New Clean Buildings Standard: Start Planning for Compliance

March 29, 2021

 

To: Hospital COOs, Hospital CFOs, Rural CEOs, Legal Counsel, and Government Affairs Staff
Please forward to facilities staff
From: David Streeter, MPA, Policy Director- Clinical and Data
DavidS@wsha.org | (206) 216-2508
Subject: New Clean Buildings Standard: Start Planning for Compliance

 

Purpose

The purpose of this bulletin is to inform hospitals and health systems about the new clean buildings standard that requires compliance as early as June 1, 2026. This bulletin provides a high-level overview of the regulations and recommended next steps. Hospitals and health systems should determine if they are impacted by this new law. If impacted, we recommend planning in 2021 for future compliance to ensure sufficient time and resources to meet their obligations under the new law.

Applicability / Scope

The new standard applies to any “covered commercial building,” which is defined as, “a building where the sum of nonresidential, hotel, motel, and dormitory floor areas exceeds fifty thousand gross square feet, excluding the parking garage area.” This includes hospitals, medical office buildings, laboratories, and other buildings that meet the definition.

Building owners are responsible for compliance with the law. A “building owner” is defined as “an individual or entity possessing title to a building.” This includes nonprofit, for-profit, and public hospital district building owners.

Compliance schedule:

  • For buildings larger than 220,000 gross square feet: June 1, 2026
  • For buildings between 90,000 and 220,000 gross square feet: June 1, 2027
  • For buildings between 50,000 and 90,000 gross square feet: June 1, 2028

Recommendations

  1. Review this bulletin, the Washington State Department of Commerce’s Clean Buildings webpage, and Commerce’s “Clean Buildings 101” video to understand the standard’s requirements.
  2. Share this bulletin with relevant staff. Staff with energy management or engineering expertise should review Chapter 194-50 WAC alongside ASHRAE Standard 100-2018- Energy Efficiency in Existing Buildings (ASHRAE-100) to understand the standard’s full requirements.
  3. See the Next Steps section to register for Washington Hospital Services’ April 7th Facilities Cohort meeting and WSHA’s informational webinar with Commerce.

Overview

Washington State’s Clean Buildings law passed the legislature as HB 1257 in 2019 and its regulations were finalized in November 2020 as new chapter 194-50 WAC. The law is part of the state’s efforts to combat climate change and is designed to reduce greenhouse gas emissions from commercial buildings. To accomplish this, building owners must implement energy efficiency measures (EEMs) for their buildings to meet specific energy use intensity targets (EUIt) established by Commerce. Building owners will be required to analyze their buildings’ current energy use intensity (EUI); determine a compliance pathway; implement EEMs; and report to Commerce in accordance with their compliance schedule.

WSHA played an active role in the rulemaking process to ensure hospitals’ unique needs were reflected in the final regulations. We continue to engage with Commerce as it releases compliance resources.

Rule Background: Adoption of ASHRAE-100 and WAC Amendments

The clean building standard is based on ASHRAE Standard 100-2018, which is adopted by reference. This means the full text of ASHRAE-100 applies except for the portions amended by chapter 194-50 WAC. Both documents will be needed simultaneously to review the standard and discern areas where state regulation differs from the original ASHRAE-100. Please see the Resources section for instructions to access an online version of ASHRAE-100.

Compliance Requirements

The clean buildings standard is complex and labor-intensive, which means compliance will require significant time and organizational resources. To comply, building owners must conduct four primary tasks:

  • Benchmark and analyze current energy use using Energy Star Portfolio Manager;
  • Implement the operations and maintenance (O&M) plan specified in WAC 194-50-060 and ASHRAE-100 Section 6;
  • Create an energy management plan as specified in WAC 194-50-050 and ASHRAE-100 Section 5; and
  • Comply with one of the two performance metrics established in the standard by the building’s compliance date.

Much of the compliance work will be conducted by the individual designated as the building’s Energy Manager. The Energy Manager must satisfy the definition of “qualified person” in WAC 194-50-030, which means the individual must have training, expertise, at least three years of experience in building energy-use analysis, and other credentials specified in the definition. The Energy Manager can be an employee or an outside vendor. It will be their responsibility to:

  • Understand ASHRAE-100 and chapter 194-50 WAC;
  • Complete the required analysis to determine the building’s compliance pathway;
  • Establish and maintain the building’s account in Energy Star Portfolio Manager;
  • Develop EEMs and implementation plans; and
  • Report to Commerce by the specified deadlines.

