Here in Louisiana, many citizens have made lots of money on oil and natural gas. Our state lies above two very profitable and prolific natural gas shales – Haynesville and Tuscaloosa.

Haynesville is located in Northwest to Central Louisiana and has made millionaires overnight. The Tuscaloosa shale is one located North of Baton Rouge into central Louisiana, Mississippi and Alabama; it is being tapped for the enormous reserves, reports Baton Rouge’s Advocate news paper in a recent article.

Natual gas is being sold by the industry to the public as a safe and green alternative to other reusable energy sources. In a new study from Cornell University, researchers say that Natual gas has as negative a carbon foot print as coal, or worse! Coal has constantly been chastised as the anti-green fuel. Time Magazine has a in depth analysis at this study and its impact on the energy industry.

New York Times reports that the gas industry “fiercely” disputes the finding of the Cornell Study. Natural gas has always been reported to the public to be plentiful, clean and green. The revolutionary process whereby the gas is extracted from depths of over 10,000 feet below the surface is called hydraulic fracturing. Apparently this process releases enough methane gas to negate all of the benefits of gas production.

In the end what could this mean for Louisiana? This reminds me of the old saying, “if is sounds too good to be true, then it probably is.” Many Louisiana citizens who live in areas encompassed by the underground shales are looking to get rich quick. Unfortunately this may come at a high price to our environment and our landscape. See picture. Louisiana citizens need to make sure they tread lightly when selling or leasing mineral rights to land. Always seek the advice of trusted independent counsel when dealing with prospecting companies.

Last week, we published an article identifying some Things That Can Go Wrong On A Green Building Project. To prepare for these potential problems (and others), here is a list of things you should keep in mind when contracting for a green building project:

1) Define Things: Terms like ‘sustainability,’ ‘green certification’ and ‘high performance building’ do not have any universal meanings. Clearly define the goals of the building and project. Consider adopting a rating system, and specify the system and the version.

2) Designate a responsible party for certification: A green/LEED coordinator can go a long way, designating someone who will be responsible for coordinating all parties, analyzing the work to ensure compatibility with the rating system, and put together all the paperwork required on the project.

3) Responsibility Matrix: Create a “matrix” of who will be responsible for what. This will at least mitigate the finger-pointing if or when something goes arwy.

4) Payment Issues. An especially important consideration for contractors: Be cautious about tying certification with substantial or final completion. Certification may never come, but in all cases, it could take between 6-18 months after substantial completion to get certified. That’s a long time to have money withheld – and this will create payment problems with subs and suppliers. If nothing else, make sure your contracts up and down the chain have the same payment timeframes and expectations.

5) Know Vendors and Products. These technologies are new and can be complex. Don’t subscribe to a technology without investigating. Get to know the products and manage the expectations of the owner. For a discussion of how these new green technologies can present problems, see Paul Beers’ guest post on Chris Hill’s Construction Law Musings.

6) Consequential or Specific Damage Waivers (LDs). Damages for failure to certify or for failure to meet certain benchmarks may be murky. Consider waiving consequential damages, and call out these specific expectations and considering waiving those damages or presenting LDs for them. For a discussion about whether a consequential damage waiver is effective for green building damages, see this blog post: Is Failure To Achieve LEED Certification Consequential Damages?

7) Flow Down. Make sure your obligations up the chain, go down the chain.

Related articles

• Is Failure To Achieve LEED Certification Consequential Damages? (constructionlawmonitor.com)
• Examples of Things That Can Go Wrong on a Green Building Project (constructionlawmonitor.com)
• Think Green Building Is Irrelevant? Think Again (constructionlawmonitor.com)

Green Building is all the rage in the United States. Whether it be a LEED project, or just a promise to the property owner to build or make a building more efficient and sustainable, as 2010 passes onto 2011, those in the construction industry are quite likely to run into projects with at least some green elements.

When bidding, contracting and working on these projects, it’s important to know what might go wrong. After all, if you have no idea what things can go wrong, you have no way to prepare for them (or charge for the extra risk).

