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Proposed Rule2022-27098

Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings

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Published

December 21, 2022

Issuing agencies

Energy Department

Abstract

The Department of Energy ("DOE") is publishing a supplemental notice of proposed rulemaking ("SNOPR") to establish revised energy performance standards for the construction of new Federal buildings, including commercial buildings, multi-family high- rise residential buildings, and low-rise residential buildings per the Energy Conservation and Production Act ("ECPA"), as amended by the Energy Independence and Security Act ("EISA") of 2007. This document presents an updated proposal with a new focus that accounts for the needs of Federal agencies and the goals of President Biden's Administration and responds to comments received on prior notice of proposed rulemaking ("NOPR") and SNOPR documents. Consistent with the requirements of ECPA and EISA, this document presents revised Federal building energy performance standards that would require reductions in Federal agencies' on-site use of fossil fuels (which include coal, petroleum, natural gas, oil shales, bitumens, tar sands, and heavy oils) consistent with the targets of ECPA and EISA and provides processes by which agencies can petition DOE for the downward adjustment of said targets for buildings.

Full Text

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[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78382-78436]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27098]

[[Page 78381]]

Vol. 87

Wednesday,

No. 244

December 21, 2022

Part IV

Department of Energy

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10 CFR Parts 433 and 435

Clean Energy for New Federal Buildings and Major Renovations of Federal
Buildings; Proposed Rule

Federal Register / Vol. 87, No. 244 / Wednesday, December 21, 2022 /
Proposed Rules

[[Page 78382]]

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DEPARTMENT OF ENERGY

10 CFR Parts 433 and 435

[EERE-2010-BT-STD-0031]
RIN 1904-AB96

Clean Energy 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.

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SUMMARY: The Department of Energy (``DOE'') is publishing a
supplemental notice of proposed rulemaking (``SNOPR'') to establish
revised energy performance standards for the construction of new
Federal buildings, including commercial buildings, multi-family high-
rise residential buildings, and low-rise residential buildings per the
Energy Conservation and Production Act (``ECPA''), as amended by the
Energy Independence and Security Act (``EISA'') of 2007. This document
presents an updated proposal with a new focus that accounts for the
needs of Federal agencies and the goals of President Biden's
Administration and responds to comments received on prior notice of
proposed rulemaking (``NOPR'') and SNOPR documents. Consistent with the
requirements of ECPA and EISA, this document presents revised Federal
building energy performance standards that would require reductions in
Federal agencies' on-site use of fossil fuels (which include coal,
petroleum, natural gas, oil shales, bitumens, tar sands, and heavy
oils) consistent with the targets of ECPA and EISA and provides
processes by which agencies can petition DOE for the downward
adjustment of said targets for buildings.

DATES:
Meeting: DOE will hold a webinar on Thursday, January 5, 2023, from
1:00 p.m. to 4:00 p.m. See section VI, ``Public Participation,'' for
webinar registration information, participant instructions, and
information about the capabilities available to webinar participants.
Comments: DOE will accept comments, data, and information regarding
this SNOPR no later than February 21, 2023. Interested persons are
encouraged to submit comments using the Federal eRulemaking Portal at
<a href="http://www.regulations.gov">www.regulations.gov</a>, under docket number EERE-2010-BT-STD-0031. Follow
the instructions for submitting comments. EERE-2010-BT-STD-0031.
Alternatively, interested persons may submit comments, identified by
docket number EERE-2010-BT-STD-0031, by any of the following methods:
(1) Email: <a href="/cdn-cgi/l/email-protection#9cdaf3efeff5f0dae9f9f0cef9f8e9ffe8b1aeacadacb1cfc8d8b1acacafaddcf9f9b2f8f3f9b2fbf3ea">[email&#160;protected]</a>. Include the
docket number EERE-2010-BT-STD-0031 in the subject line of the message.
(2) Postal Mail: Mr. Jeremy Williams, U.S. Department of Energy,
Building Technologies Program, Mailstop EE-5B, 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. If possible, please submit all items on a
compact disc (``CD''), in which case it is not necessary to include
printed copies.
(3) Hand Delivery/Courier: Mr. Jeremy Williams, 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. If possible, please submit all items on a CD, in which
case it is not necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VI of this document.

FOR FURTHER INFORMATION CONTACT:
Mr. Jeremy Williams, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Email:
<a href="/cdn-cgi/l/email-protection#561c3324333b2f78013f3a3a3f373b251633337832393378313920">[email&#160;protected]</a>.
Mr. Matthew Ring, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-2555. Email: <a href="/cdn-cgi/l/email-protection#6c210d181804091b423e05020b2c041d42080309420b031a">[email&#160;protected]</a>.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact the Building Energy Codes Program staff at
<a href="/cdn-cgi/l/email-protection#1456617d78707d7a73517a7166736d577b7071675471713a707b713a737b62">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:
DOE proposes to incorporate by reference the following industry
standards:
ANSI/ASHRAE/IES 90.1-2019, Energy Standard for Buildings Except
Low-Rise Residential Buildings, I-P Edition, copyright 2019 (``ASHRAE
90.1-2019''), into part 433.
ASHRAE 90.1-2019 is available from the American Society of Heating
Refrigerating and Air-Conditioning Engineers, Inc., 180 Technology
Parkway NW, Peachtree Corners, GA 30092; (404) 636-8400;
<a href="http://www.ashrae.org">www.ashrae.org</a>.
ICC 2021, Redline Version, Copyright 2021, (``IECC 2021'') into
part 435.
IECC 2021 is available from the International Energy Conservation
Code (IECC), 4051 West Flossmoor Road, Country Club Hills, IL 60478, 1-
888-422-7233, or go to <a href="https://www.iccsafe.org/">https://www.iccsafe.org/</a>.
See section V.M of this document for a further discussion of these
standards.

Table of Contents

I. Introduction
A. Authority
B. Background
C. Coverage of the Regulation
II. Discussion of Proposed Standards
A. Performance Standards for Fossil Fuel-Generated Energy
Consumption
B. Compliance With Performance Standards for New Construction
and Major Renovations of a Whole Building
C. Compliance With Performance Standards for Major Renovations
Within a Building
D. Development of Fossil Fuel-Generated Energy Consumption
Target
E. Petitions for Downward Adjustment
F. Terminology To Be Defined in This Rulemaking
III. Additional Discussion Including Related Comments
A. 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 Relevant Comments
B. Establishing and Using the Baseline
1. CBECS and RECS Baselines
2. Climate Adjustment
3. Plug and Process Loads
4. Differentiating Between Fossil Fuels
5. Regional Fossil Fuel Factors
6. Marginal Source of Electricity
7. Residential Common Areas
8. Major Renovations
9. Other Relevant Comments
C. 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. Other Relevant Comments
D. Petitions for Downward Adjustment
1. Technical Impracticability 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

[[Page 78383]]

6. Make Information Publicly Available
7. Narrow the Use of Petitions
8. GSA Tenant Agencies
9. Other Relevant Comments
E. Impacts of the Rule
1. Cost Impacts
2. Other Impacts
F. Guidance and Other Topics
IV. Methodology, Analytical Results, and Conclusion
A. Cost-Effectiveness
B. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
C. Monetization of Emissions Changes
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
D. Conclusion
E. Reference Resources
V. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Description of Materials Incorporated by Reference
VI. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
VII. Approval of the Office of the Secretary

I. Introduction

The following section briefly discusses the statutory authority
underlying this proposed rule, as well as some of the relevant
historical background related to the establishment of a fossil fuel-
generated energy consumption reduction rule for Federal buildings.

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 the Department of Energy (``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))
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\1\ Under 40 U.S.C. 3301(a)(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 Native American and Native Alaskan
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.
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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 (``FY'') 2003
(as measured by Commercial Buildings Energy Consumption Survey
(``CBECS'') or Residential Energy Consumption Survey (``RECS'') data
from the DOE's Energy Information Administration (``EIA'') by 55
percent beginning in FY2010, 65 percent beginning in FY2015, 80 percent
beginning in FY2020, 90 percent beginning in FY2025, and 100 percent
beginning in FY2030, also shown in the Table I.1. (42 U.S.C.
6834(a)(3)(D)(i)(I))

Table I.1--Building Percentage Reduction Requirements by Fiscal Year
------------------------------------------------------------------------
Percentage
Fiscal year reduction
------------------------------------------------------------------------
2010...................................................... 55
2015...................................................... 65
2020...................................................... 80
2025...................................................... 90
2030...................................................... 100
------------------------------------------------------------------------

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 the General
Services Administration (``GSA''). (Id.)
The term ``fossil fuel-generated energy consumption'' is not
defined in section 433 of EISA 2007. In this SNOPR, DOE is proposing to
apply the term ``fossil fuel-generated energy consumption,'' for
purposes of meeting the reduction targets in EISA section 433, as only
energy consumption from on-site fossil fuel used by equipment and
systems designed to support building operations (also referred to as
Scope 1 uses). In this SNOPR, DOE proposes that these initial standards
would not cover certain process loads, manufacturing/industrial
activities, unique research activities or back-up emergency generators
nor would the standards cover electricity or other purchased utility
consumption supplied from the grid and generated using fossil fuels
off-site. However, DOE may re-examine the scope of this term and
coverage in future updates of these standards.

B. Background

This SNOPR proposes to amend certain portions of 10 CFR parts 433
and 435, the regulations governing energy efficiency in Federal
buildings. DOE previously published a notice of proposed rulemaking
(``NOPR'') in the Federal Register on October 15, 2010, which outlined
a proposal to implement section 433 of EISA. 75 FR 63404. A public
meeting on the NOPR was held on November 12, 2010, and public

[[Page 78384]]

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 identified
additional areas for clarification and consideration that would benefit
from further public comment. DOE issued a supplemental notice of
proposed rulemaking (2014 SNOPR) on October 14, 2014. 79 FR 61694.
Comments were accepted through December 15, 2014.\4\ To ensure
alignment with the decarbonization goals of the Biden Administration,
DOE is revising its proposal and issuing a second SNOPR. This revised
SNOPR will take into consideration previous relevant comments from the
2014 SNOPR as well as considerations of Administration objectives to
reduce emissions across federal operations, as appropriate.
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\3\ Complete contents of the docket folder may be found at
<a href="http://www.regulations.gov/#!docketDetail">www.regulations.gov/#!docketDetail</a>;D=EERE-2010-BT-STD-0031.
\4\ Id.
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In this second SNOPR, DOE makes a number of changes from the 2014
SNOPR that would 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 of this document. This second SNOPR:
<bullet> Converts the proposed rule from a kBtu per ft\2\
accounting of total fossil fuel use (including both on-site fossil fuel
use and the embedded fossil fuels in on-site electricity use) to use
kBtu per ft\2\ of on-site fossil fuel usage or Scope 1 GHG emissions in
CO<INF>2</INF>e (``Carbon Dioxide Equivalent Gases'') per ft\2\.
<bullet> Implements a shift multiplier for Federal buildings that
operate on extended schedules compared to the private sector buildings
sampled in CBECS. This multiplier will apply solely to Federal
commercial buildings regulated in 10 CFR part 433 as residential
buildings of all types in both the private sector and Federal sector
are assumed to be operated 24 hours a day.
<bullet> Revises the calculation of fossil fuel usage for the
proposed design to make it consistent with how DOE tracks fossil fuel
usage and greenhouse gas emissions in reporting related to EISA 2007
section 432.
<bullet> Clarifies applicability of the rule to EISA-subject major
renovations in three categories--renovations of all Scope 1 fossil
fuel-using systems, Scope 1 fossil fuel-using system level renovations,
and Scope 1 fossil fuel-using component level renovations.
<bullet> Clarifies applicability of the rule to leased facilities,
noting that the only leases subject to this proposed rule are new
leases for buildings built specifically for the purpose of being leased
to the Federal government.
<bullet> Clarifies an approach to determine required fossil fuel-
generated energy consumption levels for EISA-subject major renovations
that are limited to system or component level retrofits.
<bullet> Clarifies an alternative compliance method for buildings
with process loads that are not included in CBECS and RECS.
<bullet> Clarifies that process loads of building types not
included in CBECS are not subject to the fossil fuel reductions,
including, for example, process loads associated with the charging of
electric vehicles and the fueling of natural gas fueled vehicles.
<bullet> Clarifies that renewable fossil fuels such as biomethane
and biopropane qualify as exemptions from the calculation of fossil
fuel usage.
<bullet> Clarifies the definition of Scope 1 fossil fuel-generated
energy consumption as the metric being used for this rule (only
including consumption for on-site fossil fuel use, not embedded fossil
fuels in on-site electricity use).
<bullet> Clarifies the definition of technical impracticability for
purposes of the petition process.
<bullet> Modifies definitions of major renovations to reflect focus
on Scope 1 fossil fuel-generated energy consumption and fossil fuel-
using systems as opposed to the whole building fossil-fuel generated
energy consumption and all building systems.
Over the past few years, DOE has addressed energy efficiency
requirements for Federal buildings as mandated in ECPA. DOE published a
final rule updating Federal building energy efficiency standards for
commercial or multi-family high-rise residential buildings to ASHRAE
Standard 90.1-2019 on April 7, 2022. 87 FR 20293. DOE also published a
final rule updating Federal building energy efficiency standards for
low-rise residential buildings to the 2021 International Energy
Conservation Code (``IECC'') on April 5, 2022. 87 FR 19613. Prior to
that, DOE published a final rule updating the Federal building energy
efficiency standards for low-rise residential buildings to the 2015
IECC on January 10, 2017 (82 FR 2857), and a final rule updating
Federal building energy efficiency standards for commercial and multi-
family high-rise residential buildings to ASHRAE Standard 90.1-2013 on
November 6, 2015. 80 FR 65749. DOE also published a final rule
regarding green building certification systems for Federal buildings
that applied to Federal commercial or multi-family high-rise
residential buildings and low-rise residential buildings on October 14,
2014. 79 FR 61563.

C. Coverage of the Regulation

This SNOPR applies to a defined subset of new Federal buildings and
major renovations to Federal buildings, as specified in section 433 of
EISA 2007. (See 42 U.S.C. 6834(a)(3)(D)(i)) 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)).
The subset of Federal buildings for which this rule will apply fall
under two categories and will be referred collectively to as ``EISA-
subject buildings.'' The first qualifying category of EISA-subject
buildings includes any new Federal buildings or major renovations to
Federal buildings that are public buildings, as defined in 40 U.S.C.
3301,\5\ for which transmittal of a prospectus to Congress is required
under 40 U.S.C. 3307. Under 40 U.S.C. 3307(a)(1), a transmittal of a
prospectus to Congress is required if a total expenditure in excess of
$1,500,000 is required to construct, alter, or acquire

[[Page 78385]]

the public building.\6\ Under 40 U.S.C. 3307(h), the GSA Administrator
may adjust this value annually to account for construction cost
increases. GSA's annual prospectus threshold for FY 2022 is
$3,375,000.\7\ GSA also provides a separate dollar threshold for
alterations in leased public buildings for which a prospectus is
required. In FY 2022, the cost threshold for alterations in leased
buildings for public purposes is $1,687,500.
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\5\ Under 40 U.S.C. 3301(a)(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 Native American and native Alaskan
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.
\6\ 40 U.S.C. 3307(a) also contains a second prospectus
threshold in 40 U.S.C. 3307(a)(3) which applies to alterations of
buildings which are under lease by the Federal Government for use
for a public purpose if the cost of the alteration will exceed
$750,000. This threshold is one-half of the threshold for all other
new construction or alterations of existing buildings.
\7\ See GSA Annual Prospectus Thresholds at <a href="http://www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds">www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds</a>.
---------------------------------------------------------------------------

The second qualifying category of EISA-subject buildings covers any
new Federal buildings or major renovations to Federal buildings that
are not public buildings and for which the construction cost or major
renovation cost is at least $2,500,000 (in 2007 dollars, adjusted for
inflation). Agencies can calculate what that adjusted cost threshold
would be currently by visiting (<a href="https://data.bls.gov/cgi-bin/cpicalc.pl">https://data.bls.gov/cgi-bin/cpicalc.pl</a>). As noted previously, GSA also provides a separate dollar
threshold for alterations in leased public buildings ($1,687,500 in
FY2022). DOE will use both of these thresholds (i.e., the $2,500,000 in
FY 2007 dollars, and the $1,687,500 in FY2022, each adjusted for
inflation) for this second category of EISA-subject buildings (i.e.,
buildings for which a prospectus is not required). With respect to the
threshold for alterations in leased buildings, while section 433 of
EISA prescribes a $2,500,000 (in 2007 dollars) threshold for major
renovations for which a prospectus is not required, DOE proposes to use
the lower GSA prospectus threshold for alterations in leased buildings
for this second category of EISA-subject buildings because it is
consistent with: (1) current agency practice for such buildings, and
(2) the scheme Congress established in EISA section 433 where the
prospectus dollar thresholds (e.g., $2,500,000 in 2007 dollars) are
nonetheless applied to buildings and renovations for which a prospectus
is not required.
For example, a building in the first category would include a
federal office building for which design for construction began in FY
2022 and with construction or renovation costs that are more than
$3,375,000. A building in the second category would include a
residential building (which is excluded from the definition of ``public
building'' under 40 U.S.C. 3301) with construction or renovation costs
of at least $3,375,000 in FY22 ($2,500,000 (in 2007 dollars, adjusted
for inflation)). DOE expects that the majority of low-rise residential
buildings that meet the cost threshold will be low-rise multi-family
buildings or low-rise dormitories as Federal low-rise single-family
homes are not likely to meet the cost threshold.
When identifying major renovation projects within an EISA-subject
building which could be subject to this regulation because of the cost
thresholds, agencies should consider any energy conservation measures
(``ECMs'') which have been identified in that building and reported to
DOE, as per 42 U.S.C. 8253(f)(3)(A). If identified ECMs include
projects which would impact on-site fossil fuel usage, the agency
should consider the total of those project costs bundled together when
implementing those ECMs to determine whether the total cost triggers
EISA compliance. ECMs that impact on-site fossil fuel usage may
include, for example: adding new fossil fuel-using heating, hot water,
or cooking systems to an existing building; direct replacement of
existing fossil fuel-using heating, hot water, or cooking systems in an
existing building; and modification or replacement of any building
systems (including systems such as lighting or building envelope
systems that do not use fossil fuel directly) that lead to an increase
or decrease in fossil fuel use). Such an approach would address a
situation where individual pieces of on-site fossil fuel consuming
technology are replaced with similar technologies in a piecemeal
approach instead of a more strategic and comprehensive way that
furthers the goals of EISA along with the Administration's priorities
to reduce Federal agencies' reliance on fossil fuels and reduce on-site
Federal building emissions.

