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!)