The U.S. Green Building Council’s (USGBC) Leadership in Energy & Environmental Design (LEED) green building standards have recently come under attack for their incorporation of the Forest Stewardship Council’s (FSC) forestry product standards into LEED’s wood product criteria. Much of this criticism has come from FSC’s competitors, most notably the Sustainable Forestry Initiative (SFI), as well as some elected officials from states with a heavy timber industry presence.[1] SFI and FSC’s other competitors have a common interest: to get a slice of the LEED pie.
The number of LEED certified or registered building projects are growing fast. From 2008 to 2009, the USGBC’s revenues from accreditation and certification more than doubled.[2] On a basic level, the LEED certification system is fairly simple: building projects earn points for incorporating specific criteria into projects being newly built or remodeled. LEED awards for everything from choosing sustainable sites for the project to improving the project’s resource efficiency, based on the environmental benefit that the particular feature provides. For a LEED project there are 100 base points available, with a possibility of 10 bonus points. A “certified” project must earn 40–49 points, a “silver” project must earn 50–59 points, a “gold” project must earn 60–79 points, and a “platinum” project must earn 80 or more points.[3]
The criterion that has caused the controversy is simple. In all of LEED’s 2009 standards, one point is available for projects which use “certified wood.”[4] Certified wood is “wood-based materials and products that are certified in accordance with the Forest Stewardship Council’s principles and criteria . . . .”[5] In order to obtain the point, at least 50% of the wood materials permanently installed in the project must be FSC certified.[6]
In his article, Revisiting Allied Tube and Noerr: The Antitrust Implications of Green Building Legislation & Case Law Consideration for Policymakers, Stephen Del Percio argues that the USGBC’s requirement of 50% FSC wood could implicate antitrust problems by effectively locking non-FSC wood product certifiers out of the market.[7] Mr. Del Percio argues that because some state and local governments have adopted measures requiring the use of LEED standards in new buildings, the 50% FSC-wood requirement is especially prone to antitrust attack.[8] Such third party standards, when they are incorporated into governmental requirements, amount to a restraint upon competition that is not entitled to immunity under the Noerr doctrine, and effectively locks non-FSC certified wood out of the market.[9] LEED’s “exclusive adoption of FSC certification,” in Mr. Del Percio’s view, is a point of concern because it potentially raises antitrust questions.
Mr. Del Percio, however, overplays his hand. In Allied Tube & Conduit Corp. v. Indian Head, Inc.,[10] the Court stated that “private standard-setting associations have traditionally been objects of antitrust scrutiny.”[11] Such organizations are objects of antitrust scrutiny because the standards they set “have a serious potential for anticompetitive harm.”[12] This is because such standards may “deprive some consumers of a desired product, eliminate quality competition, exclude rival producers, or facilitate oligopolistic pricing . . . .”[13] The very existence of the third party standard setting organization, then, is not itself the anticompetitive harm to be avoided, but rather it is the potential for anticompetitive standards coming from such organizations that justifies scrutiny.
Mr. Del Percio argues that LEED’s use of FSC standards by incorporation may rise to the level of being an anticompetitive practice.[14] This argument, however, is unavailing. In order to earn the point for certified wood, the project developer only needs to ensure that at least 50% of the wood used in the permanent wooden features of the project is FSC certified. This leaves another 50% of the wood that can come from any source, or have any certification – FSC, SFI, or no certification whatsoever.
Even more important, however, is the fact that the certified wood criterion only accounts for one point out of the 110 possible under LEED certification standards. So, even if a developer wanted to build a platinum LEED certified building, but did not want to use FSC certified wood, she could choose to not use a single sliver of FSC wood and still receive 109 points, enough to receive a platinum certification with 29 points to spare. The conditioning of one point on the use of 50% FSC certified wood in the permanent wooden features of the project hardly constitutes the deprivation of consumer choice, elimination of quality competition, exclusion of rival producers, or facilitation of oligopolistic pricing that the Court was concerned about in Allied Tube.[15]
The difference between the LEED standards and the facts of Allied Tube are illuminating. In Allied Tube, the complaining party – a manufacturer of PVC electrical conduit[16] – sued claiming that the steel conduit manufacturers had violated antitrust laws by packing the National Fire Protection Association (NFPA) with their members to prevent PVC electrical conduit from being accepted.[17] The NFPA was the “most influential electrical code in the nation,” so influential, in fact, that insurers, electrical inspectors, and distributors would not approve products that did not conform to NFPA standards.[18] Without the approval of the NFPA, Allied Tube’s PVC conduit was effectively excluded from the market.
Unlike Allied Tube, however, the LEED standards do not require the use of any particular product in LEED-certified buildings. The use of FSC certified wood is only one option that can be adopted in pursuing LEED certification, an option that represents less than 1% of the total points possible in obtaining LEED certification. LEED’s incorporation of FSC standards does not lock non-FSC wood products out of the market and, therefore, does not rise to the level of a restraint of trade which implicates antitrust concerns.
While Mr. Del Percio is correct to point out that third party standardization organizations must be careful so as to avoid implicating antitrust problems,[19] USGBC’s inclusion of using FSC certified wood as an opportunity to obtain a point toward LEED certification does not implicate such concerns.
[1] See, e.g., Sustainable Forestry Initiative, Pressure Mounts on USGBC to Open LEED to SFI, Other Credible Standards, available at http://www.sfiprogram.org/newsroom/?p=403.
[2] U.S. Green Building Council, USGBC 2010 Annual Report at 6, available at http://www.usgbc.org/ShowFile.aspx?DocumentID=8786.
[3] U.S. Green Building Council, How to Achieve Certification, available at http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1991
[4] See, e.g., U.S. Green Building Council, LEED 2009 for New Construction and Major Renovations, at vi, available at http://www.usgbc.org/ShowFile.aspx?DocumentID=5546.
[5] Id. at 55.
[6] Id.
[7] Stephen Del Percio, Revisiting Allied Tube and Noerr: The Antitrust Implications of Green Building Legislation & Case Law Considerations for Policymakers, 34 Wm. & Mary Envtl L. & Pol’y Rev. 239 (2009).
[8] Id. at 247.
[9] Id. at 253.
[10] 486 U.S. 492 (1988).
[11] Id. at 500.
[12] Id.
[13] Id. at n.5.
[14] Del Percio, supra note 7, at 244.
[15] See Allied Tube, 486 U.S. at 500.
[16] Allied Tube asserted that the PVC conduit had significant competitive advantages over steel conduit. There was scientific evidence however, that the PVC conduit would emit toxic fumes during fires in high-rise buildings. Id. at 496.
[17] Id. at 495–500.
[18] Id. at 495–496.
[19] See Del Percio, supra note 7, at 244–245.
