# Fossil Fuel-Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations of Federal Buildings > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2014-24151 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** October 14, 2014 - **Citation:** 79 FR 61694 ## Text DEPARTMENT OF ENERGY 10 CFR Parts 433 and 435 [Docket No. EERE-2010-BT-STD-0031] RIN 1904-AB96 Fossil Fuel-Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations of Federal Buildings AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Supplemental notice of proposed rulemaking. SUMMARY: The Energy Conservation and Production Act (ECPA), as amended by the Energy Independence and Security Act of 2007, requires DOE to establish revised performance standards for the construction of new Federal buildings, including commercial buildings, multi-family high-rise residential buildings and low-rise residential buildings. On October 15, 2010, DOE issued a Notice of Proposed Rulemaking (NOPR) to establish regulations implementing the fossil fuel-generated energy provisions of the ECPA performance standards for Federal buildings. In response to the NOPR, DOE received a number of comments expressing concern and encouraging DOE to re-examine the proposed regulations. In response to these comments, DOE has identified additional areas for clarification and consideration that would benefit from further public comment. In this supplemental notice of proposed rulemaking (SNOPR), DOE responds to the comments received on the NOPR and identifies and seeks comment on additional approaches to the scope of the requirements in the context of major renovations, the potential use of renewable energy certificates for compliance, and a streamlined process for agencies to seek a downward adjustment from the required reduction levels, particularly for major renovations. DATES: Public comments on this supplemental proposed rule will be accepted until December 15, 2014. ADDRESSES: This rulemaking can be identified by docket number EERE-2010-BT-STD-0031 and/or RIN number 1904-AB96. Docket: The docket is available for review at http://www.regulations.gov including Federal Register Notices, public meeting attendee lists, transcripts, comments and other supporting documents/materials. All documents in the docket are listed in the http://www.regulations.gov index. You may submit comments, identified by any of the following methods: • Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. • Email: FossilFuelReduct-2010-STD-0031@ee.doe.gov. Include EERE-2010-BT-STD-0031 and/or RIN 1904-AB96 in the subject line of the message. • Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, Fossil Fuel-Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations of Federal Buildings, EERE-2010-BT-STD-0031 and/or RIN 1904-AB96, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9138. Please submit one signed paper original. Due to the potential delays in DOE's receipt and processing of mail sent through the U.S. Postal Service, DOE encourages respondents to submit comments electronically to ensure timely receipt. • Hand Delivery/Courier: Brenda Edwards, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Instructions: All submissions must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Docket: For access to the docket to read background documents or comments received by DOE, go to the U.S. Department of Energy, Forrestal Building, Room 5E-080 (Resource Room of the Federal Energy Management Program), 1000 Independence Avenue SW., Washington, DC, (202) 586-9127, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Brenda Edwards at (202) 586-2945 for additional information regarding visiting the Resource Room. FOR FURTHER INFORMATION CONTACT: For technical issues, contact Sarah Jensen, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-5F, 1000 Independence Avenue SW., Washington, DC 20585-0121, (202) 287-6033, email: Sarah.Jensen@ee.doe.gov. For legal issues, contact Ami Grace-Tardy, U.S. Department of Energy, Office of the General Counsel, Forrestal Building, GC-71, 1000 Independence Avenue SW., Washington, DC 20585, (202) 586-5709, email: Ami.Grace-Tardy@hq.doe.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction A. Authority B. Background II. Summary of the Proposed Rule III. General Discussion and Response to Comments A. Overview B. Scope and Applicability of the Proposed Rule 1. Determining the $2.5 Million Threshold for Applicability of the Rule 2. Compliance Date of the Rule 3. Major Renovations 4. Multiple Buildings 5. Leased Buildings 6. Federal Buildings Overseas 7. Residential Buildings 8. Privatized Military Housing 9. Other C. Establishing and using the Baseline 1. CBECS and RECS Baselines 2. Climate Adjustment 3. Plug and Process Loads 4. Differentiate Between Fossil Fuels 5. Regional Fossil Fuel Factors 6. Marginal Source of Electricity 7. Residential Common Areas 8. Major Renovations 9. Other D. Methodology to Determine Compliance 1. Whole Building Simulation 2. Off-Site and On-Site Renewable Energy and Renewable Energy Certificates 3. Use of Source Energy 4. Fuel Conversion Efficiency 5. On-Site Energy Generation From Natural Gas 6. Additional Review 7. Other E. Petitions for Downward Adjustment 1. Technical Impracticability and Cost as a Basis for Downward Adjustment 2. Bundling of Petitions 3. DOE Review Process 4. Information Required in Petitions for New Construction 5. Downward Adjustments for Major Renovations 6. Make Information Publicly Available 7. Narrow the Use of Petitions 8. GSA Tenant Agencies 9. Other F. Impacts of the Rule 1. Cost Impacts 2. Other Impacts G. Guidance and Other Topics 1. Training 2. Verification and Monitoring IV. Reference Resources V. Procedural Issues and Regulatory Review I. Introduction A. Authority Section 305 of the Energy Conservation and Production Act (ECPA) established energy conservation requirements for Federal buildings. (42 U.S.C. 6834) Section 433(a) of the Energy Independence and Security Act of 2007 (Pub. L. 110-140) (EISA 2007) amended section 305 of ECPA and directed DOE to establish regulations that require fossil fuel-generated energy consumption reductions for certain new Federal buildings and Federal buildings undergoing major renovations. (42 U.S.C. 6834(a)(3)(D)(i)) The fossil-fuel generated energy consumption reductions only apply to Federal buildings that: (1) Are “public buildings” (as defined in 40 U.S.C. 3301) 1 with respect to which the Administrator of General Services is required to transmit a prospectus to Congress under 40 U.S.C. 3307; 2 or (2) those that cost at least $2,500,000 in costs adjusted annually for inflation. (42 U.S.C. 6834(a)(3)(D)(i)) 1 Under 40 U.S.C. 3301(5), “public building” is a building, whether for single or multitenant occupancy, and its grounds, approaches, and appurtenances, which is generally suitable for use as office or storage space or both by one or more Federal agencies or mixed-ownership Government corporations. “Public building” includes Federal office buildings, post offices, customhouses, courthouses, appraisers stores, border inspection facilities, warehouses, record centers, relocation facilities, telecommuting centers, similar Federal facilities, and any other buildings or construction projects the inclusion of which the President considers to be justified in the public interest. The definition does not include a building or construction project that is on the public domain (including that reserved for national forests and other purposes); that is on property of the Government in foreign countries; that is on Indian and native Eskimo property held in trust by the Government; that is on land used in connection with Federal programs for agricultural, recreational, and conservation purposes, including research in connection with the programs; that is on or used in connection with river, harbor, flood control, reclamation or power projects, for chemical manufacturing or development projects, or for nuclear production, research, or development projects; that is on or used in connection with housing and residential projects; that is on military installations (including any fort, camp, post, naval training station, airfield, proving ground, military supply depot, military school, or any similar facility of the Department of Defense); that is on installations of the Department of Veterans Affairs used for hospital or domiciliary purposes; or the exclusion of which the President considers to be justified in the public interest. 2 40 U.S.C. 3307 describes the minimum construction, alteration and lease costs that would trigger a prospectus to Congress. For these buildings, Section 305 of ECPA, as amended by EISA 2007, mandates that the buildings be designed so that a building's fossil fuel-generated energy consumption is reduced as compared with such energy consumption by a similar building in fiscal year 2003 (as measured by Commercial Buildings Energy Consumption Survey or Residential Energy Consumption Survey data from the DOE's Energy Information Administration) by 55 percent beginning in fiscal year 2010, 65 percent beginning in fiscal year 2015, 80 percent beginning in fiscal year 2020, 90 percent beginning in fiscal year 2025, and 100 percent beginning in fiscal year 2030. (42 U.S.C. 6834(a)(3)(D)(i)(I)) In addition, upon petition by an agency subject to the statutory requirements, ECPA, as amended by EISA 2007, permits DOE to adjust the applicable numeric reduction requirement downward with respect to a specific building, if the head of the agency designing the building certifies in writing that meeting such requirement would be technically impracticable in light of the agency's specified functional needs for that building and DOE concurs with the agency's conclusion. (42 U.S.C. 6834(a)(3)(D)(i)(II)) Such an adjustment does not apply to GSA. (42 U.S.C. 6834(a)(3)(D)(i)(II)) (In the remainder of today's rulemaking, all references to ECPA refer to the statute as amended through EISA 2007.) B. Background This supplemental notice of proposed rulemaking amends certain portions of 10 CFR parts 433 and 435, the regulations governing energy efficiency in Federal buildings. The Notice of Proposed Rulemaking (NOPR) was published on October 15, 2010. 75 FR 63404. The public meeting was held on November 12, 2010, and public comments were accepted through December 14, 2010. DOE received a number of comments expressing concern and encouraging DOE to re-examine the proposed regulations. 3 In response to these comments, DOE has identified additional areas for clarification and consideration that would benefit from further public comment. In this SNOPR, DOE responds to the comments received on the NOPR and identifies and seeks comment on additional approaches to the scope of the requirements in the context of major renovations, the potential use of renewable energy certificates for compliance, and a more streamlined process for agencies to seek a downward adjustment from the reduction levels. 3 Complete contents of the docket folder may be found at http://www.regulations.gov/#!docketDetail;D=EERE-2010-BT-STD-0031. DOE is in the process of addressing other requirements for Federal buildings mandated in ECPA, as amended by section 433 of EISA. DOE published a proposed rule on sustainable design standards for new Federal buildings and major renovations on May 28, 2010 (75 FR 29933) (the “Sustainable Design NOPR”), which also proposed to amend certain portions of 10 CFR parts 433 and 435. (Docket No. EE-RM/STD-02-112, RIN 1904-AC13) Elsewhere in this issue of the Federal Register , the green building certification portion of the Sustainable Design NOPR is published as a final rule. DOE received a number of comments on the scope of the EISA 2007 amendments both in the context of this rulemaking and in response to the Sustainable Design NOPR. DOE addresses both sets of comments in today's rulemaking. II. Summary of the Proposed Rule This SNOPR addresses requirements for new construction and major renovations of Federal commercial and high-rise residential buildings, as well as Federal low-rise residential buildings. The following is an overview of each section of today's SNOPR, including any relevant changes from the proposal as provided in the October 15, 2010 NOPR. (75 FR 63404; “2010 Proposed Rule”) A. Regulatory Scheme In this SNOPR, DOE is proposing to address the contents of Subpart B of both 10 CFR parts 433 and 435—the fossil fuel-generated energy consumption requirements. In addition, this rule proposes to amend the term “life-cycle cost-effective” to tie the definition of life-cycle cost-effectiveness closer to the four life cycle cost methodologies set out in subpart A of 10 CFR part 436. B. Overall Basis for the Rulemaking The underlying requirements for this rulemaking are based on the requirements in Section 433 of EISA 2007. The statute requires that covered Federal buildings be designed so that the fossil fuel-generated energy consumption of the buildings is reduced, as compared with such energy consumption by a similar building in fiscal year 2003 (as measured by Commercial Buildings Energy Consumption Survey or Residential Energy Consumption Survey data from DOE's Energy Information Administration), by the percentage specified in the following table: Fiscal Year Percentage Reduction 2010 55 2015 65 2020 80 2025 90 2030 100 As discussed later in this document, DOE believes that the current energy efficiency requirements applicable to the design of new Federal buildings, when compared to the energy efficiency of the baseline buildings, would result in a substantial level of compliance with the 55 percent and 65 percent reduction levels. C. Covered Buildings The proposed rule would apply to certain new Federal buildings, and major renovations to Federal buildings, as specified in section 433 of EISA 2007. By statute, the term “Federal building” means any building to be constructed by, or for the use of, any Federal agency, including buildings built for the purpose of being leased by a Federal agency, and privatized military housing. (42 U.S.C. 6832(6)) This proposed rule only would apply to new Federal buildings and major renovations to Federal buildings covered by EISA 2007. Federal buildings covered by EISA 2007 include new Federal buildings, or major renovations to Federal buildings, that are also: (1) Public buildings, as defined in 40 U.S.C. 3301 for which a transmittal of a prospectus to Congress is required under 40 U.S.C. 3307; or (2) Federal buildings for which the construction cost or major renovation cost is at least $2,500,000 (2007 dollars, adjusted for inflation). This subset of buildings and major renovations will be referred to as EISA-covered buildings in this SNOPR. D. Definitions This rulemaking contains definitions for “combined heat and power (CHP) system,” “district energy system,” “fiscal year,” “major renovation,” “power purchase agreement (PPA),” “proposed building,” and “renewable energy certificate.” This rulemaking also proposes to define 16 categories of commercial buildings and one category of multi-family high-rise residential buildings in 10 CFR part 433 and one category of low-rise residential buildings in 10 CFR part 435. The 16 categories of commercial buildings proposed are education, food sales, food service, health care (inpatient), health care (outpatient), laboratory, lodging, mercantile (enclosed and strip shopping malls), office, public assembly, public order and safety, religious worship, retail (other than mall), service, and warehouse and storage. Many of these commercial building categories are further divided into building types. The single category of low-rise residential buildings is divided into five building/activity types: manufactured homes, multi-family in 2-4 unit buildings, multi-family in 5 or more unit buildings, single-family attached, and single-family detached. These building categories and building types represent the high-level principal building activity and low-level principle building activity categories in the 2003 Commercial Building Energy Consumption Survey (CBECS). 