Your Energy Disclosure Requirements Are Changing

LOS ANGELES—Energy disclosure laws are changing. AB 1103 has been repealed and replaced with AB 802, a new bill that will require property owners to report and publicly disclose energy usage data. The bill is still under revision, but will likely come into effect sometime in the second half of the year. To find out more about the new regulations and what building owners need to know to comply, we sat down with Emily Murray, an attorney at Allen Matkins, for an exclusive interview.

GlobeSt.com: How are energy use disclosure requirements going to change under AB 802?

Emily Murray: Under the prior energy use disclosure law, Assembly Bill 1103 (AB 1103), building owners were required to make energy use disclosures in connection with the sale, lease, or financing of certain buildings.  AB 1103 was repealed on January 1, 2016, and replaced with Assembly Bill 802 (AB 802), codified as Public Resource Code section 25402.10.

AB 802 eliminates the private disclosure made between parties to a sale, lease, or finance transaction under AB 1103, and instead requires reporting and public disclosure of certain energy usage data for covered buildings.  Specifically, AB 802 requires that utility companies maintain at least 12 months of energy usage data for covered buildings, and provide that data to a building owner or operator upon request.  Certain energy usage data will be required to be reported to the California Energy Commission (CEC) and will be publically available.  AB 802 also applies to multifamily buildings, whereas AB 1103 did not.

AB 802 requires the CEC to develop regulations to govern the delivery of energy usage data to the CEC and the public disclosure of such data.  Pending the development of those regulations, and following the repeal of AB 1103, there are currently no statewide energy use disclosure requirements.  The CEC released its proposed regulations on February 23, 2017, and will hold a public hearing regarding the regulations on July 12, 2017.  The CEC expects to finalize the regulations in 2017, following the public hearing.

GlobeSt.com: Why do these regulations apply only to 50,000 square foot buildings?

Murray: In enacting AB 802, the California legislature stated that the intent of the bill was to “create a benchmarking and disclosure program through which building owners of commercial and multifamily buildings above 50,000 square feet gross floor area will better understand their energy consumption through standardized energy use metrics.”  However, the actual text of Public Resource Code section 25402.10 does not contain a 50,000 square foot minimum for the disclosure requirement.  Nevertheless, the CEC's proposed implementing regulations follow the stated intent of the Legislature, and only apply to building of 50,000 square feet or more.

GlobeSt.com: What do property owners need to know to comply with these new regulations?

Murray: Assuming the CEC's proposed regulations are ultimately enacted in their current form, by June 1, 2018 (June 1, 2019, for residential buildings), and every year thereafter, the owners of buildings covered by the regulations will be required to log onto the Energy Star website and complete a reporting process for each building.

Specifically, all owners of buildings required to disclose under AB 802 will have to log onto the Energy Star website and follow the prompts to register the building, even in situations where required tenant permission is lacking or the building's energy use has been determined a trade secret (in such cases, the building owner will only disclose general information about the building and not its energy use).  Building owners will be responsible for uploading data from the utility companies if the utility companies did not upload the data directly onto Energy Star.

Once building owners have disclosed the required information through the Energy Star website, they will have completed their disclosure obligations for the year.  Energy data collected in 2019 (2020 for residential buildings) and yearly thereafter will be published on a public website.

In contrast to AB 1103, building owners will have no duty to make specific disclosures to prospective buyers, lessees, or lenders.  Presumably, such parties will be able to review energy information directly on the public website.

GlobeSt.com: What needs to happen to makes these official?

Murray: The CEC released the proposed regulations on February 23, 2017.  As indicated in the CEC Notice of Proposed Action, the public comment period on the proposed regulations closed on April 10.  There will be a public hearing on July 12, 2017.  Thereafter, the CEC could finalize and adopt the proposed regulations, or the agency could make changes.  If the CEC makes substantive changes, the agency must circulate the revised regulations at least 15 days prior to adoption.

Accordingly, the regulations won't be final until at least some time after July 12, 2017.  If substantial revisions are made, it could be several months after July.  However, the CEC does expect to enact the regulations in 2017.