II. Discussion of Proposed Standards

A. Performance Standards for Fossil Fuel-Generated Energy Consumption

To provide flexibility while adhering to the statutory origins of
the rule, DOE is proposing to keep the performance standards for fossil
fuel-generated energy consumption metric from the 2014 SNOPR (expressed
in kBtu per ft\2\ of building gross area) while also providing an
equivalent conversion of the energy metric measured in greenhouse gas
(GHG) metrics. As mentioned earlier, DOE has chosen to focus on on-site
fossil fuels or Scope 1 emissions, at least initially. This is a shift
from the proposed scope of the 2014 SNOPR, which also included
consideration of off-site fossil fuel consumption. DOE determined to
focus this rule on onsite fossil fuel use in light of recent Federal
building initiatives and efforts to address fossil fuel use and
emissions generated off-site (e.g., Executive Order 14057). DOE may
address emissions generated off-site (i.e., Scope 2 emissions) at a
later time.
This SNOPR provides agencies with two separate but equivalent sets
of fossil fuel generated energy consumption targets--(1) fossil fuel-
generated energy consumption based on a summation of on-site fossil
fuel usage expressed in kBtu per ft\2\ of building gross area and (2) a
new carbon dioxide equivalent (``CO<INF>2</INF>e'') per ft\2\ metric
based on the emissions associated with the on-site fossil fuel-
generated energy consumption. Both metrics are based directly on the
reported usage of fossil fuels in CBECS and RECS, with the fossil fuel-
generated energy consumption metric simply adding up the fossil fuel
usage and converting it to kBtu and the CO<INF>2</INF>e metric
converting the amount of each fuel used to CO<INF>2</INF>e.
Agencies will be allowed to use either metric for their design
targets. DOE opted to include the GHG metric, which will measure Scope
1 emissions, because agencies are already required to track and report
their GHG emissions annually utilizing the ``Federal Greenhouse Gas
Accounting and Reporting Guidance'' (Council on Environmental Quality
(``CEQ''), January 17, 2016). DOE is proposing to align the
quantifications and terminologies with those established in the Federal
Greenhouse Gas Accounting and Reporting Guidance, which categorizes
Scope 1 emissions into ``Generation of electricity, heat, cooling, or
steam'', ``Mobile sources'', ``Fugitive emissions'', and ``Process
emissions''. As mentioned earlier, at this time, DOE is proposing that
the scope of this rule to be focused only on the on-site fossil fuel
associated with the ``Generation of electricity, heat, cooling, or
steam''.
DOE is proposing two exceptions to the scope of coverage of the
standards in this SNOPR which differ from how emissions are instructed
to be tracked by the Federal Greenhouse Gas Accounting and Reporting
Guidance. First, DOE is proposing to exclude on-site fossil fuel energy
generation or Scope 1 emissions associated with emergency backup
generation of electricity from the scope of this rule. The Federal
Greenhouse Gas Accounting and Reporting Guidance for the category of
Scope 1 emissions from ``generation of electricity, heat, cooling,

[[Page 78386]]

or steam'' requires tracking and reporting for emergency generators.
However, DOE intends for agencies to include all on-site fossil fuel
use or Scope 1 emissions associated with non-emergency generation from
backup generators (such as those for peak shaving or peak shifting) in
the scope of this rule. DOE may revisit the issue of whether to include
these on-site fossil fuel uses in the future. DOE also notes that if
agencies use their backup generators for both purposes, they will be
required to calculate what fraction of their backup generator Scope 1
emissions is associated with emergency use and what fraction is
associated with non-emergency use.
Second, DOE proposes to exclude any energy generation or Scope 1
emissions associated with biomass fuels from this rule, as they are not
fossil fuel based and thus fall outside the coverage of this rule. DOE
acknowledges that CEQ's guidance is different on biomass but is
complimentary to provide additional coverage outside the fossil fuel
scope mandated by statute for this proposed rulemaking. The Federal
Greenhouse Gas Accounting and Reporting Guidance, unlike this rule, is
not limited to fossil fuel-based emissions, and states that Scope 1
emissions include ``emissions from biomass combusted for production of
electricity, heat, cooling, or steam''. However, because EISA 2007
directed DOE to establish regulations that require fossil fuel-
generated energy consumption reductions, and biomass is not a fossil
fuel, DOE has intentionally left biomass out of the CBECS and RECS
targets developed for this rule. Agencies therefore would not include
any energy consumption or Scope 1 emissions from biomass in their
calculations.
Also, at this time DOE is focusing the scope of the SNOPR to
regulate on-site fossil fuel use or Scope 1 on-site emission from
stationary combustion sources. As such, any emissions associated with
natural gas for alternatively fueled vehicles (``AFVs'') (or any other
alternative fuel defined at 42 U.S.C. 13211 that is provided at a
Federal building) would be excluded from coverage of these standards.
In addition, for buildings with manufacturing or industrial process
loads, DOE notes that the CBECS and RECS data that provide the targets
for this rule do not contain manufacturing or industrial process loads.
Therefore, DOE proposes to exclude these loads from coverage as well.
For buildings with such process loads, the process loads will need to
be accounted for in the analysis of the building's fossil fuel
consumption and GHG emissions but would not be subject to the
percentage reductions in fossil fuel-generated energy consumption
(Scope 1 GHG emissions) required for the building related loads.

B. Compliance With Performance Standards for New Construction and Major
Renovations of a Whole Building

DOE has developed quantitative requirements to determine compliance
with the fossil fuel performance standards for new construction and
major renovations (i.e., major renovation of all Scope 1 fossil fuel-
using systems in a building) of EISA-subject buildings. Consistent with
the changes proposed in this SNOPR, DOE is proposing to define the term
``Major renovation of all Scope 1 fossil fuel-using systems in a
building,'' which DOE proposes to define as a renovation of all Scope 1
fossil fuel-using systems on an existing building that is so extensive
that it replaces all scope 1 fossil fuel-using systems in the building.
This term includes, but is not limited to, comprehensive replacement or
restoration of most or all major systems, interior work (such as
ceilings, partitions, doors, floor finishes, etc.), or building
elements and features. DOE also refers to such major renovations as
``whole building'' renovations throughout this preamble.
The proposed quantitative requirements would require agencies to
calculate the on-site fossil fuel-generated energy consumption in kBtu
of fossil fuels or the Scope 1 GHG emissions in CO<INF>2</INF>e of
their proposed building design and compare that estimate to the
allowable fiscal year percentage reduction target found in the target
tables in appendix A. Per statute (42 U.S.C. 6834), DOE has provided
three compliance years in this SNOPR, those EISA-subject buildings for
which the design for construction or major renovation begins in the
FY2024, FY2025 to FY2029, and for those which the design for
construction or major renovation begins during or after FY2030.
Fundamentally, the calculation would require agencies to determine
the allowable target (in either kBtu of on-site fossil fuels or Scope 1
greenhouse gas (``GHG'') emissions attributed to the generation of
electricity, heat, cooling, or steam) for stationary combustion sources
as per ``Federal Greenhouse Gas Accounting and Reporting Guidance''
(Council on Environmental Quality (``CEQ''), January 17, 2016). The
kBtu values or the metric tons of CO<INF>2</INF>e from the Scope 1
emissions can then be divided by the floor area of the building and
converted to per square foot (metric tons of CO<INF>2</INF>e per square
foot) value that can be compared with the target values in appendix A.
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 EISA-subject buildings for which design for construction or
whole building renovation begins in the FY2024 to FY2029, tables of the
proposed maximum allowable on-site fossil fuel-generated energy
consumption (expressed in both kBtu per ft\2\ and Scope 1 GHG emissions
in CO<INF>2</INF>e per ft\2\) by building type and climate zone are
provided. The proposed values in the tables come from DOE's 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 kBtu and Scope 1 GHG emissions in
CO<INF>2</INF>e. As noted previously, DOE is proposing to define the
term ``Major renovation of all Scope 1 fossil fuel-using systems in a
building'' as a major renovation of all scope 1 fossil fuel-using
systems in a building that is so extensive that it replaces all scope 1
fossil fuel-using systems in the building. This term includes, but is
not limited to, comprehensive replacement or restoration of most or all
major systems, interior work (such as ceilings, partitions, doors,
floor finishes, etc.), or building elements and features. DOE also uses
the term ``whole building renovation'' in reference to these types of
renovations throughout this preamble.
For EISA-subject buildings for which design for construction or
whole building renovation begins in fiscal year 2030 or beyond, the
fossil fuel-generated energy consumption of the building must be zero
for all building types and climate zones, based on the calculation
established in the regulations.

C. Compliance With Performance Standards for Major Renovations Within a
Building

To determine compliance with the fossil fuel performance standards
for major renovations of systems or components within EISA-subject
buildings, DOE has developed streamlined proposed prescriptive
requirements. The proposed prescriptive requirements in this case would
be that the systems within the building undergoing major renovation
would be brought up to the performance requirements of the individual
sections of ASHRAE 90.1-2019 (chapters 5-10).

[[Page 78387]]

DOE is not proposing fiscal year timeframes for these requirements to
apply, but rather, agencies would begin implementing them upon
effective date of the rule. For major renovations in EISA-subject
buildings which meet the project cost threshold and coverage
requirements that are less than whole building renovations (i.e.,
projects within the existing building comprising of retrofits to a
single system or component such as a HVAC system or a chiller),
agencies would be required to follow the following prescriptive
requirements.
A major renovation within a building is defined as a major
renovation of a scope 1 fossil fuel-using building system or scope 1
fossil fuel-using component that provide significant opportunities for
energy efficiency or reduction in fossil fuel-related energy
consumption. This includes, but is not limited to, replacement of the
HVAC system, hot water system, or cooking system, or other fossil fuel-
using systems or components of the building that have a major impact on
fossil fuel usage. For component level renovations, meaning just a
product or piece of equipment, agencies would be required to utilize
electric or non-fossil fuel using Federal Energy Management Program
(``FEMP'') designated or ENERGY STAR equipment, which follow existing
Federal requirements for equipment efficiency (found in 10 CFR part
436, subpart C, ``Agency Procurement of Energy Efficient Products'').
For system level renovations, agencies would be required to utilize
electric or non-fossil fuel using FEMP designated or ENERGY STAR
equipment, in alignment with 10 CFR part 436, subpart C and would also
be required to meet the system level requirements for the systems being
renovated in the model energy codes used to establish baseline energy
efficiency standards for Federal buildings (i.e., the current ASHRAE
Standard 90.1 for Federal commercial and high-rise multi-family
buildings covered under 10 CFR part 433 or the current IECC for Federal
low-rise buildings covered under 10 CFR part 435.)
While this SNOPR would only cover systems and components that
utilize on-site fossil fuels, agencies should ensure that projects that
could have secondary impacts on fossil fuel using equipment, such as
lighting or window replacement projects are considered. DOE encourages
agencies to consider whole building optimization for any type of major
renovation project to ensure no adverse impacts to on-site fossil fuel
use. DOE also encourages on-site renewables such as solar and storage
as good practice. DOE is not including on-site solar as a means to
offset on-site fossil fuel consumption because it will not reduce the
overall on-site contribution even though it is a means to reduce
emissions from the electricity use of Federal building. DOE requests
that agencies provide comments on how to ensure major renovations which
do not directly replace on-site fossil fuel using equipment could be
incorporated in this rule (e.g., lighting replacement projects that
indirectly increase onsite fossil fuel usage through decreased internal
gains and higher subsequent heating loads).

D. Development of Fossil Fuel-Generated Energy Consumption Target

To develop the target values in appendix A, DOE utilized CBECS and
RECS data to determine the on-site fossil fuel usage by fossil fuel
type for each building in CBECS or RECS and then applied two
transformations to that data.
The CBECS and RECS data was parsed into the 19 climate zones used
in the current Federal baseline standards for commercial and multi-
family high-rise residential buildings, which rely on ASHRAE Standard
90.1-2019. The same 19 climate zones are used in the current Federal
baseline standards for low-rise residential buildings, which rely on
the 2021 IECC.
The first transformation DOE performed was converting the fossil
fuel consumption data collected and reported in CBECS and RECS by
building and by fossil fuel into kBtu, dividing by the building area,
applying the weighting factors associated with the building, and
assigning each building to one of the building type/climate zone bins.
The resulting target is expressed in terms of allowable kBtu per square
foot by building type and climate zone.
The second transformation was taking the same fossil fuel
consumption data reported in CBECS and RECS for each building,
multiplying the fossil fuel usage for each fuel type by the applicable
GHG coefficient from the CEQ guidance for each fuel type, dividing by
the building area, applying the weighting factors associated with the
building, and assigning each building to one of the building type/
climate zone bins. The resulting target is expressed in terms of
allowable CO<INF>2</INF>e (in metric tons of CO<INF>2</INF>e) per
square foot by building type and climate zone. The resulting targets
are shown in appendix A to subpart B of parts 433 and 435 in Table A-1a
and Table A-1b.

E. Petitions for Downward Adjustment

Under section 433 of EISA 2007, agencies other than GSA may
petition DOE for an adjustment to the fossil fuel-generated energy
consumption 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. The 2014 SNOPR proposed allowing GSA
tenant agencies with significant control over building design to
petition DOE, and that proposal is carried forward into this second
SNOPR. This SNOPR proposes a list of what information would be required
in a petition for a downward adjustment for a new building and for
major renovations that are whole building renovations. This includes a
description of the building and associated components and equipment, an
explanation of why compliance with the requirements is technically
impracticable considering 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, the
largest feasible reduction in fossil fuel-generated energy consumption
that can reasonably be achieved, and a description of measures that
were evaluated but rejected. As proposed, the Director of FEMP will
review the petition and make a best effort to return the complete
petition in 45 calendar days of submittal (see 42 U.S.C.
8253(i)(3)(B)(iv)); incomplete petitions will not be subject to this
timeframe and may result in delays.
Additionally, this rulemaking proposes a separate downward
adjustment process for major renovations that are system or component
level retrofits. Upon application, a major renovation that is limited
to a component level retrofit will 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 using ENERGY STAR or FEMP designated products.
Upon application, a major renovation that is limited to a single system
or multiple systems will receive a downward adjustment equal to the
energy efficiency level that would be achieved through the use of the
same ENERGY STAR or FEMP designated products as required for component
renovations and through use of the system level requirements for
renovations found in the baseline energy efficiency standards in 10 CFR

[[Page 78388]]

part 433 (ASHRAE Standard 90.1-2019) or 10 CFR part 435 (the 2021
IECC). If the petition only contains component level retrofits for
adjustment consideration, the Director of FEMP will review the petition
and make a best effort to return the complete petition within 20
calendar days of submittal (see 42 U.S.C. 8253(i)(3)(B)(iv));
incomplete petitions will not be subject to this timeframe and may
result in delays. DOE is also considering a separate petition process
for Department of Defense projects that serve critical national
security functions. Under this separate process, the head of the agency
designing the building (or his or her designee) must certify that
meeting the Scope 1 fossil fuel-based energy consumption targets would
be technically impracticable because the building, system, or component
serves a critical national security function and providing basic
facility or project design information may divulge sensitive national
security information. The petition must be accompanied by a statement
that the agency has reduced the fossil fuel-based energy consumption of
the building, system or component and complied with the other
requirements of this part to the maximum extent practicable. DOE
believes this separate process would be protective of critical national
security projects and information, while also ensuring that DOE meets
its petition obligations under 42 U.S.C. 6834. However, DOE recognizes
that the term ``critical national security function'' is potentially
ambiguous. DOE also recognizes that agencies may need flexibility in
defining what buildings or projects serve critical national security
functions, and that a pending petition may delay projects that serve
critical national security functions.
DOE requests comment on (i) a separate petition process for
buildings and projects serving critical national security functions,
(ii) if and how DOE should define ``critical national security
functions'', (iii) whether such buildings or projects (or some of them)
should be exempt from the scope of the proposed rule, and (iv) how
agencies should use their own discretion in determining what buildings
or projects serve critical national security functions.