4 4 The CBECS principle building types and subcategories are described at http://www.eia.gov/consumption/commercial/building-type-definitions.cfm. This rulemaking is based on the subcategories shown in this link. E. Fossil Fuel-Generated Energy Consumption Requirements For buildings for which design for construction begins in the fiscal years 2013 to 2029, tables of the proposed maximum allowable fossil fuel-generated energy consumption by building type and climate zone are provided. The proposed values in the tables come from DOE's Energy Information Administration (EIA) CBECS (for commercial buildings) and RECS (for multi-family high-rise and low-rise residential buildings), both of which are converted from site energy consumption to source energy consumption. The building types in the tables in Appendix A to this proposed rule are subsets of the building categories discussed above. The CBECS and RECS data was parsed into the 16 climate zones used in the current Federal baseline standards for commercial and multi-family high-rise residential buildings, which rely on ANSI/ASHRAE/IESNA Standard 90.1. For buildings that combine two or more building types, area-weighted averaging by square footage for each building type would be used to calculate the maximum allowable fossil fuel-generated energy consumption of the combined building. For building types dominated by process loads, as defined in 10 CFR 433.2, and that are not listed in CBECS, the regulations would require the use of the CBECS building type that most closely matches the building without the process load and then accounting for the process load in the calculation. For these buildings, process loads would be accounted for, but are not subject to the percentage reductions in fossil fuel-generated energy consumption required for the building related loads. For major renovations that are less than whole building renovations (system or component level retrofits) DOE is proposing that the maximum allowable fossil fuel-generated energy consumption in fiscal years 2013 through 2029 be based on a percentage of the whole building energy consumption represented by the renovated system or component. For buildings for which design for construction begins in fiscal year 2030 or beyond, the fossil fuel-generated energy consumption of the building would be required to be zero for all building types and climate zones, based on the calculation established in the regulations. F. Fossil Fuel-Generated Energy Consumption Determination To determine compliance with the fossil fuel reductions, agencies would be required to estimate the fossil fuel-generated energy consumption of their proposed building design and compare that estimate to the allowable fiscal year percentage reduction target. DOE has proposed a calculation to make this estimated fossil fuel-generated energy consumption for the proposed building. Fundamentally, the calculation would add the fossil fuel component of the electricity used by the building to the direct fossil fuels used by the building. To calculate the fossil fuel component of the electricity used by the building, agencies would be required to first estimate the amount of electricity used by the building in accordance with the Performance Rating Method in Appendix G of ASHRAE Standard 90.1-2010. Any electricity produced from a renewable energy or CHP system would not count towards the site electricity consumption in the baseline or the current calculated level. This figure would then be multiplied by the fossil fuel generation factor (calculated at 0.71 for the 2003 base year and also for 2012, the latest year of data available from EIA) to account for the percentage of electricity in the U.S. that is generated from fossil fuel. 5 FEMP will publish updates to the fossil fuel generation factor annually on the FEMP Web site 6 so that agencies can use the most recent value in their calculations. The adjusted site electricity estimate would then be converted to source electricity by dividing it by the national average electricity source energy factor of 0.316 to account for fuel conversion and transmission and distribution losses. To this would be added the direct fossil fuel consumption for fuels other than electricity, adjusted for distribution and other losses that occur between delivery to the fuel provider and final delivery to the site with the other fuels source energy multiplier. The other fuels energy source multiplier would not include losses associated with the production, harvesting, refining, or transportation of bulk fuels. The result would then be divided by the floor area of the building and converted to thousands of British thermal units per square foot (kBtu/sq.ft.). 5 The fossil fuel generation factor of 0.71 is derived from Table 3.2.A of the Energy Information Administration (EIA) 2012 Electric Power Annual Report ( http://www.eia.gov/electricity/annual/html/epa_03_02_a.html ). Specifically, the number is developed by summing the annual electricity produced by coal, petroleum liquids, petroleum coke, natural gas, and other gas and then dividing the sum by the total electricity produced. 0.71 is the value of this factor in 2003 and in 2012, but the value has changed over time and is expected to vary in the future as new sources of renewable energy come online. 6 http://energy.gov/eere/femp/federal-energy-management-program . For major renovations that are less than whole building renovations (system or component level retrofits) DOE proposes to base the subject fossil fuel-generated energy consumption on the system or component as retrofitted. Electricity produced from renewable energy would qualify as a deduction to the extent that it represents new electric generating capacity or a new renewable energy obligation on the part of the agency, and not a reassignment of existing capacity or obligations. The regulations would establish criteria for on-site renewable electricity generation and off-site renewable electricity generation (including generation represented by Renewable Energy Certificates) to help clarify these terms and the limits on how this generation may be used as a deduction from the proposed building electricity consumption. DOE has also proposed a clarification as to how electricity associated with district heating or cooling systems, district chilled water, and CHP systems would be treated. G. Petitions for Downward Adjustment Under the provision of Section 433 of EISA 2007 and as proposed, agencies other than GSA (but including GSA-tenant agencies with significant control over building design) would be able to petition DOE for an adjustment to the fossil fuel requirement with respect to a specific building if meeting the requirement is technically impracticable in light of the agency's functional needs for the building. This proposed rule provides a list of what information would be required to be included in a petition for a downward adjust for a new building. This includes a description of the building and associated components and equipment, an explanation of why compliance with the requirements is technically impracticable in light of the functional needs of the building, a demonstration that all cost-effective energy efficiency and on-site renewable energy measures were included in the building design, and a description of measures that were evaluated but rejected. As proposed, the Director of the Federal Energy Management Program would review the petition and make a decision on the petition within 90 days of submittal. Additionally, this rulemaking proposes separate, streamlined downward adjustment processes for major renovations that are whole building renovations and for major renovations that are system or component level retrofits. The streamlined processes recognize the constraints on compliance inherent with major renovations, e.g., building site and orientation cannot be changed and configuration of the building shell is likely difficult, if not technically impracticable, to adjust. Under DOE's proposal, upon application, a Federal agency with a major renovation that is a whole building renovation would receive a downward adjustment equal to the energy efficiency level that would be required under the Federal building energy efficiency standards were the building a new building (i.e., the ASHRAE 90.1 and IECC requirements applicable to commercial and residential new Federal buildings, respectively). Upon application, a major renovation that is limited to a system or component level retrofit would receive a downward adjustment equal to the energy efficiency level that would be achieved through the use of products that represent a level of energy efficiency that is life-cycle cost-effective if such products are commercially available. This would be demonstrated through the use of ENERGY STAR or FEMP-designated products, or products that meet the applicable prescriptive requirements under ASHRAE 90.1 or the IECC. H. Summary of the Differences Between the 2010 Proposed Rule and This Proposed Rule In this proposed rule, the Department makes a number of substantial changes from the 2010 proposed rule. The changes apply to both 10 CFR part 433 and 10 CFR part 435 unless otherwise noted. Details of these changes with a discussion of each are described in Section III. This proposed rule would: • Add definitions for combined heat and power (CHP) system, proposed building, proposed building site electricity consumption, direct fossil fuel consumption of proposed building, district energy system, electricity source energy factor, fiscal year, floor area, fossil fuel generation factor, other fuels source energy multiplier, power purchase agreement (PPA), renewable energy certificates and renewable energy and CHP electricity deduction. • Delete definitions for fossil fuel, fossil fuel consumption for electricity generation, and primary electrical energy consumption. • Amend definitions for direct fossil fuel consumption, district energy system, electricity source energy factor, fossil fuel generation factor, and major renovation. • Clarify applicability of the rule to major renovations. • Clarify applicability of the rule to leased facilities. • Replace the proposed maximum allowable fossil fuel-generated energy consumption tables with new tables adjusted for each of DOE's 16 climate zones and covering additional commercial building types. • Consider an approach to determine required fossil fuel-generated energy consumption levels for major renovations that are limited to system or component level retrofits. • Delete the Performance Rating Method in Appendix G of ASHRAE Standard 90-1.2004 and the IECC Simulated Performance Alternative as the means to calculate a baseline for building types not listed in the Commercial Buildings Energy Consumption Survey (CBECS) and the Residential Energy Consumption Survey (RECS), respectively. The expansion of building types would eliminate the need to develop alternative baselines. • Include an alternative compliance method for buildings with process loads that are not included in CBECS and RECS. Clarifies that process loads of building types not included in CBECS are not subject to the fossil fuel reductions. • Clarify performance level determination. Modify the calculation methodology and specify the electricity source factor and the fossil fuel generation factor to be used. Add a source energy multiplier for other fuels. • Specify what qualifies as a renewable energy and CHP deduction, including renewable energy produced off-site by the agency, renewable energy acquired pursuant to a power purchase agreement, Renewable Energy Certificates and a pro-rated share of the electricity produced from a CHP system. Specify that renewable energy production must be additive, that it must be tracked, and that the renewable energy attributes must be retained. • Clarify how district heating and cooling systems and combined heat and power systems are to be considered in determining compliance with the fossil fuel reductions. • Move the discussion of petitions for downward adjustment into its own subsection. • Allow GSA-tenant agencies to submit a petition for downward adjustment. • Add information to be included in petitions for downward adjustment for new buildings, including a demonstration that all energy efficiency measures and on-site renewable energy measures that are life-cycle cost-effective have been included in the design; a description of technologies that were evaluated and rejected, including a justification for why they were rejected; and a description of the building and building energy-related features. • Provide an address to which petitions must be submitted and clarify that DOE would respond to petitions within 90 days. • Provide streamlined processes for Federal agencies to petition for a downward adjustment for major renovations. III. General Discussion and Response to Comments A. Overview DOE received comments from 22 different entities. In addition, 10,677 form letters were received in a campaign coordinated by Earthjustice, some of which included unique comments (hereinafter referred to collectively as “Form Letters.”) The comments were analyzed and categorized into six major categories: Applicability, Baseline, Methodology, Impacts, Petition for Downward Adjustment, and Guidance. Each of these major categories was subdivided into at least four subcategories, leading to the final comment categorization shown below. Applicability: costs to determine $2.5 million threshold; the effective date of the rule; definition of major renovations; applicability to single or multiple buildings; treatment