LOS ANGELES—Energy disclosure laws are changing. AB 1103 has been repealed and replaced with AB 802, a new bill that will require property owners to report and publicly disclose energy usage data. The bill is still under revision, but will likely come into effect sometime in the second half of the year. To find out more about the new regulations and what building owners need to know to comply, we sat down with Emily Murray, an attorney at Allen Matkins, for an exclusive interview.

GlobeSt.com: How are energy use disclosure requirements going to change under AB 802?

Emily Murray: Under the prior energy use disclosure law, Assembly Bill 1103 (AB 1103), building owners were required to make energy use disclosures in connection with the sale, lease, or financing of certain buildings.  AB 1103 was repealed on January 1, 2016, and replaced with Assembly Bill 802 (AB 802), codified as Public Resource Code section 25402.10.

AB 802 eliminates the private disclosure made between parties to a sale, lease, or finance transaction under AB 1103, and instead requires reporting and public disclosure of certain energy usage data for covered buildings.  Specifically, AB 802 requires that utility companies maintain at least 12 months of energy usage data for covered buildings, and provide that data to a building owner or operator upon request.  Certain energy usage data will be required to be reported to the California Energy Commission (CEC) and will be publically available.  AB 802 also applies to multifamily buildings, whereas AB 1103 did not.

AB 802 requires the CEC to develop regulations to govern the delivery of energy usage data to the CEC and the public disclosure of such data.  Pending the development of those regulations, and following the repeal of AB 1103, there are currently no statewide energy use disclosure requirements.  The CEC released its proposed regulations on February 23, 2017, and will hold a public hearing regarding the regulations on July 12, 2017.  The CEC expects to finalize the regulations in 2017, following the public hearing.

GlobeSt.com: Why do these regulations apply only to 50,000 square foot buildings?

Murray: In enacting AB 802, the California legislature stated that the intent of the bill was to “create a benchmarking and disclosure program through which building owners of commercial and multifamily buildings above 50,000 square feet gross floor area will better understand their energy consumption through standardized energy use metrics.”  However, the actual text of Public Resource Code section 25402.10 does not contain a 50,000 square foot minimum for the disclosure requirement.  Nevertheless, the CEC's proposed implementing regulations follow the stated intent of the Legislature, and only apply to building of 50,000 square feet or more.

GlobeSt.com: What do property owners need to know to comply with these new regulations?

Murray: Assuming the CEC's proposed regulations are ultimately enacted in their current form, by June 1, 2018 (June 1, 2019, for residential buildings), and every year thereafter, the owners of buildings covered by the regulations will be required to log onto the Energy Star website and complete a reporting process for each building.

Specifically, all owners of buildings required to disclose under AB 802 will have to log onto the Energy Star website and follow the prompts to register the building, even in situations where required tenant permission is lacking or the building's energy use has been determined a trade secret (in such cases, the building owner will only disclose general information about the building and not its energy use).  Building owners will be responsible for uploading data from the utility companies if the utility companies did not upload the data directly onto Energy Star.

Once building owners have disclosed the required information through the Energy Star website, they will have completed their disclosure obligations for the year.  Energy data collected in 2019 (2020 for residential buildings) and yearly thereafter will be published on a public website.

In contrast to AB 1103, building owners will have no duty to make specific disclosures to prospective buyers, lessees, or lenders.  Presumably, such parties will be able to review energy information directly on the public website.

GlobeSt.com: What needs to happen to makes these official?

Murray: The CEC released the proposed regulations on February 23, 2017.  As indicated in the CEC Notice of Proposed Action, the public comment period on the proposed regulations closed on April 10.  There will be a public hearing on July 12, 2017.  Thereafter, the CEC could finalize and adopt the proposed regulations, or the agency could make changes.  If the CEC makes substantive changes, the agency must circulate the revised regulations at least 15 days prior to adoption.

Accordingly, the regulations won't be final until at least some time after July 12, 2017.  If substantial revisions are made, it could be several months after July.  However, the CEC does expect to enact the regulations in 2017.