82nd OREGON LEGISLATIVE ASSEMBLY--2023 Regular Session

Enrolled

House Bill 3409 Sponsored by Representatives RAYFIELD, MARSH, PHAM K, Senators DEMBROW, LIEBER; Rep-resentatives ANDERSEN, BOWMAN, CHAICHI, DEXTER, GAMBA, GRAYBER, HARTMAN, HOLVEY, HUDSON, KROPF, LEVY E, MCLAIN, NELSON, NERON, NGUYEN H, NOSSE, REYNOLDS, SOSA, TRAN, WALTERS, Senators CAMPOS, MANNING JR, PATTERSON, SOLLMAN

CHAPTER

AN ACT

Relating to climate; creating new provisions; amending ORS 352.823, 468A.210, 468A.215, 468A.220, 468A.225, 468A.230, 468A.235, 468A.240, 468A.245, 468A.250, 468A.255, 468A.260, 469.754, 469.756 and 530.050 and sections 1 and 5, chapter 655, Oregon Laws 2019, and sections 2, 10, 14, 17, 21, 23, 24 and 29, chapter 86, Oregon Laws 2022; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

DESIGNATED STATE AGENCY PROGRAMS

FOR ENERGY EFFICIENCY IN BUILDINGS

SECTION 1. (1) The Legislative Assembly finds that:

(a) Energy consumption in residential and commercial buildings accounted for 34 percent of annual greenhouse gas emissions in this state in 2021, according to the Department of

Environmental Quality;

(b) Space and water heating account for 64 percent of an average residential building’s energy use;

(c) Heat pumps provide both heating and cooling benefits that keep people safe during extreme weather events that are becoming more frequent and more intense as a conse-quence of climate change;

(d) Electric heat pumps can provide up to three times more heat energy than the elec-trical energy the heat pumps consume, which makes heat pumps the most energy efficient space heating option available in the market;

(e) Upgrading space and water heating appliances with contemporary heat pump tech-nologies can help people to save money on household energy bills;

(f) Existing and forthcoming state and federal incentive programs will assist in energy efficiency improvements in homes and buildings, including adoption of energy efficient heat-ing and cooling appliances;

(g) Many residents of this state suffer from disproportionately high energy burdens, and environmental justice communities face greater barriers to purchasing and installing heat pumps and other energy efficient appliances; and

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(h) Additional support and innovative solutions are necessary to ensure that all house-holds in this state benefit from energy efficient appliances and heating and cooling upgrades.

(2) The Legislative Assembly declares as goals for this state:

(a) That owners, operators or residents of residential or commercial buildings in this state install and use at least 500,000 new heat pumps by 2030;

(b) That the state provide programs and support for accelerating purchases and instal-lations of heat pump technologies to help meet the state’s greenhouse gas emissions re-duction goals;

(c) That the programs and support described in paragraph (b) of this subsection should prioritize environmental justice communities and individuals who reside in houses and structures that do not have a functioning, adequate or affordable heating or cooling system;

(d) That the state evaluate the adoption and use of heat pump technologies regularly to determine whether the rate of adoption and use will enable the state to meet greenhouse gas emissions reduction goals; and

(e) That the agencies of the executive branch of state government lead by example by acquiring, installing and using heat pump technologies.

SECTION 2. (1) As used in this section and sections 3 and 4 of this 2023 Act:

(a) “Designated state agency program” means a program related to the promotion, im-plementation, incentivization or regulation of energy efficiency in buildings carried out by any of the following state agencies, as determined by the agency by rule or other action:

(A) The State Department of Energy;

(B) The Housing and Community Services Department;

(C) The Public Utility Commission;

(D) The Department of Environmental Quality;

(E) The Oregon Health Authority; and

(F) The Department of Consumer and Business Services.

(b) “Greenhouse gas emissions reduction goals” means policies and goals for reducing greenhouse gas emissions in this state to achieve, at a minimum, emissions reductions con-sistent with the greenhouse gas emissions reduction goals specified in ORS 468A.205.

(c) “Heat pump” means a device that provides indoor space heating and cooling by transferring thermal energy between the interior and exterior of a building.

(d) “Heat pump technology” means:

(A) A device that transfers thermal energy between the interior and exterior of a build-ing for the purpose of space heating or cooling;

(B) A device that transfers thermal energy from the interior or exterior of a building to water for the purpose of heating the water; or

(C) A device that performs both of the functions described in subparagraphs (A) and (B) of this paragraph.

(2) In carrying out a designated state agency program, an agency described in subsection

(1)(a) of this section shall consider actions to aid in achieving greenhouse gas emissions re-duction goals that include, but are not limited to:

(a) Considering greenhouse gas emissions reduction goals in designated state agency program regulatory decisions.

(b) Aligning the creation or operation of new or existing designated state agency pro-grams with greenhouse gas emissions reduction goals.

