New Federal Interim Rule Requires Changes To Bring About More Green Contracting

This post was written by Lorraine Campos and Amy Koch.

Coming soon: Most of the U.S. government's future acquisitions will have to be green and environmentally sustainable. In this Reed Smith alert, we discuss a recently issued interim rule (PDF) that would require federal agencies to conduct their environmental, transportation, and energy-related activities in an environmentally, economically, integrated, efficient, and sustainable manner. The interim rule would seek to lower greenhouse gas emissions from sources owned or controlled by federal agencies and otherwise promote the creation of a "clean energy economy." In addition, the interim rule would require federal agencies to leverage agency acquisitions to foster markets for sustainable technologies, materials, products, and services by ensuring that 95 percent of new contract actions, including task and delivery orders, for products and services are energy-efficient, water-efficient, biobased, environmentally preferable, non-ozone depleting, contain recycled content, or are non-toxic or less-toxic alternatives. Federal agencies are also required to implement high-performance sustainable building design, construction, renovation, repair, commissioning, operation and maintenance, management, and deconstruction practices. On May 31, 2011, the U.S. Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration issued this interim rule amending the Federal Acquisition Regulation (FAR) by implementing Executive Orders 13514 and 13423.

The interim rule (PDF) should further open up opportunities for contractors with sustainable technologies, materials, products, and services to sell to federal agencies. Contractors with strong views on these FAR changes should prepare comments and submit them prior to August 1, 2011, to ensure that their views are considered. Reed Smith attorneys, including the authors of this post and more detailed alert, are tracking changes to the FAR as they evolve.

In Amending RoHS, the European Union Restricts Hazardous Substances in Medical Devices, Electronic Toys and Other Products

This post was written by David Wagner.

On May 27, the European Council, which represents the governments of EU Member States, revised the Directive on the Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS Directive), and extended a ban on certain hazardous substances to a wider range of products, including medical devices, electronic toys, electrical appliances, cables, and spare parts. First adopted in 2003, the RoHS Directive bans six hazardous substances in electrical and electronic equipment, including lead, mercury and cadmium. With the amendment, the ban will now in principle apply to all electrical and electronic equipment as well as to cables and spare parts. Certain transitional periods are provided for, e.g., monitoring and control devices and medical devices will be covered in three years, in vitro medical devices in five years and industrial control appliances in six years. There are also a few exceptions such as photovoltaic panels that produce energy from solar light and energy-saving light bulbs. EU countries are required to adopt the revised RoHS legislation into their national legal codes within 18 months.


Cadmium in Jewelry and Plastics Banned in Europe in December 2011

This post was written by David Wagner.

On May 20, the European Commission adopted an amendment under its REACH law to ban the use of cadmium in jewelry, plastics, and brazing sticks (which are used to join metals) and create new restrictions on its use. The amendment will enter into force on December 20, 2011. The European Commission stated that high levels of cadmium have been found in some jewelry articles, especially in imported imitation jewelry. It also found that consumers including children risked being exposed to cadmium through skin contact or through licking. The new legislation prohibits the use of cadmium in all types of jewelry products, except for antiques

The legislation also prohibits cadmium in all plastic products while encouraging the recovery of PVC waste for use in a number of construction products. Because PVC can be recovered a number of times, the REACH amendment allows the re-use of recovered PVC containing low levels of cadmium in a limited number of construction products. In order to fully inform buyers, construction products that will be made of this recovered PVC will be marketed with a specific logo.

Cadmium is also present in brazing sticks, which is an alloy used to join dissimilar materials, and it is used for specific applications such as amateur railroad modeling. The European Commission found that fumes released during the brazing process are highly dangerous if inhaled. The legislation prohibits the use of brazing materials except for very specific professional uses.

The use of cadmium in the European Union is already restricted under REACH in paints and consumer goods (see Annex XVII of REACH). In addition, cadmium is banned from electrical and electronic products under the EU's Restriction of Hazardous Substances (RoHS) Directive.

It's Official: the Environmental Law Resource is a Top 50 Environmental Law Blog

This post was written by David Wagner.

We’re in – LexisNexis has selected Reed Smith's Environmental Law Resource blog as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. We were recognized as "preeminent thought leaders in the blogosphere" who "offer some of the best writing out there." LexisNexis found that our blog contains "a wealth of information for all segments of the environmental law and climate change industry, and includes timely news items, expert analysis, practice tips, frequent postings and helpful links to other sites and sources."