There’s no way to enumerate all of the risks…but here are a few to get you thinking about it:

1) Vegetative Roofing: In some areas, these so-called “green roofs” are becoming popular. The most ambitious green roof program is likely found in Portland, which we’ve discussed in a previous post. Essentially, vegetation is planted on the roof of a building to better insulate it, reduce the heat island effect in the area, and better control water runoff. The downside? Well, it’s quite a bit heavier than a standard roof, and the construction and design of the structure should accommodate the extra weight.

2) Rainwater Runoff: Plan on channeling rainwater into storing containers to use within the property as waste water? Be sure to contract with someone with experience, because the control of rainwater is different than the disposing of it through ordinary guttering systems.

3) Greenwashing: It’s popular to be green, and there’s an absence of real regulation prohibiting businesses from advertising its products and services as “green” – which, really, is undefined. So, when incorporating a service or product into your technology, make sure you select vendors, products, services and the like that will live up to their marketing.

4) New, Untested Technologies: Even the stuff that isn’t fraudulently labeled green may still present problems, as many technologies advertised as green may simply not perform as expected, since the technologies and products are new and haven’t been tested over time. The lesson? Keep your vendors on the hook for promises made by their products, and be cautious about relaying promises that are uncertain.

5) Human Interference: Green buildings and green technologies are not insulated from human intervention. Especially considering energy performance, the human factor can be great – as humans are the ones that will control energy use (such as using more than the allocated energy amounts), and generally doing things that can affect energy use (covering windows, for example) .

6) Certification Problems: Rating and certification system (like LEED) are not easy to guarantee. The certification decision is left to a third party, certification can be taken away, and certification can be challenged. Don’t be too concerned – many projects work toward a certification and get it. But know the road ahead.

Related articles

• Is Failure To Achieve LEED Certification Consequential Damages? (constructionlawmonitor.com)

Started in the green revolution’s holy land, Berkley, California, PACE financing is shorthand for Property-Assessed Clean Energy Financing (Wikipedia entry).

The concept is simple: cities loan money to property owners to install clean energy equipment. The loans are then repaid to the city through annual property tax assessments.

As originally conceived, it’s a win/win/win situation really. Property owners get funds to improve their property, paying back the loan with money saved in the the property’s reduced operating expenses. Cities and communities benefit by upgrading its overall energy efficiency. Businesses and efficient energy investors benefit because the market grows for its products.

All was going very well for PACE Financing. PACE legislation was passing across the country, and President Obama’s administration wholeheartedly supported PACE programs.

This progress came to an abrupt halt in June 2010, when the Federal Housing Financing Authority (FHFA) dropped this news: Properties with PACE loans cannot be purchased by mortgage giants Fannie Mae and Freddie Mac.

Why not?

Well, PACE loans create a lien against properties similar to a tax lien, meaning that the lien has priority over all other debts (including mortgages). The value of these loans can be between $10,000 and $100,000, and sometimes more. The problem for these mortgage holders is obvious, as they are losing priority on their collateral.

The news from the FHFA caused more than $150m in funding to get yanked by the US Department of Energy, and has some predicting the demise of PACE Financing as we know it. And they may be right.

Can PACE Be Saved?

The question now is whether these PACE Programs can be saved. While I believe they can be, I don’t think the programs will be unaffected by the FHFA determination. Here is a few things that are happening to help PACE stage a comeback, and a glimpse at how this might affect the PACE Programs:

1) California is Fighting It: First, Sonoma County and the California Attorney General have both separately filed suit against the FHFA claiming that the determination is wrong, or that FHFA lacks jurisdiction to make the determination on behalf of states and counties.

2) Legislation is Being Proposed: The US Congress (as well as local reps and senators) are introducing bills aiming to protect PACE financing programs. One such bill is the PACE Assessment Protection Act of 2010.

3) Re-Thinking PACE: States may be ready to re-think the way they structure these PACE programs, and provide some protections for mortgage companies. While not passed in response to the FHFA announcement, Louisiana’s new PACE egislation may have predicted these problems, as it greatly accommodated mortgage holders. The PACE legislation from the 2010 session, for example, requires enough equity in the house to support the loan, and requires permission from the mortgage holder for commercial loans greater than $100k (talked about in this post)

4) Commercial Focus: The FHFA restriction really affects the residential markets only. As such, many states and municipalities may be re-focusing their PACE programs on the commercial market. One example of this is New Orleans, who anticipated launching a PACE district with the help of funding from the US Department of Energy’s America’s Solar Cities program. The city says they plan on moving forward with the district, except it will only be for commercial PACE loans.