(c) Working in consultation and aligning efforts with other agencies to simplify and im-prove access for residents of this state to existing and new programs that relate to energy efficiency and resilience, and, where appropriate, to reduce or eliminate within programs fi-nancial or nonfinancial barriers to accessing energy efficiency measures or appliances that will result in the greatest available energy efficiency and reductions of greenhouse gas emissions.

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(d) Consistent with applicable federal and state laws and program requirements, prior-itizing actions that help environmental justice communities, as defined in ORS 469A.400:

(A) Adapt to impacts from climate change; and

(B) Overcome cost burdens and other barriers to using energy in a way that is efficient and in alignment with greenhouse gas emissions reduction goals.

(e) Consistent with applicable federal and state laws, consulting with the Oregon Global

Warming Commission and the Environmental Justice Council and using, when appropriate, the environmental justice mapping tool developed under section 12, chapter 58, Oregon Laws

2022, when considering or evaluating for development or implementation the policies and actions described in this subsection.

SECTION 3. (1) The State Department of Energy shall submit to the Governor and an interim committee of the Legislative Assembly related to the environment not later than

September 15 of each odd-numbered year, beginning in 2025, a report that evaluates the rate of adoption of heat pump technologies among residents of this state and progress the state is making in achieving the state’s greenhouse gas emissions reduction goals. At a minimum, the report must:

(a) Review, using existing studies, market reports, polling data and other publicly avail-able information, the nature and state of the market for heat pump technologies, including the size and dollar value of the market and the variety of available technologies, applications and appliances;

(b) Identify financial and nonfinancial barriers that prevent adoption of heat pump tech-nologies by residents of this state;

(c) Assess the state’s progress in achieving the goals specified in section 1 (2) of this 2023

Act; and

(d) Estimate the date by which the state will achieve the goals specified in section 1 (2) of this 2023 Act.

(2) The department shall collaborate with other state agencies described in section 2

(1)(a) of this 2023 Act in preparing the report described in subsection (1) of this section and may:

(a) Contract with a private entity to conduct research for, prepare or assist in preparing the report; and

(b) Incorporate the findings from this report into the biennial energy report or into other reports to the Legislative Assembly concerning home energy efficiency or heat pump tech-nologies.

(3) In assessing the state’s progress toward achieving the goal specified in section 1 (2)(a) of this 2023 Act, the department shall focus on heat pumps that are commercially available and shall, to the extent possible, use existing studies, data and analysis to evaluate:

(a) Whether reductions in greenhouse gas emissions attributable to new heat pumps in-stalled in homes and buildings in this state contribute to the state’s ability to meet greenhouse gas emissions reduction goals; and

(b) To the extent possible, whether sales figures, the percentage of newly installed space and water heating systems that are heat pumps and the rate at which residents of this state install new heat pumps indicate that the state will meet the goal specified in section 1 (2)(a) of this 2023 Act.

SECTION 4. (1) The State Department of Energy shall collaborate with other state agencies described in section 2 (1)(a) of this 2023 Act to reduce financial and nonfinancial barriers to home energy efficiency and resilience by:

(a) Providing initial and continuing technical assistance and training in order to build capacity in developers, builders, community-based organizations, homeowners and tenants to conduct renovations and installations of energy efficient technologies, including heat pumps; and

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(b) Providing education and training to contractors, subcontractors, technicians, community-based organizations and other installers and other workers in industries related to construction and energy appliance installation concerning:

(A) The availability of moneys, programs, rebates and other incentives for acquiring and installing energy efficient appliances for heating and cooling;

(B) Methods, techniques, available incentives and funding available for upgrading elec-trical panels and wiring to accommodate energy efficient appliances for heating and cooling;

and

(C) Planning for, installing and operating heat pumps.

(2) The program described in subsection (1) of this section must:

(a) Provide information and assistance that is understandable and usable by developers, builders, community-based organizations and other industry stakeholders with an interest in acquiring, maintaining and using energy efficient technologies for heating and cooling homes and commercial buildings, including heat pump technologies;

(b) Include information on delivering, installing and using high efficiency heating and cooling appliances in instances where variation exists in funding options for various mini-mum efficiency requirements;

(c) Work with locally connected and culturally connected organizations to provide the program’s information, technical assistance, training and support; and

(d) Allow sufficient flexibility for designated state agencies to contract with private en-tities to provide needed information, assistance, training and support.

(3) The department may incorporate the work described in this section with other pro-grams that serve to educate the public on energy efficiency.

SECTION 5. (1)(a) The Energy Efficient Technologies Information and Training Fund is established in the State Treasury, separate and distinct from the General Fund. Interest that the Energy Efficient Technologies Information and Training Fund earns must be credited to the fund.

(b) Moneys in the fund may be invested and reinvested as provided in ORS 293.701 to

293.857.

(2) Moneys in the fund consist of:

(a) Appropriations to the State Department of Energy for the purposes described in sections 1 to 5 of this 2023 Act;

(b) Moneys from federal sources and other moneys the department receives for the pur-poses specified in sections 1 to 5 of this 2023 Act;

(c) Interest and other earnings on moneys in the fund; and

(d) Other amounts the department receives from any source and deposits into the fund.