of leased buildings and mixed use buildings; Federal buildings overseas; residential building categories; privatized military housing; coordination with the DOE rulemaking on sustainable design practices; and other. Baseline: CBECS and RECS baseline; climate adjustment; whole building simulation; buildings with energy-intensive process loads not covered in CBECS and RECS; plug and process loads; differentiation between fossil fuels; differentiation of electric power mix by region; using the marginal source of electricity; treatment of residential common areas; and other. Methodology: additional rounds of review of the rule; off-site renewable energy; source versus site energy; on-site energy generation; fuel conversion efficiency; and other. Impacts: cost impacts and other. Petition for downward adjustment: bundling of petitions; costs as grounds for a petition; DOE review process; information in petitions; public availability of petitions; stringency of petition requirements; GSA-tenant agencies; and consideration of technical impracticability. Guidance: training and verification and monitoring. Most of the issues are the same for both commercial buildings (including multi-family residential buildings four stories or more) and residential buildings. Therefore, the discussion below applies to both building categories unless otherwise noted. B. Scope and Applicability of the Proposed Rule This section discusses the scope, or applicability, of the rule as proposed in response to comments received to date. This section provides preliminary responses related to: (1) What costs should be considered when calculating whether a construction project meets the $2.5 million threshold in EISA 2007; (2) when the rule goes into effect; and (3) which new construction and major renovation projects are covered by today's rule. 1. Determining the $2.5 Million Threshold for Applicability of the Rule As noted above, the proposed rule would apply to new Federal buildings and major renovations to Federal buildings that are: (1) “public buildings” as defined by 40 U.S.C. 3301 for which a prospectus to Congress is required under 40 U.S.C. 3307; or (2) buildings with construction or renovation costs of at least $2.5 million in costs adjusted annually for inflation. (42 U.S.C. 6834(a)(3)(D)(i)) (These buildings are collectively referred to as “EISA-covered buildings” in this SNOPR.) DOE notes that the ECPA definition of “Federal building” was revised by EISA 2007. DOE is addresses this definition and the regulatory definition of “new Federal building” in this rulemaking. ECPA, as amended, defines “Federal building” to mean any building to be constructed by, or for the use of, any Federal agency including buildings built for the purpose of being leased by a Federal agency, and privatized military housing. (42 U.S.C. 6832(6)) DOE requested comments in the NOPR specifically on the definition of construction costs to determine which buildings meet the $2.5 million threshold and would be subject to the fossil fuel reduction requirements. DOE noted that construction costs generally include design, permitting, construction (materials and labor), and commissioning costs, but that land and legal costs generally would not be included. 75 FR 63406. The American Gas Association (AGA) and the Department of Health & Human Services-Indian Health Service-Office of Environmental Health, Division of Engineering Services (DHHS-IHS-OEHE) agreed with the proposed definition. (AGA, No. 16 at p. 4; 7 DHHS, No. 24 at p. 1) The Edison Electric Institute (EEI) commented that the land and legal costs could be very high, and that all costs should be considered in any analysis. (EEI, No. 10 at p. 2) 7 Notations of this form appear throughout this document and identify statements made in written comments or at public hearings that DOE has received and has included in the docket for this rulemaking. For example, “AGA, No. 16 at p. 4” refers to a comment: (1) From the American Gas Association; (2) in document number 16 in the docket of this rulemaking; and (3) appearing on page 4 of the submission. DOE preliminarily has decided that land and legal costs would not be included when determining the $2.5 million threshold. Legal costs are generally part of overhead costs, not construction costs. Concerning land costs, many new Federal buildings are built on land already owned by the Federal government. Moreover, it would be very challenging for agencies to determine the value of the land in these cases where there is no recent land purchase. Not including land costs for new Federal buildings in the threshold calculation would be consistent with the threshold calculation for major renovations, for which land costs are not a concern. In addition to comments specifically about land and legal costs, AGA and the National Propane Gas Association (NPGA) both questioned whether the cost of compliance with the fossil fuel consumption reductions would be included when determining whether the $2.5 million applicability threshold is met. (AGA, No. 17 at p. 6; NPGA, No. 23 at p. 3) NPGA also expressed concern that the threshold is too low. (NPGA, No. 23 at p. 3) DOE believes that it could be difficult to separate the costs of complying with the requirements of this rule from other design and construction costs. Conversely, it may be difficult to calculate the cost of a project including the costs to comply with the fossil fuel reduction requirements in those instances in which an agency would be seeking a downward adjustment. DOE anticipates that design and constructions costs for most new Federal buildings, and many renovations to Federal buildings, will exceed $2.5 million. Therefore, DOE proposes that the $2.5 million threshold does not include the cost of complying with the reductions and requests comment on this proposal. 2. Compliance Date of the Rule The NOPR stated that the requirements would apply to all eligible buildings for which design for construction began at least one year after publication of the final rule. 75 FR 63415. The Department of Defense-Air Force (DOD-AF) asked that the rule apply to projects programmed after the date the rule is final. (DOD-AF, No. 25C at p. 3) The majority of the comments on this issue suggested not delaying the rule. The Natural Resources Defense Council (NRDC) and the Form Letters stated that the rule should be finalized and implemented immediately, and AGA commented that the target reductions should be promulgated as soon as administratively practicable. (NRDC, No. 14 at pp. 13-14; Form letter, No. 29 at p. 1; AGA, No. 16 at p. 2) NRDC commented that the rule is already late, and recommended that “design for construction” be interpreted to mean the initiation of the schematic design phase. (NRDC, No. 14 at pp. 13-14) NRDC also commented that DOE should interpret the fossil fuel-generated reduction tables in EISA 2007 to apply to the date of initial occupancy rather than the date that design begins. (NRDC, No. 14 at p. 15) DOE proposes to retain the compliance date, tied to the design of the building, as proposed in the NOPR. Federal agencies are familiar with this date as it is consistent with the compliance date that DOE has used for baseline Federal building energy efficiency standards at 10 CFR parts 433 and 435 for several years. Under 10 CFR parts 433 and 435, “design for construction” means the stage when the energy efficiency and sustainability details (such as insulation levels, HVAC (heating, ventilating, and air-conditioning) systems, water-using systems, etc.) are either explicitly determined or implicitly included in a project cost specification. This proposed rule would add a closely related definition of “proposed building” to tie the “design for construction” definition to the fossil fuel-generated energy consumption determination equation in the rule. A proposed building would be the design for construction of a new Federal commercial, multi-family high-rise residential building, or low-rise residential building, or major renovation to such a building, proposed for construction. This definition was not proposed in the NOPR. DOE intends that the addition of this definition would help clarify terms in the fossil fuel-generated energy consumption determination equation. 3. Major Renovations ECPA requires that fossil fuel reductions be implemented in “major renovations” to EISA-covered buildings. The Sustainable Design NOPR would define major renovation to include changes to a building that provide significant opportunities for substantial improvement in energy efficiency and renovations of any kind with costs that exceed 25 percent of the replacement value of the building, and requested comments on the definition. 75 FR 29942. Because DOE had assigned the definition to the Sustainable Design Rule with the expectation that it would serve for both rules, DOE did not include the definition in the NOPR for this rule. However, this supplemental proposed fossil fuel-generated reduction rule is now being published prior to a final Sustainable Design rule, so DOE has modified the major renovation definition proposed in the Sustainable Design rule to align more closely with today's fossil fuel-generated reduction supplemental proposed rule. Nonetheless, DOE received several comments related to major renovations for this rulemaking. NRDC commented that the scope of the rule should be broadened to apply to all new Federal buildings in order to meet the requirements of EISA 2007. (NRDC, No. 14 at p. 2) The American Public Gas Association (APGA) commented that the 25 percent threshold amount is too low. (APGA, No. 17 at p. 2) Both the Department of Defense-Navy (DOD-N) and DOD-AF recommended that DOE limit the rule to major renovations that cost 50 percent or more of the building replacement value, as that is the definition they use internally for their facilities. (DOD-N, No. 25B at p. 11; DOD-AF, No. 25C at p. 5) DOE also received two comments about renovations spanning more than one year. NRDC commented that DOE must define “construction project costs” to be the total planned or budgeted project costs for the renovation, irrespective of whether the project spans more than one fiscal year or whether the agency has yet to receive full funding. (NRDC, No. 14 at p. 5) APGA commented that by not including renovation activities that potentially could occur in future fiscal years, that energy saving capital-expenditure renovations will be deferred to future fiscal years and could end up producing a negative net energy and greenhouse gas emissions return for renovation dollars expended. (APGA, No. 17 at p. 6) Based on the comments received, DOE is proposing to not include the 25 percent cost limit in the definition of “major renovation.” Regarding the issue of renovating a Federal building in phases over more than one year, the applicability of the requirements are again tied to the design for construction. If the cost of the design for construction, although performed in different phases, would trigger application of the fossil fuel requirements and the phases are known in advance, the fossil fuel requirements would apply. The construction phases should be planned such that the fossil fuel reductions are achieved by the time the entire project is complete. DOE proposes to clarify how the requirements would be applied to portions of a building or individual systems being renovated as part of a major renovation. DOE does not intend to require Federal agencies to meet the fossil fuel-generated reduction requirements for an entire building when an agency renovation is limited to system or component level retrofits. DOE proposes that the fossil fuel reduction requirements apply only to the fossil fuel consumption associated with the portions of the building or building systems that are being renovated and only to the extent that the scope of the renovation provides an opportunity for compliance with the applicable fossil fuel-generated energy consumption reduction requirements. This addition to the regulatory language would direct Federal agencies to determine whether the extent of the renovation allows for compliance with the requirements. For example, a renovation that overhauls a major energy-consuming system (e.g., lighting, HVAC, envelope, etc.) is likely a major renovation subject to today's requirements because the renovation likely allows for compliance with the rule. Additionally, DOE proposes to distinguish between a major renovation that is a whole building renovation, and a major renovation that is limited to a system or component level retrofit. As reflected in the comments received, DOE acknowledges that it would often be technically impracticable in light of an agency's specified functional needs to meet the requirements of today's rule during a major renovation. A major renovation could range from what is essentially a “gut rehab” or total replacement of all building systems without replacement of the building structure itself to a replacement of a single system or piece of equipment to replacement of several systems in a building. DOE believes that given the $2.5 million or “public building” threshold, the fossil fuel-generated energy consumption requirement will primarily apply to Federal commercial buildings. The Department notes, however, that the rule could apply to certain multi-family housing that costs at least $2.5 million that is built by or for the use of any Federal agency, including buildings built for the purpose of being leased by a Federal agency and privatized military housing. With a complete whole building renovation, the building is stripped down to its structural elements and all new systems (including envelope, lighting, HVAC, and water heating systems) are installed. Generally, the designer of the renovation has less flexibility in design than the designer of a new building. There are also limitations on whole building renovations that may not be present with new construction. The geometry, orientation, and location of the building structure on the building lot are likely to be fixed. As noted, a whole building renovation is one in which a building is gutted to the level of its structural elements. The structural elements of the building should not have a major impact on the fossil fuel-generated energy consumption of the building. The fossil fuel reduction baseline and requirements derived from EIA's CBECS, www.eia.doe.gov/emeu/cbecs, relate to entire building fossil fuel-generated energy consumption, not the fossil fuel consumption of individual systems. The level of fossil fuel consumption impacted through a whole building renovation is comparable to that consumption proposed in the appendices to this proposed rule; i.e., both the subject energy consumption and the maximum permitted amount of energy consumption are at the whole building level. Therefore DOE proposes that the requirements and methodologies applicable to new construction would be applicable to major renovations that are whole building renovations. Major renovations that are limited to system or component level retrofits, have additional practical limitations for reducing fossil fuel-generated energy consumption. Based on the DOE Buildings Energy Databook, DOE has estimated the contribution of major energy related systems to a commercial building's energy use for primary energy. 