"Neither Rush Limbaugh nor Al Gore will be happy about it when the ultimate contours of today's green-building trend have emerged," Kosch commented. "And that is because the same macroeconomic factors that have been so visible this year -- as reflected in the extreme volatility in gas prices and the capital markets -- also tend to have a moderating impact over time." Not so long ago, many observers still wondered whether the green movement that emerged in recent years, in part because of rising concern about global warming, would follow historical precedent and quickly fade.

"Memories of the early 1990s are still strong," noted Kosch, a director of the New Jersey State Bar Association's Environmental Law Section. "The idea back then was that everyone would have hand-pushed lawn mowers, recycle everything and drive tiny cars. By 1993, however, Americans all drove SUVs, rarely recycled and wanted the biggest power mowers they could buy." This shift boiled down to simple macroeconomics: As gas prices plummeted, so did the level of interest in both the green lifestyle and in eco-friendly construction projects. Echoes of this were evident last year as average U.S. gas prices, which had soared to a record $4.10 in July, collapsed along with consumer demand in the wake of the global economic crisis.

"The pace of the green movement moderated," Kosch noted. "Companies that were looking at going green a year ago -- either because of shareholder pressure, marketing considerations or demands from the European Union -- backed off a bit." Interestingly, today's green movement appears to be more deeply rooted than those of previous eras like the early 1990s or 1970s, said Kosch. Polls show U.S. shoppers still put a high priority on sustainability despite the recession, and marketers have responded by stepping up their green-themed promotional campaigns. Meanwhile, even today's cash-strapped state and local governments continue to push for alternative energy and eco-friendly construction, and the Obama administration has committed to spending some $80 billion by 2010 on nearly all things green.

"There is a cultural shift underway," Kosch observed. "Part of it has to do with improvements in technology. We can now ‘do green' much more effectively than in the past." Still, major uncertainties remain. Legal professionals tracking this trend are navigating uncharted territory on issues related to water reuse, energy generation and sales, tax credits, insurance, economic incentives, easements for light, air and conservation, and much more, Kosch explained. They must pay particularly close attention to the status of legislation and regulation that affects, or may affect, future projects, he added.

So far this year, for example, New Jersey lawmakers have introduced 20 or 30 green-building related bills. "Fortunately, much of this legislation shows a moderating sensitivity to the economic challenges now faced by New Jersey businesses. We've seen bills pass that provide flexibility," Kosch said. "That is a positive development. After all, the Soviet Union tried command-and-control, and it didn't exactly work."

[Note: Founded in 1988, LeClairRyan provides business counsel and client representation in corporate law and high-stakes litigation.


Written by Peter L. Mosca
May 27, 2009