(3) Subject to subsection (4) of this section, moneys in the fund are continuously appro-priated to the department for the purpose of funding the purposes described in sections 1 to

5 of this 2023 Act.

(4)(a) The department may not during any biennium expend more than 10 percent of the average quarterly balance of the fund to pay the cost of administering the fund or the ad-ministrative costs of carrying out the purposes described in sections 1 to 5 of this 2023 Act.

(b) As used in this subsection, “administrative cost” does not include grants or other funds provided to community-based organizations or other contracted entities.

DEPARTMENT OF CONSUMER AND BUSINESS SERVICES:

ENERGY EFFICIENCY IN BUILDINGS

SECTION 6. (1) The Department of Consumer and Business Services shall, after obtain-ing approval from the appropriate advisory board and as the department’s responsibilities relate to efficiency or resiliency in buildings:

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(a) Exercise any and all authority and discretion the department has available under ap-plicable law to help to facilitate, at a minimum, emissions reductions consistent with the greenhouse gas emissions reduction goals specified in ORS 468A.205;

(b) In addition to the department’s existing responsibilities, prioritize and take such actions as are necessary to accelerate reductions in greenhouse gas emissions, including but not limited to rulemaking processes; and

(c) Consider and integrate the prevention or reduction of impacts from climate change and the state’s greenhouse gas emissions reduction goals into the department’s planning, budgeting, investment and policy-making decisions, which must involve, at a minimum:

(A) Prioritizing actions that reduce greenhouse gas emissions in a cost-effective manner;

(B) Prioritizing actions that help vulnerable populations and environmental justice com-munities, as defined in ORS 469A.400, adapt to impacts from climate change; and

(C) Consulting with the Environmental Justice Council when evaluating priorities the department sets and actions the department takes to adapt to and mitigate the impacts from climate change.

(2)(a) In addition to the general directives specified in subsection (1) of this section, the department, after obtaining approval from the appropriate advisory board, shall contribute to the state’s achievement of greenhouse gas emissions reduction goals and the mitigation of impacts from climate change by:

(A) Setting goals for improved energy efficiency in buildings for each code development cycle; and

(B) Investigating the potential benefits and the feasibility of updating building ventilation standards and of specifying standards for air cleaners present in building mechanical systems and in occupied indoor spaces.

(b) To carry out the directives specified in paragraph (a)(A) of this subsection, the De-partment of Consumer and Business Services shall:

(A) Obtain the approval of the department’s advisory boards and committees and consult with the State Department of Energy to specify energy efficiency goals for new residential and commercial construction that aim to achieve by 2030, at each new residential or com-mercial building site, at least a 60 percent reduction in annual energy consumption from standards specified in the statewide building code and applicable specialty codes that were in effect in 2006, excluding consumption of electricity in transportation or in powering appli-ances or other loads that the statewide building code or specialty codes do not regulate;

(B) Consult with the State Department of Energy and seek approval of the appropriate advisory boards to identify metrics derived from best practices and academic research to inform updates to the statewide building code and applicable specialty codes specifying a baseline for, and achievable reductions in, energy consumption;

(C) Report not later than December 31 of every third year, beginning with December 31, 2023, to an interim committee of the Legislative Assembly related to the environment con-cerning:

(i) The Department of Consumer and Business Services’ evaluation of progress toward achieving the goals the department specifies under subparagraph (A) of this paragraph; and

(ii) Options for achieving the goals over the course of the subsequent three updates to the statewide building code and applicable specialty codes;

(D) Outline and evaluate for feasibility in the report described in subparagraph (C) of this paragraph a range of available options for achieving steady progress toward the goals de-scribed in subparagraph (A) of this paragraph over the course of scheduled updates to the statewide building code and applicable specialty codes that occur up until 2030; and

(E) Update the Reach Code described in ORS 455.500 through rulemaking and after ob-taining approval from the appropriate advisory boards to reflect incremental progress toward the goals specified in subparagraph (A) of this paragraph each time the Department of Con-

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(3) In carrying out the directives set forth in this section, the Department of Consumer and Business Services shall consider industry standards including, where appropriate, standards promulgated by the American Society of Heating, Refrigerating and Air-

Conditioning Engineers.

SECTION 7. The Department of Consumer and Business Services shall, no later than

December 31, 2024, report to an interim committee of the Legislative Assembly related to the environment. The report under this section shall include the department’s findings and re-commendations on options for, and the feasibility of, reducing greenhouse gas emissions that result from materials used in building construction, based on the findings of the department and after consultation with the Department of Environmental Quality, including:

(1) Studying the use of lower carbon materials in the statewide building code or applica-ble specialty code; or

(2) Other means for reducing greenhouse gas emissions attributable to building materials that the Department of Consumer and Business Services identifies after consultation with the Department of Environmental Quality.