F. Terminology To Be Defined in This Rulemaking

This SNOPR adds definitions for ``construction cost,'' ``design for
renovation,'' ``fiscal year (``FY''),'' ``major renovation,'' ``major
renovation cost,'' ``major renovation of a whole building,'' ``major
renovation of a building system or component,'' ``multi-family high-
rise residential building,'' and revises the definition for ``proposed
building.'' For the purposes of establishing the targets, this proposed
rulemaking establishes the definitions of 16 categories of commercial
buildings and 5 categories of residential dwelling units which cover
all residential buildings, including low-rise (single-family and multi-
family), mid-rise apartment buildings, and high-rise apartment
building.
The 16 categories of commercial buildings defined 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 (not applicable), retail (other than mall), service,
and warehouse and storage. Many of these commercial building categories
are further divided into building types, providing a total of 48
commercial building types. These building categories and building types
represent the high-level Principle Building Activity (``PBA'') and low-
level Principle Building Activity Plus categories in the 2003 CBECS.
The five categories of residential buildings are divided into five
building/activity types: mobile, multi-family in 2-4-unit buildings,
multi-family in 5 or more unit buildings, single-family attached, and
single-family detached. These building types represent the housing unit
types in the 2005 RECS. Residential buildings that fall under 10 CFR
part 435 and multi-family mid-rise and high-rise buildings that fall
under 10 CFR part 433 will use these same categories. For the purposes
of analysis of the rule, DOE assumes that most multi-family high-rise
residential buildings will fall into the ``multi-family in 5 or more
unit buildings'' based on the most typical buildings representative of
the Federal building.
Federal agencies would be required to select from these 53
categories to identify the fossil fuel-generated energy consumption
target (expressed in both kBtu per ft\2\ and Scope 1 GHG emissions in
CO<INF>2</INF>e per ft\2\), for their new construction or building
undergoing a major renovation. DOE notes that the building types
available from CBECS and RECS do not correspond directly to the
building types used in the Federal Real Property Profile (``FRPP'').
Thus, agencies may need to area-weight the floor space these CBECS and
RECS targets for Federal buildings that do not correspond directly to
the CBECS or RECS building types. For example, a DOD Post Exchange
building might have aspects of Food Sales, Food Service, and
Mercantile, necessitating the development of an area-weighted target.
Similarly, a DOD barracks building might include aspects of Lodging or
Residential, Education, and Warehouse, again necessitating the use of
an area-weighted mapping.

III. Additional Discussion Including Related Comments

DOE received 179 comments on the 2014 SNOPR from 27 different
entities.\8\ The comments were analyzed and categorized into the same
six major categories used to categorize comments on the NOPR: Scope and
Applicability of the Proposed Rule, Baseline, Methodology, Impacts,
Petition for Downward Adjustment, Impacts of the Rule, and Guidance.
Each major category of comment was broken down into multiple
subcategories for discussion purposes.
---------------------------------------------------------------------------

\8\ Comments received on the proposed rule are designated by the
commenter or commenting organization, the DOE assigned number of the
individual comment, and the page number of the commenters or
commenting organizations submission.
---------------------------------------------------------------------------

DOE believes that many of the prior comments may no longer be
appropriate or applicable given recent Federal building initiatives
(e.g., Executive Order 14057) and the significant change in the scope
of the rule in this second SNOPR. Therefore, in this SNOPR, DOE only
discusses comments relevant to DOE's current proposal, and only in a
manner applicable to this proposal. DOE encourages those agencies and
other stakeholders who commented on the 2014 SNOPR to read this
proposed rule and provide further comment on this updated proposal.

A. Scope and Applicability of the Proposed Rule

This section discusses the scope and applicability of the proposed
rule and the comments received on the 2014 SNOPR regarding that topic.
The subcategories of comments are determining the $2.5 million
threshold for applicability of the rule, compliance date of the rule,
major renovations, multiple buildings, leased buildings, Federal
buildings overseas, residential buildings, privatized military housing,
and other relevant comments.
1. Determining the $2.5 Million Threshold for Applicability of the Rule
DOE received four comments including the Clean Energy Rule'' should
apply to all new construction without consideration of the $2.5 million
threshold,'' ``the $2.5 million threshold implies that low-rise
residential buildings (such as military

[[Page 78389]]

family housing) will not be included,'' ``replace the mention of the
$2.5 million in 2007 dollars with a table of year by year amounts,''
and ``do not use the $2.5 million threshold for major renovations as
the definition of those renovations already mentions `significant
opportunities' ''. In light of the comment to provide tables with the
year-by-year the $2.5 million in 2007 dollars, DOE has provided a link
to the GSA website where such a table resides. See <a href="http://www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds">www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds</a>. In
response to comments suggesting different cost thresholds, the cost
threshold at 42 U.S.C. 6834(3)(D)(I) forms the basis of the $2.5
million in 2007 cost threshold. DOE maintained use of this threshold in
this SNOPR for consistency with the statutory requirement.
2. Compliance Date of the Rule
DOE received two comments on this topic, including a comment that
the rule is overdue and another that DOE should finalize this rule only
when DOE feels that agencies can meet the requirements in the rule,
especially for the requirements in year 2030 and beyond. DOE is issuing
this SNOPR with the intent of establishing these standards
expeditiously. DOE also believes that agencies can now meet the
requirements of this revised SNOPR as the new proposal would simply
require elimination of on-site fossil fuel usage in the years 2030 and
beyond.
3. Major Renovations
DOE received four comments on the 2014 SNOPR related to major
renovations, including (1) agencies might break up their renovations
into smaller pieces to avoid the rule's scope, (2) DOE should eliminate
requirements for major renovations that involve single components or
systems, (3) DOE should provide instructions for how to deal with major
renovations for part of a building, and (4) agreement with DOE's
previous decision to drop a 25 percent replacement cost threshold that
appeared in the original NOPR. In response, DOE accepted the first,
third, and fourth comments, but rejected the second comment. DOE will
attempt to discourage the possibility of ``breaking up renovation
projects to get around the cost threshold'' in the guidance document
that will accompany this rule. DOE notes that section 433 states that
``[i]n establishing criteria for identifying major renovations that are
subject to the requirements of this subparagraph, [DOE] shall take into
account the scope, degree, and types of renovations that are likely to
provide significant opportunities for substantial improvements in
energy efficiency.'' 42 U.S.C. 6834(a)(3)(D)(ii). This indicates
Congressional intent that the term ``major renovations'' should be
construed broadly to include projects for which agencies can
practicably implement the energy efficiency and fossil fuel reduction
goals of ECPA and EISA. DOE believes that major renovations that are
less than whole building renovations, i.e., component and system level
renovations, can provide significant opportunities for substantial
improvements in efficiency and reduction of fossil fuel usage across
the Federal building portfolio. Accordingly, this proposed rule
addresses how building systems and components should be addressed if
only part of the building is renovated, and the requirements for these
renovations are not based on the whole building targets that apply to
new construction and major renovations of the whole building.
4. Multiple Buildings
DOE received one comment in this category supporting DOE's decision
to apply the $2.5 million threshold to individual buildings rather than
to multiple buildings in a single project. DOE concludes that the $2.5
million threshold should apply to individual buildings in order to
determine whether they are covered buildings under this rule. The
statute mandates that the requirements apply to ``buildings,'' not
``projects'' or ``developments.'' (42 U.S.C. 6834(a)(3)(D)(i))
5. Leased Buildings
DOE asked for and received two comments on leased buildings. One
comment pointed out that applying this rule to short term leases would
preclude the use of Utility Energy Service Contracts (``UESCs'') or
Energy Savings Performance Contracts (``ESPCs''). DOE notes that
agencies may implement UESCs and ESPCs in leased buildings.\9\
Therefore, the rule's requirements would apply to renovations of such
leased buildings where the cost thresholds are met. However, DOE does
not anticipate that many, if any, agencies would implement such
renovations in short-term leases, and expects that most renovations of
short-term leases would likely fall under the cost thresholds of the
rule. However, the rule would not apply in cases of Federal agencies
leasing space in buildings where the entire building is not leased to
the Federal Government. This proposed rule only applies to major
renovations of buildings originally built to be leased to the Federal
Government with the exclusion that if the building at issue is not
entirely leased to the Federal Government at the time of renovation,
this proposed rule does not apply. DOE also received a comment
objecting to DOE removing mention of ``significant design control'' as
a limitation to the rule. In response to this comment, DOE points out
that it addressed a similar comment in the issuance of the Green
Building Certification Rule. (79 FR 61563) In that rule, DOE stated
that it has not expressly added the significant control restriction to
the rule for leased buildings because the ECPA definition of Federal
building is limited to buildings that are built specifically for the
Federal government. See 42 U.S.C. 6832. Construction design for a
building built specifically for use of the Federal government,
including under lease to a Federal agency, is, presumably, under the
significant control of the Federal owner or Federal lessee. DOE
reaffirms its previous decision on significant control in this proposed
rule.
---------------------------------------------------------------------------

\9\ More guidance on considerations and implementation of ESPCs
and UESCs in leased spaces may be found on FEMP's web page. For
ESPCs: <a href="https://www.energy.gov/sites/default/files/2022-07/espc_faq_42-usc-8287-0622.pdf">https://www.energy.gov/sites/default/files/2022-07/espc_faq_42-usc-8287-0622.pdf</a>. For UESCs: <a href="https://www.energy.gov/eere/femp/frequently-asked-questions-about-federal-utility-energy-service-contracts">https://www.energy.gov/eere/femp/frequently-asked-questions-about-federal-utility-energy-service-contracts</a>.
---------------------------------------------------------------------------

6. Federal Buildings Overseas
DOE received no comments on this topic in the 2014 SNOPR. DOE re-
affirms its statement that this proposed rule will 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)).
7. Residential Buildings
DOE received no comments on residential buildings in the 2014
SNOPR. Therefore, DOE does not believe any changes to the proposed

[[Page 78390]]

language in the 2014 SNOPR are needed. The statute requires the
inclusion of all Federal buildings, including residential buildings
that are EISA-subject buildings.
8. Privatized Military Housing
DOE received no comments on this topic in the 2014 SNOPR.
Therefore, DOE will confirm its use of the EISA 2007-modified ECPA
definition of ``Federal building'' to apply to any building to be
constructed by, or for the use of, any Federal agency. Such 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, 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)'' of section 433
of EISA. (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 rule will apply to privatized military housing with
construction costs of at least $2.5 million. As described in this
preamble, this cost threshold applies on an individual building basis.
9. Other Relevant Comments
DOE received three comments in this category. One comment from
electric utilities indicated that fossil fuel generated energy
consumption of a building should only apply to on-site energy
consumption. DOE agrees with this comment and this proposed rule is
based solely on on-site fossil fuel usage. A second comment indicated
that the rule should include all Federal buildings due to the long term
ecological and economic benefits of the rule. DOE notes that under
section 433 of EISA 2007, there is a clear limit to the application of
this rule to larger and costlier buildings and major renovations so DOE
declines to expand the rule to additional Federal buildings. A third
comment indicated that the use of energy efficient buildings is not
only ecologically sound but also of great strategic value, due to the
increases in energy costs and the reduction of government funds to pay
for programs and these costs. DOE agrees with this comment.

B. Establishing and Using the Baseline

This category was divided into nine subcategories: CBECS and RECS
baselines, climate adjustment, plug and process loads, differentiating
between fossil fuels, regional fossil fuel factors, marginal source of
electricity, residential common areas, major renovations, and other
relevant comments.
1. CBECS and RECS Baselines
DOE received two comments in this category--one asking if DOE was
planning to update the rule to refer to the 2012 CBECS when that data
became available and another questioning the statistical significance
of the CBECS data when it is split at the building category level. In
response, DOE notes that EISA 2007 requires the use of 2003 CBECS and
RECS as a baseline. DOE also notes that because this proposed rule
includes a gradual increase to 100 percent fossil fuel-based energy
consumption reduction in 2030, the use of a single, unchanging baseline
is necessary.
DOE believes that while there may be some loss of statistical
significance by using disaggregated building types and climate zones,
the flexibility the disaggregation provides agencies in terms of
selecting a building type and climate zone that much more accurately
reflects an agency's building and its location outweighs the loss of
statistical significance.
2. Climate Adjustment
DOE received no comments on this topic in the 2014 SNOPR.
Therefore, DOE re-affirms its commitment to including fossil fuel-based
energy consumption reduction targets based on both building type and
climate zone in the rule.
3. Plug and Process Loads
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. In response, DOE received 15 comments on plug
and process loads. Given that DOE has revised the scope of this
proposed rule to apply only to on-site fossil fuel usage associated
with heating, hot water, generation of electricity, and cooking,
virtually all these comments are no longer applicable. Plug loads
(entirely electric) are excluded from this proposed rule. Certain
process loads that use fossil fuel may be applicable in the petition
process.
4. Differentiating Between Fossil Fuels
DOE received several comments on the NOPR about differentiating
between fossil fuels i.e., natural gas versus crude oil. The comments
varied, although most favored differentiating between fossil fuels. DOE
received three comments on the 2014 SNOPR on this topic, with two
comments agreeing that not differentiating between fossil fuel was
appropriate and one comment focusing on the source emissions factors
used by DOE. In response, DOE notes that this proposed rule focuses on
only on-site fossil fuel emissions. DOE notes that the targets, while
based on the actual fossil fuels used in CBECS and RECS buildings, are
expressed only in terms of overall kBtu per ft\2\ of fossil fuels or
CO<INF>2</INF>e per ft\2\ of emissions, thus keeping with DOE's
original intent of not differentiating between fossil fuels. DOE also
notes that since the rule is now focused on on-site fossil fuel use
only, the issue of source emission factors for electricity is now less
important as DOE is no longer proposing to regulate the fossil fuel
content of electricity used in Federal buildings. DOE does acknowledge
that the source emission factors related to electricity are used in
DOE's analysis of the impacts of the rule and that DOE will use the
latest available source emission factors from DOE and EPA.
5. Regional Fossil Fuel Factors
DOE indicated in the 2010 NOPR that it was considering a regional
approach to establishing the fossil fuel fraction associated with
electricity and asked for comments. In the 2014 SNOPR, DOE decided to
use the national electric power mix in determining the fossil fuel
portion of electricity consumption in the rule. DOE received no
comments on this topic in the 2014 SNOPR, so DOE re-affirms those
decisions in this second SNOPR. DOE also notes that this issue is much
less important in this proposed rule as DOE is no longer regulating the
fossil fuel content of grid electricity used in Federal buildings. DOE
does acknowledge that the source emission factors related to
electricity are used in DOE's analysis of the impacts of the rule and
that DOE will use the latest available source emission factors from DOE
and EPA.
6. Marginal Source of Electricity
DOE received a number of comments on this topic in the NOPR and
proposed in the 2014 SNOPR to not use marginal electric source factors.
DOE received two comments on this topic in the 2014 SNOPR, both
agreeing with DOE's decision not to use marginal electrical

[[Page 78391]]

rates. Receiving no other comments, DOE re-affirms its tentative
decision to not use marginal electricity rates in second SNOPR.
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. 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. DOE received no comments on this topic in
the 2014 SNOPR and re-affirms the approach taken in the NOPR and 2014
SNOPR in this second SNOPR.
8. Major Renovations
As noted previously in this document, the CBECS and RECS data that
provide the baseline for this proposed 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, in the 2014 SNOPR, DOE proposed
that the requirements for system and component level retrofits be based
on the 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
requested 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. DOE received five comments on this topic
in the 2014 SNOPR. Comments ranged from agreement with DOE's approach
to not require major renovations of systems or components to meet the
full target to opposition to DOE's approach because it did not require
specific evaluation of the renovation petitions, to comments that DOE
should expand the scope of the rule to all renovations, even those that
did meet the cost threshold, and other comments that DOE should apply
the requirements of ASHRAE Standard 90.1 and the IECC to renovations,
and comments that DOE should not even consider major renovations that
do not involve the whole building, but which happen to meet the cost-
threshold.
In response, DOE notes major renovations are required to be part of
this proposed rule by statute, and that DOE believes any renovation
that meets the cost-threshold of the rule and falls within the scope of
the rule should comply with the rule unless agencies go through the
petition process for specific considerations of a given project. DOE is
proposing this approach to allow agencies to take a more holistic view
of their renovation projects over time, so that projects resulting in
load reductions (such as insulation improvements) as well as
electrifying end-uses can be implemented in a complimentary fashion.
DOE also notes that for major renovations involving only replacement of
equipment (such as boilers), there is little else DOE can direct
agencies to do other than to use high efficiency equipment (as is
required under 10 CFR part 436, subpart C) and to require that that
equipment uses electricity and not fossil fuels. DOE cannot require
agencies to renovate other parts of the building. For major renovations
that involve renovation of individual systems (such as hot water or
heating, ventilation, and air-conditioning (``HVAC'') systems), DOE is
requiring agencies to use high efficiency equipment that uses
electricity and not fossil fuels and meet the renovation requirements
of the baseline standards in 10 CFR part 433 (ASHRAE Standard 90.1-
2019) or 10 CFR part 435 (the 2021 IECC), as appropriate. DOE notes and
encourages on-site renewables such as solar and storage as good
practice.
9. Other Relevant Comments
Three additional comments were submitted that do not fit into one
of the scope subcategories. One comment recommended using embodied
energy in the rule. DOE noted that it was required to use CBECS and
RECS data per statute and that CBECS and RECS do not contain embodied
energy. Two other comments recommended that DOE implement a multiplier
based on hours of operation for Federal buildings that are in operation
longer than corresponding private sector buildings found in CBECS. DOE
found these two comments persuasive because many types of Federal
buildings are operated longer hours than typical buildings covered in
CBECS and RECS. In addition, DOE notes that hours of operation are
already considered in tools such as ENERGY STAR Portfolio Manager which
agencies are required to use as part of their building benchmarking
activities. (42 U.S.C. 8253(f)(8)) The hours of operation of a building
are also implicit in any whole building simulation done on a building
design, with longer hours of operation typically leading to higher
energy usage. The proposed shift multiplier in this proposed rule is
based on analysis by Oak Ridge National Laboratory and was originally
developed for ASHRAE Standard 100-2018 and is expressed in ``number of
operating shifts'' as opposed to actual hours of operation. Shift
multipliers provided are both less than and greater than 1 depending on
building type. For government offices, for example, operating the
building for 2 shifts does not increase the energy usage, but operating
the building 3 shifts increases the energy use by a multiplier of 1.4.
DOE notes that residential buildings, by their very nature, are already
considered to be 24-hour operation and, therefore, this multiplier will
only apply to Federal commercial buildings regulated under 10 CFR part
433.