8 8 Based on Table 3.1.4 of the DOE Buildings Energy Databook ( http://buildingsdatabook.eere.energy.gov/TableView.aspx?table=3.1.4 ). Table III.1—Contribution of Energy Use by Major Systems Percent Lighting 20 Space Heating 16 Space Cooling 15 Ventilation 9 Refrigeration 7 Electronics 4 Water Heating 4 Computers 4 Cooking 1 Other 15 Adjust to SEDS * 5 Total 100 * SEDS (States Energy Data System) is used by the U.S. Energy Information Administration to resolve discrepancies between data sources. There have been improvements in the efficiencies of the systems and components as compared to that which was present in the buildings reported under the 2003 CBECS and 2005 RECS databases. 9 A comparison of equipment efficiency changes for chillers and boilers (two pieces of equipment likely to be involved in a major renovation) from the original 1975 ASHRAE Standard 90-75, Energy Conservation in New Building Design, to the present FEMP-designated efficiency requirements for these pieces of equipment showed cooling end-use savings of up to 34 percent and heating end-use savings of up to 11 percent. 10 The same analysis report shows a similar comparison for lighting indicated a potential savings of up to 52 percent of the lighting load if lighting power density requirements from ASHRAE 90.1-2010 were compared with those found in ASHRAE 90A-1980. However, many Federal buildings have likely already undergone some lighting renovation, so it may be unlikely that a Federal building still has a lighting system based on 1980 standards. Therefore, even if the subject energy use is limited to the energy use of the retrofitted system or component, the improvements in energy efficiency as compared to the systems and components in the typical CBECS building are not sufficient to meet the required reductions. If the impact of the efficiency improvements between current systems and components and those represented in CBECS is considered in the whole building context, a typical commercial building would realize whole building fossil fuel savings of 3 percent for cooling, 2 percent for heating, and 7.5 percent for lighting. 9 See discussion below in Section C. Establishing and Using the Baseline. 10 See Simulation Analyses in Support of DOE's Fossil Fuel Rule for Single Component Equipment and Lighting Replacements by M Halverson and W Wang of Pacific Northwest National Laboratory at http://www.pnl.gov/main/publications/external/technical_reports/PNNL-22887.pdf . For these reasons, for major renovations that are less than whole building renovations (system or component level retrofits) DOE is proposing establishing the maximum allowable energy use in fiscal years 2013 through 2029 based on the percentage of whole building energy consumption represented by the retrofitted system or component. The applicable value from the appendices in today's rule would be multiplied by this percentage to arrive at the maximum allowable energy use of the retrofitted system or component. DOE requests comment on whether further direction would be required on how to distinguish between a major renovation that is a whole building renovation and one that is a system or component level retrofit, and requests comment on how such a distinction could be made. To further address issues related to major renovations, while ensuring that a fossil fuel-generated energy reduction is attained during a renovation, today's rulemaking would require both that Federal agencies achieve specified energy efficiency levels before applying off-site renewable energy generation and before petitioning for a downward adjustment. Again, the proposed rule would distinguish between whole building renovations and system and component level retrofits. These changes are described further in the “Off-Site and On-Site Renewable Energy and Renewable Energy Certificates” and “Downward Adjustments for Major Renovations” sections. 4. Multiple Buildings DOE received one comment from DOD-AF asking whether the $2.5 million threshold for applicability of the rule would apply to individual buildings or to projects which may have two or more buildings. (DOD-AF, No. 25C at p. 2) DOE has preliminarily determined that the $2.5 million threshold should apply to individual buildings to determine if they are covered buildings under this rule. The statute mandates that the requirements apply to “buildings,” not “projects” or “developments.” 5. Leased Buildings EISA 2007 modified the ECPA definition of “Federal buildings” to include any building to be constructed by, or for the use of, any Federal agency. This term includes buildings built for the purpose of being leased by a Federal agency and privatized military housing. (42 U.S.C. 6832(6)) In addition, the NOPR limited application of the rule to renovations of leased buildings to only those renovations for which a Federal agency has significant control over the renovation design. 75 FR 63405. NRDC commented that there is a disconnect between the rule scope and the ECPA definition, which NRDC believes does not permit the exclusion of buildings that have been built for the purpose of being leased by a Federal agency. (NRDC, No. 14 at pp. 4-5) The U.S. Army Corps of Engineers-North Atlantic Division (NAD) commented that it seemed more appropriate to cover Federally leased buildings via the existing EISA 2007 section 435 rules, which require new Federal agency leases to be for ENERGY STAR labeled buildings, since existing buildings will be difficult to retrofit to meet these fossil fuel reductions. (NAD, No. 19 at p. 2) Department of Defense-Office of Under Secretary of Defense (DOD-OUSOD) recommended against applying the rule to any building whose design is not completely under the control of Federal agencies, and suggested that the rule should just state this principle and allow the agencies to apply their own judgment. (DOD-OUSOD, No. 25A at p. 1) EEI asked if there would be a minimum lease period. (EEI, No. 10 at p. 2) DOE preliminarily has decided to remove the “significant control” provision for leased buildings covered under today's rule because the ECPA definition of “Federal building” makes clear that the rule applies only to buildings built specifically for the Federal government. Significant control, therefore, is implicit in the definition. DOE is aware that compliance with today's rule for small buildings or spaces that are leased for relatively short periods of time may not be possible. DOE also recognizes that at least two Federal agencies utilize contracts for short-term leases. Therefore, DOE requests comment on whether there should be a minimum lease period or a minimum rentable square footage threshold. 6. Federal Buildings Overseas The DOD-N commented that including overseas facilities in the definition of Federal building may lead to circumstances where the agency does not have complete control over the design, or where other technical factors challenge the practicality of meeting the fossil energy reductions. (DOD-N, No. 25B at p. 8) DOE recognizes that several agencies have buildings overseas and these buildings may be subject to a variety of legal authorities specific to that agency. DOE intends that the proposed rule would apply to the extent that the requirements are consistent with applicable law. DOE does not intend for the rule to cause any Federal agency to violate other legal authorities. This proposed rule does not expressly address the extent to which it may be applicable to buildings overseas as each individual agency is best positioned to understand the various and sometimes unique authorities that may be applicable to overseas buildings of that agency. In applying the proposed rule to any given building, Federal agencies must also decide whether the building meets the definition of Federal building at 42 U.S.C. 6832(6) and either the requirement that the building be a “public building” for which a prospectus is required, or the requirement that the building or major renovation cost at least $2.5 million. (42 U.S.C. 6834(a)(3)(D)(i)) For covered overseas facilities, Federal agencies should use the U.S. climate zone most similar to the location of the proposed building. 7. Residential Buildings DOE received four comments related to the definition of residential building categories. Lish commented that the rule definition should include housing facilities owned and managed by Federal agencies, such as the National Park Service, Forest Service, and other land management agencies. (Lish, No. 13 at p. 1) The DOD-AF requested that dormitories be removed from the proposed rule because of cost. (DOD-AF, No. 25C at p. 6) DHHS-IHS-OEHE believes there is an inconsistency between the reference to manufactured homes and mobile homes in the rule and in RECS. (DHHS, No. 24 at p. 3) DOE does not believe any changes to the proposed language in the NOPR are needed as a result of these comments. The statute requires the inclusion of all Federal buildings that are EISA-covered buildings. Some of the building types discussed by commenters may not meet the definition of “public building” at 40 U.S.C. 3301(a)(5) or may not require a prospectus to Congress as described at 40 U.S.C. 3307, but may meet the $2.5 million construction cost threshold. Some of the referenced buildings may not meet either threshold. Finally, DOE does not believe there would be an inconsistency between the reference to manufactured and mobile homes in the rule and in the RECS database. For purposes of the RECS database, manufactured and mobile homes are the same product. They are both defined as a housing unit built to the Federal Manufactured Home Construction and Safety Standards (24 CFR part 3280), built on a permanent chassis and moved to a site. 8. Privatized Military Housing DOD-AF stated that DOE should clarify that the rule does not apply to privatized military housing because, in DOD-AF's view, privatized military housing is not “leased by a Federal agency.” (DOD-AF, No. 25C at p. 2) In addition, DOD-AF is concerned that the proposed rule may cause many AF Privatized Housing deals that have already been closed to be canceled or renegotiated if they have to comply with the fossil fuel reduction requirements. (DOD-AF, No. 25C at p. 1) As noted above, EISA 2007 modified the ECPA definition of “Federal building” to apply to any building to be constructed by, or for the use of, any Federal agency. Such term shall include buildings built for the purpose of being leased by a Federal agency, and privatized military housing. (42 U.S.C. 6832(6)) In addition, Congress again mentioned privatized military housing in ECPA when it specified that, “with respect to privatized military housing, the Secretary of Defense, after consultation with the Secretary [of Energy] may, through rulemaking, develop alternative criteria to those established in subclauses (I) [fossil fuel reduction requirements] and (III) [sustainable design requirements] of clause (i).” (42 U.S.C. 6834(a)(3)(D)(vi)) Although privatized military housing may not meet the definition of “public building” at 40 U.S.C. 3301(a)(5), the proposed rule would apply to privatized military housing with construction costs of at least $2.5 million. As described in this preamble, this cost threshold would apply on an individual building basis. 9. Other A few miscellaneous comments were submitted regarding the scope of the rule that did not fit into one of the above subcategories. One comment was submitted by an anonymous commenter and encouraged the use of vacant buildings rather than new construction. (Anon, No. 27 at p. 1) There is nothing in ECPA that would prevent the reuse of vacant buildings. Earthjustice requested data on the number of new buildings and renovations that are likely and projected to be covered by this rule. (EJ, Public Meeting Transcript, at p. 69) For purposes of developing this supplemental proposed rule, DOE assumed that the Federal government constructs 42 million square feet of new construction per year and renovates 14.6 million square feet per year. This assumption is based on the analysis of three years of construction data purchased by PNNL as part of a commercial building construction dataset. The data is described in “Weighting Factors for the Commercial Building Prototypes Used in the Development of ANSI/ASHRAE/IESNA Standard 90.1-2010”, (Jarnagin and Bandyopadhyay, 2010). Data from the years 2007, 2008, and 2009 were used. Based on these analyses and assumptions, DOE expects that 44.6 million square feet of Federal building stock would be subject to this regulation each year. Over the next twenty years, DOE expects that this rulemaking would affect approximately 892 million square feet of Federal floor space. This represents less than 25 percent of the total Federal building stock in 2030, and about a quarter of one percent of the total residential and commercial building floor space in the U.S. in 2030. C. Establishing and Using the Baseline The CBECS and RECS data, which can be found at http://www.eia.doe.gov/emeu/cbecs/contents.html and at http://www.eia.gov/emeu/recs/contents.html, are based on actual reported energy use over a large sample of buildings, normalized for size to thousands of British thermal units per square foot of floor space (kBtu/ft 2 ). For purposes of this rulemaking, the statute directs DOE to establish a baseline based on the energy consumption in similar buildings in fiscal year 2003 as measured by CBECS and RECS. One characteristic of buildings reported in the surveys is their age, or vintage. 11 The 2003 CBECS estimates of building vintage range from pre-1920 buildings (representing the oldest) to the 2000-2003 years, which are the newest buildings in the 2003 CBECS. 12 An analysis of the CBECS data indicates that 39 percent of the surveyed buildings were constructed prior to the publication of a standard energy code; the first widely recognized building energy codes were developed and published in 1975. 13 Furthermore, DOE estimates that an additional 17 percent of the surveyed buildings were built before the architecture and construction industry recognized and used ASHRAE 90-75 nationally; i.e., 1980. Therefore, an estimated 56 percent of the buildings surveyed were constructed prior to 1980. 14 The “typical building” in the 2003 CBECS was likely built between 1970 and 1979. 