Benchmarking and Analysis

Building owners must benchmark the building’s current EUI using Energy Star Portfolio Manager, which is the required software platform for compliance. The Energy Manager will input the building’s baseline energy use data in Energy Star Portfolio Manager and conduct analysis using the methodology specified in ASHRAE-100 Section 7 and WAC 194-50-070. Please see ASHRAE-100 Sections 4 and 7, WAC 194-50-040, and WAC 194-50-070 for full details. Additionally, Energy Star has a collection of materials available to help get started with the software.

O&M Plan

Building owners must develop and implement the O&M plan as outlined in ASHRAE-100 Section 6 and WAC 194-50-060. The plan must be implemented at least 12 months prior to the building’s compliance date so that there is sufficient data to report to Commerce. According to ASHRAE-100 Section 6.2, the plan “documents O&M objectives, establishes the criteria for evaluation, and commits the building operator and maintenance personnel to basic goals of performance.” The basic performance goals include minimizing equipment failures, ensuring efficient operation, and performing maintenance tasks. Normative Annex L in WAC 194-50-130 lists the tasks that must be conducted and other requirements for the O&M plan. Please see ASHRAE-100 Section 6, WAC 194-50-060, and WAC 194-50-130 for full details.

Energy Management Plan

Building owners must develop and implement the energy management plan as outlined in ASHRAE-100 Section 5 and WAC 194-50-050. The energy management plan’s components include an energy accounting system and ongoing documentation of the building’s energy use through Energy Star Portfolio Manager. The plan is submitted to Commerce in accordance with the reporting provisions contained in Normative Annex Z. Please see ASHRAE-100 Section 5 and WAC 194-50-050 for full details.

Performance Metrics

The standard’s building performance metrics are the primary determinant for compliance. Building owners must satisfy one of the two metrics, which are:

  1. Meet the EUIt by the compliance date; or
  2. Satisfy the investment criteria as specified in Normative Annex X in WAC 194-50-140.

Buildings can meet their EUIt through EEMs that lower the building’s EUI so that it is equal to or less than the EUIt listed in Table 7-2A in WAC 194-50-150. For example, the EUIt for hospitals is set at 215 kBtu/ft2/yr, which means hospitals with baseline EUIs larger than 215 kBtu/ft2/yr will need to implement EEMs to lower their EUI to either meet or show progress toward the EUIt. EEMs may include upgrades to lighting, HVAC, refrigeration, windows, and other building systems. Buildings that meet their EUIt will report their compliance to Commerce using forms that Commerce will release in advance of the compliance dates.

If the building does not meet its required EUIt, then the building owner can satisfy the investment criteria specified in Normative Annex X. This requires the building to undergo a Level 2 energy audit as specified in ASHRAE-100 Section 8 and WAC 194-50-080. The Level 2 energy audit must be conducted by a qualified energy auditor, which means your hospital or health system will likely need to contract with an energy management firm. The Level 2 energy audit must identify:

  • A list of recommended EEMs that will either meet the building’s EUIt or satisfy the investment criteria;
  • The estimated energy savings generated by the EEMs; and
  • The estimated costs for implementing the EEMs.

EEMs will have financial costs that reflect how much work must be done, the timeframe for the projects, and other variables. The standard specifies in Normative Annex X2.3.2.1 that EEMs that are not cost-effective will not need to be implemented. Importantly, EEM projects may cause disruptions to your hospital, such as temporarily closing a space so a project can be completed.

Conditional Compliance

Commerce is required to offer a conditional compliance option for building owners that are unable to meet one of the performance metrics by their compliance deadline. Building owners seeking conditional compliance must apply no later than 180 days before the building’s compliance date. Once conditional compliance is granted, building owners will still need to follow the steps in the standard and report annually to Commerce to demonstrate that work is underway to lower the building’s energy use.