ENERGY PERFORMANCE STANDARDS FOR COVERED COMMERCIAL BUILDINGS

SECTION 8. As used in sections 8 to 17 of this 2023 Act:

(1)(a) “Agricultural building” means a structure that is used for:

(A) Storing, maintaining or repairing farm or forestry machinery and equipment;

(B) Raising, harvesting and selling crops or forest products;

(C) Feeding, breeding, managing and selling livestock, poultry, fur-bearing animals or honeybees or the produce of livestock, poultry, fur-bearing animals or honeybees;

(D) Dairying and selling dairy products; or

(E) Any other agricultural, forestry or horticultural use or animal husbandry, or any combination of agricultural, horticultural or animal husbandry uses, including preparing and storing produce raised on the farm for human use and animal use, preparing, processing and storing agricultural and forestry products and goods and disposing, by marketing or other-wise, of farm produce or forest products.

(b) “Agricultural building” does not include:

(A) A dwelling;

(B) A structure used for a purpose other than growing plants in which 10 or more per-sons are present at any one time;

(C) A structure regulated by the State Fire Marshal pursuant to ORS chapter 476;

(D) A structure used by the public; or

(E) A structure that is subject to the National Flood Insurance Act of 1968 (42 U.S.C 4001 to 4127), as amended, and regulations promulgated under that Act.

(2) “Conditional compliance” means a temporary method that a building owner can use to demonstrate that the building owner has implemented required energy use reduction strategies when the building owner cannot demonstrate full compliance with a required en-ergy use intensity target.

(3) “Covered commercial building” means a tier 1 building or a tier 2 building.

(4) “Eligible building owner” means:

(a) An owner of a tier 1 building that must comply with the standard established in sec-tion 9 of this 2023 Act; or

(b) An owner of tier 2 building.

(5) “Energy” means:

(a) Electricity, including electricity that is delivered through the electric grid and elec-tricity that is generated at a building site using solar or wind energy resources;

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(b) Natural gas;

(c) Steam, hot water or chilled water used for heating or cooling;

(d) Propane;

(e) Fuel oil;

(f) Wood;

(g) Coal; or

(h) Any other fuel that meets a covered commercial building’s energy load.

(6) “Energy use intensity” means a measurement that weather normalizes a building’s site energy use relative to the building’s size, calculated by dividing the total net energy the building consumes in one year by the building’s gross floor area, excluding any parking ga-rage, and that is reported in thousands of British thermal units per square foot per year.

(7) “Energy use intensity target” means a net energy use intensity that complies with the standard set forth in section 9 of this 2023 Act.

(8) “Greenhouse gas” has the meaning given that term in ORS 468A.210.

(9)(a) “Gross floor area” means the total number of square feet of a building, measured from the exterior surfaces of a building’s fixed enclosing walls, including all floor space used as offices, lobbies, restrooms, equipment storage areas, mechanical rooms, break rooms and elevator shafts.

(b) “Gross floor area” does not include bays or docks outside the building.

(10) “Net energy use” means the sum of metered and bulk fuel energy that enters a building, minus the sum of metered energy that leaves the building.

(11) “Savings to investment ratio” means the ratio of the total present value of savings to the total present value of costs to implement an energy conservation measure or water conservation measure, in which the numerator of the ratio is the present value of net savings in energy or water or in maintenance costs not related to fuel use or water use that are attributable to the energy conservation measure or water conservation measure and the denominator of the ratio is the present value of the net increase in investment and replace-ment costs, less the salvage value, of the energy conservation or water conservation meas-ure.

(12) “Semiheated space” means an enclosed space within a covered commercial building that is heated by a heating system with an output the Department of Consumer and Business

Services specifies in an applicable specialty code.

(13) “Tier 1 building” means a building in which the sum of gross floor area for hotel, motel and nonresidential use equals or exceeds 35,000 square feet, excluding any parking garage.

(14)(a) “Tier 2 building” means:

(A) A building with gross floor area, excluding any parking garage, that equals or exceeds

35,000 square feet and that is used as a multifamily residential building, a hospital, a school, a dormitory or a university building; or

(B) A building in which the sum of gross floor area for hotel, motel and nonresidential use exceeds 20,000 square feet but does not exceed 35,000 square feet, excluding any parking garage.

(b) “Tier 2 building” does not include a covered commercial building that is classified as a tier 1 building.

(15) “Unconditioned space” means an enclosed space within a covered commercial build-ing that is not:

(a) Heated by a heating system or cooled by a cooling system with output capacities the

Department of Consumer and Business Services specifies in an applicable specialty code; or

(b) Indirectly heated or cooled in accordance with standards the department specifies in an applicable specialty code.