The 50 honorees were grouped into 10 categories and our blog was one of just 4 blogs honored under the "Litigation" category.

We’re thrilled and certainly appreciate the recognition. Even more importantly, we appreciate your interest in our blog.

The Environmental Law Resource Nominated for LexisNexis Top 50 Environmental Law Blogs

This post was written by David Wagner.

It's really nice to be recognized. In fact, we're thrilled that LexisNexis has nominated Reed Smith's Environmental Law Resource as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. Even better, they grouped the 50 nominees into 11 categories and our blog was one of just 7 blogs nominated under the "Litigation" category. LexisNexis selected the nominees based on "timely topics, quality writing, frequent posts and that certain something 'extra' that keeps a web audience coming back for more."

We certainly appreciate your interest in our blog and, if you want to support our nomination, LexisNexis is inviting comments.


New ASTM Standard for Measuring Energy Performance in Commercial Buildings

This post was written by Lou Naugle and David Wagner.

With an increasing number of local and state governments adopting regulations that require reporting on building energy usage, ASTM International just made things easier by releasing a standard for collecting, compiling, and analyzing energy use in commercial buildings. The standard, which is a set of guidelines called the Standard Practice for Building Energy Performance Assessment for a Building Involved in a Real Estate Transaction (E2797-11), has a variety of uses. It can be used to develop data to assess building energy performance as part of a commercial real estate transaction, comply with regulatory reporting requirements, or develop plans for improving a commercial building’s energy efficiency improvements. You can purchase this new standard from ASTM here.

How Buyers, Owners and Lenders May Use the ASTM Standard

Keep in mind that, although it is not a certification or benchmarking tool, the standard is designed to be used in connection with programs such as LEED and Energy Star. The data collected under the standard offers more detail than an Energy Star rating and, unlike LEED certification, can be used to assess energy use within the time constraints of a real estate transaction.

With commercial building buyers and tenants using energy efficiency and related green building criteria as a key element of determining a site to purchase or lease, look for building owners to use the standard to reduce energy usage, and, in turn, improve a building’s score in required reports, increase its value, make it more attractive to potential buyers or tenants, or receive an energy efficiency loan. Lenders also may analyze the data to identify where a building could improve its energy efficiency before offering loans for retrofits.

U.S. Government Announces Funding of $184 M for Next Generation of Cars and Trucks

This post was written by Christopher Rissetto, Henry King and Robert Helland.

The U.S. Department of Energy (DOE) announced the availability of $184 million "to accelerate the development and deployment of new efficient vehicle technologies." DOE will award cooperative agreements to businesses, universities and nonprofits to promote research and development of technologies supporting energy-efficient and environmentally friendly highway vehicles (i.e., cars and trucks). This funding is provided through the Vehicle Technologies Program, whose mission is to reduce consumption of gasoline and diesel fuels by cars and trucks, which account for 55 percent of total U.S. oil use. In this Reed Smith client alert, we discuss specifics of the eight funding categories that range from the development of performance-enhancing fuels and lubricants to the development of fuel-efficient tires and the creation of greater driver feedback technologies. The client alert also details other project and award information. You should know that the authors of this post have worked with a number of clients in crafting competitive applications for grant funding and complementary strategies to achieve funding, including obtaining support and assistance from members of Congress. Please let us know if we can assist with the preliminary notice and development of a competitive application for these funds.


Reed Smith and the Association of National Advertisers Discuss the Green Guides

This post was written by Adam Snukal.

On October 6, the Federal Trade Commission (FTC) issued its long awaited proposed revisions to its Green Guides. The revisions seek to clarify an array of existing and new environmental marketing terms, like "renewable energy" and proposes ways in which consumers reasonably understand terms, seals, and certifications. The FTC is seeking public feedback through December 10, 2010 and there will be many areas that will impact any marketer who engages in "green" marketing. Yesterday, John Feldman of Reed Smith and Keith Scarborough, Senior Vice President of Government Relations at the Association of National Advertisers, addressed key issues on the proposed revisions to the Green Guides. You can access the teleseminar materials here. If you have questions regarding the Green Guides or wish to explore how the revisions may impact your business, please contact either John Feldman or Adam Snukal.

The Green Guides' Proposed Revisions Have Arrived

This post was written by Adam Snukal.

In what was the next of the Federal Trade Commission’s (“FTC”) pillar documents to undergo an overhaul, the FTC yesterday disclosed its proposed revisions to its Guides for the Use of Environmental Marketing Claims (the “Green Guides”). The Green Guides (16 C.F.R. Part 260) set forth the FTC’s position on permissible environmental claims in advertising. The Green Guides were first issued in 1992 and then revised in 1996 and 1998. The proposed revisions have been released for public comments through December 10, 2010, at which time the FTC will decide on those changes that make the final cut. 