11 http://www.eia.gov/emeu/cbecs/cbecs2003/detailed_tables_2003/2003set1/2003pdf/a1.pdf . 12 Because of the criteria for buildings subject to the requirements, DOE has initially determined the proposed requirements would apply primarily to commercial buildings. As such, DOE has focused this discussion on CBECS. 13 ASHRAE Standard 90-75, Energy Conservation in New Building Design, August 1975. 14 DOE estimates that even more than 56% of the surveyed buildings would have used 90-75, since the adoption of the 1980 standard was delayed two years. The ASHRAE code is revised on a three year cycle. The version of the ASHRAE code that is applicable to new Federal commercial buildings for which design for construction began on or after August 10, 2012, is ASHRAE 90.1-2007. 10 CFR 433.4(a)(2). As compared to ASHRAE 90-75, ASHRAE 90.1-2007 has an energy efficiency improvement of approximately 30 percent. 15 ASHRAE 90.1-2010 adds an additional energy efficiency improvement of approximately 18.5%. 16 Although the average building in the 2003 CBECS would have been built to ASHRAE 90-75, it is important to note that in the course of the lives of these buildings, building system components have been replaced over time so that the energy consumption as surveyed in 2003 will not be the same energy level the building used when first constructed. Even so, the energy efficiency improvements that are already required for the design of new Federal buildings would achieve a substantial portion of the fossil fuel-generated energy consumption reductions required in the interim years up to FY 2020. DOE has data that would indicate that Federal offices in Climate Zones 1a (Miami, Florida), 4c (Salem, Oregon), and 5a (Chicago, Illinois) as constructed to the requirements of the Federal baseline standard (90.1-2010) are approximately at the 65% Fossil Fuel Reduction level for government offices. Buildings constructed to be 30% better than 90.1-2007 (as required in the Federal standards if life-cycle cost-effective) will achieve more than 65% Fossil Fuel Reduction level for government offices. This is especially true considering that new Federal buildings must be designed to achieve an energy efficiency improvement 30 percent beyond the referenced ASHARE code to the extent life cycle cost effective. 15 ASHRAE Journal article titled “ 35 Years of Standard 90.1” in March 2010. http://www.ashrae.org/File%20Library/docLib/Public/20100625_ASHRAEDAJ10Mar0220100301.pdf . 16 See DOE's final determination notice on Standard 90.1-2010 at 76 FR 64904 (October 19, 2011) or http://www.gpo.gov/fdsys/pkg/FR-2011-10-19/pdf/2011-27057.pdf . The CBECS and RECS data are reported at a high level. At the highest level, the utility of the data is limited in terms of climate zones and building types. However, CBECS and RECS microdata allow additional analysis and refinement. Recognizing the importance of climate on building energy use, as well as the limitations in CBECS and RECS, in the NOPR, DOE asked several questions about refinements to the CBECS and RECS data by different categories. The questions included whether the baseline should be adjusted for climate, how to treat plug and process loads, whether the rule should differentiate between fossil fuels, and whether the rule should include a regional adjustment to the fossil fuel component of the electric power mix. These and other issues are further addressed below. 1. CBECS and RECS Baselines As previously indicated, the statute directs DOE to establish a baseline for the fossil fuel-generated energy consumption requirements using CBECS and RECS data from fiscal year 2003. A preliminary survey of the CBECS data indicates that the average building in the 2003 CBECS was subject to the 1975 version of the ASHRAE building code for commercial buildings. 17 17 DOE has preliminarily determined that the building criteria that determine applicability of the requirements would result in primarily commercial buildings being subject. As such, DOE has focused on commercial buildings. The building type definitions for commercial buildings used in the NOPR were based largely on the CBECS and RECS glossaries, with minimal modifications for regulatory clarity. For a commercial building type not listed in CBECS, the NOPR proposed that agencies establish a baseline for the proposed design using the procedures in Appendix G, Performance Rating Method, of ASHRAE Standard 90.1-2004. For residential building types not listed in RECS, agencies would develop a baseline using the Simulated Performance Alternative from section 404 of the IECC, 2004 Supplement Edition. DOE requested comments on the building type categories and definitions. Most of the comments DOE received related to how to establish a baseline for building types not listed in the tables derived from CBECS and RECS. The American Society of Heating, Refrigeration and Air Conditioning Engineers Standard 100 Revision Committee Standard (ASHRAE Standard 100 Committee) commented that an analysis by DOE's Oak Ridge National Laboratory (ORNL) determined that there is sufficient data in CBECS to establish energy consumption targets for 48 building types, and recommended that the rule be modified to do so. (ASHRAE, No. 8 at p. 1) ICC and the Institute for Market Transformation (IMT) endorsed the uses of the CBECS and RECS databases. (ICC, No. 11 at p. 3; IMT, Public Meeting Transcript, No. 7 at p. 26) DHHS-IHS-OEHE supported DOE's interpretation of the CBECS and RECS baselines and commented that building type definitions are appropriate, but requested clarification of the definition of health care (outpatient) facilities with diagnostic medical equipment. (DHHS, No. 24 at pp. 1, 3) EEI agreed with use of CBECS but commented that some buildings do not neatly fall into a building category. (EEI, No. 10 at p. 3) AGA encouraged the Department to develop more detailed procedures for building types not directly represented in the CBECS and RECS data, and believes the Department may engage stakeholders in this analysis. (AGA, No. 16 at p. 3) NAD and DOD-AF commented that the CBECS and RECS data does not cover some building types and larger buildings of a more industrial nature, such as military buildings, and requested information on how these will be included. (NAD, No. 19 at p. 1; DOE-AF, No. 25C at pp. 3-4) Regarding the use of ASHRAE or the IECC, EEI recommended that ASHRAE 90.1-2004 should be allowed as an alternative to the IECC 2004 Supplement for residential buildings without baseline data. (EEI, No. 10.2 Cover Letter at p. 2) Several commenters noted that there would be a disparity between the baselines generated from CBECS and the baselines generated using ASHRAE 90.1-2004. (DHHS, No. 24 at p. 4; National Nuclear Security Administration, No. 9 at p. 1; EEI, No. 10 at p. 3; DOD-AF, No. 25C at p. 4) The Gas Technology Institute (GTI) proposed that DOE amend the ASHRAE Performance Rating Method to create a single reference building in order to be consistent with the CBECS database methodology, noting that DOE's Home Energy Score Tool methodology would be a superior approach. (GTI, No. 22 at p. 12) NIBS supported DOE's proposal to use Appendix G of ASHRAE Standard 90.1 and the IECC Simulated Performance Alternative, stating that these are probably the best alternatives to CBECS and RECS. However, NIBS noted there could be some issues with the quality of the baselines produced using these methods, and suggested certification of modelers and use of the COMNET protocols. (NIBS, No. 12 at p. 2) ICC and IMT stated that the CBECS and RECS data are in need of upgrading. NIBS encouraged DOE to expand sample sizes and improve the surveys going forward. (NIBS, No. 12 at pp. 1-2) DOE regularly updates and improves upon the CBECS and RECS. The versions of these surveys that DOE chose to use in today's rule (2003 CBECS and 2005 RECS) were based on Congressional direction in EPCA. DOE chose to use 2005 RECS data because the RECS was conducted in 2001 and 2005 but not 2003. DOE proposes to retain CBECS as the baseline for commercial buildings and RECS as the baseline for multi-family high-rise and low-rise residential buildings with one exception. In the NOPR, DOE proposed to include the category “multi-family in 5 or more units” in the commercial building and multi-family high-rise residential building requirements. A “multi-family high-rise residential building” is a residential building that contains three or more dwelling units and that is designed to be four or more stories above grade. It is possible that a building could have four or more stories above grade, but fewer than five units. DOE believes that such buildings designs would be rare and would have energy consumption patterns similar to such buildings with five or more units. To avoid a potential gap in coverage of the building types, DOE proposes to use “multi-family high-rise residential building” in place of “multi-family in 5 or more units.” In addition, regarding the definition of health care (outpatient) facilities with diagnostic medical equipment, the reference to diagnostic equipment is from the current CBECS building types under which agencies have been reporting. DOE proposes that agencies continue to apply that term consistent with CBECS reporting. In response to comments, DOE preliminarily has decided to use the analysis from ORNL for the ASHRAE Standard 100 Revision Committee to expand the CBECS data from the twelve building categories used in the NOPR to the 48 commercial building types used in today's rule. (As noted in the NOPR, the phrases “principal building activity” and “building types” are used interchangeably in CBECS and RECS documents. For the sake of consistency, this document only uses the phrase “building type.”) While ORNL was conducting the climate adjustment for DOE, as DOE indicated it would conduct in the NOPR, it coordinated its work with the ASHRAE Standard 100 Revision Committee, which had a need for similar work. While developing the climate adjustment method, ORNL also developed a methodology to parse the CBECS and RECS microdata into more building types. As a result, as part of its public comment on today's rulemaking, the ASHRAE Standard 100 Revision Committee requested that DOE use these building types. Although the reduction requirement for multi-family high-rise residential buildings comes from the RECS database, DOE proposes to include the requirements in the tables for 10 CFR part 433 to maintain the scope of coverage of part 433 versus part 435 building types. 2. Climate Adjustment The maximum allowable fossil fuel-generated energy consumption values in Tables 1 and 2 of the NOPR were based on national averages not adjusted for climate. The NOPR noted that the limited number of buildings surveyed by CBECS and RECS data does not always allow for a direct estimate of building energy use by climate zone and building type because there are only a few surveyed buildings that fit into some building type/climate zone groups. 75 FR 63406. However, DOE noted that it believed a climate adjustment is necessary to provide reasonable baselines and, therefore, stated that DOE is developing fossil fuel-generated reduction requirements based on building type and then applying a climate zone as defined in the baseline energy efficiency standards at 10 CFR parts 433 and 435. 75 FR 63406. DOE requested comments on including a climate adjustment. Most of the comments DOE received regarding the climate adjustment were favorable. The ASHRAE Standard 100 Committee recommended that the maximum allowable consumption values for each of the CBECS and RECS building types be adjusted for each of the 16 climate zones developed by DOE's Pacific Northwest National Laboratory (PNNL) based on a simulation of prototype buildings meeting ASHRAE Standard 90.1-2004 developed by DOE's National Renewable Energy Laboratory (NREL). (ASHRAE, No. 8 at p. 1) NIBS recommended utilizing the climate normalization techniques developed by EPA for the ENERGY STAR program. (NIBS, No. 12 at p. 4) ICC states that it believes that it is sensible to take into account regional climate variations, such as those recognized in the International Energy Conservation Code. (ICC, No. 11 at p. 2) DHHS-IHS-OEHE and the American Institute of Architects (AIA) urged DOE to consider regional and climatic factors, and DHHS-HIS-OEHE suggested using the climate zones identified in ASHRAE 90.1 and IECC. (DHHS, No. 24 at p. 1; AIA, No. 15 at p. 2) GTI recommended the DOE Home Energy Score Tool used for existing home ratings. (GTI, No. 22 at p. 11) The National Park Service, Alaska Region (NPS-Alaska), recommended an alternative table of Alaskan climate zones. (NPS-Alaska, No. 6, p. 1) EEI questioned how the adjustments are going to be calculated to address the limitations of the CBECS and RECS data. (EEI, No. 10 at p. 3) AGA commented that a climate adjustment is logical for some loads, such as space conditioning, but requested more information about DOE's methodology. (AGA, No. 16 at p. 4) DOE proposes to include a climate adjustment. A climate adjustment places buildings in different climates on a more level-playing field. Under the proposed climate adjustments, buildings would have to achieve reductions commensurate to a baseline appropriate for their climate zone rather than a national average baseline. As a result, buildings in cold climates would have a higher target to account for the increased energy use associated with a cold climate, and buildings in warmer climates would have a lower target. This approach would ensure that buildings in both cold and warm climates achieve 55 percent reductions based on a climate-adjusted baseline, rather than the building in the cold climate having to achieve a deeper percentage reduction and a building in a warm climate having to achieve a lesser percentage reduction to meet the same absolute target based on a national average. For example, assuming a CBECS or RECS national average baseline fossil fuel use equals 100 kBtu/sq.ft. for a given building, at a 55 percent reduction for FY 2010-14, the target fossil use becomes 45 kBtu/sq.ft. However, a building in a cold climate may actually use more than the national average, perhaps 150 kBtu/sq.ft. The same building in a warm climate may actually use less, perhaps 50 kBtu/sq.ft. To meet the 55 percent reduction for the FY 2010-14 national average target of 45 kBtus/sq.ft. without a climate adjustment, a building in a cold climate must achieve a reduction of 105 kBtus/sq.ft. (which would be an actual 70 percent reduction), while the same building in a warm climate would need to achieve a reduction of only 5 kBtus/sq.ft. (which would be an actual 10 percent reduction). Using the above example, the climate adjustment in today's rule would set the baseline at 150 kBtu/sq.ft. for the cold climate example, so a 55 percent reduction would make