C. Methodology To Determine Compliance

DOE categorized comments on the methodology to determine compliance
in six subcategories: whole building simulation, off-site and on-site
renewable energy and renewable energy certificates, use of source
energy, fuel conversion efficiency, and on-site energy generation from
natural gas. Each of these subcategories is discussed below.
1. Whole Building Simulation
To determine energy use in the proposed building design, DOE
proposed in the 2010 NOPR and re-affirmed in the 2014 SNOPR 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

[[Page 78392]]

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 increases cost.
In the 2014 SNOPR, DOE recognized that the whole building approach
is likely not appropriate for major renovations that are limited to
system or component level retrofits. For major renovations that are
less than whole building renovations (i.e., system or component level-
retrofits) DOE proposed establishing the maximum allowable fossil fuel
consumption in fiscal years 2018 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 proposed basing the subject fossil fuel-generated
energy consumption on the system or component as retrofitted. This will
require the design engineer to estimate both the energy consumption of
the systems or components as renovated and the energy consumption of
the entire building as renovated.
DOE received no comments on the use of whole building simulation,
but DOE has changed its adopted approach to major renovations to system
and components in a manner which will no longer require whole building
simulation, as described in this section. Instead, component and system
level renovations will be required to use electric or non-fossil fuel
using FEMP designated or ENERGY STAR equipment and system level major
renovations will be required to use the same electric or non-fossil
fuel using FEMP designated or ENERGY STAR equipment and major
renovation requirements in the baseline standards for 10 CFR part 433
and 10 CFR part 435. (ASHRAE 90.1-2019 is the current baseline standard
for 10 CFR part 433 and the 2021 IECC is the current baseline standard
for 10 CFR part 435.)
2. Off-Site and On-Site Renewable Energy and Renewable Energy
Certificates
In the NOPR and 2014 SNOPR for this rule, DOE considered both the
on-site fossil fuel usage and the fossil fuel use associated with the
electricity used on site. As part of compliance with the NOPR and 2014
SNOPR versions of the rule, renewable energy and renewable energy
certificates were allowed for compliance with this rule. This topic
area was the single most commented on topic area in the 2014 SNOPR,
with 51 comments being received. However, given that DOE has chosen to
refocus this rule on just on-site fossil fuel usage, the entire concept
of using (or not using) renewable energy or renewable energy
certificates to meet this rule is no longer relevant. Therefore, DOE
will not list all the comments related to the use of renewable energy
and renewable energy certificates from the 2014 SNOPR.
3. Use of Source Energy
DOE previously made use of source energy for both on-site fossil
fuel usage and electrical usage in the NOPR and 2014 SNOPR. DOE
received six comments on this topic in response to the 2014 SNOPR.
However, with the refocus of the rule to just on-site fossil fuel
usage, consideration of source energy is no longer relevant. DOE will
use on-site fossil fuel usage using the directions provided for Federal
greenhouse gas emission calculation as noted previously in this
proposed rule. The six comments will not be discussed in this SNOPR.
4. Fuel Conversion Efficiency
In the NOPR, DOE proposed that the electricity source energy factor
would be based on the average utility delivery ratio in Table 6.2.4 of
the 2010 DOE Building Energy Data Book (See <a href="https://buildingsdatabook.eere.energy.gov">https://buildingsdatabook.eere.energy.gov</a>). 75 FR 63410. The ratio accounts for
fuel conversion losses to produce electricity, as well as transmission
and distribution losses. DOE used the electricity source energy factor
of 0.316 from the most recent year data was available, 2008.
DOE made several definition changes in the 2014 SNOPR and added a
new source energy multiplier for other fuels. DOE received no comments
on this topic on the 2014 SNOPR, but DOE has made one further
refinement to its treatment of fuel conversion efficiency in this
proposed rule. DOE has added reference to ``coke'' \10\ and used the
same source energy multiplier as for coal and other fossil fuels. This
action brings this proposed rule more into alignment with how fossil
fuel usage is reported to FEMP under the requirements of EISA 2007
Section 432. The new fuel conversion efficiencies are taken from FEMP's
Annual Reporting Template for agencies.
---------------------------------------------------------------------------

\10\ Coke is defined as a solid carbonaceous residue derived
from low-ash, low-sulfur bituminous coal from which the volatile
constituents are driven off by baking in an oven at temperatures as
high as 2,000 degrees Fahrenheit so that the fixed carbon and
residual ash are fused together. Coke is used as a fuel and as a
reducing agent in smelting iron ore in a blast furnace.
---------------------------------------------------------------------------

5. On-Site Energy Generation From Natural Gas
The 2010 NOPR indicated DOE's interest in the effect of the fossil
fuel-generated energy consumption reduction requirements on distributed
energy technologies that provide on-site electrical generation from
natural gas, such as Combined Heat and Power (``CHP'') systems, to
generate both heat and electricity. A building with a CHP system could
potentially be an all-gas building in terms of utility purchases and
would, therefore, be required to reduce natural gas consumption in
accordance with the fossil fuel-generated energy consumption reduction
requirements. DOE indicated its interest in minimizing the penalty in
order to not discourage the use of on-site CHP systems, within the
limits of the statutory language. DOE invited comments on the NOPR on
how appropriate credit may be given for CHP systems through the
compliance determination methodology. 75 FR 63410.
DOE received several comments related to distributed energy
technologies on the 2010 NOPR. Based on the comments received and a
technical review of the issues raised, DOE proposed specificity on how
CHP and district heating systems should be considered in the 2014
SNOPR. Under this proposed rule, for district heating or cooling
systems using fossil fuel as the source, the fossil fuel-generated
energy consumption would be determined by adjusting the building load
for the plant fuel conversion efficiency and estimated distribution
losses as reflected in the Other Fuels Energy Source Multiplier. If a
non-fossil fuel is used as the sole source (e.g., geothermal) of energy
for the district heating system, there would be no contribution to
fossil fuel-generated energy consumption.
For CHP district heating systems, the electricity attributed to the
proposed building would be determined by multiplying the building's
pro-rated share of the total delivered heat from the system times the
total electricity produced by the CHP system. For CHP systems serving
only one building, fossil fuel consumption of the CHP system would be
added to the direct fossil fuel consumption in Equation 1 proposed
below. Because the electricity is produced from waste heat, the amount
of electricity produced by either the CHP system serving a single
building or a CHP district heating system, as determined previously,
would be

[[Page 78393]]

deducted from the proposed design site electricity in Equation 1 under
the renewable energy and CHP deduction.
In response to the 2014 SNOPR, DOE received 22 comments from
natural gas associations, utilities, and manufacturers of gas turbines
and fuel cells, most opposing the application of this rule to natural
gas as doing so would will preclude the use of natural gas in the
future which is problematic not only because it is an economical and
environmentally beneficial domestic fuel, but also because doing so
would be fundamentally inconsistent with the then Administration's
support of CHP and the then Administration's goals to promote greater
use of alternative fuels by Federal agencies. This subcategory was the
second most commented on topic in the 2014 SNOPR.
In response to these comments, DOE emphasizes, once again, that
this proposed rule is based directly on congressionally mandated
language in section 433 of EISA 2007, which governs fossil fuel-
generated energy consumption. DOE notes that the use of natural gas,
CHP, and alternative fuels is not entirely prohibited by this rule
(until 2030), although all fossil fuel usage must be accounted for and
is regulated by this proposed rule.
6. Other Relevant Comments
DOE received fourteen additional comments relating to methodology
that did not fit into one of the other subcategories in this larger
topic. These comments covered potential exclusions for thermal and
electrical energy storage systems, making this rule be based on an
agency portfolio (as opposed to on a building-by-building basis),
exemption of emergency backup systems, exemptions for fuel use for
alternatively fueled vehicles (``AFVs''), potential credits for nuclear
and hydropower electricity, and the need to rewrite the main equation
in the rule.
In response to the comments about energy storage systems, DOE's
rewrite of the rule to focus only on on-site combustion of fossil fuels
makes any discussion of electrical energy storage moot. If agencies
choose to burn fossil fuels to store heat in a thermal energy storage
system, that fossil fuel would be counted as part of the consumption of
the building. DOE notes that this rule applies to individual buildings
based on statutory requirements, so DOE cannot change this rule to a
portfolio approach. DOE notes that while emergency backup systems are
part of the Scope 1 emissions covered by this rule, DOE has implemented
a specific exemption for emergency backup generators that are used
solely for emergency backup. Any use of these backup generators for
peak shaving, peak shifting, or other demand management activities must
be included in the building consumption.
With respect to mobile sources, section 433 of EISA refers to the
fossil fuel-generated energy use of ``Federal buildings.'' 42 U.S.C.
6834(a)(3)(D)(i). Under ECPA, the term ``building'' means ``any
structure to be constructed which includes provision for a heating or
cooling system, or both, or for a hot water system.'' 42 U.S.C. 6832.
This does not include mobile sources. Accordingly, mobile sources are
excluded from the scope of this rule. Finally, DOE notes that credits
for nuclear and hydropower electricity are no longer relevant to this
proposed rule and that the governing equation in this proposed rule has
been extensively rewritten and simplified in accordance with the change
of scope.

D. Petitions for Downward Adjustment

Upon petition by an agency subject to the statutory requirements,
ECPA permits DOE to adjust the applicable numeric fossil fuel-generated
energy consumption percentage reduction requirement downward with
respect to a specific building, if the head of the agency designing the
building certifies in writing that meeting the requirement would be
technically impracticable in light of the agency's specified functional
needs for the building and DOE concurs with the agency's conclusion.
(42 U.S.C. 6834(a)(3)(D)(i)(II)) ECPA further directs that such an
adjustment does not apply to GSA, however, DOE proposes that GSA tenant
agencies that have design control over their buildings and make
significant design decisions that will allow for compliance with the
rule may petition DOE for a downward adjustment, even if that building
is owned by GSA. DOE also proposes a downward adjustment process for
new construction and major renovations that are whole building
renovations, as well as for major renovations that are limited to
system or component level renovations.
1. Technical Impracticability as a Basis for Downward Adjustment
Technical impracticability is defined as a situation in which
achieving the Scope 1 fossil fuel-based energy consumption targets
would: (1) not be feasible from an engineering design or execution
standpoint due to existing physical or site constraints that prohibit
modification or addition of elements or spaces; (2) significantly
obstruct building operations and the functional needs of a building,
specifically for industrial process loads, research operations, and
critical national security functions, mission critical information
systems as defined in NIST SP 800-60 Vol. 2 Rev. 1; or 3) significantly
degrade energy resiliency and energy security of building operations as
defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 101(e)(7), respectively.
Upon determination that complying with these standards is technically
impracticable, the building would still be required to reduce fossil
fuel consumption to the maximum extent practicable. Technical
impracticability may include technology availability and cost
considerations but may not be based solely on cost considerations.
The 2010 NOPR noted that the downward adjustment provision of ECPA
does not expressly include cost considerations, but that DOE was
considering incorporating cost considerations as part of a
``technically impracticable'' determination. Cost would not be the sole
rationale for a determination of ``technically impracticable,'' but
high costs could be part of the evaluation. 75 FR 63412. DOE also
invited comments on what kind of technical impracticability would
constitute grounds for a petition for downward adjustment. DOE received
a number of comments on this topic in the NOPR and restated its
position in the 2014 SNOPR that cost could not be the sole rationale
for a determination of ``technically impracticable.'' DOE also
emphasized in the 2014 SNOPR that it would be appropriate and
permissible to consider a petition for downward adjustment based on the
impact to an agency's functional needs for the building of achieving
the fossil fuel-generated energy consumption reductions. DOE recognizes
that an agency's functional needs for a building may be inextricably
linked with costs, but cost should not be the primary basis for a
petition for downward adjustment. DOE received no further comments on
this topic in the 2014 SNOPR and thus reaffirms its intent to not allow
cost as the sole rationale for a determination of technically
impracticable, but also to consider an agency's functional needs in
that determination.
2. Bundling of Petitions
The bundling of petitions was not an issue addressed in the NOPR.
However, three comments were submitted on whether an agency could
submit a single petition for downward adjustment for multiple agency
buildings of the same building type, rather than requiring a petition
for each building separately, to minimize agency burden.

[[Page 78394]]

DOE agreed that bundling of petitions by an agency for buildings of
the same building type and function would help streamline the
petitioning process and relieve the burden on agencies and DOE by
avoiding duplication of effort. In the 2014 SNOPR, DOE stated that
although DOE would require an individual petition containing the
information required under this proposed rule for each building, if the
petitions for similar buildings are submitted jointly, a petition may
reference the downward adjustment justification in another petition in
the bundle. DOE also noted in the 2014 SNOPR that DOE is considering
allowing agencies to bundle petitions for new buildings or whole
renovations to buildings: (1) that are of the same building type and of
similar size and location; (2) that are being designed and constructed
to the same set of targets for fossil fuel-generated energy consumption
reduction; and (3) that would require similar measures to reduce fossil
fuel-generated energy consumption and similar adjustment to the numeric
reduction requirement. The bundled petitions should clearly state any
differences between the buildings and explain why the differences do
not warrant the submission of separate evaluations. Projects involving
multiple new buildings would need to submit separate petitions for each
building if they do not meet criteria (1)-(3) previously listed. For
component-level major renovations, the 2014 SNOPR stated that DOE is
considering allowing bundling petitions that are of the same component
and building type.
In response, DOE received one comment on bundling of petitions. AGA
and other utilities supported the concept of bundling of petitions.
(AGA et al No. 18 at p.6). DOE agrees that bundling of petitions for
buildings of the same building type and function in a similar location
is a useful feature of the process and bundling is being proposed. DOE
encourages agencies to submit a singular petition with all of the
information on groups of similarly situated buildings to help
streamline the review process.
3. DOE Review Process
The 2010 NOPR stated that DOE will review petitions in a timely
manner and if the petitioning agency has successfully demonstrated the
need for a downward adjustment per the previous discussion, DOE will
concur with the agency's conclusion and notify the agency in writing.
If DOE does not concur, it will forward its reasons to the petitioning
agency with suggestions as to how the fossil fuel-generated energy
consumption percentage reduction requirement may be achieved. 75 FR
63412.
Several comments were submitted about the DOE review process in the
NOPR. In response, DOE recognized that agencies want assurance that DOE
will respond to petitions in a timely manner in order to avoid project
delays. For petitions for new construction, DOE proposes to make a best
effort to notify an agency in 45 calendar days of submittal whether a
petition is approved or rejected, granted the petition is complete. If
DOE rejects the petition, it would include its reasons for doing so in
its response to the agency. Additionally, for new construction, DOE
proposed a provision under which DOE could establish an adjusted value,
other than the one presented in a petition, if DOE finds that the
petition does not support the conclusion of the submitting agency but
that the statutorily required level was nonetheless technically
impracticable in light of the agency's specific functional needs for
the building. This provision is intended to provide flexibility in the
petition process and reduce the need for agencies to resubmit in the
instance of a rejection. For petitions for downward adjustments to the
requirements applicable to major renovations, DOE proposed that the
downward adjustment would be granted upon submission of specified
certifications. The necessary certifications are discussed in greater
detail in section III.D.5 in this document. In response, DOE received
five comments on its review process.
The Department of Defenses (``DOD's'') Office of the Under
Secretary of Defense (``OUSD'') \11\ and the Office of the Deputy Under
Secretary of Defense (Installations and Environment) (``ODUSD(I&E)'')
stated that regardless of project type, all petitions for downward
adjustments should be deemed approved upon submittal to DOE. (OUSD-AF 9
at p.6 and ODUSD(I&E) 16 at p.4) In response, DOE notes that approving
all petitions for downward adjustment without reviewing the petitions
to ensure that the Secretary of DOE concurs with the petition would be
contrary to the statutory requirement that DOE review and concur on
each petition submitted. (42 U.S.C. 6834(a)(3)(D)(i)(II)) The American
Gas Association (``AGA'') and other utilities commented that they
support DOE's proposed review process (AGA et al No. 18 at p.6) and
they also requested that DOE consider the cost-effectiveness of fossil
fuel energy reduction measures to the greatest extent possible in the
downward reduction process. (AGA et al No. 17 at p.6) In response, DOE
notes that the statutory requirement for adjusting the fossil fuel-
generated energy consumption requirements is technical
impracticability. As previously noted, DOE will consider cost and cost-
effectiveness through that lens; however, cost or cost-effectiveness
impacts cannot be the only reason a petition is approved. (See section
E.1 of this proposed rule for additional discussion of cost.)
---------------------------------------------------------------------------