The FTC has communicated that its goal in releasing the Green Guides’ revisions is to provide marketers with guidance in helping them avoid making misleading environmental claims, and also to update the guides and make them easier for companies to understand and use. According to FTC Chairman, Jon Leibowitz: "In recent years, businesses have increasingly used 'green' marketing to capture consumers' attention and move Americans toward a more environmentally friendly future. But what companies think green claims mean and what consumers really understand are sometimes two different things. The proposed updates to the Green Guides will help businesses better align their product claims with consumer expectations." Let’s see…

Adhering to many of the same trends and areas of focus upon which the FTC undertook its revision of the endorsement and testimonial guidelines last year, the FTC has sought to curb unqualified general environmental benefits that are nearly impossible to substantiate, to limit claims as much as possible to those benefits actually realized by consumers, and to ensure advertisers make their disclosures clearly and prominently.

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Progress Made In the Development of California's Green Chemistry Regulations

This post was written by Eric McLaughlin.

Since the enactment of California’s two landmark green chemistry laws in September 2008 (AB 1879 and SB 509), significant effort has been made to develop their implementing regulations. This process has proven to be difficult and controversial, because a compromise must be reached between numerous competing concerns, most notably the legislative mandate to protect human health and the environment, and the significant costs to be imposed on companies manufacturing and selling consumer products in California. The process has also come under intense nationwide scrutiny, because California's Green Chemistry Initiative is considered a possible model for national chemical policy reform.

State regulators at the Department of Toxic Substances Control (DTSC) have until January 1, 2011 to enact the final version of the green chemistry regulations, known as the Safer Consumer Products Alternatives (SCPA) regulations. An informal rulemaking process has been used to shape the regulatory framework and extensive public comment has been received from stakeholders, including the scientific community, industry and environmentalists. The most recent draft of the SCPA regulations was released on June 23, 2010 and public comments were accepted through July 15, 2010.

California’s green chemistry laws are intended to completely refocus the regulation of chemicals in consumer products on the beginning of the product life cycle – the design phase. This approach will enable determinations to be made about which chemicals should be used in which products, and weighing the potential effects of those products on human health and the environment before they occur. Drafting the regulations to accomplish this goal, however, has prompted much debate throughout the informal rulemaking process, which has intensified as the SCPA regulations have taken shape, and has focused on six main issues: (1) scope of the regulations; (2) prioritizing chemicals of concern; (3) alternatives analysis; (4) confidential business information; (5) conflicting and duplicative regulations; and (6) the cost of implementation. This post summarizes the status of these issues.

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New York State Enacts Electronic Waste Law

This post was written by David Wagner.

On May 28, the State of New York enacted the Electronic Equipment Recycling and Reuse Act, a law requiring all manufacturers that sell electronic equipment in the state to have in place a free, convenient electronic waste or recycling program by April 1, 2011. Under the new law, each manufacturer will have to recycle or reuse its market share of electronic waste by weight, based on its three-year average of annual sales in the state. They will also have to submit annual reports to the state documenting that they have met goals for collection and recycling. All electronics manufacturers must register with the state by January 1, 2011, and pay a $5,000 registration fee.

The new law, which preempts a New York City e-waste recycling law, covers televisions, VCRs, DVD and MP3 players, game consoles, fax machines, and computers and their peripherals such as monitors, keyboards, mice, scanners and printers.

U.S. Department of Energy Announces Grants for Solar, Marine and Hydrokinetic Technologies

This post was written by Christopher Risetto, Henry King and Robert Helland.

In May, the U.S. Department of Energy (DOE) announced the availability of more than $171 million in grants, cooperative agreements, and technology-investment agreements "to expand and accelerate the development, commercialization, and use of solar and water power technologies throughout the United States". This funding continues a strong emphasis in the DOE, since the passage of the Recovery Act, on projects that promote alternative energy development, sustainability, and green jobs. The goal is to further the development of "evolving technologies," i.e., those that are not existing commercial technologies. In this Client Alert, Reed Smith provides key details behind the two major initiatives included within these announcements, particularly what information is necessary to complete a competitive application.

Estidama: It's Arabic for Sustainability

This post was written by Arash Amai.

