Lawsuit Contrasts LEED Certification And Energy Efficiency

2/8 UPDATE To Story: The original complaint filed by Henry Gifford was amended on Feb. 7, 2011, filed in the Southern District of New York. Three plaintiffs have been added, and individual defendants have been replaced with the United States Green Building Council. The lawsuit is no longer a class action lawsuit, but is strictly an antitrust case.

Both proponents and critics of the Leadership in Energy and Environmental Design certification system would agree that the system created by the United States Green Building Council has shifted the way businesses address going green.

Though the system is no stranger to criticism, LEED came under fire in June 2010 in a class action lawsuit filed by Henry Gifford in the state of New York, alleging that LEED is misleading due to its lack of building performance measurement, and that numbers from a study claiming LEED certified buildings are more energy efficient are deceptive.
The U.S. Green Building Council is a non-profit organization founded in 1993 by real estate developer David Gottfried, a defendant in the lawsuit, and Richard Fedrizzi, a marketing executive and co-defendant.
Gifford, President of Gifford Fuel Saving, Inc. and a veteran in the energy efficiency field for 29 years, published an article in 2008 stating that LEED is not based on actual measurements but of anticipated energy use levels.
The lawsuit, which echoes arguments made in the article, charges monopolization through fraud, unfair competition and deceptive trade practices, along with false advertising and wire fraud.
The rating system is “supplanting building codes in many jurisdictions, undermining competition and obscuring other building standards that are proven — unlike LEED — to reduce energy and carbon emission,” according to the complaint.
Gifford said that when he heard California was replacing its prescriptive energy codes with “performance-based codes” similar to the LEED model on the Jan. 1 of this year, he decided to file the lawsuit.
“I don’t believe laws are the solution to our energy problems, but laws that are impossible to enforce, and discourage integrity, are counter to anyone’s best intentions,” Gifford said. “Thus, I figured someone has to do something to stop the modeling madness encouraged and required by LEED, so we can get serious about really saving energy.”
Under the new code, builders and design professionals are required to incorporate features within a building’s design and site preparation to meet the new requirements, according to the California Building Standards Commission.

