Use of cross-laminated timber may rise in the U.S.

A view of the Garcia River Forest near Longvale, California July 27, 2009. REUTERS/Peter Henderson

August 25, 2022 - Developed in Germany and Austria roughly 30 years ago, cross-laminated timber (CLT) has been used in construction across Europe for the past two decades. CLT is a type of engineered wood that rivals the load-bearing capacity of concrete and steel. Made by gluing together layers of lumber in a way that creates stronger structural integrity than regular timber, CLT is an attractive sustainable building material because it is made from the kinds of trees that have few other uses and that tend to fuel forest fires.

As demand for CLT increases, timber companies will have more incentives to cut down the types of trees used to manufacture CLT, which could help reduce the spread of forest fires.

Despite key benefits such as being eco-friendly, conduciveness to prefabrication, and myriad potential design applications, U.S. builders have been slow to adopt CLT. One reason might be the higher production costs compared to other forms of timber. Another reason could be the relative novelty of the material. With so few U.S. structures built to date with CLT, many U.S. builders are hesitant to use CLT until they see more large-scale applications.

Three recent developments in the construction industry, however, including inclusion in building codes and insurance coverage, suggest U.S. builders may soon begin using CLT more frequently in residential and commercial projects. This could trigger an explosion of demand, lending to the added benefit of reducing the risk and spread of forest fires.

State and local building codes are changing to accommodate CLT

In 2018, Oregon became the first state in the U.S. to revise its building code to permit CLT structures taller than six stories. That same year, Washington signed State Bill 5450 which added Section 19.27.570 to the Revised Code of Washington, stating that Washington's building code council "shall adopt rules for the use of mass timber products," which for the purposes of the provision include CLT, "for residential and commercial building construction."

California recently updated its building codes in July 2022 as well to allow for construction of CLT buildings up to 18 stories.

Many jurisdictions across the U.S. that use the International Building Code (IBC) as their default building code now have codes permitting CLT buildings. In 2015, the American National Standards Institute's International Code Council (ICC) incorporated CLT into the IBC, and in 2021, the ICC tweaked the IBC to allow CLT buildings of taller heights under certain circumstances.

Many states, including Georgia, Idaho, Maine, Virginia and Utah, and localities, including Austin, Dallas and Denver, have adopted CLT provisions from the 2021 or the forthcoming 2024 IBC.

As more states and localities permit or encourage CLT through building code modification, more developers are likely to explore incorporating CLT into their projects. And, because we are still early in the adoption of CLT in the U.S., new CLT projects are likely to attract publicity for both their builders and the jurisdictions where these projects are located. This will likely result in a domino effect, attracting more developers looking to be early entrants in a CLT building boom.

Insurance companies are slowly warming up to CLT buildings

While building codes have for some years now permitted or encouraged the use of CLT in new construction, builders still have to navigate the thorny issue of securing insurance coverage for these projects. However, as CLT buildings continue to sprout up across the globe without incident, insurers are beginning to show a willingness to insure those buildings.

Historically, insurers have been hesitant to provide builders with risk coverage for CLT buildings because they were concerned about fires and the resulting structural damage. Yet, as more CLT buildings are completed without issue, an increasing number of insurers are becoming comfortable insuring CLT construction, gradually whittling away at this obstacle as well.

Insurers are also warming to insuring CLT buildings post-construction, although some still require builders to take additional structure-strengthening measures like covering up exposed wood beams with gypsum board. These measures are problematic because they can change the aesthetics of a CLT building and increase the costs of constructing one, which deters builders from using CLT.

Unfortunately, the tide has not yet fully turned for insurers underwriting Commercial General Liability (GCL) policies for CLT projects that would cover construction defect cases. There is uncertainty in the insurance industry regarding construction defect cases arising from CLT projects because so few claims have been made to date. Because insurers aren't as familiar with those claims, there is not much GCL insurance coverage available today for CLT projects, and the coverage that is available is still expensive.

However, as more CLT projects pop up around the country, and particularly on the West Coast, it is likely more insurance products will come to market to provide for this new niche.

CLT buildings are healthier buildings

Developers are also increasingly turning to CLT because it is a healthier building material than traditional materials. Buildings constructed from traditional materials release harmful volatile chemical compounds into the air, through a process known as "outgassing."

Over the past decade, the U.S. Environmental Protection Agency, the Occupational Safety and Health Administration, and state environmental regulatory agencies have placed an increased emphasis on monitoring and improving indoor air quality. Recently, large employers too have begun looking to improve indoor air quality as part of an increased focus on "employee wellness."

While traditional building materials can contribute to poor indoor air quality, CLT, on the other hand, is generally not manufactured using products that release volatile compounds, such as formaldehyde, nor do its sealants typically result in outgassing. Using CLT will result in a healthier built environment, which is appealing to health and employee advocates. In addition, using CLT for a building results in a smaller carbon footprint for the project, because the wood in the CLT contains sequestered carbon.

CLT as a key component of healthier buildings is not just an environmental issue. Unhealthy buildings could lead to workers' compensation claims, increased government regulatory actions and litigation brought by entrepreneurial plaintiffs' attorneys. Therefore, buildings with CLT could play a role in environmental risk management if air quality comes under scrutiny from government agencies and the plaintiffs' bar.

The effect of more CLT buildings in the U.S.?

The construction industry accounts for approximately 38 percent of annual CO2 emissions globally. CLT offers a sustainable alternative to traditional materials and can significantly reduce the carbon footprints of new construction projects, while helping to utilize less valuable timber that acts as fuel for forest fires. As building codes and insurers evolve to be more receptive to CLT, one might say developers are starting to see the forest for its trees.

Alexandra Kleeman is a regular contributing columnist on environmental law for Reuters Legal News and Westlaw Today.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.

Alexandra Kleeman is a partner at Stoel Rives LLP. Her practice focuses on transactional and litigation support on real estate and environmental matters, including disposition and acquisition of contaminated sites, redevelopment and cleanup of contaminated properties, and resolution of cleanup liability disputes. She has extensive experience with the investigation and remediation of complex contaminated sites arising under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) and the Model Toxics Control Act, Washington state's environmental cleanup law, and advises potentially liable parties and stakeholders on investigation strategies, agency coordination, allocation of past and future cost liabilities, and navigating historic insurance coverage issues. She may be reached at: alexandra.kleeman@stoel.com.