As discussed in this client alert, "Estidama" is the first sustainability program implemented in the Emirate of Abu Dhabi. The program focuses on the sustainable construction and operation of buildings and is a key aspect of the "Plan Abu Dhabi 2030", an effort to positively influence the design, development, and construction of every project in Abu Dhabi. Although still in development, one aspect of Estidama is a voluntary green building rating system called the Pearl Rating System. Additional elements of the Pearl Rating System are expected to be released in April 2010.

Finnair's Eco Ad Has Its Wings Clipped

This post was written by Alun Jones and John Feldman. The original post can be found on Adlaw by Request.

On January 6, 2010, the UK's advertising watchdog, the Advertising Standards Authority (the ASA), issued a decision upholding complaints it received against a poster that promoted the Finnish airline, Finnair. The poster featured an image of an Airbus flying above Finland's coastline and stated, "Be eco-smart. Choose Finnair's brand new fleet."

Finnair supported its statement on the basis that it had a new fleet of planes and it structured its flight routes with an eye toward increasing fuel efficiency. The ASA did not find that support very compelling. ASA decided that readers were likely to interpret "eco-smart" as analogous to "environmentally friendly," implying that flying Finnair would have little or no detrimental effect on the environment. Furthermore, the ASA required robust substantiation for the fuel efficiency claims beyond Finnair's emissions data. ASA even questioned whether the ad was clear enough in defining the nature of the comparison: Was Finnair comparing its old fleet with its new fleet, or its new fleet with other airlines?

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In the U.S., the Federal Trade Commission Takes on Environmental Marketing Claims

This post was written by Brian Goldberg.

On June 9, 2009, the U.S. Federal Trade Commission (“FTC”) testified regarding its efforts to ensure truthfulness of environmental or “green” marketing claims before the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce.  Through its testimony and latest enforcement actions, the FTC has clearly demonstrated that it will continue to ensure that green advertisements are “truthful, substantiated, and not confusing to consumers.”

In order to protect consumers from unfair or deceptive practices, the FTC explained its multi-tiered approach of (1) issuing rules and guides for businesses, (2) challenging fraudulent and deceptive ads through enforcement actions, and (3) publishing materials to help consumers make informed purchasing decisions. 


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New York Governor Approves Two Green Building Laws For Residential And State Structures

This post was written by Eric M. McLaughlin and Keisha M. Williams.

In late September, New York became the latest state to give the green light to “green building,” after Gov. David Paterson signed two bills introducing green building performance standards for construction and renovation of New York state government buildings, and a Grants Program for green residential builds. The new laws aim to encourage and incentivize the construction of energy-efficient, sustainable buildings, using recyclable and environmentally friendly materials, and are in line with the governor’s “15 x 15” plan to reduce energy use by 15 percent of expected levels by 2015. New York’s new laws highlight the fact that buildings account for nearly 40 percent of the nation’s greenhouse gas emissions and more than 70 percent of its electricity consumption, and that these impacts can be reduced by regulations governing design and construction.

The State Green Building Construction Act (A. 2005) (State Building Act) will require all new state-owned buildings, and substantial renovations of existing state-owned buildings, to comply with green construction principles set forth in standards to be developed by the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA). State agencies will also be required to prepare annual building performance reports containing information on their green credentials, including energy consumption, waste reduction, and how indoor air quality compares with set benchmarks. The State Building Act takes effect 180 days after signature, on or about March 25, 2009.

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Congress Enacts Five-Year Extension of Tax Incentives for Green Buildings

This post was written by Ruth N. Holzman, James R. Eskilson, Todd O. Maiden, Eric M. McLaughlin, and Jennifer Smokelin.

There’s good news for commercial building owners who have wanted to “go green,” but have been waiting to see whether the tax incentives for green buildings, set to expire at the end of 2008, would be extended. The historic financial rescue bill (H.R. 1424), signed by President Bush on Friday, Oct. 3, 2008, also included the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (“TEAMTRA”). Among the tax-extenders in TEAMTRA was a five-year extension of the tax incentives for “green” commercial buildings.

Internal Revenue Code Section 179D gives owners of commercial real property a tax break by allowing them to deduct the cost of certain energy-efficient property. It applies to both new construction and to retrofits of existing construction. Prior to TEAMTRA, this tax break only applied to property placed in service on or prior to Dec. 31, 2008. With the extension of this provision to Dec. 31, 2013, property owners now have sufficient time to design, construct and complete projects that will qualify for this tax break. Although numerous bills had been introduced in Congress that would have raised the amount deductible under Section 179D, TEAMTRA did not contain any increase in this amount. The deduction is still limited to the product of $1.80 multiplied by the square footage of the building.