\11\ OUSD submitted 4 sets of comments--one set on behalf of the
Air Force (marked ``-AF''), another set on behalf of the U.S. Army
Corps of Engineers (marked ``-USACE''), a third set on behalf of the
Army (marked ``-Army''), and a final set on behalf of OUSD's
Facility Energy and Privatization director (marked ``-FEP'').
---------------------------------------------------------------------------

Earthjustice noted that despite mention in the preamble, the
regulatory text of the 2014 SNOPR fails to recognize that, to evaluate
petitions for downward adjustments, DOE needs a description of all
technologies and practices that an agency evaluated and rejected,
including a justification as to why the technologies were not included
in the design. (Earthjustice No. 4 at p.3)
DOE agrees with Earthjustice with respect to documentation
requirements for downward petitions for whole building renovations.
This documentation should be identical to that required for new
construction petitions. This change was made in this proposed rule. DOE
expanded the type of building specific information that DOE is
requesting in petitions as requested by Earthjustice but is doing so in
a manner that allows DOE to analyze what possibilities each petitioner
has to meet the rule in its renovation. DOE changed the rule to require
the director of FEMP to approve each petition after reviewing this
building-specific information.
4. Information Required in Petitions for New Construction
The NOPR proposed that a petition for downward adjustment of the
numeric requirement should include an explanation of what measures
would be required to meet the fossil fuel-generated energy consumption
reduction requirement, and why those measures would be technically
impracticable in light of the agency's specified functional needs for
the building. DOE also proposed that the petition should demonstrate
that the adjustment requested by the agency represents the largest
feasible reduction in fossil fuel-generated energy consumption that can
reasonably be achieved. DOE solicited comments on those issues. 75 FR
63412.
DOE received several comments on the NOPR and provided more
detailed

[[Page 78395]]

petition requirements in the 2014 SNOPR that allows DOE to determine
more comprehensively whether a downward adjustment should be approved.
DOE proposed a modified provision that requires a Federal agency to
demonstrate that the requested adjustment represents the largest
feasible fossil fuel reduction that the agency can reasonably achieve
by providing evidence that the agency included all life-cycle cost-
effective energy efficiency and on-site renewable energy measures in
the design and by providing a description of the technologies and
practices that the agency evaluated and rejected, including a
justification as to why these technologies and practices were rejected.
Finally, agencies would also be permitted to provide additional
information they think will help justify the request for downward
adjustment.
As per the 2014 SNOPR, petitions would also be required to include
the maximum allowable fossil fuel-generated energy consumption for the
proposed building, the estimated fossil fuel-generated energy
consumption of the proposed building, the total estimated project cost,
and a description of the building and the building energy systems. A
description of the building would include, but would not be limited to,
location, use type, floor area, stories, expected number of occupants
and occupant schedule, and functional needs of the building, and any
other information the agency deems pertinent. The building energy
Federal agencies must describe includes the HVAC systems and service
water heating system, as well as the loads in the building, including
any specialized process, specialized research loads, electric vehicle
charging stations, alternatively fueled vehicle fueling stations, and
emergency backup generators. This information should provide DOE the
necessary information to review petitions, and help agencies ensure key
questions and options are addressed in the design process.
DOE received one comment on the information required in petitions
for new construction. An individual commenter suggested that to
discourage excessive petitions for downward adjustment, DOE should
require a comprehensive analysis of the selected and rejected energy
efficiency measures or technologies, similar to methods employed in a
Level II energy audit as defined by the American Society of Heating,
Refrigeration and Air-Conditioning Engineers (``ASHRAE''). In response,
DOE notes that Federal agencies are already required to perform audits
on 25 percent of their buildings every year under the provisions of
section 432 of EISA 2007. DOE believes that dividing major renovations
into three categories that each have their own threshold for DOE
granting of a petition for downward adjustment (e.g., whole building
renovations, system level renovation, and component level renovations)
should keep the number of petitions submitted by agencies to a minimum.
5. Downward Adjustments for Major Renovations
As noted previously, for major renovations, DOE proposes that the
fossil fuel reduction requirements apply only to the energy use
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.
Recognizing the practical limitations on improving energy
efficiency through retrofits, DOE proposes separate downward adjustment
processes for major renovations. For major renovations that are whole
building renovations, a downward adjustment will be provided at a level
equal to the energy efficiency level that would be achieved were the
proposed building designed to meet the baseline energy efficiency
standard applicable to new construction in 10 CFR parts 433 or 435. DOE
proposed in the 2014 SNOPR that this adjustment would be available to
GSA-tenant agencies with significant control over building design and
DOE re-affirms this proposal.
The energy efficiency standards for new construction are
established in 10 CFR part 433, for commercial and multi-family high-
rise residential buildings, and 10 CFR part 435, for low-rise
residential buildings. The energy efficiency standards require a
building be designed to, at minimum, achieve the energy efficiency
levels of the applicable referenced voluntary consensus code: ASHRAE
90.1 for commercial buildings multi-family high-rise residential
buildings and IECC for low-rise residential buildings. The energy
efficiency standards for new Federal buildings further require that
buildings be designed to achieve energy efficiency levels that are at
least 30 percent beyond the levels established in the referenced codes,
if life-cycle cost-effective.
For major renovations that are limited to system or component level
retrofits, DOE proposed in the 2014 SNOPR to provide downward
adjustments at a level equal to the energy efficiency level that would
be achieved through the use of commercially available systems and/or
components that provide a level of energy efficiency that is life cycle
cost effective, i.e., ENERGY STAR or FEMP designated products. For
system level renovations, agencies would adopt as renovation
requirements the relevant parts of new building baseline energy
efficiency standard in 10 CFR part 433 or 435 on a system level (i.e.,
brought up to the performance requirements of the individual sections
of ASHRAE 90.1-2019 (chapters 5-10)) where appropriate and cost
effective, and additionally would follow the replacement guidance for
all equipment that is included in the renovation with ENERGY STAR or
FEMP designated products, per 10 CFR part 436, subpart C. For component
level retrofits, agencies will replace all equipment that is part of
the renovation with ENERGY STAR or FEMP designated products as defined
at 10 CFR part 436, subpart C.
In setting efficiency requirements, both FEMP and ENERGY STAR
choose levels that are among the highest 25 percent of efficiency for a
given product category. ENERGY STAR estimates that its program saves
more than 200 billion kWh of electricity each year, and FEMP estimates
that compliance with its efficiency requirements can save the
government more than 30 trillion BTUs each year. Both programs have
integrated life-cycle cost effectiveness into their guiding principles
and, as such, Federal buyers can have confidence that required products
have both good energy performance and a total cost of ownership that is
equal to or less than products below set efficiencies. Prescriptive
requirements of ASHRAE 90.1 and IECC demonstrate similarly high levels
of efficiency. Together, these requirements cover more than 70 product
types and will help ensure that the products used within Federal
facilities are among the highest energy efficiencies available. Federal
buildings that install and use these products will realize lower energy
intensities compared to using non-compliant products.
6. Make Information Publicly Available
DOE received some comments on the NOPR that petitions for downward
adjustment should be made publicly available on a DOE website.
Commenters stated that making this information publicly available would
make the process transparent, hold agencies accountable, and could
reduce unsupported petitions. As a result of these comments on the
NOPR, DOE proposed in the 2014 SNOPR to report petition summary level
information in

[[Page 78396]]

the DOE Annual Report to Congress on Federal Energy Management and
Conservation Programs (See <a href="http://www.energy.gov/about/budget.htm">www.energy.gov/about/budget.htm</a>).
DOE received two comments on its proposal. Earthjustice commented
that to ensure public accountability, all petitions and DOE responses
should be made publicly available. (Earthjustice No. 9 at p.7) An
individual commenter commented that transparency is an important factor
that will influence the effectiveness of this regulation and create
accountability for meeting the target requirements and deadlines.
(Dirogene No. 3 at p.1) DOE agrees that transparency is important and
will publish any petitions that are filed, deemed complete, and
screened for national security reasons for downward adjustment that are
received (subject to potential filtering for national security reasons)
on the DOE website.
7. Narrow the Use of Petitions
DOE received a few comments on the NOPR related to narrowing the
use of petitions for downward adjustment. In response to these
comments, DOE proposed changes in the 2014 SNOPR that would reduce the
number of petitions submitted for downward adjustment and improve the
content of submitted petitions. DOE expanded the number of building
types covered in Tables A-1a and A-1b to A-2a and A-2b in appendix A of
part 433 and added a methodology for calculating the maximum allowable
fossil fuel-generated consumption values for buildings with process
loads. This was expected to greatly reduce the number of building types
without baselines and fossil fuel reduction targets, eliminating a
significant potential source of petitions. In addition, in response to
some of the public comments received, the 2014 SNOPR proposed that
additional information be provided as part of the petition process,
including that Federal agencies must: (1) demonstrate that the
requested adjustment represents the largest feasible fossil fuel
reduction that can be achieved, given agency mission and building
purpose; and (2) describe all technologies and practices that were
evaluated and rejected, including a justification as to why they were
not included in the design. The rule requires Federal agencies to
provide specific information about the energy efficiency and on-site
renewable energy measures included in the proposed building design to
enable DOE to evaluate the request for downward adjustment.
DOE received no comments on this topic in the 2014 SNOPR, so DOE
proposes to require evidence of these additional criteria in petitions
for downward adjustments.
8. GSA Tenant Agencies
ECPA, as amended, does not provide GSA the option of petitioning
DOE for a downward adjustment of the applicable percentage reduction
requirement. (42 U.S.C. 6834(a)(3)(D)(i)(II)) In the NOPR, DOE proposed
that a new Federal building or a Federal building undergoing major
renovations for which a GSA tenant that is a Federal agency is
providing substantive and significant design criteria may be the
subject of a petition. 75 FR 63412. Under this approach, DOE proposed
that a GSA building that is designed to meet the specifications
provided by a tenant agency may be considered for a downward adjustment
if a petition is submitted by the head of the tenant agency.
In response to the NOPR, DOE received one comment on this issue
stating that allowing GSA tenant agencies to petition for downward
adjustments contradicts the statute. DOE noted in the 2014 SNOPR that
while the statute prohibits GSA from petitioning DOE for a downward
adjustment, it makes no reference to GSA tenant agencies. DOE will
allow GSA tenant agencies that have significant control over building
design to submit a petition. In such cases, it will be the tenant
agency, not GSA, that is making the design choices that will allow for
compliance with the rule. Allowing GSA tenant agencies to submit a
petition for downward adjustment will provide an option for some
buildings for which the required fossil fuel reductions may be
technically impracticable in light of the building's functional needs,
but for which GSA may not submit a petition.
DOE received one comment on this topic in response to the 2014
SNOPR. Earthjustice commented that DOE may not allow tenants of GSA
buildings to petition for downward adjustments of the fossil fuel
reductions because the statute specifically excludes only GSA from the
downward adjustment petition process, expanding the number of buildings
eligible for such adjustments in a manner that directly contravenes the
plain statutory language and that is arbitrary and capricious.
(Earthjustice No. 8 at p.6) DOE reiterates that while the statute
prohibits GSA from petitioning DOE for a downward adjustment, it makes
no reference to GSA tenant agencies. The statute allows for an
``agency'' to petition for a downward adjustment. The term ``Federal
agency'' means any department, agency, corporation, or other entity or
instrumentality of the executive branch of the Federal Government,
including the United States Postal Service, the Federal National
Mortgage Association, and the Federal Home Loan Mortgage Corporation.
42 U.S.C. 6832(5). As the commenter notes, the statute only prohibits
GSA from submitting a petition. Thus, in cases in which the tenant
agency exercises significant control of design choices in the building,
and GSA does not, it makes little sense to prohibit the tenant agency
form petitioning for an adjustment where the statute does not expressly
require it. Moreover, these petitions are still subject to the same
criteria and review process as other petitions and would need to
justify any downward adjustment in accordance with such. Accordingly,
in this SNOPR, DOE has decided to continue to allow GSA tenant agencies
to petition in those cases where GSA tenants have design control.
9. Other Relevant Comments
In this category, DOE received two comments on the 2014 SNOPR.
Earthjustice commented that it is unnecessary to limit the scope of
major renovations covered by the rule to the extent that the renovation
permits compliance with applicable requirements. Earthjustice argues
that as the rule does not apply to unaltered portions of buildings or
buildings systems that are undergoing major renovations it is not
necessary to further limit the scope. Moreover, because ``the scope of
the renovation'' is not a defined term, it may be subject to a broad
interpretation by agencies subject to the fossil fuel reduction
requirement. (Earthjustice No. 5 at p.4)
In response, DOE also notes that this rule is not the only
requirement that mandates that Agencies implement and upgrade their
facilities. Per 42 U.S.C. 8253(f), agencies are required to complete
their annual comprehensive energy and water evaluation for
approximately 25 percent of their covered facilities each calendar year
and through those evaluations agencies will identify and plan for
significant updates and modifications to those covered facilities. This
proposed rule is not the appropriate vehicle for requiring significant
facility upgrades beyond the portions being replaced.
ODUSD(I&E) also commented that requiring individual renovation
projects that have difficulty in meeting the requirements, (regardless
of size, renovation type, scope, funding, climatic conditions, etc.) to
petition

[[Page 78397]]

DOE for downward adjustment may pose significant challenges.
(ODUSD(I&E) No. 1 at p.1) DOE recognizes that petition submittals may
add burden for agencies undertaking major renovations in buildings.
However, EISA provides no recourse to agencies other than petitioning
DOE for major renovations subject to the scope of these standards. As
noted previously, pursuant to the intent indicated by EISA, DOE
construes the term ``major renovations'' broadly to include projects
for which agencies can practicably implement the energy efficiency and
fossil fuel reduction goals of ECPA and EISA, including component and
system level renovations subject to the $2.5 million threshold.
Accordingly, agencies will need to submit a petition to adjust the
relevant reduction targets for such projects. DOE notes that, in this
SNOPR, DOE is proposing to make best efforts to complete review of
petitions within 45 calendar days of receipt for new construction and
major building retrofits and 20 calendar days for component level
retrofits for adjustment consideration. DOE believes this will help
obviate any burden experienced by agencies that submit petitions.

