at the Capital Hotel and the Friday lunch.

More information about the Summit can be found here: http://www.lrsustainabilitysummit.com/

So What The Heck Is This Sustainability Blawg About Anyway?

Or, perhaps more accurately, what is the law of sustainability?

Good question! My friend, mentor, and law partner Janet Pulliam taught me that sometimes the best way of talk about something that defies definition is to start by identifying what the thing is not about.

So here is what the law of sustainability is not:

• It is not “water law,” “oil and gas law,” or “environmental law”;

• It is not about toxic torts or Erin Brockovich;

• It is not about tree hugging, tree spiking, Glen Canyon, or the Monkey Wrench Gang;

• It is not about a political, religious, or scientific agenda; and,

• It is not about a cost prohibitive approach to doing business divorced from economic reality.

Now that we’ve gotten that out of the way, here is my latest and best stab at what the law of sustainability is about:

It is about bringing a strategic and interdisciplinary approach to the law to partnering with people and businesses that produce or sell sustainable products, services, and innovations, or that operate or aspire to operate in a sustainable manner.

Consider:

You make a widget (widget is a lawyer word for “thing”; we learn it in law school and, therefore, paid a hefty sum for the privilege of using it) that is made entirely of recyclable materials, is recyclable in any community on the earth, and is produced using entirely renewable energy.

This is the easy one. Your business lives smack dab in the middle of the land of the law of sustainability. The federal government (through the Federal Trade Commission) has guidelines that influence the manner in which you can promote and make claims about your product (see previous post). You have particular needs for siting, licensing, permitting, and financing your business, and for purchasing your renewable energy. You may have a LEED certified production facility, and you need to be sure you preserve that certification. If you’ve had the benefit of good legal counsel, then you know that there are local and federal tax credits and incentives related to your workforce and plant and you are taking advantage of them.

Now consider:

You have an idea for a widget, and you want to make that idea a reality. You are decent, well meaning person, but your business plan does not call for a “green” or “environmentally conscious” or “sustainable” business. Bottom line: you just want to be successful, make a few bucks and provide for your family, send your children to the University of Arkansas, and maybe buy a nice bass boat, hunting camp, and/or lake house.

You are still smack dab in the middle of the law of sustainability. There are local, state, and federal tax and financing incentives that can help you build or acquire a manufacturing plant if you take certain easy steps to make the plant “green,” and others that kick-in if you site your plant in a neighborhood that is “depressed” or slated for “revitalization” or “renewal.” There are similar tax breaks and financial incentives that kick in if you employ the right workers. Putting recycling, paperless, and renewable energy initiatives in place from the get go will save your business significant money in the long term. And, more likely than not, when word gets out about your “sustainable” business you will find yourself buoyed by the support of local civic leaders.

So that’s what this blawg is about: I’m a lawyer, and I have some specialized knowledge about the law of sustainability (some of which, quite candidly, others have paid for); Arkansas is prime and fertile ground for people and businesses interested in staking out a piece of sustainability; and I aim to connect the two and tell you about it.

Oh yeah: as for the term “blawg,” that’s just the same as “blog” but with “law” in the middle, which I’ve learned is the way that lawyers title their blogs. My law firm paid a wonderful consultant, Chris Fritch, a lot of money to learn me that.

(Department of Shameless Plugs for Chris Firtch: www.ClientsFirstConsulting.com)

It Ain’t Easy Claiming Green: The FTC Proposes New Guidelines For Green Claims (Part 1)

On October 6, 2010, the FTC issued proposed guidelines for “green claims.” The proposal updates the “Green Guides” issued by the FTC in 1998 and are a long over due response to the viral proliferation of green claims in today’s marketplace.

In a nutshell, the proposed guidelines are a strong signal that those making green claims in connection with products or services can expect a much higher level of scrutiny from all quarters, and particularly from the federal government. For these eyes, the new guidelines are summed up in this equation: claim + proof = not deceptive (and, therefore, not fodder for an enforcement action).

Here are the high points:

First, the FTC reaches into entirely virgin territory and proposes guidance for claims not currently addressed by the Green Guides.

• The claims “made with renewable materials” and “made with renewable energy” will need to be qualified and explained.

• If you are going to claim a product is “made with renewable materials,” you will also need to explain what the renewable material is, why it is renewable, and where it comes from.

• If you are going to make the unqualified claim a product is “made with renewable energy,” it better be 100% made with renewable energy. If the power used to make any component of the product was generated through the use of fossil fuels, then you cannot make the unqualified claim. Likewise, be prepared to specify the source of the renewable energy, and consider the energy used in making the product packaging.

• Claims involving carbon offsets and credits will need to be specific, quantified, and supported by competent and reliable scientific evidence. For those seeking to benefit by advertising a carbon offset that is the result of mere compliance with the law, no dice: you should not advertise a carbon offset that is a lucky side effect of a legal requirement.

Second, the FTC is looking to add considerable meat to the guidelines already in place, and the new guidance touches on just about every aspect of a green claim.

• General environmental benefit claims like “green” or “eco-friendly” will become difficult, if not impossible to make without some kind of prominent, plain-language qualification.

• Certifications and “Seals of Approval” will also become difficult to use. These to must be substantiated and accompanied by a prominent and substantive qualification. And no more blind reliance on a third-party reviewer; the person making the claim is always responsible for backing it up.

• The use of the terms “degradable” and “compostable,” (it’s a really a real word!), are addressed. The short rows on these: it’s all about timing. A product that takes years to biodegrade or compost cannot carry the claim; the process must occur over a reasonably short period of time.

• The most significant new guidance addresses “recyclable,” and “free-of” claims. Here it is obvious that the FTC is going after the advertising carnies who follow the “it ain’t deceptive if you don’t know you’ve been deceived” maxim. Thus, a product is only recyclable if the consumers where the product is sold have access to recycling facilities for the product. The fact that a product is “free-of” one substance is immaterial if either (a) the substance has never been associated with the product in the first place (i.e., milk that is free of bleach), or (b) the product contains a substance that poses risks similar to those posed by the substance not present.

In all, the proposed guidance, discussion, comments, and examples run nearly 140 pages in the Federal Register. If you are unfamiliar with the Federal Register, picture dense government prose, in a painfully small font, three columns across and then think of a joke that involves a cure for insomnia.

So what’s it all mean? The public comment period for the proposed green guidelines ends in December 2010, and we can expect the final guidelines to go into effect shortly thereafter. This means that if you are in the business of making green claims, you have roughly two months to understand these 140 pages, figure out how they apply to you, and come up with a plan for dealing. Or, more efficiently, two months to buy the advice of someone who has already read and understood the proposed guidelines.

(Department of Blatant Pitch Awareness: I am a lawyer, and that was a blatant pitch.)

The full text of the proposed guidelines can be found here: http://www.ftc.gov/os/fedreg/2010/october/101006greenguidesfrn.pdf