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September 9, 2016

Large Building Owners Must Publicly Disclose Energy Usage

A new California law will soon require owners of commercial buildings over 50,000 square feet to calculate the energy consumption and energy efficiency of their buildings every year. The annual calculations, and other building information, must then be delivered to the State of California, which will publish the building-specific data on a publicly-viewable website.

The statute that imposes this so-called “benchmarking” program is California Public Resources Code § 25402.10. It was adopted in 2015, as AB 802, a bill that also repealed the prior energy benchmarking program, AB 1103, that had been in place, but widely ignored, for several years.

AB 802 gives the California Energy Commission (“CEC”) the power and duty to develop regulations to implement the benchmarking program. As of this writing, the CEC is in the process of developing those regulations.  The CEC published draft regulations on July 18, 2016.  Although the details may still change before the final regulations are issued, here are some of the key features of the program as described in the draft regulations:

  • Annual obligation to measure and report. This is completely different from AB 1103, under which the benchmarking obligation was triggered by a sale, lease or financing transaction. AB 802 has no transactional triggers. Instead, it requires every owner of every building meeting certain size and type criteria to measure and report energy usage and other information every year, starting in 2018.
  • Detailed information about privately owned buildings will be made publicly available. The information that building owners must gather and report, and which will be published on a publicly-viewable State website starting in 2019, includes the building’s: gross floor area, “primary property type,” occupancy percentage, number of occupants (it is unclear if this means tenants or persons), Energy Star score, hours operated per week, monthly and/or annual energy used, and total greenhouse gas emissions.
  • There may be penalties. The statute authorizes the CEC to impose monetary penalties for non-compliance with the reporting requirements. The CEC has not yet made clear what penalties building owners will be subject to, if any, but the statutory language presents the risk that these penalties could be very substantial.

The attorneys in Boutin Jones’s real estate practice group will continue to monitor the development of this new requirement and will provide future updates in this space when appropriate.

Please contact any member of the Boutin Jones Real Estate Group if you have any questions regarding this article.