E. Impacts of the Rule

As part of the 2014 SNOPR, DOE requested comments on the impacts of
the proposed rule. DOE received comments in two categories--Cost
Impacts and Other Impacts.
1. Cost Impacts
In response to the 2014 SNOPR, DOE received eight comments on cost
impacts. Several comments recommended referring to the Office of
Management and Budget (``OMB'') Circular A-94 to the rule. In response,
DOE notes that while OMB Circular A-94 is an important document,
section 544 of the National Energy Conservation Policy Act (``NECPA''),
as amended by section 441 of EISA 2007, directed DOE to establish
practical and effective present value methods for estimating and
comparing life-cycle costs for Federal buildings, based on capital and
operating costs during a period of the expected life of the building's
energy system or 40 years, whichever is shorter. See 42 U.S.C. 8254.
Further, Federal agencies must use the DOE-established methods in the
design of new Federal buildings and the application of energy
conservation measures to existing Federal buildings. Id. at (b)(1). DOE
established life-cycle cost analyses methodologies and procedures in 10
CFR part 436, subpart A. Federal agencies are already using the
methodologies and procedures in 10 CFR part 436, subpart A when meeting
the energy efficiency obligations in 10 CFR parts 433 and 435. To
ensure consistency across Federal buildings regulations, DOE will
continue to use the same methodologies and procedures.
Other comments suggested that the life-cycle costs of implementing
new requirements under the fossil energy reduction rule are
underestimated and that costs for compliance should be more closely
examined. In response to these comments, DOE based its costs on the
best available estimates it had at the time.
Several comments stated that while the 2014 SNOPR explicitly did
not consider costs, because of the obligations imposed by the statute,
exorbitant additional expenditures remain unjustified. Further comments
implied that because of the inherent efficiency of natural gas used
directly on site, the overall impact of displacing natural gas use with
electrically powered alternatives will be an increase in total GHG
emissions, a decrease in energy productivity of Federal buildings, and
increased energy costs to Federal agencies and ultimately to taxpayers.
In response, DOE notes that had Congress intended for DOE to consider
costs in establishing the fossil fuel use reduction targets in this
rule or in adjudicating petitions it would have specified to do so.
Instead, Congress directed DOE to use the specific reduction targets
contained in 42 U.S.C. 6834(a)(3)(d)(i)(I), and base DOE's petition
adjudication decisions on agency determinations of technical
impracticability.
However, while DOE did not consider costs in setting the reduction
targets or petition requirements, as part of its obligations under
Executive Order 12866 to inform the public of the impacts of the
proposed rule, DOE analyzed the costs and benefits of the rule proposed
in the 2014 SNOPR and in this proposed rule, and has tentatively
concluded that the rule as a whole saves both site energy and life-
cycle cost.
Other commenters also requested that DOE present its construction
cost increases as a percentage of total cost on both a year and
cumulative basis and provide more detail about DOE's assumptions
underlying the analysis. The commenters further requested that DOE also
explain why its year 2020 costs and beyond are relatively constant,
stating that they believe that compliance costs will grow much more
significantly as permitted fossil fuel energy consumption nears zero.
All assumptions used in the RIA are documented in the RIA document. The
costs for year 2020 and beyond are relatively constant because DOE
assumed that by 2020, agencies would be able to achieve the maximum
estimated savings for major renovations by that time.
Another comment was made that a problem with the cost estimate is
that the RIA makes no reference to life cycle costs, even though
section 109 of Energy Policy Act of 2005 (``EPAct 2005'') requires
technologies employed be life[hyphen]cycle cost[hyphen] effective.
(ODUSD(I&E) No. 4 at p.1) DOE notes that section 109 of EPAct 2005
amended section 305 of ECPA, which was later amended by section 433 of
EISA, which provides the authority for this rulemaking. The amendments
made by section 433 of EISA did not include requirements or references
to life-cycle cost-effectiveness with respect to the fossil fuel-
generated energy consumption reduction targets of EISA section 433. If
Congress intended for life-cycle cost-effectiveness to be considered as
part of these reduction targets, it would have specifically stated so
in section 433 of EISA as it did in the amendments in section 109 of
EPAct 2005. Moreover, DOE does not see a conflict between this rule and
the Federal building energy efficiency rules in 10 CFR parts 433 and
435 in terms of life-cycle cost-effectiveness.
2. Other Impacts
DOE also received eighteen comments on other impacts of the rule.
One comment stated this rule is an action that would have a significant
adverse effect on energy, and therefore DOE must prepare a Statement of
Energy Effects pursuant to E.O. 13211. See 79 FR 61722. In response,
DOE states that this rule is not a significant energy action requiring
a Statement of Energy Effects pursuant to E.O. 13211, because it is not
expected to have a significant adverse effect on the supply,
distribution, or use of energy. According to the Office of Management
and Budget, ``adverse effects'' requiring a statement under E.O. 13211
include significant (1) reductions in the production or supply of crude
oil, coal, natural gas, or other fuel; (2) increases in energy use; or
(3) increases in the cost of energy production or distribution. The
current action implements a statutory mandate to reduce fossil fuel
energy use in Federal buildings. As such, this action cannot reasonably
be expected to reduce the production or supply of fuel, increase energy
use, or significantly increase the cost of energy production.
Several other comments suggested that the proposed mandate is not
only

[[Page 78398]]

costly and impractical, but also infeasible, not flexible enough, or
absolutely unattainable. In response, DOE notes that DOE's rule is
based directly on Congressionally mandated language in section 433 of
EISA 2007, which governs fossil fuel-generated energy consumption. Per
the statute, however, the rule does allow for the downward adjustments
of the required reductions in some cases.
Other comments supported the rule, by pointing out that this rule
presents DOE with a significant opportunity not only to reduce the
Federal Government's own energy costs and environmental footprint, but
also to influence the design of both state and local government
buildings as well as all new residential and commercial buildings.
Therefore, this proposed rulemaking is an opportunity for the Federal
Government to use its large purchasing power to drive and transform
markets for greater efficiency and reduced fossil fuel consumption in
all buildings. Two additional supportive comments commended DOE for
working with stakeholders to craft the 2014 SNOPR and pointed out that
the rule will increase the ability to design and build facilities that
use less energy, save energy, save taxpayers money, and protect the
environment; and also that stakeholders from varying industries have
been working with the Department of Energy to implement this rule in a
way that is smart, efficient, and effective, noting that some have
argued that these targets are not achievable, but building and
sustainability professionals are already succeeding in making Federal
facilities meet sustainability targets, including DOE's new Research
Support Facilities (``RSF'') in Colorado, which opened in 2010. More
importantly, private sector owners are increasingly adopting these
technologies and strategies for their buildings.
DOE also received six comments on the use of the social cost of
carbon (``SCC''). DOE is presenting monetized benefits in accordance
with the applicable Executive Orders and DOE would reach the same
tentative conclusion presented in this SNOPR in the absence of the
social cost of greenhouse gases, including the February 2021 Interim
Estimates presented by the Interagency Working Group on the Social Cost
of Greenhouse Gases.

F. Guidance and Other Topics

DOE requested specific comment in the 2010 NOPR and 2014 SNOPR on
what additional training and guidance would help agencies meet the
reductions called for by this statute. DOE received a single comment on
this topic in the 2014 SNOPR. That comment focused on the fact that DOE
had not included implementation of sub-metering as a requirement for
new Federal buildings and major renovations for Federal buildings
because the compulsory implementation of sub-metering should alleviate
future stresses related to clarification of major renovations, improve
accuracy of process load baselines for future Federal building
construction, and aid in verification of building simulation models
developed during the design stage (especially since they are enforced
under this rule for current and future projects). The commenter further
stated that dissemination of sub-metering in Federal buildings is
instrumental in achieving an intelligent grid capable of improving
delivered power quality and inducing energy efficient behavior from
building owners and operators. In response, DOE notes that agencies are
already subject to certain metering and advanced metering requirements.
42 U.S.C. 8253(e). DOE has issued metering guidance for Federal
agencies in accordance with the Energy Policy Act of 2005, EISA 2007,
and the Presidential Memorandum ``Federal Leadership on Energy
Management''. See <a href="http://www.energy.gov/eere/femp/articles/doe-releases-Federal-building-metering-guidance">www.energy.gov/eere/femp/articles/doe-releases-Federal-building-metering-guidance</a> for more details. DOE notes this
guidance addresses metering, and not sub-metering, in accordance with
Congressional and Presidential direction. Neither sub-metering nor
metering is expressly mentioned in section 433 of EISA 2007. Therefore,
those topics are not addressed in this SNOPR.

IV. Methodology, Analytical Results, and Conclusion

DOE acknowledges exchanging on-site fossil fuel generated energy
for reliance on the electric grid, which may still be generating energy
with fossil fuels, doesn't necessarily lead to an immediate reduction
in emissions of GHGs and SO<INF>2</INF> and in some cases (and as a
whole) may result in increased energy costs. However, this proposed
rule is intended to prepare federal buildings for a green energy
future. By ensuring that federal buildings are designed--either from
the ground up, or when being renovated--to rely on the electric grid,
the rule ensures that long-term, as the grid integrates more carbon
free energies, emissions will be reduced. In addition, DOE expects
emerging and improving technological advancements in electric equipment
such as heat pumps will lead to additional and dramatic site energy
savings further improving the emissions and cost savings cases for this
rule.

A. Cost-Effectiveness

DOE's assumptions and methodology for the cost-effectiveness of
this rule are built upon the cost-effectiveness analysis of ASHRAE
Standard 90.1-2019 conducted by DOE's State building energy codes
program,\12\ as well as DOE's Environmental Assessment (EA) for this
proposed rulemaking.\13\ As described in the EA, DOE identified a rate
of new Federal commercial construction of 13.3 million square feet per
year with a distribution of building types as shown in Table IV.1.
Starting in the year 2030, section 205(c)(ii) of Executive Order 14057,
``Catalyzing Clean Energy Industries and Jobs Through Federal
Sustainability.'' (December 8, 2021) requires to ``design new
construction and modernization projects greater than 25,000 gross
square feet to be net-zero emissions by 2030''. This effectively
reduces the impact of this rule to apply to new construction and major
renovation projects that fall above the cost threshold but are also
below 25,000 gross square feet. For the year 2030 and beyond the
estimated new Federal commercial and multi-family high-rise residential
building construction volume per year will be 2.2 million square feet
per year with a distribution of building types as shown in Table IV.2.
The distribution of building types is based on an extraction of the
latest 10 years of new construction data entered into the Federal Real
Property Portfolio Management System (``FRPP MS'') that meets the
required cost threshold of the proposed rule for cases both before and
after the 25,000 Sf minimum triggering E.O. 14057 compliance.\14\
Additionally DOE identified an estimated rate of federal major
renovation projects that would be influenced by this rule. To do so DOE
utilized data from the Federal Compliance Tracking System (``CTS'')
where agencies report data on building efficiency improvement projects.
The

[[Page 78399]]

data from CTS was queried to include only those projects which would
meet the cost threshold and have impacts on site fossil fuel energy
consumption. As not all agencies are compliant in reporting data into
CTS, results were scaled up to account for agencies out of compliance.
CTS does not supply data on the types of buildings for the reported
projects, as such the distribution of eligible federal buildings for a
renovation that would meet the cost threshold was applied to the
estimated project square footage. DOE identified a rate of new Federal
major renovation construction of 1.36 million square feet per year with
a distribution of building types as shown in Table IV.1. Starting in
the year 2030, section 205(c)(ii) of Executive Order 14057 ``Catalyzing
Clean Energy Industries and Jobs Through Federal Sustainability.''
(December 8, 2021) requires agencies to ``design new construction and
modernization projects greater than 25,000 gross square feet to be net-
zero emissions by 2030''. This part of the Executive Order effectively
reduces the impact of this rule to apply only to new construction and
major renovation projects that fall above the cost threshold but are
also below 25,000 gross square feet. Taking this into account for the
year 2030 and beyond, the estimated new Federal commercial and multi-
family high-rise residential building major renovation construction
volume per year will be 0.4 million square feet per year with a
distribution of building types as shown in Table IV.1 and Table IV.2 of
this document. These tables also show the prototype buildings
incorporated into computer simulations that are used to estimate energy
use in each building type. DOE derived these prototype buildings from
16 building types in 17 climate zones \15\ using its Commercial
Prototype Building models.\16\ Of the 16 prototype buildings, DOE
developed costs for 6 prototype buildings to determine the cost
effectiveness of ASHRAE Standard 90.1-2016 and ASHRAE Standard 90.1-
2019. DOE then extracted the cost-effectiveness information for those
prototype buildings and weighted those values as appropriate to obtain
an average cost effectiveness value for building types found in the
Federal commercial sector.
---------------------------------------------------------------------------

\12\ See DOE's analysis of the cost savings of the 2016 and 2019
ASHRAE 90.1 Standards at <a href="http://www.energycodes.gov/sites/default/files/2020-07/90.1-2016_National_Cost-Effectiveness.pdf">www.energycodes.gov/sites/default/files/2020-07/90.1-2016_National_Cost-Effectiveness.pdf</a> and
<a href="http://www.energycodes.gov/sites/default/files/2021-07/90.1-2019_National_Cost-Effectiveness.pdf">www.energycodes.gov/sites/default/files/2021-07/90.1-2019_National_Cost-Effectiveness.pdf</a>, respectively.
\13\ The Environmental Assessment (EA) (DOE/EA-2165) is
entitled, ``Environmental Assessment for Final Rule, 10 CFR part
433, `Energy Efficiency Standards for New Federal Commercial and
Multi-Family High-Rise Residential Buildings' Baseline Standards
Update''. The EA may be found in the docket for this proposed
rulemaking and at <a href="http://www.energy.gov/node/472482">www.energy.gov/node/472482</a>.
\14\ See <a href="http://www.realpropertyprofile.gov/FRPPMS/FRPP_Login">www.realpropertyprofile.gov/FRPPMS/FRPP_Login</a>.
\15\ Briggs, R.S., R.G. Lucas, and Z.T. Taylor. 2003. ``Climate
classification for building energy codes and standards: Part 1--
Development Process.'' ASHRAE Transactions 109(1): 109:121. American
Society of Heating, Refrigerating and Air-Conditioning Engineers.
Atlanta, Georgia.
\16\ DOE's prototype buildings are described at
<a href="http://www.energycodes.gov/prototype-building-models">www.energycodes.gov/prototype-building-models</a>.

Table IV.1--New Federal Commercial and High-Rise Multi-Family Construction Volume by Building Type for Buildings
Constructed in Years 2025-2029
----------------------------------------------------------------------------------------------------------------
Fraction of
Federal
Building type construction Assumed BECP prototypes Assumed BECP prototypes
volume (by floor for energy savings for cost effectiveness
area) (%)
----------------------------------------------------------------------------------------------------------------
Office................................. 17.77 Small Office, Medium Small Office, Large
Office, Large Office. Office.
Dormitories and Barracks............... 14.57 Small Hotel, Mid-rise Small Hotel, Mid-rise
Apartment, High-rise Apartment.
Apartment.
School................................. 15.65 Secondary School......... Primary School.
Service................................ 15.16 Stand-alone Retail, Non- Stand-alone Retail.
refrigerated Warehouse.
Other Institutional Uses............... 5.76 None *................... None.
Hospital............................... 7.80 Hospital................. Small Office, Large
Office.
Warehouses............................. 2.95 Non-Refrigerated None.
Warehouse.
Laboratories........................... 4.24 Medium Office, Hospital.. Small Office, Large
Office.
All Other.............................. 2.74 None..................... None.
Outpatient Healthcare Facility......... 5.00 Outpatient Healthcare.... Small Office.
Industrial............................. 1.63 None..................... None.
Child Care Center...................... 0.89 Primary School........... Primary School.
Communications Systems................. 1.42 None..................... None.
Prisons and Detention Centers.......... 0.18 None..................... None.
Family Housing......................... 1.06 Mid-rise Apartment....... Mid-rise Apartment.
Navigation and Traffic Aids............ 0.53 None..................... None.
Land Port of Entry..................... 0.68 Non-refrigerated None.
Warehouse.
Border/Inspection Station.............. 0.64 Small Office, Non- Small Office.
refrigerated Warehouse.
Facility Security...................... 0.25 Small Office............. Small Office.
Data Centers........................... 0.34 None..................... None.
Museum................................. 0.74 None..................... None.
Comfort Station/Restrooms.............. 0.01 Non-refrigerated None.
Warehouse.
Public Facing Facility................. 0.02 Stand-alone Retail....... Stand-alone Retail.
Aviation Security Related.............. 0.00 Small Office............. Small Office.
Post Office............................ 0.00 Stand-alone Retail....... Stand-alone Retail.
----------------------------------------------------------------------------------------------------------------
* Note that energy savings and cost-effectiveness mapping are not available for a number of Federal building
types, with other institutional uses, warehouses, and all other being the largest Federal building types with
no reliable mapping. As described in this section, DOE considered energy savings and costs for these unmapped
Federal building types to be equivalent to the weighted energy savings and cost for the mapped Federal
building types.

[[Page 78400]]

Table IV.2--New Federal Commercial and High-Rise Multi-Family Construction Volume by Building Type for Buildings
Constructed in Years 2030-2054
----------------------------------------------------------------------------------------------------------------
Fraction of
Federal
Building type construction Assumed BECP prototypes Assumed BECP prototypes
volume (by floor for energy savings for cost effectiveness
area) (%)
----------------------------------------------------------------------------------------------------------------
Office................................. 14.24 Small Office, Medium Small Office, Large
Office. Office.
Dormitories and Barracks............... 4.02 Small Hotel, Mid-rise Small Hotel, Mid-rise
Apartment, High-rise Apartment.
Apartment.
School................................. 10.88 Secondary School......... Primary School.
Service................................ 18.34 Stand-alone Retail, Non- Stand-alone Retail.
refrigerated Warehouse.
Other Institutional Uses............... 12.63 None *................... None.
Hospital............................... 2.97 Hospital................. Small Office, Large
Office.
Warehouses............................. 6.88 Non-Refrigerated None.
Warehouse.
Laboratories........................... 4.37 Medium Office, Hospital.. Small Office, Large
Office.
All Other.............................. 5.58 None..................... None.
Outpatient Healthcare Facility......... 7.66 Outpatient Healthcare.... Small Office.
Industrial............................. 2.05 None..................... None.
Child Care Center...................... 2.67 Primary School........... Primary School.
Communications Systems................. 0.87 None..................... None.
Prisons and Detention Centers.......... 0.26 None..................... None.
Family Housing......................... 1.49 Mid-rise Apartment....... Mid-rise Apartment.
Navigation and Traffic Aids............ 1.95 None..................... None.
Land Port of Entry..................... 0.99 Non-refrigerated None.
Warehouse.
Border/Inspection Station.............. 0.36 Small Office, Non- Small Office.
refrigerated Warehouse.
Facility Security...................... 1.36 Small Office............. Small Office.
Data Centers........................... 0.19 None..................... None.
Museum................................. 0.10 None..................... None.
Comfort Station/Restrooms.............. 0.03 Non-refrigerated None.
Warehouse.
Public Facing Facility................. 0.09 Stand-alone Retail....... Stand-alone Retail.
Aviation Security Related.............. 0.00 Small Office............. Small Office.
Post Office............................ 0.00 Stand-alone Retail....... Stand-alone Retail.
----------------------------------------------------------------------------------------------------------------
* Note that energy savings and cost-effectiveness mapping are not available for a number of Federal building
types, with other institutional uses, warehouses, and all other being the largest Federal building types with
no reliable mapping. As described in this section, DOE considered energy savings and costs for these unmapped
Federal building types to be equivalent to the weighted energy savings and cost for the mapped Federal
building types.