Hey, What Does This Have To Do With Construction?

The PACE Financing Programs has a lot to do with construction and construction law. You may or may not know, but our firm publishes two blogs that focuses on green building laws: The Louisiana Green Building Law Blog and the Northwest Green Building Law Blog. I am also a LEEP AP, and focus part of my practice on green building issues.

I recently wrote a blog post called: Think Green Building is Irrelevant? Think Again. The post discussed a report published by NPR saying that green building accounts for 33% of new construction in the United States. That’s a remarkable number. And if these PACE Programs get off the ground, the existing construction green building numbers will be driven up significantly.

Stay tuned.

Green, green, green, green, green, green. The word gets used so much (see: Greenwashing). Geesh, even companies are changing their logos to green to cash in on the popularity.

Still, despite the PR, many in the construction sector wonder: Does anyone actually build green?

A report from NPR suggests that they certainly do, reporting that green building accounts for 1/3 of new construction in the United States! The article suggests, and I agree, that:

The numbers suggest a revolution is taking place within an industry that is historically slow to change. There are many factors � and many players � in this move toward green building

I was alerted to an article in the Orlando Sentential about a Florida couple fighting their homeowner’s association for the right to convert their roof to an energy-efficient white roof. It presents an interesting problem for the green building movement. Solar equipment, white roofs, green roofs, and similar “green” installations are…let’s be honest…sometimes bulky. But even the sleekish (that a word?) and stylish green installations are this: different. And people fight different.

So, how is the battle between solar installations and the status quo going to end?

Interestingly, the 2010 Louisiana legislature passed a bill speaking directly to this, affirmatively setting forth the right for a property owner to install solar equipment on their homes or businesses.

It’s good news for folks in Louisiana, but doesn’t much help the folks in Florida.

What do you think? How should zoning ordinances and associations handle green installations?

As Portland is in love with its green roof program, so too is New Orleans in love with Solar energy. And why not? We have lots of sun in the South, a very impressive tax rebate program (for now), and the city has been named as one of 25 American Solar Cities.

We’ve talked about solar energy and Louisiana’s incentives for its use on the Louisiana Green Law Blog here.

Here, we’re just going to identify some of the movers & shakers in the New Orleans solar market. This post is not an advertisement, although many of these links are to companies selling and installing solar equipment. But those who are identified all provide good resources for solar energy and keep up with news and legislation affecting the solar market.

Louisiana Solar Energy Society
The Louisiana Solar Energy Society has a great news section that will keep you up to date on legislation and nationwide news related to solar energy.

The Solar Installers
There are three companies I’ll highlight, because I think they’re doing the best job of marketing themselves online. This is not a comment to the services themselves…but simply just recognition that their websites and published information is useful to folks looking to learn more about solar energy and the Louisiana incentives for using solar equipment. South Coast Solar, Gulf Coast Solar, and Joule Energy.

John Moore & the Department of Environmental Affairs
New Orleans’ Department of Environmental Affairs was getting on its feet in the Nagin administration, but under Mitch Landrieu the department is really picking up some steam. One area where good work is being done is in the solar energy market. With financial assistance from the Solar American Cities program, New Orleans is looking to become a Sustainable Energy Financing District (commercial only for now) to help solar equipment penetrate the market.

Know any more movers & shakers? Give us your comments.

The 2010 Legislative Session closed earlier this summer, and most of the passed laws are now in effect. It was a very active legislative session, and a very interesting one for the “green” interests. This post breaks down some of the more significant green legislation and links to PDFs of each relevant Act.