(16) “Weather normalized” means a method for modifying a building’s energy use inten-sity in a specific year to account for deviations from the building’s energy use intensity as

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SECTION 9. (1)(a) Not later than December 31, 2024, the State Department of Energy, in consultation with the Department of Consumer and Business Services, shall adopt rules that use the American National Standards Institute’s standards for Energy Efficiency in Existing

Buildings (ANSI/ASHRAE/IES Standard 100) as an initial model for specifying an energy performance standard for covered commercial buildings. In rulemaking proceedings to adopt or update rules under this paragraph, the State Department of Energy shall disclose the sources of information, including the model described in this paragraph and any peer-reviewed science, that the department relies on in developing or updating the energy per-formance standard. The department shall update the energy performance standard not later than July 1, 2029, and by the same month and day in each successive period of five years.

(b) The energy performance standard described in paragraph (a) of this subsection must:

(A) Comply with the requirements of sections 8 to 10 of this 2023 Act;

(B) Seek to maximize reductions in greenhouse gas emissions from covered commercial buildings;

(C) Include energy use intensity targets that apply to specific types of buildings; and

(D) Provide for methods to achieve conditional compliance with an applicable energy use intensity target, which must, at a minimum, require:

(i) Preparing an energy management plan;

(ii) Developing a program for building operations and maintenance that aims at achieving the applicable energy use intensity target;

(iii) Making investments in energy use efficiency measures that aim at achieving the applicable energy use intensity target; and

(iv) Submitting to energy use audits, which may be based upon or linked to ASHRAE

Standard 211 audits.

(c) Adoption of the energy performance standard described in paragraph (a) of this sub-section does not change eligibility criteria for, or benefits or incentives available under, other programs for energy efficiency demand response.

(2)(a) In adopting the energy performance standard described in subsection (1) of this section, the department:

(A) Shall:

(i) Develop energy use intensity targets that are not more stringent than the average energy use intensity for each covered commercial building occupancy classification, adjusting as necessary for a covered commercial building’s unique energy-using features;

(ii) Consider, for the purpose of establishing energy use intensity targets, regional and local data that identifies building energy use, such as existing benchmarking data from the

Energy Star program established under 42 U.S.C. 6294a;

(iii) Consider, for the purpose of establishing the energy performance standard, federal and local programs that relate to energy efficiency standards, aligning where possible re-quirements under the energy performance standard to avoid duplicative work by regulators and eligible building owners;

(iv) Develop energy use intensity targets for two or more climate zones that represent energy use in a year with normal weather;

(v) Develop energy use intensity targets that exclude energy delivered through electric vehicle supply equipment; and

(vi) Adopt a conditional compliance method that:

(I) Requires eligible building owners of covered commercial buildings that do not meet an energy use intensity target to take action to reduce energy use; and

(II) Specifies investment criteria that meet the requirements set forth in paragraph (b) of this subsection and that ensure progress toward meeting the energy use intensity target;

and

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(B) May:

(i) Consider building occupancy classifications set forth in ANSI/ASHRAE/IES Standard

100 and the United States Environmental Protection Agency’s Energy Star portfolio man-ager;

(ii) Base energy use intensity targets for recently constructed covered commercial buildings on statewide energy codes that were in effect at the time the covered commercial building was constructed; and

(iii) Require utilities, eligible building owners and other entities to aggregate data for covered commercial buildings that have multiple meters and to report or, as appropriate, provide the aggregated data for reports under section 10 of this 2023 Act.

(b)(A) Investment criteria the department specifies as part of a conditional compliance method under paragraph (a) of this subsection must:

(i) Ensure that an eligible building owner meets the covered commercial building’s energy use intensity target by implementing energy efficiency measures identified in energy use audits; and

(ii) Except as provided in subparagraph (B) of this paragraph, require an eligible building owner to implement an optimized bundle of energy efficiency measures that provide maxi-mum energy savings without resulting in a savings to investment ratio of less than 1.0 or require the eligible building owner to achieve the energy use intensity target by means of an implementation plan that:

(I) Is based on an energy use audit and life-cycle cost analysis from ANSI/ASHRAE/IES

Standard 211 that accounts for the period during which a bundle of energy efficiency meas-ures provide savings;

(II) Reflects the eligible building owner’s net costs of implementing energy efficiency measures, excluding any costs that utility or government grants cover;

(III) Allows an exclusion of energy efficiency measures that do not pay back the cost of the energy efficiency measure over the useful life of the energy efficiency measure;

(IV) Allows an exclusion of energy efficiency measures that are excluded under subpar-agraph (B) of this paragraph; and

(V) Allows for phased implementation in which an eligible building owner need not re-place a system or equipment before the useful life of the system or equipment ends.

(B) An eligible building owner need not meet an energy efficiency requirement that would compromise the historical integrity of a covered commercial building or part of a covered commercial building that:

(i) Is listed on a state or national register of historic places;

(ii) Is designated as an historic property under a state or local statute, ordinance, rule or other legislative act or a survey conducted under a statute, ordinance, rule or other leg-islative act;

(iii) Is certified as a contributing resource within a historic district that is listed on a national register or is locally designated as a historic district; or

(iv) A state historic preservation officer or the keeper of the national register of historic places has determined in an opinion or certification is eligible to be listed on the national or state register of historic places either as an individual building or as a building that con-tributes to a historic district.

