Going green with construction projects can create serious perks, most importantly easing your impact on the environment. However, with the benefits of going green also come some pitfalls. It appears that the law has not caught up with the green movement, and environmental interests in construction have not really been tried in court despite the number of green projects skyrocketing. Whether because firms are buying into corporate social responsibility or because businesses are seeking out available tax credits for going green, it appears green construction will only grow with time. With the rising number of green projects, however, there has been little spike in the number of law suits regarding green construction across the country. While there have been some high profile suits brought against fraudulent or defective green products, including those against BMW and Whirlpool, litigation in green construction has not raised the same level of interest.
With construction litigation as prevalent as ever, why no litigation over green construction?
Who Really Knows How Green They Are?
In green construction the most fundamental elements are reducing output and curbing consumption. In order to effectively prove that a project is more efficient, there must be monitoring put in place. The idea of economically conscious construction is a relatively new one which means the information is often inadequate to show whether or not green projects live up to their billing. For the most part, states do not require reporting on the environmental footprint of homes and businesses. As more states institute energy conservation requirements and information becomes readily attainable, more litigation will likely ensue.
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While tracking levels of energy output may be cumbersome, there is precedent for bringing litigation over green certifications. In Shaw Development v. Southern Builders, Shaw sought damages over lost tax credits due to a condominium project’s failure to achieve LEED Silver Certification. Ultimately the case was settled, but this should signal to other businesses, or at least construction law attorneys, that there are opportunities for recovery when green construction goes awry.
Insurance Can Be Tricky
Insurance policies are crucial to protect insureds against defects in construction projects, but these policies are not currently structured to protect against losses due to inefficiency. Under commercial general liability policies, defects in green construction are treated just as they are under other construction projects.
As green construction has become more prevalent, more green variations to insurance policies have been made available to insureds, though. These variations typically exist as endorsements to existing policies. However, as green construction continues to blossom, it is likely that insurers will respond by offering more green insurance products going forward. Why not make some green by going green?
Insuring these types of projects raises problems not seen in other insurance policies. The unique issues green builders are tasked with, such as meeting benchmarks for water consumption and energy efficiency, are often not covered. Insurers are unlikely to take on a risk that is hard to quantify. As the effects of faulty green construction are often hard to measure, it is less likely that an insurer will take on the corresponding unknown amount of risk. Where failure to meet green standards can be quantified, such as loss of expected savings related to consumption or waste, it is possible that insurers will begin to offer products in this area. However, it may be tough to prove that the damage was caused by a specific green construction defect. Ultimately, once enough consumers voice a demand for the product, the insurance industry will respond.
For Attorneys, There’s No Green In Going Green (Yet)
While attorneys understand the aspects of traditional construction claims, there has been little litigation in green construction and they may not be as prepared to tackle issues that relate specifically to the field. However, as it continues to grow, surely lawyers will wise up and follow the green.
Insurance and litigation go hand-in-hand, and because much of the green aspects of projects are not protected, there have been less suits brought on these issues. However, we have provided some insight into how mechanics liens and bond claims operate in this field. As it stands, there may not be enough perceived benefit for attorneys to venture into the fold. But green construction is seeing rapid growth across the country. As with insurance companies, when the demand for litigation in this field grows to a certain point attorneys will have to respond by educating themselves on the intricacies found in green construction.
The Takeaway
It may sound ridiculous, but there hasn’t been much litigation because there hasn’t been much litigation. Once reliable information can be readily found regarding the results of green construction, it will be easier to track and spot issues in green projects. As more green projects can be monitored, the demand for insurance on environmental interests should meet a friendly market for insurance products which will grab the attention of construction attorneys. When there are more qualified attorneys, more litigation will follow.
