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Legislature passes bill requiring building owners to reduce greenhouse gas emissions

Under bill E3SHB 1257, recently passed by the Legislature, many commercial office buildings will have to take actions to reduce greenhouse gas (GHG) emissions. Funding is available to help building owners in the transition. Plus, the bill requires new buildings with parking to provide electric charging stations.

Under the bill, By November 1, 2020, the Department of Commerce must establish by rule a state energy performance standard for covered commercial buildings. "Covered commercial building" means a building where the sum of nonresidential, hotel, motel, and dormitory floor areas exceeds 50,000 gross square feet, excluding the parking garage area. Commerce must provide the owners of covered buildings with notification of compliance requirements no later than July 1, 2021.

In developing the standard, Commerce must seek to maximize reductions in greenhouse GHG emissions from the building sector. The standard must include energy use intensity targets by building type and methods of conditional compliance that include an energy management plan, operations and maintenance program, energy efficiency audits, and investments in energy efficiency measures designed to meet the targets. Commerce must update the standard by July 1, 2029, and every five years thereafter. 

A building owner of a covered commercial building must meet the following compliance schedule:

- June 1, 2026, for a building with more than 220,000 gross square feet;

- June 1, 2027, for a building with more than 90,000 gross square feet, but less than 220,001 gross square feet; and

- June 1, 2028, for a building with more than 50,000 gross square feet, but less than 90,001 gross square feet.

A covered commercial building is exempt from the standard if it meets at least one of several listed criteria, including:

- the building did not have a certificate of occupancy or temporary certificate of occupancy for all 12 months of the calendar year prior to the building owner compliance schedule;

- the building is an agricultural structure; or

- the primary use of the building is manufacturing or other industrial purposes.

Commerce may impose an administrative penalty upon a building owner for failing to submit documentation demonstrating compliance with the requirements of the standard. The penalty may not exceed $5,000 plus an amount based on the duration of any continuing violation. The additional amount for a continuing violation may not exceed a daily amount equal to $1 per year per gross square foot of floor area. Commerce may by rule, adjust the maximum penalty rates for inflation.

An eligible building owner may submit to Commerce an application for an incentive payment (provided by utilities) in a form and manner prescribed by Commerce. The application must be submitted in accordance with the following schedule:

- beginning July 1, 2021, through June 1, 2025, for a building with more than 220,000 gross square feet;

- beginning July 1, 2021, through June 1, 2026, for a building with more than 90,000 gross square feet, but less than 220,001 gross square feet; and

- beginning July 1, 2021, through June 1, 2027, for a building with more than 50,000 gross square feet, but less than 90,001 gross square feet.

An eligible building owner that demonstrates early compliance with the applicable energy use intensity target under the standard may receive a base incentive payment of $0.85 per square foot of floor area, excluding parking, unconditioned, or semi-conditioned spaces.

Commerce may not issue a certification for an incentive application to an eligible building owner if doing so is likely to result in total incentive payments in excess of $75 million.

The State Building Code Council must develop rules for electric vehicle infrastructure that require electric vehicle charging capability at all new buildings providing on-site parking. Where parking is provided, the greater of one parking space or 10 percent of parking spaces, rounded to the next whole number, must be provided with wiring or raceway size to accommodate 208/240 V 40-amp or equivalent electric vehicle charging.

AGC encouraged changes to the bill to provide greater stakeholder participation in developing rules, and to require new rules and building codes to be approved by the Legislature. These changes were not made and ultimately AGC opposed the legislation. The bill passed the House 55 to 37, and the Senate 25 to 23.  It is expected to be signed into law soon, as the bill was a top legislative priority of the Governor.

For more information, contact AGC Chief Lobbyist Jerry VanderWood, 360.352.5000.