the target 67.5 kBtu/sq.ft. instead of 45 kBtu/sq.ft. In the warm climate example, the baseline would be 50 kBtu/sq.ft., and a 55 percent reduction would make the target 22.5 kBtu/sq.ft. instead of 45 kBtu/sq.ft. In other words, buildings in both the warm and cold climate zones have to achieve 55 percent reductions but must meet that baseline relative to the climate adjusted baseline for the appropriate climate. The same logic applies to the 65, 80, 90, and 100 percent reductions. All covered buildings designed in FY 2030 or later would be required to meet the 100 percent reduction, regardless of climate. The maximum allowable fossil fuel-generated energy consumption in proposed Tables 1-4 of Appendix A of both part 433 for commercial buildings and multi-family residential buildings and part 435 for low-rise residential buildings include adjustments for climate. The climate adjustments were developed by ORNL. ORNL developed national energy use intensities (EUIs) for over 50 building types from CBECS and RECS, and used zonal EUI ratios derived from building simulation modeling performed by the NREL to parse the building types into 16 different climate zones. The procedure is described in more detail in “Derivation of Federal Building Fossil Fuel Energy Use Reduction Targets,” (ORNL/TM-2011/84, http://hyperion.ornl.gov/pubs/EISATargets.pdf ). DOE's climate zone map is produced below for reference. The county-by-county climate zones are defined in the baseline standard for 10 CFR part 433—ASHRAE Standard 90.1-2010. EP14OC14.000 3. Plug and Process Loads In addition to fossil fuel-generated energy consumption used for building-related functions such as lighting, HVAC, and envelope, equipment related to the use that occurs within the building also consumes fossil fuel-generated energy. This includes plug loads such as office equipment, personal computers, cash registers, and other such equipment that are typical to buildings. However, some building types also house process loads that are very energy-intensive relative to other building-related energy use. In the NOPR, DOE acknowledged that inclusion of plug and process loads in the methodology may make it more difficult to achieve the mandated fossil fuel-generated energy consumption reductions. DOE noted that all building energy consumption, including plug and process load consumption, is included in the baseline CBECS and RECS data and, therefore, proposed that plug and process loads would be subject to the fossil fuel reductions. DOE requested comments on how the proposed rule could be designed such that the assumptions used in the whole building simulations would accurately reflect the final building design and operation, including plug and process loads. 75 FR 63410. In this SNOPR, DOE clarifies that CBECS does not include building types with energy use dominated by process loads. Several comments were submitted relating to plug and process loads. Most comments received on plug and process loads expressed concerns about including process loads in the fossil fuel-generated energy consumption baselines, with particular concern about including energy-intensive process loads. EEI, DHHS-IHS-OEHE, DOD-AF, ASHRAE 100, and AGA commented that process or plug and process loads should not be included in the calculations since these loads do not directly represent the building design attributions. (EEI, No. 10 at p. 6; DHHS, No. 24 at p. 4; DOD-AF, No. 25C at p. 5; ASHRAE, No. 8 at p. 2; AGA, No. 16 at p. 4) DOE received a number of comments from DOD suggesting that because many DOD facilities do not map to the CBECS building types, DOE should remove the process load component from the calculations or otherwise treat certain buildings with process loads differently. (DOD-AF, No. 25C at p. 4; DOD-OUSOD, No. 25A at p. 2; NAD, No. 19 at p. 1;DOD-N, No. 25B at p. 9) Otherwise, DOD-N noted, petitions for downward adjustment of the reduction requirement could consist predominantly of buildings dominated by process loads. (DOD-N, No. 25B at pp. 6, 9, 12) DOD-N recommended standardized building occupancy and use assumptions. (DOD-N, No. 25B at p. 6) CBECS and RECS do not include building types with what are generally understood to be energy-intensive process loads. Process loads are typically metered separately and do not include energy consumed for maintaining comfort and amenities for the occupants of the building (including space conditioning and lighting for human comfort or convenience), commercial equipment and office-related plug loads, and other loads whose energy use is included in the building categories in CBECS and RECS (such as medical equipment and commercial refrigeration). Energy-intensive process loads would include, but not be limited to, activities such as manufacturing, painting, welding, metal work, fabricating, assembly, and data centers. In the proposed rule, the baseline for building types not in CBECS or RECS would have been determined by a whole building simulation, and the process loads would have been subject to the fossil fuel-generated energy consumption reduction requirements. DOE understands that it could be much more difficult for agencies designing buildings with energy-intensive process loads to comply with the requirements of today's rule than agencies designing buildings without process loads. It is more difficult to reduce process energy consumption, and the process activity is critical to the agency's purpose for the building. In addition, for buildings with energy-intensive process loads, the process loads tend to dominate the energy consumption of the building. As a result, DOE acknowledges that agencies with buildings with such process loads may be the agencies most likely to petition DOE for a downward adjustment of the standard if the process loads were subject to the fossil fuel reduction requirements. DOE also notes that plug and process loads are excluded from the baseline energy efficiency requirements for Federal commercial and multi-family high-rise residential buildings. ( See 10 CFR 433.101) Based on these considerations, DOE proposes that for building categories and types not listed in CBECS with energy-intensive process loads, the process loads should not be subject to the fossil fuel-generated energy consumption reduction requirements of this rule. These building types would remain subject to today's requirements by separating the process loads from the building and building-related loads as follows: 1. Federal agencies with buildings with energy-intensive process loads would choose the CBECS building type (from Tables 1-4 of Appendix A) that most resembles the building as if it had no process loads. For example, industrial facilities and airplane hangars for painting/plating would generally map to warehouses, and data centers would generally map to laboratories. 2. Agencies would then find the appropriate target from Tables 1-4 based on climate zone and fiscal year in which design for construction began for the underlying building type selected in Step 1. Because Tables 1-4 do not include these process loads, agencies would add to the target the estimated fossil fuel-generated energy use of the process loads to determine the maximum allowable fossil fuel-generated energy consumption for the proposed building. When estimating the process load, the agency would use the electricity fossil fuel generation factor and the electricity source energy factor defined in this rule to convert electricity into kBtu/sq.ft. 3. To determine compliance, agencies would estimate the energy use and fossil fuel-generated energy consumption of the proposed building using the equation in section 433.201(a) (for CBECS) or 435.201(a) (for RECS), add the estimated process load from Step 2, and compare the result to the maximum allowable fossil fuel-generated energy consumption. DOE believes that this calculation for buildings with process loads, along with the expanded list of building types described earlier, would make it unnecessary to develop an alternative baseline using a simulated model as was proposed in the NOPR. The expanded list of building types is comprehensive and should cover virtually all building types and categories in the Federal sector. Agencies should be able to find a building type from the expanded list that closely resembles the building as if there were no process loads. Thus, DOE has deleted provisions in the proposed rule to develop alternative baselines using Appendix G of the Performance Rating Method in ASHRAE Standard 90.1-2004 or the IECC Simulated Performance Alternative. DOE believes this approach is simpler and clearer than the method proposed in the NOPR, and addresses the concerns and comments that were submitted. DOE seeks comment on three specific issues related to process loads: 1. DOE recognizes that not all building categories or building types are equally represented in CBECS data. Additionally, energy use can vary widely within the same building category or type. Therefore, DOE requests additional comment on the treatment of process loads for building categories that are under-represented in CBECS, or where energy use varies widely. DOE also seeks comment on what parameters to use when determining that a building is under-represented in CBECS. 2. In addition, DOE recognizes that buildings with high process loads must increase the capability of their HVAC systems beyond what the building would require absent the building's process-related mission. Therefore, DOE seeks further comment on whether and how to account for the increment of supplemental HVAC required to condition buildings with high process loads. 3. DOE understands that agencies may not be uniformly equipped to submeter their process loads for the purposes of calculating their required fossil fuel reduction. Therefore, DOE requests comment on the degree to which agencies presently submeter process loads. Concerning plug loads, GTI suggested that the additional variability in plug loads is a legitimate issue, but suggested that it is an issue that can be addressed by a good engineering analysis during the design phase. (GTI, No. 22 at p. 12) EEI stated that the methodology must treat plug loads the same for purposes of both the baseline and the proposed design. (EEI, No. 7 Public Meeting Transcript, at p. 33-35) Plug loads are included in the building types reported by the CBECS and RECS databases. In addition, they generally do not dominate the building energy profiles like some process loads, and it is easier to achieve plug load reductions through the use of ENERGY STAR and other energy efficient products than it is to reduce process loads. As a result, DOE preliminarily has decided that plug loads would continue to be included in the baseline and would be subject to the fossil fuel reduction requirements. 4. Differentiate Between Fossil Fuels Some fossil fuels produce higher CO 2 emissions than other fossil fuels, with coal being the highest and natural gas being the lowest. The NOPR noted that ECPA makes no distinction between fossil fuels for purposes of the required fossil fuel-generated energy consumption reductions addressed by this rule. 75 FR 63406 While the statute does not specifically direct DOE to consider variation in fossil fuels for purposes of this rulemaking, DOE stated that the statute does not prohibit DOE from taking the variation into account. With that in mind, DOE requested comments on whether all fossil fuels should be treated equally or whether each should be treated differently based on CO 2 emissions or some other factor. DOE received several comments about differentiating between fossil fuels. The comments varied, although most favored differentiating between fossil fuels. DHHS-IHS-OEHE supported taking into consideration the actual CO 2 emission factors of fossil fuel types and whether or not a fuel comes from domestic or imported sources. (DHHS, No. 24 at p. 2) DOD-N, National Rural Electric Cooperative (NREC) and the General Services Administration—Office of Federal High Performance Green Buildings (GSA) also supported weighting fossil fuels based on their respective carbon footprints. (DOD-N, No. 25B at p. 4; NREC, No. 28 at p. 2; GSA, No. 26 at p. 2) The Office of the Deputy Under Secretary of Defense, Installations and Environment, Facilities Energy Directorate (ODUSD) believes such an approach would help, but recommended a thorough study of the potential cost impact prior to implementing such a policy. (DOD-OUSOD, No. 25A at p. 3) GTI recommended that fossil fuel types be distinguished by their cost, efficiency and CO 2 content. (GTI, No. 22 at p. 13) The AGA commented that the DOE should restrict its consideration only to fuel cycle issues, not carbon contributions of fuel cycles, because greenhouse gas emissions are not the dominant issue in this rulemaking. (AGA, No. 16 at pp. 4-5) DOE notes that ECPA establishes building design requirements based on “fossil fuel-generated energy consumption” of a building, not greenhouse gas emissions of a building or other factors that may differentiate fossil fuels. Upon reconsideration of the issue as it was proposed in the NOPR, DOE believes that applying the reduction requirements equally to all fossil fuel types is the best interpretation of the statute. As a result, DOE is not differentiating between fossil fuels in today's rulemaking. 