California’s Building Energy Disclosure Law: June 1, 2018 Disclosure Deadline For Non-Residential Buildings with 50,000 Square Feet of Floor Area

Under California’s building energy disclosure law, Assembly Bill 802, June 1, 2018 is the deadline to submit 2017 building energy use benchmarking data to the California Energy Commission for non-residential buildings with more than 50,000 square feet of gross floor area. The disclosures are now required annually on June 1, and in 2019 will apply to both non-residential and residential buildings. 

Wasn’t California’s energy disclosure law previously repealed? How is AB 802 different?  

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You may recall the short lived Assembly Bill 1103, which in 2014 required owners to disclose a building's energy performance each time the building was financed, leased, or sold. The disclosure requirements under AB 1103 were transaction based and had to be provided to tenants, buyers or lenders at the time of the transaction. The AB 1103 program was difficult to implement, and many private parties simply waived or ignored the disclosure requirements altogether.  

This led to the repeal of AB 1103 in 2015 by Assembly Bill 802, which directed the Energy Commission to draft new regulations requiring building owners to instead make annual energy disclosures directly to the Energy Commission. In March 2018, the Energy Commission completed the new regulations.

Which buildings are covered?  

All buildings with at least 50,000 square feet of gross floor area are subject to the disclosure requirements, except for the following:

  • residential or mixed-use buildings with less than 17 residential utility accounts (but for 2018 only, all buildings with residential utility accounts are exempt);
  • condominium projects as described in section 4125 or 6542 of the California Civil Code;
  • buildings in which more than half of the gross floor area is used for scientific experiments requiring controlled environments, or for manufacturing or industrial purposes;
  • buildings without a certificate of occupancy for more than half of the reporting year or that are scheduled to be demolished within a year after the reporting date; and
  • buildings subject to local benchmarking and disclosure requirements approved by the Energy Commission (currently Berkeley, Los Angeles, and San Francisco).

The regulations define gross floor area as the area measured from the exterior surfaces of the walls of a building and including all interior areas. Additionally, if one common meter (electricity, natural gas, steam, or fuel) serves multiple buildings without sub-metering, then the buildings are considered one building and the floor area is aggregated.

How are energy disclosures made?  

A building owner must take the following steps to comply with the energy disclosure requirements: 

  1. open an ENERGY STAR Portfolio Manager account online, www.energystar.gov/buildings/facility-owners-and-managers/existing-buildings/use-portfolio-manager, for each building covered by the disclosure requirements;
  2. request energy use data from the utility for the building by March 1 of each year; and 
  3. by June 1 of each year, go to the Energy Commission’s benchmarking website, www.energy.ca.gov/benchmarking, select the appropriate Energy Star Portfolio Manager reporting link and complete the report to share the energy data and benchmarking information with the Energy Commission.

The California Business Properties Association (CBPA) notes that the rollout of the new regulations, adopted in March 2018, i.e., concurrently with the first deadline for requesting energy data, is still unfolding.  Presumably, delays are expected.  The CBPA has a resource page with additional information, www.cbpa.com/government/benchmarking-ab-802, and a fact sheet that’s helpful for determining whether the regulations apply to a building, www.cbpa.com/wp-content/uploads/2018/03/AB802-FactSheet.pdf.

What is disclosed? 

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AB 802 requires utilities to maintain records of the energy use data for all buildings they serve. “Energy” includes electricity, natural gas, steam, or fuel oil.  When a building owner requests energy use data from the utility, the utility is required to provide aggregated energy use data to the owner or to the owner’s account in the ENERGY STAR Portfolio Manager.

Based on additional information provided by the building owner about the building and its use, the ENERGY STAR Portfolio Manager will provide certain benchmarking data about the building, including in some cases an ENERGY STAR rating, which is then reported to the Energy Commission by following the applicable reporting links on the Energy Commission’s website.

There are two exceptions, even for covered buildings, which prevent the disclosure of energy data. First, if a building has less than three accounts, then a utility must obtain the permission of all customers before providing energy data. An owner may obtain permission from customers directly through a lease or other document, provided the customers clearly grant permission for public disclosure of the aggregated energy use data; however, nothing requires that an owner do so.  If an owner has not obtained permission to disclose energy use data, the utility will send a request to each customer, and if all customers do not respond within 30 days, then the utility will notify the owner that no energy use data will be provided.  Second, an owner may obtain a determination from the Energy Commission that disclosure of the owner’s energy use data would result in the release of proprietary information that can be characterized as a trade secret.

In either case, a building owner would still be required to make annual disclosures using the Energy Commission’s website; however, the disclosure would include only general information about the building and would not include energy use data.  
 

Will the information be public?

Yes. Starting in 2019 for buildings with no residential accounts, and in 2020 for all buildings, the Energy Commission may disclose any of the following on a public website:

(A) Building address.
(B) County.
(C) Year built.
(D) Gross Floor Area.
(E) Latitude and longitude.
(F) Property or building name, if any.
(G) Property type.
(H) Property floor area (building and parking).
(I) Open "comments" field for the building owner or Owner’s Agent to provide additional information about the building.
(J) ENERGY STAR Portfolio Manager Property ID.
(K) Percentage of space occupied (Occupancy).
(L) Number of occupants.
(M) Number of buildings (if served by one common Energy meter without sub-metering).
(N) ENERGY STAR Score, for eligible buildings.
(O) Monthly and/or annual site Energy use by Energy type.
(P) Monthly and/or annual weather‐normalized site and/or source Energy use intensity.
(Q) Monthly and/or annual peak electricity demand.
(R) Total greenhouse gas emissions.

The information under items N-R will be disclosed only if energy data is available and not subject to a trade secret exception as noted above.

What’s the penalty for failing to comply? 

If a building owner fails to comply with the disclosure requirements, the Energy Commission will provide a 30-day notice to correct the violation. If the violation continues, the Energy Commission may enforce the requirements through Public Resources Code section 25321 by imposing a civil penalty of up to $2,000 for each violation, for each day the violation has existed and continues to exist.

photo credit: La Chachalaca Fotografía & Dominique Chappard

Jonathon Giebeler

Jonathon Giebeler is a graduate of the University of Southern California Law School, where he also earned a Master of Real Estate Development. His practice emphasizes commercial leasing representing landlords and tenants (including retail, office and industrial leases), real estate-secured finance, and the sale and purchase of real property.