Lawsuit Filed

In the complaint, filed in the Southern District of New York, Gifford cites a USGBC study conducted by the New Building Institute that said LEED buildings are 25 to 30 percent more energy efficient than non-LEED buildings. Gifford states that the NBI study sample was comprised of just 22 percent of LEED-certified buildings rather than all LEED-certified buildings and claims that USGBC knowingly selected a skewed sample.
While letters were sent to owners of the 552 buildings certified at the time, a total of 252 responded — but only 121 were used, according to the complaint.
Gifford claims that the study did not take into account the fact that LEED certified buildings had a vested interest in boosting the value of the certification that they paid for, and that “a motive to distort the data should have been attributed to the survey respondents and methodologically corrected in order to product accurate results.”
“The bias in the NBI study sample is so obvious, it is about as useful as studying blood alcohol levels of drivers who volunteer to be tested,” the complaint states. “USGBC fraudulently misrepresented its findings, by failing to disclose those obvious sample flaws.”
The NBI study compared the median energy use of the LEED buildings to the mean energy use of buildings in the Commercial Buildings Energy Consumption Survey — a comparison that Gifford claims makes LEED buildings appear more energy efficient than they actually are, and that is intended to mislead consumers.
Gifford said that when an NBI analyst was asked why the study compared median to mean values rather than mean to mean values, the response was: “(W)e did use the median in this data to avoid being skewed by the extreme results.”
However, Gifford alleges that the “extreme results” show that LEED buildings use 29 percent more energy than buildings in the Energy Consumption Survey.
“When the mean value of LEED buildings is compared to the mean value of CBECS buildings, LEED buildings perform worse than CBECS,” the complaint states.
Gifford also alleges that USGBC claims the LEED system provides third-party verification, but that the USGBC does not require any data to be submitted.
“The reason the performance of LEED buildings stinks is LEED does not measure anything, LEED does not require performance below any amount of energy,” Gifford said. “They misleadingly call this verification, but since LEED does not measure anything, LEED can’t be verified — there is nothing to verify.”
Gifford added that USGBC began requiring measurements for all buildings after his article came out.
Gifford also alleges that while LEED’s NBI study includes a sample of buildings built or renovated after 2000 — with energy savings that reflect “at least in part … post -2000 building practices and materials” — to a set of 5,215 buildings maintained by the U.S. Energy Info Administration Commercial Buildings Energy Consumption Survey’s catalog, which date from as early as 1920.
“Upon information and belief, the LEED system is harmful to the environment because effective energy saving methods are ignored in favor of the postulated [not actual] energy savings promised by LEED promotional materials,” the complaint states.
USGBC Responds
Ashley Katz, communications director for the United States Green Building Council, said that they were not able to discuss ongoing litigation.
However, Katz did say that the Council has a Building Performance Partnership program announced in 2009 and rolled out in 2010 that creates a data-sharing stream between building owners and the council.
“We’re looking at water and energy bills, and that information that they stream to us not only informs rating systems, but will also give them this feedback,” she said. “Projects will be able to see if they’re actually saving money or energy.”
The Partnership is open to all current LEED certified building owners on a voluntary basis, but will be required for the new version of LEED currently open for public comment, Katz added.
“The draft of LEED for New Construction that is open for public comment has a new Performance category, which has new prerequisites that require all project types to monitor, track, and report energy consumption and demand in the project,” Katz said. “This prerequisite requires project participation in the Building Performance Partnership or data reporting to USGBC.”
Tracking Energy Use
In contrast to the LEED system, the United States Environmental Protection Agency’s Energy Star program differs in three primary aspects, according to Maura Beard, Communications Director for the agency.
“I think the first thing that’s important is to earn the Energy Star, we require actual energy use data,” she said. “It’s actually based upon 12 months of certified energy use data — not intent, but performance.”
The Energy Star program, which started appliance ratings in 1992 and buildings in 1999, requires independent verification by a professional engineer or a registered architect to verify the data and characteristics of the data.
Beard said Energy Star-rated office buildings, currently totaling 13,000, typically cost fifty cents less per square foot to operate, and are 30 percent more efficient. Along with substantially lower utility costs and tax benefits, the buildings tend to emit 30 percent less greenhouse gas emissions and reduce carbon footprints.
Beard highlighted the importance of measuring actual performance.
“When you’re looking at the environmental benefits, you need to look at how a building is actually performing, not how it was intended to perform,” she said. “It’s like a diet — I intend to lose 20 pounds, but unless I actually step on that scale, the intent to lose the weight is valuable but I don’t experience the benefit until I measure the results. It’s the same concept with building.”
Tim Clayton, an associate at Columbus-based law firm Luper Neidenthal & Logan and LEED A, said he thinks LEED is headed in the right direction.
With a background in real estate law, commercial litigation, green building and construction law, Clayton said he has seen a similar issue in ‘greenwashing’ lawsuits where a plaintiff goes after something intended to be positive.
“I think that the key issue for me is, when does perfect become the enemy of good?,” he said. “(LEED) is positive, it helps the environment. Maybe it’s not perfect, and I don’t think anyone’s saying it’s perfect — it’s something to be built upon.”
Clayton said he thinks the new version of LEED is on the right track.
“It’s not a set-in-stone code. If there are issues they’ll change it,” he said. “I think it’s an evolving system and it’s going to take time to perfect.”
The lawsuit could also set a bad precedent, he added.
“The fact that Mr. Gifford went after USGBC like this with this lawsuit, it turns into this world where everyone wants to sue,” Clayton said. “It creates an environment where, why would I want to put something out there that I think would be helpful when I’m just going to be sued?”
In his article, Gifford suggests posting utility bills as he does on his personal website, but when he suggested it to the Green Building Council they stated they would not publish utility bills due to building owner confidentiality.
“A person can hold a press conference claiming to be energy efficient while hiding the facts as long as that foundation upon which LEED rests does not change,” Gifford said.
“As long as we rate buildings based on models, there will be no pressure involved in the building, design or construction to get the building to actually perform,” he said. “We’re saving modeled energy at the cost of increased measured energy. We now live in this wacky world where modeled energy [efficiency] has a legal standing and actual measured energy [efficiency] is something different.”
Gifford said he hopes the lawsuit leads to the industry delivering on promises made to the public.
“We’ve promised the public that we’re claiming that were doing better buildings. I’d like to see us first learn how to do that and then do that,” he said. “I would like to see any building that’s claimed to be energy efficient, to have its utility bills on the internet every month — no more smoke and mirrors.”
Gifford is also asking the court that the Council be required to pay monthly payments to LEED building owners or tenants whose utility bills show increased energy use over similar buildings.
“Giving the USGBC this responsibility for their buildings being what they claim they are would be a great step forward toward making better buildings,” he said, adding that he would like to see competition for the most energy efficient buildings. “LEED is the reason we’re estimating energy and not counting it.”
Clayton and others have speculated that a few initial hurdles stand in the way of Gifford’s case.
“There are a couple of hurdles that any class action has to go through, like certification of the class,” he said. “You’re not just suing on behalf of yourself, you’re suing on behalf of others and Gifford is claiming that he’s suffered this injury.”
Since Gifford does not own any LEED-accredited buildings, it may be hard to prove he is part of that injured class, and whether the USGBC intended to deceive people, he said.
“Fraud’s tough to prove,” he said. “It’s not just circumstantial evidence, you have to prove that the USGBC really intended to defraud people and it’s very tough to do.”
Gifford said that other plaintiffs have stepped forward on behalf of the class.
In response to claims that the lawsuit may spur an anti-green movement, such as from groups against government grants rampant in the industry or with vested business interests, Gifford said that was one reason he hesitated to publish his article.
“LEED was in existence about 10 years before the first measurement was done — that itself is a scandal,” he said. “If someone from the inside from the industry doesn’t speak up and hold us accountable for delivering on our promises, then someone outside our industry who is [against] our industry will do it in a much more harmful way and use that information against us.”

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