DOE has determined incremental construction first cost information
for the building types and climate zones analyzed for buildings
compliant with this proposed rule (``Clean Energy Rule Compliant''
buildings) versus ASHRAE Standard 90.1-2019 (see Table IV.3).\17\
---------------------------------------------------------------------------

\17\ Note that the values in Table IV.3 have been adjusted to
reflect 2021$ from the table that appears in DOE's determination of
energy savings for Standard 90.1-2016, which were in 2018$. This
adjustment was made using the GDP deflator value to correct for
inflation between 2018 and 2021. Organization for Economic Co-
operation and Development, GDP Implicit Price Deflator in United
States, retrieved from FRED, Federal Reserve Bank of St. Louis;
<a href="http://fred.stlouisfed.org/series/USAGDPDEFAISMEI">fred.stlouisfed.org/series/USAGDPDEFAISMEI</a>, Updated February 17,
2021. These values have also been adjusted to reflect the same
underlying economic assumptions as the 2019 version, and sales tax
has also been removed.

Table IV.3--Incremental Construction First Cost (2021$) for ASHRAE Standard 90.1-2019 vs. Fossil Fuel Compliant
Building Design
----------------------------------------------------------------------------------------------------------------
ASHRAE climate zone *
Prototype Value ----------------------------------------------------------------
2A 3A 3B 4A 5A
----------------------------------------------------------------------------------------------------------------
Small Office................. First Cost...... $673 $584 $515 $1,666 $641
$/ft\2\......... 0.12 0.11 0.09 0.30 0.12
Large Office................. First Cost...... 261,781 268,194 196,408 354,808 223,553
$/ft\2\......... 0.52 0.54 0.39 0.71 0.45
Stand-alone Retail........... First Cost...... 19,608 20,240 19,740 21,563 19,363
$/ft\2\......... 0.79 0.82 0.80 0.87 0.78
Primary School............... First Cost...... (126,946) (121,994) (116,139) (94,722) (122,894)
$/ft\2\......... (1.72) (1.65) (1.57) (1.28) (1.66)
Small Hotel.................. First Cost...... (104,866) (104,624) (104,396) (101,194) (103,044)
$/ft\2\......... (2.43) (2.42) (2.42) (2.34) (2.38)
Mid-rise Apartment........... First Cost...... (18,343) (17,490) (18,113) (12,445) (25,126)
$/ft\2\......... (0.54) (0.52) (0.54) (0.37) (0.74)
----------------------------------------------------------------------------------------------------------------
* Negative costs (shown in parentheses) indicate a reduction in cost due to changes in the code, usually due to
reduced HVAC capital cost and reduction of venting required for onsite combustion.

[[Page 78401]]

DOE used data from Table IV.3 to calculate preliminary values for
overall incremental first cost of construction for Federal commercial
and high-rise, multi-family residential buildings. DOE calculated the
incremental first cost of the Federal building types based on the DOE
cost prototypes shown in the far-right column of Table IV.1 of this
document. DOE then calculated the weighted average incremental cost for
mapped Federal building types based on their corresponding BECP
prototypes, which represent an estimated 79.3 percent of new Federal
construction. This weighted incremental cost was assigned to un-mapped
Federal building types, and a total weighted incremental cost was
calculated by multiplying the incremental cost for each Federal
building type by the fraction of Federal construction shown in Table
IV.1.
The national incremental first cost for building types was
developed by multiplying the average (across climate zones) incremental
first cost of the prototypes (determined from the DOE State building
energy codes program ASHRAE Standard 90.1 cost-effectiveness analysis)
by the fraction of the Federal sector construction volume shown in
Table IV.1, and then multiplying that by the total estimate of Federal
new construction floorspace.\18\ DOE estimates that total first cost
outlays for new Federal buildings will be less under Clean Energy Rule
compliant designs than ASHRAE Standard 90.1-2019, primarily due to
lower HVAC equipment costs for some building types (See Table IV.3).
The resulting total incremental first cost estimate is a savings of
$8.62 million per year. The average first cost decrease is $1.86 per
square foot. These first cost decreases are a result of the lower
capital costs of the assumed electric equipment types as dictated in
the ASHRAE and IECC energy codes (as mandated in 10 CFR part 433 and 10
CFR part 435 and are the baseline for this modified building efficiency
standard). Minimally compliant electric equipment was assumed in the
proposed case as hitting the 30% better than baseline performance goal
as generally required by regulation and does include a cost
effectiveness caveat that can reduce the goal down to minimal
compliance. As can be seen in Table IV.4, most building types switch
their space heating systems from a fossil fuel burning system over to
an electric resistance-based system. DOE seeks comment on the
efficiency of the electric equipment used in its analyses.
---------------------------------------------------------------------------

\18\ For the Federal office building, the small and large office
prototype first costs were averaged. For the Federal education
building, the primary school prototype first cost was used. For the
Federal dormitories/barracks building type, the small hotel and mid-
rise apartment prototype first costs were averaged.

Table IV.4--Breakdown of Proposed Heating System by Building Protype
--------------------------------------------------------------------------------------------------------------------------------------------------------
Yearly Yearly
constructed constructed Baseline gas Proposed electric unit
Building prototype SF--Post 2030 SF--Pre 2030 unit efficiency Space heat notes
(%) (%) efficiency
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Office........................... 12.8 14.8 0.81 99% Electric Boilers...... Convert using AFUE for gas furnace
and AFUE Estimate for Electric
Furnace.
Medium Office.......................... 2.6 5.5 0.79 99% Electric Furnaces..... Convert using pre 1/1/2023 Et
estimated Et for Furnaces assuming
0.75% casing loss.
Large Office........................... 0.0 2.3 0.82 99% Electric Boilers...... Convert using Et Estimate for
boilers.
Stand-Alone Retail..................... 13.2 8.8 0.79 1.76 COP RTU Heat Pump.... Convert using national weight heat
pump efficiency from office
analysis.
Primary School......................... 3.8 1.0 0.81 99% \1/4\ Furnaces, \3/4\ \1/4\ Furnaces, \3/4\ boilers.
boilers. Convert both to electric
equivalents.
Secondary School....................... 15.5 18.1 0.82 99% Electric Boilers...... Convert using Et Estimate for
boilers.
Outpatient Health Care................. 10.9 5.8 0.82 99% Electric Boilers...... Convert using Et Estimate for
boilers.
Hospital............................... 8.9 12.7 0.82 99% Electric Boilers...... Convert using Et Estimate for
boilers.
Small Hotel............................ 0.4 1.2 0.81 99% Electric Furnaces..... Convert using AFUE for Gas and AFUE
Estimate for Electric.
Warehouse.............................. 24.4 13.1 0.79 99% Electric Furnaces..... Note Model uses a 0.8 gas AFUE for
office space, but 0.7925 for Fine
storage and unit heater.
Mid-Rise Apartment..................... 4.7 8.7 0.81 2.4 COP Residential Heat Convert using AFUE Estimate to
Pump. residential HSPF.
High-Rise Apartment.................... 2.7 8.2 0.82 99% Electric Boilers...... Convert using Et Estimate for
boilers.
--------------------------------------------------------------------------------------------------------------------------------------------------------

An estimated 17.7 percent of the projects would utilize heat pumps
in their proposed ``all electric'' case (those that map to Stand Alone
Retail and Mid-Rise Apartment prototype models) with assumed efficiency
performance metrics as noted. Service hot water systems (when not
already specified as an electric system per 10 CFR parts 433 and 435
requirement) are similarly assumed to be minimally compliant electric
resistance systems with 99 percent efficiencies. Cooking systems where
present are assumed to switch from 40 percent efficient gas systems to
70 percent standard efficiency electric systems.
It should be noted that in all cases higher efficiency electric
equipment is available on the market, but the statutory authority of
this rule is limited to total building reduction targets and does not
specify specific equipment types or efficiency levels. An agency is
free to design a project per their own site, cost, and usage specific
needs, while complying with the applicable efficiency targets. As such,
the analysis presented in this SNOPR intends to capture the base-level
compliance cases only. An agency is free and encouraged to select
higher efficiency equipment (such as even higher efficiency heat pumps
and/or more widespread adoption) as project details accommodate. DOE
encourages the higher efficiency equipment to be carefully considered
by agencies as it can often provide projects with a lifecycle cost
effective solution that saves even more energy and emissions (albeit
usually with higher up-front capital costs) than presented for base
compliance with this rule.
DOE is seeking comment with regard to heat pump pricing,
availability, efficiency levels, and weather incentivizing higher
performing equipment is likely to increase utilization amongst federal
facilities.
DOE also analyzed the relative impact of the final rule on the
first cost of new constructed Federal buildings as a

[[Page 78402]]

percentage of the overall annual cost of newly constructed Federal
commercial and high-rise buildings. In order to estimate the total cost
of construction for new Federal buildings, DOE obtained estimated
construction costs for new Federal commercial and high-rise multifamily
buildings were obtained from RS Means (2020) \19\ for the six building
types analyzed in DOE's cost-effectiveness report. These new
construction costs were weighted by the percent of Federal floorspace
to develop an average cost of a new Federal building of $198 per square
foot, as shown in Table IV.5. This average construction cost may be
multiplied by the overall total of 19.54 million square feet of new
Federal construction per year used in this rulemaking to estimate the
annual total cost of all new Federal commercial and high-rise multi-
family construction of $3.86 billion. As previously noted, first cost
savings associated with this rulemaking are estimated at $8.62 million
per year, indicating a potential cost reduction in new Federal
construction costs of 0.223 percent ($8.62 million divided by $3.86
billion).
---------------------------------------------------------------------------

\19\ RS Means. 2020. RS Means Building Construction Cost Data,
78th Ed. Construction Publishers & Consultants. Norwell, MA.

Table IV.5--First Cost of Typical New Federal Building in $/ft\2\
----------------------------------------------------------------------------------------------------------------
Weighted
Federal building type Weight (%) First cost * cost
----------------------------------------------------------------------------------------------------------------
Office............................................................. 20.74 $210 $43.51
Barracks and Dormitories........................................... 14.85 217 32.18
School............................................................. 14.33 225 32.25
Service............................................................ 13.31 116 15.44
Hospital........................................................... 5.57 200 11.14
Laboratories....................................................... 4.37 200 8.73
Outpatient Healthcare Facility..................................... 3.35 220 7.38
Child Care Center.................................................. 1.18 225 2.67
Family Housing >3 Stories.......................................... 0.68 218 1.48
Border/Inspection Station.......................................... 0.49 220 1.07
Facility Security.................................................. 0.31 220 0.69
Aviation Security Related.......................................... 0.01 220 0.02
Public Facing Facility............................................. 0.05 116 0.06
Post Office........................................................ 0.01 116 0.01
Remaining Federal Stock............................................ 20.75 198 41.00
Federal Average.................................................... 100.00 198 197.62
----------------------------------------------------------------------------------------------------------------
* All building first cost data from RS Means 2020.

DOE determined that the total incremental first cost estimate for
Federal buildings (as mapped to the prototype buildings in Table IV.1)
is a savings of $139.4 million (at a 3 percent discount rate) and a
cost of $85.5 million (based on a 7 percent discount rate), with an
average first cost decrease of $1.0 per square foot (at a 3 percent
discount rate) and $0.61 per square foot (at a 3 percent discount
rate).
For annualized energy cost savings, DOE used a similar approach to
that used for incremental first cost. That is, DOE developed the
national annualized energy cost savings \20\ for building types by
multiplying the average (across climate zones) energy cost savings
(determined from the DOE ASHRAE Standard 90.1 cost-effectiveness
analysis) by the fraction of the Federal sector construction volume
shown in Table IV.1, and then multiplying that by the total estimate of
Federal new construction floorspace.\21\ Table IV.6 \22\ shows the
annual energy cost savings by prototype buildings for a Clean Energy
Rule compliant building compared to ASHRAE Standard 90.1-2019. There
are increases in energy costs across the board, this is because despite
the increases in equipment efficiency and overall site energy savings
the difference between the cost of fossil fuels (primarily natural gas)
and purchased electricity at a national level are too high for the
improvements to overcome. The EIA AEO 2021 energy outlook rate
projections indicate that per the same amount of site energy consumed,
electricity is about 4.3x more expensive than natural gas, this number
gradually reduces over time per this projection down to 3.2x by the
year 2050.
---------------------------------------------------------------------------

\20\ The energy costs used were the national average energy
costs used by ASHRAE in the development of Standard 90.1-2019. To
quote the cost-effectiveness analysis report ``Energy rates used to
calculate the energy costs from the modeled energy usage were $0.98/
therm for fossil fuel and $0.1063/kWh for electricity. These rates
were used for the 90.1-2019 energy analysis and derived from the EIA
data. These were the values approved by the SSPC 90.1 for cost-
effectiveness for the evaluation of individual addenda during the
development of 90.1-2019.''
\21\ For the Federal office building, the small and large office
prototype LCCs were weighted by estimated fraction of small and
large offices observed in the FRPP MS database over the past 10
years of construction. For the Federal education building, the
primary school prototype LCC was used. For the Federal dorm/barracks
building type, the small office, small hotel and mid-rise apartment
prototype LCCs were averaged.
\22\ Note that the values in Table IV.5 have been adjusted to
reflect 2020$ from the table that appears in DOE's determination of
energy savings for Standard 90.1-2016, which were in 2018$. This
adjustment was made using the GDP deflator value to correct for
inflation between 2018 and 2020. Organization for Economic Co-
operation and Development, GDP Implicit Price Deflator in United
States, retrieved from FRED, Federal Reserve Bank of St. Louis;
<a href="http://fred.stlouisfed.org/series/USAGDPDEFAISMEI">fred.stlouisfed.org/series/USAGDPDEFAISMEI</a>, Updated February 17,
2021. These values have also been adjusted to reflect the same
underlying economic assumptions as the 2019 version.
---------------------------------------------------------------------------

As was done for the incremental cost analysis, the 2019 energy cost
savings analysis was adjusted to use the same underlying economic
assumptions as the Clean Energy Rule Compliant version, including fuel
prices, fuel price escalations, labor and material costs, and the
removal of sales tax. The resulting total annualized energy cost
impacts for the Clean Energy Rule affected buildings' 14.7 million
square feet of annual construction for years 2025-2029 and 2.6 million
square feet of annual construction for years 2030-2054 was estimated to
be an additional cost of $10.6 million/yr (at a 3 percent discount
rate) and $8.3 million/yr (at a 7 percent discount rate). The
annualized energy cost impacts were estimated to be an additional $2.28
per square foot (at a 3 percent discount rate) and -1.78 per square
foot (at a 3 percent discount rate). Note the annual energy cost
impacts are for one year of Federal commercial and high-rise multi-
family residential construction and that those

[[Page 78403]]

impacts accumulate over the evaluation period.

Table IV.6--Annualized Energy Costs (2021$) for ASHRAE Standard 90.1-2019 vs. Fossil Fuel Compliant Building
Design
----------------------------------------------------------------------------------------------------------------
Annualized energy cost savings Annualized energy cost savings
Total (M$2021) intensity (M$2021/SF)
Building prototype prototype -------------------------------------------------------------------
usage (%) 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate
----------------------------------------------------------------------------------------------------------------
Small Office................... 14.78 ($1.57) ($1.23) ($0.34) ($0.26)
Medium Office.................. 5.53 (0.59) (0.46) (0.13) (0.10)
Large Office................... 2.26 (0.24) (0.19) (0.05) (0.04)
Stand-Alone Retail............. 8.76 (0.93) (0.73) (0.20) (0.16)
Strip Mall..................... 0.00 0.00 0.00 0.00 0.00
Primary School................. 1.02 (0.11) (0.08) (0.02) (0.02)
Secondary School............... 18.06 (1.91) (1.50) (0.41) (0.32)
Outpatient Health Care......... 5.76 (0.61) (0.48) (0.13) (0.10)
Hospital....................... 12.68 (1.34) (1.05) (0.29) (0.23)
Small Hotel.................... 1.18 (0.12) (0.10) (0.03) (0.02)
Large Hotel.................... 0.00 0.00 0.00 0.00 0.00
Quick-service Restaurant....... 0.00 0.00 0.00 0.00 0.00
Full-service Restaurant........ 0.00 0.00 0.00 0.00 0.00
Mid-Rise Apartment............. 8.95 (0.95) (0.74) (0.20) (0.16)
High-Rise Apartment............ 7.90 (0.84) (0.66) (0.18) (0.14)
Non-Refrigerated Warehouse..... 13.12 (1.39) (1.09) (0.30) (0.23)
--------------------------------------------------------------------------------
Total...................... 100.00 (10.60) (8.30) (2.28) (1.78)
----------------------------------------------------------------------------------------------------------------
Note: Negative numbers represent an increase cost.