(3) The department shall create a database of eligible building owners and covered com-mercial buildings that are subject to the requirements of sections 8 to 10 of this 2023 Act based on records the department obtains from each county assessor and on other informa-tion available to the department.

(4)(a) Not later than July 1, 2025, the department shall notify eligible building owners of the requirement to comply with the provisions set forth for tier 1 buildings in sections 8 to

10 of this 2023 Act.

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(b) The department may approve an eligible building owner’s use of a conditional com-pliance method in lieu of full compliance with an energy use intensity target if the depart-ment determines that the eligible building owner has the capacity to take the actions and make the investments required under the conditional compliance method and otherwise qualifies to use the conditional compliance method.

(5) A municipality, as defined in ORS 455.010, may by ordinance, rule or land use process, adopt an energy performance standard and greenhouse gas emission reduction standards that are more stringent, or that have broader application, than the energy performance standard that the department adopts under this section, provided:

(a) The standard does not exceed the energy efficiency requirements of the state building code for new buildings, except where permitted under ORS 455.040;

(b) The standard does not apply to buildings that are less than six years old, measured from the date of the building’s certificate of occupancy; and

(c) The municipality cooperates with the department in aligning, where practicable, the energy performance standard the municipality adopts with the energy performance standard the department adopts under this section.

(6) Construction work performed to comply with the provisions of sections 8 to 10 of this

2023 Act must comply with all applicable provisions of the state building code and permitting procedures that apply to the construction work.

(7) Except as provided in subsection (5) of this section, this section does not affect or supersede the provisions of ORS 455.040.

SECTION 10. (1) An eligible building owner of a tier 1 building shall report to the State

Department of Energy concerning the eligible building owner’s compliance with the energy performance standard described in section 9 of this 2023 Act. The eligible building owner shall submit the report in accordance with the schedule specified in subsection (4) of this section and shall submit a new report at the end of every successive five-year period. Each report the eligible building owner submits must include documentation that demonstrates that:

(a) The tier 1 building’s weather normalized energy use intensity during the previous calendar year is less than or equal to the applicable energy use intensity target;

(b) The eligible building owner is taking actions and making investments in accordance with a conditional compliance method the department approved; or

(c) The tier 1 building is exempt from an energy performance standard that otherwise would apply to the tier 1 building because:

(A) The tier 1 building did not have a certificate of occupancy or temporary certificate of occupancy during all of the 12 months that preceded the date on which the eligible building owner’s report is due;

(B) The tier 1 building did not have an actual rate of occupancy that exceeded 50 percent of the tier 1 building’s capacity during all of the 12 months that preceded the date on which the eligible building owner’s report is due;

(C) The sum of the tier 1 building’s gross floor area, minus unconditioned spaces and semiheated spaces, is less than 35,000 square feet;

(D) The primary use for the tier 1 building is manufacturing or another industrial use, as defined in accordance with the following use designations of the International Building

Code:

(i) Factory group F; or

(ii) High hazard group H;

(E) The tier 1 building is an agricultural building; or

(F) The eligible building owner or the tier 1 building has undergone or is undergoing fi-nancial hardship, as measured in accordance with the following criteria:

(i) Within the 24 months that precede the date on which the eligible building owner’s report is due, a city or county listed the tier 1 building on the city’s or county’s annual tax lien sale list because of arrears in property taxes or water or wastewater charges;

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(ii) A court appointed receiver controls the tier 1 building because of financial distress;

(iii) A financial institution owns the tier 1 building because of a borrower’s default;

(iv) Within the 24 months that precede the date on which the eligible building owner’s report is due, the eligible building owner acquired the tier 1 building by means of a deed in lieu of foreclosure;

(v) The tier 1 building has a senior mortgage that is subject to a notice of default; or

(vi) Other criteria that the department specifies by rule as indicative of financial hard-ship.

(2) The department shall develop methods and procedures for administering reports that eligible building owners of tier 1 buildings submit to the department under subsection (1) of this section.

(3)(a) The department shall provide a support program to eligible building owners of covered commercial buildings that includes, at a minimum, information and periodic train-ing, technical assistance and telephone and electronic mail support that will assist eligible building owners in complying with the energy performance standard, applicable energy use intensity targets and reporting requirements under sections 8 to 10 of this 2023 Act.

(b) As part of the support program described in paragraph (a) of this subsection, the department may encourage eligible building owners to seek for maintenance staff accredi-tation from the U.S. Green Building Council’s Green Janitors Education Program.

(4) An eligible building owner must comply with the energy performance standard adopted under section 9 of this 2023 Act by the following dates:

(a) If the eligible building owner’s tier 1 building has a gross floor area of 200,000 square feet or more, not later than June 1, 2028;

(b) If the eligible building owner’s tier 1 building has a gross floor area of 90,000 square feet or more but less than 200,000 square feet, not later than June 1, 2029; and

(c) If the eligible building owner’s tier 1 building has a gross floor area of 35,000 square feet or more but less than 90,000 square feet, not later than June 1, 2030.