HB 973 – Amendments to PACE Financing Program

In the 2009 session, the legislature passed Act 348 creating sustainable energy financing districts in the state. As passed in 2009, the program was in the spirit of PACE Financing…but not quite there. The amendments in this Act make the SEFD (Sustainable Energy Financing District) a traditional PACE program. The amendments require all city loans to get paid back through property tax assessments. Now…Louisiana will likely have to wait and see how the Obama / California v. FHFA fight turns out to see if PACE Financing programs are viable any longer. The act amends La. R.S. 130.812. View HB 973. Sponsored by Representative Foil.

HB 699 – Oversight and Audit Additions to Performance Based Energy Contracts

How can a company guarantee the city will see energy savings? How does a city keep up and audit this? These are questions that Louisiana’s Performance-Based Energy Efficiency Contracts have struggled with, and that this law hopes to answer. The Act adds an “Energy Efficiency Procurement Support Team,” a few additional lawyers of administration and more rigid auditing requirements. The Act amends La. R.S. 39:1496. View HB 699. Sponsored by Louisiana Representative Geymann.

SB 103 – Alternative Fuel Vehicle Revolving Loan Fund

Senator Gautreaux wants Natural Gas to be a big deal in Louisiana. Why? Because Louisiana is the nation’s largest source of natural gas. Natural Gas vehicles are an excellent use of the natural gas resource, but the old “chicken or the egg” problem persists. Without natural gas fueling stations, folks won’t buy the vehicles. Without the vehicles, there’s no need for fueling stations.

The concept of this Fund is to create below market interest loans for public entities and subdivisions, for use of them to purchase or convert their fleets to CNG vehicles. This fund is not “funded,” meaning the state hasn’t allocated any money to actually offer these loans yet. But, they are getting ready to make the offering to give cities state-wide incentive to convert their fleets. Act enacts La. R.S. 33:1419. View SB 103. Sponsored by Louisiana Senator Gautreaux.

SB 183 – State Leases for Alternative Energy Production

Previously, the Louisiana Department of Natural Resources and State Mineral and Energy Board could only lease state land for the production and development of oil, minerals and gases. This law changes this slightly, allowing state land to also be leased through these departments for the development and production of “alternative energy sources.” The Act amends La. R.S. 30:124. View SB 183. Sponsored by Louisiana Senator Gautreaux.

SB 624 – Energy Rebates for Mega-Projects

This bill applies only to mega-projects in Louisiana. A mega-project is defined as one that brings 500 direct new jobs to the state, or a $500m facility. If a major operation cost for the mega-project is energy consumption, and if energy savings is a priority factor to get the mega-project in Louisiana, this law allows the state to offer a rebate of severance taxes equal to the natural gas consumption of the mega-project. The Act enacts La. R.S. 51:2366. View SB 624. Sponsored by Louisiana Senator Marionneaux.

SB 648 – Changes to Louisiana Appraisal Law

A simple bill making a change to the definitions portion of the Louisiana Appraisal Law. The change requires an appraiser to consider the energy efficiency of a property when estimating its value. The Act amends La. R.S. 37:3392. View SB648. Sponsored by Louisiana Senator Hebert.

HB 751 – Right to Install Solar Collectors

A simple bill prohibiting “unreasonable restrictions” on a property owner’s right to install solar collectors at its property. The Act enacts La. R.S. 9:1255. View HB 751. Sponsored by Louisiana Representative Foil

HB 733 – Carbon Sequestration

A bill authorizing the Department of Agriculture and Forestry to participate “to the fullest extent possible” regarding carbon sequestration and reduction of emissions of carbon dioxide. Enacts La. R.S. 3:1221. View HB 733. Sponsored by Louisiana Representative Anders.

Read our summary of the 2009 Green Legislation here and here.

Tomorrow, I’ll be presenting the 2010 “Green” Legislation Briefing at the Federal Reserve Bank of Atlanta (New Orleans Branch) on St. Charles Ave. The event is being put on by the Greater New Orleans, Inc. / Green N.O., the Greater New Orleans Home Builder’s Association and the Federal Reserve Bank of Atlanta.

The presentation will focus on the legislation passed in Louisiana during the 2010 session, specifically focusing on “green” legislation (related to sustainable practices, energy credits and incentives, PACE Financing, etc.).

The slides have now been published on SlideShare and can be viewed below, or at my Slideshare account.