5. Regional Fossil Fuel Factors To determine the fossil fuel-generated energy consumption of the buildings reported in CBECS and RECS, the fossil fuel component of the electricity used by the building was added to the building's direct fossil fuel consumption. To calculate the fossil fuel component of site electricity use, site electricity was multiplied by the percentage of electricity nationally that is produced from fossil fuels, referred to as the electricity fossil fuel generation factor for purposes of this rule. The factor was obtained by summing the electricity generated from fossil fuels (coal, oil, natural gas, and other gases) from Table 3.2.A of the Energy Information Administration (EIA) 2012 Electric Power Annual Report ( http://www.eia.gov/electricity/annual/html/epa_03_02_a.html ) and dividing it by the total electricity produced in the U.S. 75 FR 63407. According to Table 3.2.A, for 2003, the fossil fuel generation factor was 0.71, meaning that about 71 percent of all electricity in the U.S. is generated from fossil fuels. DOE chose to use the 2003 value in accordance with the statutory mandate that buildings be designed so that the fossil fuel-generated energy consumption of the buildings is reduced as compared with such energy consumption by a similar building in fiscal year 2003 (as measured by CBECS or RECS.) In addition, DOE notes that the fossil fuel generation factor has varied from 0.71 in 2003 to a peak of 0.74 in 2007 and back to 0.71 in 2012. DOE indicated in the NOPR that it was considering a regional approach to establishing the fossil fuel fraction associated with electricity, and asked for comments. Public comments were mixed, some supporting and some opposing the use of a regional fossil fuel factor. EEI questioned whether adjustments for regional electricity use would be made by census region, sub-census region, power pool region, by state, or by some other form of disaggregation. (EEI, No. 10 at p. 3) GSA also supported a regional approach. (GSA, No. 26 at p. 1) AGA supports use of a regional fossil fuel mix for electric generation based on eGRID subregional level data. (AGA, No. 16 at p. 4) The ICC supported the current proposed approach of using the national average, stating that it would be more efficient to simplify the requirements and smooth the differentials between buildings by using a national average fossil fuel generation factor. (ICC, No. 11 at pp. 2-3) GTI stated that for the purposes of national rulemaking, national average factors would be consistent with some of DOE's prior methodology and protocols. (GTI, No. 22 at p. 7) DHHS-IHS-OEHE and NIBS also support the national average fuel mix. (DHHS, No. 24 at p. 2; NIBS, No. 12 at p. 2) NAD stated that the electricity source energy factor and electricity fossil fuel-generation factor should be based on a regional approach. (NAD, No. 19 at p. 1) The difference in regional fossil fuel factors would not increase overall fossil fuel reductions, but would simply shift where reductions come from. Buildings in regions with high fossil fuel content in their electric power mix would require deeper reductions in electricity use than buildings in regions with lower fossil fuel content in their electric power mix. For agencies with buildings across the nation, the fossil fuel content of their buildings, in the aggregate, would tend toward the national average. Introducing regional differences adds complexity to the rule with little additional benefit. Finally, the source of electricity used in a region may be different than the source of electricity generated in that region. Power may be generated in one place, but shipped via the grid to another area for use. Utilities may purchase power from another utility or a merchant plant at a distant location. While data on power generation is readily available, data on where the electricity in an area comes from and how it was produced is more difficult to trace. This leads to the question of what the appropriate breakdown of region would be—utility district, state, power pool area, or interconnection grid. Based on these preliminary conclusions, DOE proposes to use the national electric power mix in determining the fossil fuel portion of electricity consumption in the rule. Using the national average fossil fuel factor is simpler for Federal agencies and DOE believes it would yield equivalent results. In addition, DOE proposes to calculate and post the value of the fossil fuel generation factor to be used each year on the FEMP Web site and as an update to this regulation 1 rather than requiring agencies to refer to the Buildings Energy Data Book on an annual basis as was proposed in the NOPR. 1 http://energy.gov/eere/femp/federal-energy-management-program . 6. Marginal Source of Electricity The NOPR stated that reductions in future electricity demand are likely to cause electric utilities to reduce the power supplied by those electricity generation units or sources that have the highest marginal costs. DOE believes that over the short and long-run, fossil fuel-powered units would have higher marginal costs than units powered by nuclear, hydropower, or renewable energy sources. DOE invited comments on whether marginal factors to estimate the fossil fuel consumption associated with electricity consumption should be considered, on grounds that marginal factors might better reflect the fossil fuel portion of new generating capacity that is being built. 75 FR 63407. For example, if almost all new electricity generation capacity built for new demand in the coming years is from non-fossil sources of energy, then it might be reasonable for new Federal buildings to reduce only their locally consumed fossil fuel consumption and not focus on reducing electricity demand to meet the requirements of the rule. AGA commented that the rule should not use marginal electricity generation, noting that the most equitable means of including new “marginal” generation into the electric grid is as additional supply to the average mix. (AGA, No. 16 at p. 4) DOD-N recommended using marginal fossil fuel reduction factors, averaged nationally. (DOD-N, No. 25B at p. 4) NIBS commented that it would be appropriate to consider the time of such electricity use and its likely impact on the fossil fuel mix. (NIBS, No. 12 at p. 2) EEI was concerned that the electric grid is changing and the tools used by DOE in the rule are already out of date. (EEI, Public Meeting Transcript, No. 7 at p. 45) EEI commented that the source energy methodology looks backwards and does not account for the dynamic changes to electric generation that will be occurring over the next 20-30 years, and that DOE's 71 percent electric source factor nationwide is outdated and does not account for the states that have renewable portfolio standards. (EEI, No. 10 at p. 3) DOE has considered the issue and is proposing not to use marginal electric source factors. The mix of new electric generating capacity added to the grid varies year-to-year. However, the amount of electricity generated from fossil fuels on an annual basis has varied from 68 percent to 72 percent over the past fifteen years, with no discernible trend. If new, marginal generating capacity were steadily becoming more fossil fuel-dependent or less fossil fuel-dependent, there would be a trend in how much electricity is produced from fossil fuel on an annual basis, but such a trend is not discernible in the current data. In addition, the load growth represented by buildings covered by this rule is likely too small relative to overall electric utility load growth to change utility decisions on investment in new generating resources. Furthermore, as the fossil fuel reduction requirement increases toward 100 percent for buildings for which design for construction begins in FY2030, the marginal factors will be less relevant because all fossil fuel use will be eliminated in any event. For these reasons DOE believes it would be best to continue to use average generating capacity for the fossil fuel generation factor rather than marginal generating capacity. 7. Residential Common Areas The NOPR stated that the RECS baseline for multi-family residential buildings only includes the energy use for individual dwelling units, not any associated conditioned common areas. DOE proposed applying the RECS-derived fossil fuel requirements to all applicable floor space, including both common and non-common areas. 75 FR 63408. Because common areas often have a lower energy intensity than individual dwelling units, using only non-common areas in the calculation for the proposed design's fossil fuel consumption is likely to result in a slightly higher maximum allowable fossil fuel-generated energy requirement than using both common areas and non-common areas in the calculation. This approach will make it easier for building designers to demonstrate compliance for a residential building overall. Because common areas account for only a small fraction of the floor space in multi-family residential buildings, however, the actual effect on fossil fuel reductions would be minimal. AGA and DHHS-IHS-OEHE supported application of the energy use values for non-common areas to all applicable floor space, common and non-common. (AGA, No. 16 at p. 4; DHHS, No. 24 at p. 4) Based on the rationale provided in the NOPR and the supporting public comments, this proposed rule continues the approach proposed in the NOPR. 8. Major Renovations As noted previously in this document, the CBECS and RECS data that provide the baseline for today's requirement are building level data. For major renovations that are whole building renovations, the maximum fossil fuel-generated energy consumption values generated from CBECS and RECS provide requirements that are comparable to the energy consumption of the whole building renovation. However, DOE believes that the maximum consumption levels presented in the proposed tables may not be appropriate for major renovations that are system or component level retrofits. As such, DOE is proposing that the requirements for system and component level retrofits would be based on percentage of whole building fossil fuel consumption represented by the retrofitted system or component. The applicable table value would be multiplied by this percentage to arrive at the maximum allowable energy use of the retrofitted system or component. DOE requests comment on this approach, as well as comment on other approaches that could be used to determine the requirement for system and component level retrofits. 9. Other Two additional comments were submitted that do not fit into one of the scope subcategories. EEI asked how mixed-use buildings would be treated. (EEI, Public Meeting Transcript, No. 7 at p. 19) The proposed rule required agencies to perform a building area-weighted average in order to determine the appropriate baseline for mixed-use buildings. 75 FR 63407. The specific method to do this is found in section 433.200(d)(3) of the proposed rule. NPGA thought a paradox existed in that the required reductions identified for years preceding FY 2030 may change and yet fossil fuel energy consumption reductions may not apply to Federal agencies until the regulations are finalized. (NPGA, No. 23 at p. 4) DOE notes that the specific percentage reduction requirements by fiscal year are defined by statute and cannot be changed by DOE. In the NOPR, DOE stated that DOE intends to revise the maximum allowable fossil fuel-generated energy consumption tables, which are based on the required percentage reductions in the statute, to adjust for climate. 75 FR 63408. DOE has done this in today's rulemaking. DOE acknowledges that the specific means to obtain the FY 2030 goal are not known today, but believes that advances in design practices and technology over the next 20 years will make the requirement increasingly attainable. D. Methodology To Determine Compliance Once the appropriate baseline fossil fuel-generated energy consumption has been determined for commercial buildings and multi-family high-rise residential buildings and low-rise residential buildings, this rule provides the statutorily-mandated reduction requirements to those baseline consumption values. As noted in the NOPR, rather than setting standards by only listing the percentage reductions required, DOE has decided to deduct the statutorily-required percent reductions from the CBECS and RECS baselines to establish the maximum allowable fossil fuel-generated energy consumption for each building type and climate zone. 75 FR 63408. Establishing today's standard as an absolute value should simplify agency use and interpretation of this proposed rule. 1. Whole Building Simulation To determine energy use in the proposed design, DOE proposed in the NOPR that the fossil fuel-generated energy consumption of a proposed new Federal building or major renovation of a Federal building be estimated using the Performance Rating Method found in Appendix G of ANSI/ASHRAE/IESNA Standard 90.1-2004 for commercial and multi-family high-rise residential buildings, and the IECC 2004 Supplement for low-rise buildings. 75 FR 63409. Because of the complexity involved in estimating fossil fuel- generated energy consumption, this requirement would effectively require the use of a whole building simulation tool, which can be difficult and increase cost. As a result, DOE invited comments on alternatives to a whole building simulation. The ICC endorsed the use of the Simulated Performance Alternative found in IECC 2004, but suggested that the rule reference more recent versions. (ICC, No. 11 at p. 3) NRDC and NIBS commented that DOE should work with the energy modeling industry to standardize modeling assumptions and results provided by the simulation programs, and eventually certify modeling programs and users. (NRDC, No. 14 at p. 16; NIBS, No. 12 at p. 2) The International District Energy Association (IDEA) was concerned that the Performance Rating Method in Appendix G of ASHRAE Standard 90.1-2004 is based on energy costs, as it modifies the Energy Cost Budgeting Method in Chapter 11 of ASHRAE Standard 90.1. (IDEA, No. 21 at p. 2) DOE proposes that the estimated fossil fuel use of the proposed building be calculated in accordance with the provisions relating to “the proposed design” in the Performance Rating Method in Appendix G of ASHRAE 90.1-2007. Provisions in Appendix G relating to the generation of a baseline or the Energy Cost Budgeting Approach are irrelevant to today's rule. As stated in the NOPR, the Performance Rating Method in Appendix G of ASHRAE 90.1 and the IECC Simulated Performance Alternative are already prescribed at 10 CFR parts 433 and 435 for determining whether covered new Federal buildings meet the required energy efficiency standards in those sections. In addition, whole building simulations are already performed today for most medium- and large-sized buildings to accurately estimate loads for purposes of sizing HVAC equipment and to evaluate buildings under voluntary advanced building programs. Based on this and the comments received, DOE is not changing this approach in today's rule. On August 10, 2011, DOE published a final rule updating Federal energy efficiency baseline standards in 10 CFR part 435 for low-rise residential buildings to the 2009 IECC. 76 FR 49279. On July 19, 2013, DOE published a final rule updating the Federal energy efficiency baseline standard in 10 CFR part 433 for commercial and multi-family high-rise buildings to ASHRAE Standard 90.1-2010. 78 FR 40945. DOE also acknowledges the need to improve work with the energy modeling industry to standardize assumptions and certify programs and users, but such collaboration is outside the scope of this rule. DOE and ENERGY STAR, drawing upon their experience with EnergyPlus Software and Target Finder, respectively, are participating with the Commercial Energy Services Network (COMNET, www.comnet.org ) to develop energy performance modeling guidelines and procedures. DOE recognizes that the whole building approach likely is not appropriate for major renovations that are limited to system or component level retrofits. As noted previously, for major renovations that are less than whole building renovations (i.e., system or component level retrofits) DOE is proposing establishing the maximum allowable fossil fuel consumption in fiscal years 2013 through 2029 based on the percentage of whole building consumption represented by retrofitted system or component. The applicable table value would be multiplied by this percentage value to arrive at the maximum allowable fossil fuel consumption of the retrofitted system or component. For determining compliance, DOE is proposing basing the subject fossil fuel-generated energy consumption on the system or component as retrofitted. This would require the design engineer to estimate the energy consumption of the systems or components as renovated. 