(5)(a) The department shall notify an eligible building owner of a tier 1 building of a failure to comply with sections 8 to 10 of this 2023 Act if the eligible building owner fails to:

(A) Submit the report described in subsection (1) of this section by the date required or in a form and manner the department requires;

(B) Meet the energy performance standard or an applicable energy use intensity target or, in lieu of meeting the standard or target, fails to obtain the department’s approval to use a conditional compliance method;

(C) Provide accurate reporting that meets the requirements of sections 8 to 10 of this

2023 Act; or

(D) Demonstrate as provided in subsection (1)(c) of this section that the eligible building owner is exempt from an otherwise applicable energy performance standard.

(b) In the notice described in paragraph (a) of this subsection, the department may specify a date by which the eligible building owner of a tier 1 building must correct the fail-ure the department identified in the notice. In addition, the department shall specify the date by which the eligible building owner’s failure to comply or failure to correct a lack of com-pliance will subject the eligible building owner to a civil penalty under subsection (6) of this section.

(c) At an eligible building owner’s request, the department shall cite the specific legal authority upon which the department relied as a basis for issuing a notice to the eligible building owner under paragraph (a) of this subsection.

(6)(a) The department may impose a civil penalty as provided in ORS 183.745 upon an el-igible building owner of a tier 1 building to which the department issued a notice under subsection (5) of this section if the department determines that the eligible building owner:

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(A) Has not complied with the requirement set forth in the notice or has not corrected a lack of compliance by the date for correction that the department specifies in the notice;

or

(B) Otherwise violated a provision of sections 8 to 10 of this 2023 Act or a rule the de-partment adopted under sections 8 to 10 of this 2023 Act.

(b) A civil penalty the department imposes under paragraph (a) of this subsection may not exceed $5,000 plus an amount for the duration of a continuing violation, which may not exceed a daily amount that the department calculates by multiplying $1 per year per square foot of gross floor area of the tier 1 building that is the subject of the department’s notice.

(c) The department shall deposit the proceeds of any civil penalty the department im-poses and collects under this subsection into the State Department of Energy Account es-tablished under ORS 469.120 and shall allocate the proceeds for the purpose of administering the department’s energy efficiency programs.

SECTION 11. (1) In addition to the energy performance standard the State Department of Energy adopts in accordance with section 9 of this 2023 Act, the department shall adopt rules to implement sections 8 to 10 of this 2023 Act. The rules must:

(a) Ensure timely, accurate and complete reporting of compliance with the requirements of sections 8 to 10 of this 2023 Act from all tier 1 buildings;

(b) Enable the department to effectively enforce the energy performance standard and energy use intensity targets established under sections 8 to 10 of this 2023 Act;

(c) Provide means for affected eligible building owners of tier 1 buildings to appeal deci-sions and enforcement actions of the department that affect the eligible building owner; and

(d) Ensure that an eligible building owner of a tier 1 building is responsible for paying the costs of compliance with sections 8 to 10 of this 2023 Act.

(2) Before adopting rules under this section, the department shall establish and consult an advisory committee that includes representatives of eligible building owners, tenants of covered commercial buildings, public utilities, organizations with experience in designing or implementing energy efficiency programs, local governments, organizations that focus on environmental justice and other stakeholders the department identifies as needing repre-sentation. The department shall consult with the advisory committee before amending rules the department adopts under this section.

SECTION 12. At the request of the State Department of Energy, each county assessor in this state shall provide information from existing records data that the department re-quires to implement sections 8 to 10 of this 2023 Act, including information about covered commercial buildings within the county.

SECTION 13. The State Department of Energy shall report not later than January 15, 2025, and by the same date in each succeeding year until 2035, to the Governor and to com-mittees of the Legislative Assembly that are related to the environment concerning the im-plementation of the energy performance standard established under section 9 of this 2023

Act. The report must include information about the department’s adoption of the

ANSI/ASHRAE/IES Standard 100 as the department’s initial model for the energy perform-ance standard, the financial impact the standard has had on eligible building owners of tier

1 buildings, the amount of any incentives the department provided for compliance and any other information that is relevant to the department’s implementation of sections 8 to 10 of this 2023 Act.

SECTION 14. (1) Sections 8 to 10 of this 2023 Act do not require an eligible building owner to take action to comply with sections 8 to 10 of this 2023 Act:

(a) If the eligible building owner owns a tier 2 building; or

(b) Before the State Department of Energy adopts an energy performance standard under section 9 of this 2023 Act, if the eligible building owner owns a tier 1 building.

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(2) The department may offer incentives for eligible building owners to voluntarily com-ply with, or for early compliance with, ANSI/ASHRAE/IES Standard 100 or the energy per-formance standard the department establishes under section 9 of this 2023 Act.

