Compliance Exemption Application Period Extended by 3 Years for State Energy Performance Standard (Clean Buildings)

Emergency Rule: Clean Building Law Exemption Application Period Extension

To:	Rural Hospital CEOs, Hospital CFOs, Hospital COOs, Facilities Leads, Legal Counsel, and Government Affairs Staff Please forward to facilities staff
Staff Contact:	Remy Kerr, MPH, Policy Director, Government Affairs remyk@wsha.org | (206) 216-2514
Subject:	Compliance Exemption Application Period Extended by 3 Years for State Energy Performance Standard (Clean Buildings)

 

Purpose
This bulletin serves to notify hospitals and health systems of a Department of Commerce (Commerce) emergency rule¹ and subsequent final rule. The rule amends current law to expand the application window to three years for building owners to file an exemption for state energy performance standard (“Clean Buildings law”) compliance. This bulletin outlines the changes the rule makes to the application process and recommended next steps.

Hospitals and health systems should determine if meeting their performance standard compliance will be problematic. If so, begin planning for the appropriate application period based on building size.

Applicability/Scope
The rule immediately applies to any building owner that is considered a “Tier 1” building. Tier 1 buildings are those greater than or equal to 50,000 gross square feet. Parking garage areas are not included in the gross square footage calculation. Hospitals, laboratories, medical office buildings, as well as various other commercial buildings are subject to the Clean Buildings law. For-profit, non-profit and public hospital districts are included. The rule does not apply to Tier 2 buildings.

Building owners are defined as “an individual or entity possessing title to a building.”

Recommendation

1. Visit Washington State Department of Commerce’s Clean Buildings webpage and “Clean Buildings 101” video to review the compliance standard.
2. If your hospital or health system anticipates any of your facilities having challenges complying with the performance standard by its assigned compliance date, apply for an exemption as early as possible.
3. Participate in the General Q&A Session and public comment process.
4. If you apply for an exemption, please email Remy Kerr (RemyK@wsha.org).

Overview
The emergency rule, effective immediately, allows Tier 1 building owners to apply for an exemption as early as three years prior to their compliance date. The emergency rule amends regulation WAC 194-50-150 Normative Annex, Z4.1. An overview of the application window for each Tier 1 building size is below:

• Tier 1 buildings over 220,000 gross sq. ft., with a compliance date of June 1, 2026, can apply for an exemption beginning July 1, 2023.
• Tier 1 buildings between 90,001 and 220,000 gross sq. ft., with a compliance date of June 1, 2027, can apply for an exemption beginning July 1, 2024.
• Tier 1 buildings between 50,000 and 90,000 gross sq. ft., with a compliance date of June 1, 2028, can apply for an exemption beginning July 1, 2025.

If approved, within 6 months of the compliance date, the building owner must certify that the building still meets the eligibility criteria for the granted exemption. This includes certifying that there have not been any material changes to the building’s qualifying conditions. Commerce will provide a one-page declaration to building owners that must be signed and submitted.

The criteria that allows for a building owner to qualify for an exemption is outlined in WAC 194-50-150, Z4.1(2). Building owners must meet at least one. For reference, the criteria are below²:

1. The building did not have a certificate of occupancy or temporary certificate of occupancy for a consecutive twelve months period within two years prior to the compliance date;
2. The building did not have physical occupancy by owner or tenant for at least fifty percent of the conditioned floor area throughout the consecutive twelve month period prior to the building compliance date;
3. The sum of the building’s gross floor area minus unconditioned and semi-conditioned spaces, as defined in the Washington State Energy Code, is less than fifty thousand square feet;
4. More than 50% of the gross floor area of the building is primarily used for manufacturing or other industrial purposes, as defined under the following use designations of the Washington state edition of the International Building Code:
   • Factory group F; or
   • High hazard group H.
5. The building is an agricultural structure;
6. The building is pending demolition; or
7. The building meets at least one of the following conditions of financial hardship:
   • The building had arrears of property taxes or water or wastewater charges that resulted in the building’s inclusion, within the prior two years, on a city’s or county’s annual tax lien sale list;
   • The building has a court appointed receiver in control of the asset due to financial distress;
   • The building is owned by a financial institution through default by a borrower;
   • The building has been acquired by a deed in lieu of foreclosure within the previous twenty-four months;
   • The building has a senior mortgage subject to a notice of default;
   • The building owner has an immediate and heavy financial need which cannot be satisfied from other reasonable available resources and which are caused by events that are beyond their control.

Next Steps
Commerce has asserted that the final rule will be released in June. Commerce will also host a public hearing on Tuesday, April 5. Details of the public hearing will be forthcoming. WSHA will be commenting on the rule.

Commerce will also host a General Q&A Session related to the Clean Buildings law on Thursday, March 23, 11 a.m. – noon PT. Registration and an area to submit questions is available here.

Background
The Clean Buildings law was enacted in 2019 after passing the legislature as E3SHB 1257 (2019)³. Commerce finalized regulations as directed in November 2020. WSHA has been an active stakeholder throughout the legislative and regulatory process, to ensure hospitals and health systems’ specific concerns are represented. WSHA will continue to work with Commerce to make certain that specific compliance resources for hospitals and health systems are available.

Note: The final rule, expected to be identical to the emergency rule language, will be released in June 2023. Commerce is statutorily required to follow standard rulemaking procedures and issue a final rule for regulations that will be in effect on a permanent basis. This emergency rule, while currently in effect for 120 days, is not expected to terminate after that time due to the final rule issuance.

References

1. WSR-23-05-101 – Rule
2. WAC 194-50-150 – Regulation to be Amended
3. E3SHB 1257 (2019) – Concerning Energy Efficiency
4. Chapter 19.27A RCW – Energy-Related Building Standards
5. WSHA Bulletin on Clean Buildings Compliance Requirements