2. Off-Site and On-Site Renewable Energy and Renewable Energy Certificates The NOPR stated that in order to meet the fossil fuel-generated energy consumption reduction requirements mandated by ECPA, fossil fuel-generated energy consumption could be offset with the use of renewable energy. 75 FR 63410. DOE also recognized that there may be physical limitations to the amount of on-site renewable electricity that can be produced, and it may be more affordable for an agency to purchase electricity from centralized renewable energy-generation facilities. DOE was concerned, however, that the purchase of renewable energy-generated electricity via Renewable Energy Certificates or direct Power Purchase Agreements (PPAs) may simply reduce the amount of renewable energy available for purchase by other entities within the U.S. and may not necessarily lead to an overall decrease in domestic fossil fuel-generated energy consumption. In addition, DOE was concerned that the purchase of Renewable Energy Certificates does not involve a long-term binding agreement and can readily be cancelled. DOE indicated in the NOPR that it was leaning toward allowing direct PPAs with a long-term contract to count toward meeting the fossil fuel-generated energy consumption reduction requirements, but not allowing Renewable Energy Certificates. 75 FR 63410. Numerous comments were submitted about Renewable Energy Certificates and PPAs. The Renewable Energy Markets Association (REMA) supported the use of Renewable Energy Certificates and stated that as demand outstrips supply, more renewable energy generation will be built. (REMA, No. 20 at pp. 1-2) REMA also indicated that the purchase of Renewable Energy Certificates is allowed to meet other Federal requirements, and commented that PPAs should be allowed only if the renewable energy attributes (the associated Renewable Energy Certificates) are purchased by the agency as well. (REMA, No. 20 at pp. 1-2) NAD and NREC encouraged the use of Renewable Energy Certificates to stimulate demand for renewable energy generation. (NAD, No. 19 at p. 2; NREC, No. 28 at p. 2) EEI recommended use of both Renewable Energy Certificates and PPAs with a minimum contract term. (EEI, No. 10 at p. 8) The National Nuclear Security Administration (NNSA) commented that Renewable Energy Certificates should be allowed if the renewable energy was generated on Federal property or, from any source, if the contract is for a period of five years or greater. (NNSA, No. 9 at p. 1) DHHS-IHS-OEHE was concerned that unless the availability of renewable energy sources from the grid is allowed and expanded, these fossil fuel reduction goals will not be met, and therefore supported the use of Renewable Energy Certificates and PPAs. (DHHS, No. 24 at pp. 5-6) GSA expressed concern about the requirement for long-term contracts, and indicated that GSA cannot procure renewable energy under PPAs in a manner that would make them economical due to their 10 year utility contracting authority under Federal Acquisition Regulation Part 41. (GSA, No. 26 at p. 2) NIBS strongly discouraged the utilization of PPAs or Renewable Energy Certificates as a mechanism for meeting such requirements, stating that it would hamper interest in energy efficient design. (NIBS, No. 12 at p. 3) AGA opposed the use of Renewable Energy Certificates and PPAs, stating there is no guarantee that they will contribute to fossil fuel reductions. (AGA, No. 16 at p. 5) AGA was also concerned that, because the statute does not address efficient use of energy in Federal buildings, the rule encourages potentially wasteful use of renewables and nuclear-generated electric energy. (AGA, No. 16 at p. 1) AGA and GTI commented that, if PPAs are allowed, the rule should also allow the purchase of natural gas from renewable sources as well, such as biomethane, biopropane, biofuel oil and biomass. (AGA, No. 16 at p. 5; GTI, No. 22 at p. 14) APGA commented that DOE should not allow contracts to deliver off-site renewable energy to count towards on-site fossil fueled energy reductions because such contracts cannot insure that only non-fossil-fueled electrons are delivered to Federal facilities. (APGA, No. 17 at p. 6) In addition to Renewable Energy Certificates and PPAs, DOE received several comments from DOD about allowing agencies to use an agency portfolio approach for renewable electricity produced off-site by the agency. These commenters stated that they encourage investment in renewable energy where it is most cost-effective, which is often across a portfolio rather than on a building-by-building basis. (DOD-OUSOD, No. 25A at p. 1; DOD-N, No. 25B at p. 1; DOD-AF, No. 25C at p. 4) DOE proposes to permit a deduction, subject to limitation, for “on-site renewable electricity generation” and for “off-site renewable electricity generation” (e.g., Renewable Energy Certificates, agency portfolio renewable energy production and off-site PPAs). Today's proposal specifies that “on-site renewable electricity generation” is the amount of electricity to be consumed by the subject building that is contributed by renewable electricity generated at the Federal site or facility on which the subject building will be located. Thermal energy produced from a renewable energy source reduces a building's load and would be treated the same as energy efficiency for purposes of this rule. Federal agencies that choose to use on-site renewable electricity generation would not be permitted to transfer the environmental attributes of the on-site generation. In other words, agencies would not be permitted to convey the REC associated with the on-site project to an off-site project. In the proposed regulation Federal agencies are given credit for on-site renewable energy via the renewable energy and CHP electricity deduction in the calculation for the fossil fuel-generated energy consumption of a proposed design. On-site renewable energy would be subtracted from the proposed design's annual site electrical consumption. The building designer typically uses site electrical energy consumption when calculating the building's fossil fuel-generated energy consumption. Deducting renewable energy generation from the proposed design's site electricity consumption before adjusting the electricity consumption for the electricity source energy factor and the fossil fuel generation factor would ensure that renewable energy generation is given appropriate credit for reducing fossil fuel-generated energy consumption. Biomethane, biopropane, biofuel oil, and biomass used on-site, to the extent they can be identified and accounted for, would not be included in direct fossil fuel energy consumption and would qualify as a renewable energy deduction if used to generate electricity. DOE understands agencies' interest in allowing the use of off-site renewable energy resources, including environmental attributes represented by Renewable Energy Certificates, to help meet the requirements. It may be difficult to achieve the required fossil fuel reductions without use of renewable resources, and on-site renewable resources may not be feasible or available in many cases. Thus, use of off-site renewable electricity resources and/or Renewable Energy Certificates, may be necessary. In addition, with off-site renewable resources, agencies may be better able to optimize production or reduce costs because of resource availability, economies of scale, and other factors. While DOE acknowledges the benefits of off-site renewable energy, DOE has some concerns with allowing the use of off-site renewable energy, including Renewable Energy Certificates, without limitation. DOE is concerned that energy representing a Renewable Energy Certificate that is not under substantial control of the Federal agency claiming the REC because ECPA, as amended, requires that each Federal agency meet the reduction requirements for each of its Federal buildings. DOE is also concerned about RECs being not properly tracked and accounted for, and that a REC may not represent new or additional capacity. Additional administrative and accounting complexity could detract from agency compliance. Therefore, under this SNOPR, agencies would be required to ensure that any renewable energy resources used to meet the rule represent new capacity and are not drawn from existing resources, and the renewable energy generation could not be used to offset the fossil fuel-generated energy consumption of more than one design. DOE believes that requiring off-site generation to represent new capacity would be consistent with the statutory goal of reducing total fossil fuel consumption. DOE acknowledges that increased demand for Renewable Energy Certificates, whether from the Federal sector or elsewhere, will send a market signal to develop more renewable resources rather than reduce the amount of Renewable Energy Certificates available for other entities. DOE also recognizes that many commenters support the use of Renewable Energy Certificates as a compliance path for this SNOPR. To receive credit against the reduction targets under any of the above scenarios, an agency would be required to ensure that the renewable energy environmental attributes are dedicated to meeting the fossil fuel reduction requirements of the subject new or renovated building and not used elsewhere. The renewable energy environmental attributes would need to be retained by the agency. Environmental attributes represent the general environmental benefits of renewable generation such as air pollution avoidance (e.g., sulfur dioxide, nitrogen oxide, methane, carbon dioxide). The exact quantity of the environmental benefit (e.g. pounds of emission reductions of a given pollutant) is not indicated by an environmental attribute, though it can be quantified separately through engineering estimates. The environmental attribute represents all environmental benefits provided by renewable energy generation. DOE recognizes that the December 5, 2013 “Presidential Memorandum—Federal Leadership on Energy Management” (“Presidential Memorandum) prioritizes Federal agency renewable energy sources for purposes of meeting the renewable energy consumption goals in the Presidential Memorandum. Federal agencies should consider the prioritization in the Presidential Memorandum when determining how they would comply with this proposed rule. DOE requests additional comment on the issues related to the use of off-site renewable energy generation, including Renewable Energy Certificates, in complying with the proposed rule. Specifically, DOE is also concerned about, and requests comment on, how the current state of information and markets would allow Federal agencies to reliably trace a Renewable Energy Certificate to an actual reduction in fossil fuel use. 3. Use of Source Energy The NOPR stated that CBECS and RECS data does not provide data on total fossil fuel-generated energy consumption in buildings; however, fossil fuel-generated energy consumption can be calculated from CBECS and RECS data by using the following equation: Fossil fuel-generated energy consumption = Direct consumption of fossil fuels in the building plus the amount of electrical energy consumption that is generated from fossil fuels. 75 FR 63407. In order to determine the amount of electricity consumed in the building that is generated from fossil fuels, it is necessary to convert site electricity to source energy. Source energy is the total amount of energy used at the site, including the energy used to generate and deliver electricity to the site. Site electricity is converted to source energy by multiplying site electricity by the electricity source energy factor. For purposes of today's rule, source energy is further adjusted to account for the portion of electricity generated from fossil fuels by multiplying source energy times the fossil fuel generation factor and adding direct consumption of fossil fuels in the building. DOE did not ask for comment on this issue except as to whether the calculation could be effectively used for on-site combined heat and power systems (discussed later). Nonetheless, DOE received several comments concerning the use of source energy rather than site energy. NREC commented that site energy, which can be easily measured and verified, is the only correct method that can be used. (NREC, No. 28 at pp. 1-2) EEI stated that the use of source energy contradicts the 2007 final rule on energy efficiency performance standards for new Federal buildings, and urged DOE to use site energy. (EEI, No. 10 at p. 2) EEI stated that the use of source energy contradicts the conclusion of ASHRAE's Technology Council Ad Hoc Committee on Energy Targets, where ASHRAE, the American Institute of Architects (AIA), the U.S. Green Building Council (USGBC), and the Illuminating Engineering Society of North America (IESNA) agreed to use site energy as the metric for net-zero energy buildings. (EEI, No. 10 at pp. 4-5) EEI also claimed that the use of source energy will make the reduction targets unattainable. (EEI, No. 10 at p. 7) Finally, EEI argued that site energy metrics would eliminate any game playing or distorted results from the use of on-site renewable energy or CHP systems. (EEI, No. 10 at p. 6) AGA commented in support of DOE's proposed use of source energy. Source energy, AGA stated, is essential to calculating fossil fuel use in both direct primary energy use and electric generation, and is consistent with the recommendations of the National Research Council on energy efficiency standards and measurement approaches, EPA's ENERGY STAR for Commercial Buildings, and national consensus standards such as the Green Buildings Initiative, ANSI standard and proposed IgCC Version 2.0 model code. (AGA, No. 16 at pp. 2-3) AGA recommended, for clarity, that the regulatory definitions include “source” energy. (AGA, No. 16 at p. 4) GTI supported the use of source energy. They commented that site energy incentivizes lower first cost technologies and inadvertently promotes fuel switching away from more full-fuel-cycle energy efficient and lower greenhouse gas-emitting technologies. (GTI, No. 22 at pp. 5, 14) GTI also commented that the proposed DOE definit [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2014-24151. Public record. Not legal advice.