Noncompliance

Noncompliance will result in heavy fines as specified in WAC 194-50-150 Z5.4.1.2. Fines for noncompliance are set at “an amount not to exceed five thousand dollars plus an amount based on the duration of any continuing violation,” and “the additional amount for a continuing violation may not exceed a daily amount equal to one dollar per square foot of gross floor area per year.” The rules also specify a penalty for building owners who choose to pay a fine instead of implementing EEMs, which is set at “the maximum penalty of five thousand dollars plus a daily amount equal to $1.00 per square foot of gross floor area per year not to exceed a value greater than eighteen months of accrued penalty.”

Financial Hardship Exemption

WAC 194-50-150 contains a financial hardship exemption for building owners with “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.” However, it is too soon to apply for the exemption since the first applications will not be accepted until 180 days before the building’s scheduled compliance date.

Next Steps

Summer 2021 Notification Letters

Commerce is required to issue notification letters to building owners by July 1, 2021 stating that their building is covered by the new standard. Commerce will be basing this determination on data from county property assessments. If your hospital or other building is assigned the wrong compliance date, then you will be responsible for correcting the error in Commerce’s records by following the instructions included with the notification letter.

April 7, 2021: WHS Facilities Cohort Meeting

Washington Hospital Services will be convening its new Facilities Cohort on April 7, 2021, at 8:30 AM to begin the conversation about how the new standards will impact hospital operations and facility management. The meeting is open to CFO’s and facilities staff. Click here to register for the meeting. Please contact Cynthia Hay for more information.

May 19, 2021: WSHA Webinar with Commerce

WSHA will host an informational webinar with Commerce on May 19, 2021, at 11 AM about the new standard. Representatives from Commerce will cover the clean building standard; mandatory requirements; compliance paths; customer support; and the early adopter incentive program. After the presentation, Commerce staff will be available to answer questions about compliance with the new standard. Click here to register for the webinar. Please contact David Streeter for more information.

Engage with Commerce and Submit Questions

Commerce is in the process of releasing compliance resources for building owners. You can stay up to date with the clean buildings program by subscribing to email notifications through the form at the bottom of Commerce’s Clean Buildings Webpage. If you have specific questions about the standard, Commerce staff will reply to questions submitted to buildings@commerce.wa.gov.

Early Adopter Incentive Program

Building owners that are currently working toward energy efficiency may be eligible for the early adopter incentive program that launches July 1, 2021. Eligible buildings must be at least 15 points above their EUIt and be able to meet their EUIt within 18 months of being approved for the incentive program. Eligibility is also limited to buildings that are customers of participating utility companies. Commerce is still developing the rules for the program and intends to have its guidebook finalized this spring. Please visit Commerce’s Early Adopter Incentive Program webpage to learn more.

WSHA’s 2020 New Law Implementation Guide

Please visit WSHA’s 2020 implementation guide online, where you will find a list of the high priority laws that WSHA is preparing resources and information on to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for release of upcoming resources on other laws and additional resources for implementation.

Background

Washington state’s Clean Buildings law passed the legislature as HB 1257 (2019), which amended the state energy code in Chapter 19.27A RCW. Rules for the clean buildings program were finalized in November 2020 as Chapter 194-50 WAC. WSHA played an active role in the rulemaking process to ensure hospitals’ unique needs were reflected in the final rules. WSHA’s advocacy resulted in:

  • Appropriate EUIts for hospitals and other medical buildings;
  • Exceptions for hospitals that permit the use of higher operating shift normalization factors when calculating EUI;
  • The financial hardship exemption; and
  • Other technical changes that reflect hospitals’ operations.

During the rule design process, WSHA offered to work with Commerce to develop compliance resources for hospitals. WSHA will continue to work with Commerce and the legislature to ensure hospitals remain an active participant in shaping clean buildings policies.

Resources

HB 1257 (2019) – Concerning Energy Efficiency

Chapter 19.27A RCW – Energy-Related Building Standards

Chapter 194-50 WAC – Washington State Department of Commerce Adoption and Amendment of ASHRAE Standard 100, 2018

ASHRAE Standard 100-2018 – Energy Efficiency in Existing Buildings (The document link is in the “Preview ASHRAE Standards and Guidelines” section. Physical copies may also be purchased.)

Department of Commerce Clean Buildings Webpage

“Clean Buildings 101” Video

Energy Star Portfolio Manager Training Resources

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