For a brief overview of the Section 179D deduction for “green” buildings, see “New Tax Incentives for ‘Green’ Buildings Have Owners Seeing Green,” in The Critical Path, Fall 2006; for a more detailed discussion, see "New Tax Incentives for 'Green' Buildings Have Owners Seeing Green," in the ABA's The Construction Lawyer, Summer 2007.

California Enacts Groundbreaking Green Chemistry Law

This post was written by Todd O. Maiden and Eric M. McLaughlin.

On Sept. 29, 2008, California Gov. Arnold Schwarzenegger signed two green chemistry bills—AB 1879 and SB 509—into law. This new green chemistry law totally refocuses chemical regulation in California, from reacting to chemicals after they have already been used in manufacturing or industrial processes, to assessing and regulating the use of chemicals in the design stage. The regulatory system created by the law will evaluate chemical risks and impose tailored restrictions based on science and the real-life impacts of chemical usage, rather than instituting an abstract chemical ban. California’s green chemistry law will take effect Jan. 1, 2009, which means the rulemaking process for the numerous regulations needed to implement the system will begin in earnest.

To achieve the goal of a regulatory system based on science and the real-life impacts of chemical usage and exposure, the green chemistry law was drafted using a comprehensive and collaborative approach. Implementation of the regulations will involve an interagency consultative process, incorporating chemical-related research done by other government agencies, and comments from stakeholders and the public. This approach, combined with the notice and comment requirements of the California Administrative Procedure Act, is intended to eliminate the ad hoc rulemaking seen with other environmental laws, such as California’s Proposition 65. Additionally, the scope of the law includes all chemicals used in consumer products, unlike the current patchwork of California laws that address only select product categories, such as lead in jewelry and on lunchboxes, chemicals in food containers, and household products such as light bulbs and batteries.

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California Adopts New Green Building Code Impacting Developers, Lenders and Tenants

This post was written by James R. Eskilson, Ruth N. Holzman, Todd O. Maiden, and Simon Adams.

On July 17, 2008, California adopted a new California Green Building Standards Code that will change future construction standards and costs, and affect all new construction. The code, adopted by the California Building Standards Commission, is the first of its kind on a national level and has been marketed as setting an international precedent for resource preservation and combating global warming. 

The California Green Building Standards Code will affect planning and design of new construction projects; energy efficiency of new construction projects; water efficiency and conservation; material conservation and resource efficiency; and environmental air quality. The goal of the new standards is to reduce energy use by at least 15 percent. They will also reduce the use of toxic substances in new construction projects. These new standards will further California’s goals of reducing greenhouse gases, by 2020, to a level that will be 20 percent below those measured in 2005. Another beneficial result of the new standards is a 50 percent reduction in waste streams from construction sites. 

Beyond water and energy efficiency, compliance with the code will require developers to meet new standards regarding the use of eco-friendly flooring, carpeting, ceiling panels and insulation, among other things. The code also sets new standards for dual plumbing systems, for potable and recyclable water, and for the diversion of construction waste to landfills. While initial construction costs may be higher, supporters of the new code argue that the long-term operation and use of buildings meeting this new standard will result in cost savings. This will require additional due diligence on the part of investors and lenders regarding understanding cost-benefit analysis and predicting returns on investments.

Developers are already lobbying to receive greenhouse gas emission reduction credits for their investment in buildings with lower carbon footprints. How such emission reductions will be calculated and how associated emission reduction credits may be allocated, if at all, may dramatically impact the cost benefit analyses of all parties associated with the construction, lending, and long-term use of affected properties.

Compliance with the new building code is currently voluntary, but will become mandatory in 2010. To encourage developers to follow the new green standards during this period of voluntary compliance, California is looking at potential incentive programs, including tax breaks. 

Some of the federal income tax incentives for installing energy-efficient improvements in buildings expired at the end of 2007, and many more will expire after 2008 if Congress does not act to extend them. Although the House passed a bill this spring that would have extended these tax breaks for as long as five years, the Senate failed to vote on any “tax extender” bill before it recessed July 31. Senate Majority Leader Harry Reid has pledged that the Senate will work to pass an energy and “tax extenders” bill in September. We will continue to follow this issue and keep you updated.

From assistance with basic licensing and registration requirements, to contract negotiations and mechanics' lien matters, to resolution of disputes in virtually any forum, Reed Smith represents clients in all aspects of the construction process.