SECTION 15. (1)(a) Not later than December 31, 2024, the State Department of Energy by rule shall establish a requirement and standards under which eligible building owners of tier 2 buildings must provide to the department data that would enable the department to establish a benchmark for energy use in, and greenhouse gas emissions from, tier 2 buildings.

(b) The State Department of Energy shall cooperate with the Department of Education to establish a requirement to provide the data described in paragraph (a) of this subsection in a manner that minimizes costs to schools and avoids or minimizes duplication with the

Department of Education’s school facility assessments.

(2) Not later than July 1, 2025, the State Department of Energy shall notify all eligible building owners of tier 2 buildings of the requirement and standards the department adopts by rule under subsection (1) of this section.

(3) Not later than July 1, 2028, and by July 1 every five years thereafter, an eligible building owner of a tier 2 building shall provide the department with data the department requires in rules the department adopts under subsection (1) of this section.

(4) Not later than July 1, 2029, the department shall evaluate and use the data the de-partment receives from eligible building owners of tier 2 buildings to calculate average en-ergy use in, and average greenhouse gas emissions from, each of the categories of tier 2 buildings that exist in this state.

(5) Not later than July 1, 2025, the department shall establish and consult an advisory committee to identify and evaluate the financial and nonfinancial implications of establishing and implementing an energy performance standard for tier 2 buildings. The advisory com-mittee must include, but is not limited to, representatives of renters, low-income tenants and environmental justice communities, as defined in ORS 469A.400.

(6) Not later than October 1, 2030, the department shall submit a report to the Governor and to an interim committee of the Legislative Assembly related to energy that:

(a) Recommends a cost-effective energy performance standard for tier 2 buildings; and

(b) Includes estimates of costs to eligible building owners, and challenges that eligible building owners would face, in implementing an energy performance standard for tier 2 buildings.

SECTION 16. (1) As used in this section, “person” means an individual, corporation, nonprofit corporation, professional corporation, limited liability company, partnership, lim-ited partnership, limited liability partnership, cooperative, business trust, joint venture or other form of business entity, including Energy Trust of Oregon.

(2) The State Department of Energy may contract with another person to administer incentive payments to eligible building owners for early compliance with the energy per-formance standard described in section 9 of this 2023 Act.

(3) The person with which the department contracts under subsection (2) of this section shall administer incentive payments:

(a) In a manner that is consistent with rules the department adopts under, and for compliance that is consistent with, sections 8 to 10 of this 2023 Act; and

(b) To eligible building owners that the department certifies as qualifying for incentive payments under, and at rates established for the payments in, section 17 of this 2023 Act.

(4) A person that administers incentive payments on the department’s behalf:

(a) Remains subject to any obligations the person has or will have to provide energy ef-ficiency programs or incentives to the person’s customers; and

(b) Is not liable for excess incentive payments the person makes in reliance on the department’s certification or determination of the proper amount of the incentive payment, Enrolled House Bill 3409 (HB 3409-C) Page 13 if the person is not otherwise responsible for any inaccuracy in the amount of the incentive payment.

SECTION 17. (1) The State Department of Energy by rule shall establish a program to pay incentives to eligible building owners that implement ANSI/ASHRAE/IES Standard 100 or the energy performance standard described in section 9 of this 2023 Act for covered commercial buildings before adoption and implementation is mandatory. The program must provide for:

(a) An application process;

(b) Standards by which the department may qualify an eligible building owner to receive, or disqualify an eligible building owner from receiving, an incentive payment;

(c) A method for verifying a covered commercial building’s energy consumption with the eligible building owner and the electric utility, gas company or thermal energy company that supplies energy to the covered commercial building for the purpose of qualifying the eligible building owner to receive an incentive payment;

(d) A process for calculating the amount of any incentive payment;

(e) An administrative process by which an eligible building owner may appeal the department’s decision to qualify or disqualify the eligible building owner or the department’s determination of the amount of an incentive payment; and

(f) A process for authorizing incentive payments and notifying eligible building owners and persons that administer incentive payments of the department’s authorization.

(2) To qualify for an incentive payment, an eligible building owner must report to the department in accordance with section 10 of this 2023 Act by the deadlines and for a period of time the department specifies by rule. In addition:

(a) The eligible building owner must own a tier 1 building that is or will become subject to the requirements of sections 8 to 10 of this 2023 Act or must own a tier 2 building that qualifies as provided in subsection (3) of this section;

(b) If the covered commercial building is a tier 1 building, the tier 1 building must have a baseline energy use intensity that exceeds an applicable energy use intensity target by at least 15 energy use intensity units; and

(c) The eligible building owner must comply with any other requirements the department specifies by rule.

(3) An eligible building owner of a tier 2 building may receive an incentive payment of

35 cents per square foot of gross floor area, excluding any parking garage, unconditioned space or semiheated space if the eligible building owner has submitted to the department, or has agreed to submit to the department in advance of an established deadline, the data described in section 15 of this 2023 Act.

(4)(a) Subject to paragraph (c) of this subsection, an eligible building owner that applies and…