For LCC net savings, DOE used a similar approach to that used for
incremental first cost and first year energy cost savings. That is, DOE
developed the national annual LCC net savings \23\ for the entire rule
by multiplying the average (across climate zones) LCC net savings
(determined from the DOE ASHRAE Standard 90.1 cost-effectiveness
analysis) by the fraction of the Federal sector construction volume
shown in Table IV.1, and then multiplying that by the total estimate of
Federal new construction floorspace.\24\ Table IV.7 shows annual LCC
net savings by prototype buildings for the Clean Energy Rule Compliant
Case compared to ASHRAE Standard 90.1-2019. As was done for the
incremental cost analysis, the 2019 LCC analysis was adjusted to use
the same underlying economic assumptions as the Clean Energy Rule
Compliant Case, including fuel prices, fuel price escalations, labor
and material costs, and the removal of sales tax. The resulting total
LCC net savings for 14.7 million square feet of annual construction for
years 2025-2029 and 2.6 million square feet of annual construction for
years 2030-2054 was estimated to be a cost of $56.13 million (at a 3
percent discount rate) and a cost of $4.07 million (based on a 7
percent discount rate). The average LCC net impacts in year 1 was
estimated to be a cost of $12.09 million (at a 3 percent discount rate)
and a cost of $0.88 million (based on a 7 percent discount rate. Note
the annual LCC savings are for one year of Federal commercial and high-
rise multi-family residential construction and that those savings would
accumulate over the LCC evaluation period. For the purpose of this
analysis, DOE relied on a 30-year period.\25\
---------------------------------------------------------------------------

\23\ The energy costs used were the national average energy
costs used by ASHRAE in the development of Standard 90.1-2019. To
quote the cost-effectiveness analysis report ``Energy rates used to
calculate the energy costs from the modeled energy usage were $0.98/
therm for fossil fuel and $0.1063/kWh for electricity. These rates
were used for the 90.1-2019 energy analysis and derived from the EIA
data. These were the values approved by the SSPC 90.1 for cost-
effectiveness for the evaluation of individual addenda during the
development of 90.1-2019.''
\24\ For the Federal office building, the small and large office
prototype LCCs were weighted by estimated fraction of small and
large offices observed in the FRPP MS database over the past 10
years of construction. For the Federal education building, the
primary school prototype LCC was used. For the Federal dorm/barracks
building type, the small office, small hotel and mid-rise apartment
prototype LCCs were averaged.
\25\ Lavappa, P and J Kneifel. 2021. Energy Price Indices and
Discount Factors for Life-Cycle Cost Analysis-2021 Annual Supplement
to NIST Handbook 135.

Table IV.7--Annual Net Life-Cycle Cost (LCC) (2021$) for ASHRAE Standard 90.1-2019 vs. Fossil Fuel Compliant
Building Design
----------------------------------------------------------------------------------------------------------------
Cumulative LCC cost savings, Annualized LCC cost savings,
Total (M$2021) annualized (M$2021)
Building prototype prototype -------------------------------------------------------------------
usage (%) 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate
----------------------------------------------------------------------------------------------------------------
Small Office................... 14.78 ($8.30) ($0.60) ($0.45) ($0.13)
Medium Office.................. 5.53 (3.10) (0.23) (0.17) (0.05)
Large Office................... 2.26 (1.27) (0.09) (0.07) (0.02)
Stand-Alone Retail............. 8.76 (4.92) (0.36) (0.27) (0.08)

[[Page 78404]]

Strip Mall..................... 0.00 0.00 0.00 0.00 0.00
Primary School................. 1.02 (0.57) (0.04) (0.03) (0.01)
Secondary School............... 18.06 (10.13) (0.73) (0.55) (0.16)
Outpatient Health Care......... 5.76 (3.24) (0.23) (0.17) (0.05)
Hospital....................... 12.68 (7.12) (0.52) (0.38) (0.11)
Small Hotel.................... 1.18 (0.66) (0.05) (0.04) (0.01)
Large Hotel.................... 0.00 0.00 0.00 0.00 0.00
Quick-service Restaurant....... 0.00 0.00 0.00 0.00 0.00
Full-service Restaurant........ 0.00 0.00 0.00 0.00 0.00
Mid-Rise Apartment............. 8.95 (5.02) (0.36) (0.27) (0.08)
High-Rise Apartment............ 7.90 (4.43) (0.32) (0.24) (0.07)
Non-Refrigerated Warehouse..... 13.12 (7.37) (0.53) (0.40) (0.12)
--------------------------------------------------------------------------------
Total...................... 100.00 (56.13) (4.07) (0.45) (0.88)
----------------------------------------------------------------------------------------------------------------
Note: Negative numbers represent an increase cost or disbenefit.

DOE also conducted a net benefits and costs analysis using a 30-
year analysis period and an assumed building lifetime of 30 years. The
building lifetime assumption was made to correspond with availability
of underlying data from the cost-effectiveness analysis conducted by
DOE's State building energy codes program.
DOE calculated the net present value (``NPV'') of the change in
equipment cost and reduced operating cost associated with the
difference between the Clean Energy Rule compliant case and ASHRAE
90.1-2019. The NPV is the value in the present of a time-series of
costs and savings, equal to the present value of savings in operating
cost minus the present value of the increased total equipment cost.
DOE determined the total increased equipment cost for each year of
the analysis period (2024-2053) using the incremental construction cost
described previously. DOE determined the present value of operating
cost savings for each year from the beginning of the analysis period to
the year when all Federal buildings constructed by 2054 have been
retired, assuming a 30-year lifetime of the building.
The average annual operating cost includes the costs for energy,
repair, or replacement of building components (e.g., heating and
cooling equipment, lighting, and envelope measures), and maintenance of
the building. DOE determined the per-unit annual increase in operating
cost based on the differences in energy costs plus replacement and
maintenance cost savings, which were calculated in the underlying cost-
effectiveness analysis by DOE's State building energy codes program.
While DOE used the methodology and prices described above to calculate
first year energy cost savings and LCC net savings, for the NPV
calculations, DOE determined the per-unit annual savings in operating
cost by multiplying the per square foot annual electricity and natural
gas savings in energy consumption by the appropriate energy price from
EIA's AEO2021.\26\ DOE forecasted energy prices based on projected
average annual price changes in EIA's AEO2021 to develop the operating
cost savings through the analysis period.
---------------------------------------------------------------------------

\26\ DOE--U.S. Department of Energy. 2022. Annual Energy Outlook
2022 with Projections to 2050. Washington, DC. Available at
<a href="http://www.eia.gov/outlooks/aeo/">www.eia.gov/outlooks/aeo/</a>.
---------------------------------------------------------------------------

DOE uses national discount rates to calculate national NPV. DOE
estimated NPV using both a 3-percent and a 7-percent real discount
rate, in accordance with the Office of Management and Budget's guidance
to Federal agencies on the development of regulatory analysis,
particularly section E therein: Identifying and Measuring Benefits and
Costs.\27\ The NPV is the sum over time of the discounted net savings.
---------------------------------------------------------------------------

\27\ Office of Management and Budget. OMB Circular A-4,
Regulatory Analysis. 2003. OMB: Washington, DC, September 17, 2003.
<a href="http://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf">www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf</a>.
---------------------------------------------------------------------------

The present value of increased equipment costs is the annual total
cost increase in each year (the difference between The Clean Energy
Rule Compliant Case and ASHRAE 90.1-2019), discounted to the present,
and summed throughout the analysis period (2024 through 2053) plus 30-
year lifetime. Because new construction is held constant through the
analysis period, the installed cost is constant.
The present value of savings in operating cost is the annual
savings in operating cost (the difference between The Clean Energy Rule
Compliant Case and ASHRAE 90.1-2019), discounted to the present and
summed through the analysis period (2024 through 2053) plus 30-year
lifetime. Savings are decreases in operating cost associated with the
higher energy efficiency associated with buildings designed to the
Clean Energy Rule Compliant Case compared to ASHRAE 90.1-2019. Total
annual savings in operating cost are the savings per square foot
multiplied by the number of square feet that survive in a particular
year through the lifetime of the buildings constructed in the last year
of the analysis period.

B. Emissions Analysis

The emissions analysis consists of two components. The first
component estimates the effect of potential Federal building energy
standards on power sector and site (where applicable) combustion
emissions of CO<INF>2</INF>, NO<INF>X</INF>, SO<INF>2</INF>, and Hg.
The second component estimates the impacts of potential Federal
building energy standards on emissions of two additional greenhouse
gases, CH<INF>4</INF> and N<INF>2</INF>O, as well as the changes to
emissions of other gases due to ``upstream'' activities in the fuel
production chain. These upstream activities comprise extraction,
processing, and transporting fuels to the site of combustion.
The analysis of electric power sector emissions of CO<INF>2</INF>,
NO<INF>X</INF>, SO<INF>2</INF>, and Hg uses emissions factors intended
to

[[Page 78405]]

represent the marginal impacts of the change in electricity consumption
associated with Federal building energy standards. The methodology is
based on results published for the AEO, including a set of side cases
that implement a variety of efficiency-related policies. The analysis
presented in this notice uses projections from AEO2022. Power sector
emissions of CH<INF>4</INF> and N<INF>2</INF>O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (``EPA'').\28\
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\28\ Available at <a href="http://www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf">www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf</a> (last accessed July 12,
2021).
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Until 2030, the on-site operation of construction subject to this
proposed rule allows combustion of fossil fuels and results in
emissions of CO<INF>2</INF>, NO<INF>X</INF>, SO<INF>2</INF>,
CH<INF>4</INF>, and N<INF>2</INF>O where these products are used. Site
emissions of these gases were estimated using Emission Factors for
Greenhouse Gas Inventories and, for NO<INF>X</INF> and SO<INF>2</INF>
emissions intensity factors from an EPA publication.\29\
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\29\ U.S. Environmental Protection Agency. External Combustion
Sources. In Compilation of Air Pollutant Emission Factors. AP-42.
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter
1. Available at <a href="https://www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors">https://www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors</a> (last
accessed April 15, 2022).
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FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH<INF>4</INF> and CO<INF>2</INF>, are estimated based on the
methodology described in chapter 1 of the NOPR TSD.
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. For power sector
emissions, specific emissions intensity factors are calculated by
sector and end use. Total emissions changes are estimated using the
energy savings calculated in the national impact analysis with energy
savings derived from a load shifting modeling analysis of ASHRAE
Prototype models.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2022 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2022,
including the emissions control programs discussed in the following
paragraphs.\30\
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\30\ For further information, see the Assumptions to AEO2022
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at <a href="http://www.eia.gov/outlooks/aeo/assumptions/">www.eia.gov/outlooks/aeo/assumptions/</a> (last accessed April 15, 2022).
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SO<INF>2</INF> emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO<INF>2</INF> for affected EGUs in the 48 contiguous States and
the District of Columbia (D.C.). (42 U.S.C. 7651 et seq.)
SO<INF>2</INF> emissions from numerous States in the eastern half of
the United States are also limited under the Cross-State Air Pollution
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these
States to reduce certain emissions, including annual SO<INF>2</INF>
emissions, and went into effect as of January 1, 2015.\31\ AEO2022
incorporates implementation of CSAPR, including the update to the CSAPR
ozone season program emission budgets and target dates issued in 2016.
81 FR 74504 (Oct. 26, 2016).\32\ Compliance with CSAPR is flexible
among EGUs and is enforced through the use of tradable emissions
allowances. Under existing EPA regulations, for states subject to
SO<INF>2</INF> emissions limits under CSAPR, excess SO<INF>2</INF>
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO<INF>2</INF> emissions by another regulated
EGU.
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\31\ CSAPR requires states to address annual emissions of
SO<INF>2</INF> and NO<INF>X</INF>, precursors to the formation of
fine particulate matter (PM<INF>2.5</INF>) pollution, in order to
address the interstate transport of pollution with respect to the
1997 and 2006 PM<INF>2.5</INF> National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NO<INF>X</INF>, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
\32\ In Sept. 2019, the D.C. Court of Appeals remanded the 2016
CSAPR Update to EPA. In April 2021, EPA finalized the 2021 CSAPR
Update which resolved the interstate transport obligations of 21
states for the 2008 ozone NAAQS. 86 FR 23054 (April 30, 2021); see
also, 86 FR 29948 (June 4, 2021) (correction to preamble). The 2021
CSAPR Update became effective on June 29, 2021. The release of AEO
2021 in February 2021 predated the 2021 CSAPR Update.
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However, beginning in 2016, SO<INF>2</INF> emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final rule, EPA
established a standard for hydrogen chloride as a surrogate for acid
gas hazardous air pollutants (``HAP''), and also established a standard
for SO<INF>2</INF> (a non-HAP acid gas) as an alternative equivalent
surrogate standard for acid gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas; thus, SO<INF>2</INF> emissions are
being reduced as a result of the control technologies installed on
coal-fired power plants to comply with the MATS requirements for acid
gas. In order to continue operating, coal power plants must have either
flue gas desulfurization or dry sorbent injection systems installed.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO<INF>2</INF> emissions. Because of the emissions reductions
under the MATS, it is unlikely that excess SO<INF>2</INF> emissions
allowances resulting from the lower electricity demand would be needed
or used to permit offsetting increases in SO<INF>2</INF> emissions by
another regulated EGU.
CSAPR also established limits on NO<INF>X</INF> emissions for
numerous States in the eastern half of the United States. Impacts from
this Clean Energy Rule would have little effect on NO<INF>X</INF>
emissions in those States covered by CSAPR emissions limits if excess
NO<INF>X</INF> emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NO<INF>X</INF> emissions from other EGUs. In such case, NOx emissions
would remain near the limit even if electricity generation goes down. A
different case could possibly result, depending on the configuration of
the power sector in the different regions and the need for allowances,
such that NO<INF>X</INF> emissions might not remain at the limit in the
case of lower electricity demand. In this case, Federal building
standards might reduce NO<INF>X</INF> emissions in covered States.
Despite this possibility, DOE has chosen to be conservative in its
analysis and has maintained the assumption that standards will not
reduce NO<INF>X</INF> emissions in States covered by CSAPR. Federal
building standards would be expected to reduce NO<INF>X</INF> emissions
in the States not covered by CSAPR.
DOE estimated mercury emissions reduction using emissions factors
based on AEO2022, which incorporates the MATS.

C. Monetization of Emissions Changes

As part of the development of this rule, for the purpose of
complying with the requirements of Executive Order 12866, DOE
considered the estimated monetary climate and health benefits and
disbenefits from the changes in

[[Page 78406]]

emissions of CO<INF>2,</INF> CH<INF>4</INF>, N<INF>2</INF>O,
NO<INF>X</INF>, and SO<INF>2</INF> that are expected to result from
this rule. DOE considered the emissions changes expected to result over
the lifetime of buildings constructed in the analysis period. This
section summarizes the basis for the values used for monetizing the
emissions changes and presents the values considered in this rule.
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits and
disbenefits of changing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach prior
to the injunction and present monetized benefits and disbenefits where
appropriate and permissible under law.
1. Monetization of Greenhouse Gas Emissions
For the purpose of complying with the requirements of Executive
Order 12866, DOE estimates the monetized benefits and disbenefits of
the changes in emissions of CO<INF>2</INF>, CH<INF>4</INF>, and
N<INF>2</INF>O by using a measure of the social cost (``SC'') of each
pollutant (e.g., SC-CO<INF>2</INF>). These estimates represent the
monetary value of the net harm to society associated with a marginal
increase in emissions of these pollutants in a given year, or the
benefit of avoiding that increase. These estimates are intended to
include (but are not limited to) climate-change-related changes in net
agricultural productivity, human health, property damages from
increased flood risk, disruption of energy systems, risk of conflict,
environmental migration, and the value of ecosystem services. DOE
exercises its own judgment in presenting monetized climate benefits and
disbenefits as recommended by applicable Executive orders and guidance,
and DOE would reach the same conclusion presented in this notice in the
absence of the social cost of greenhouse gases, including the February
2021 Interim Estimates presented by the Interagency Working Group on
the Social Cost of Greenhouse Gases.
DOE estimated the climate benefits and disbenefits of
CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O changes (i.e., SC-
GHGs) using the estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
under Executive Order 13990 published in February 2021 by the
Interagency Working Group on the Social Cost of Greenhouse Gases (IWG)
(IWG, 2021).\33\ The SC-GHGs is the theoretically appropriate value to
use in conducting benefit-cost analyses of policies that affect
CO<INF>2</INF>, N<INF>2</INF>O and CH<INF>4</INF> emissions. As a
member of the IWG involved in the development of the February 2021 SC-
GHG TSD, the DOE agrees that the interim SC-GHG estimates represent the
most appropriate estimate of the SC-GHG until revised estimates have
been developed reflecting the latest, peer-reviewed science.
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\33\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. Available at: <a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>
(last accessed March 17, 2021).
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The SC-GHGs estimates presented here were developed over many
years, using transparent process, peer-reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, an interagency working group (``IWG'')
that included the DOE and other executive branch agencies and offices
was established to ensure that agencies had access to the best
available information when quantifying the benefits of reducing
CO<INF>2</INF> emissions in benefit-cost analyses. The IWG published
estimates of the social cost of carbon (``SC-CO<INF>2</INF>'') in 2010
that were developed from an ensemble of three widely cited integrated
assessment models (``IAMs'') that estimate climate damages using highly
aggregated representations of climate processes and the global economy
combined into a single modeling framework. The three IAMs were run
using a common set of input assumptions in each model for future
population, economic, and CO<INF>2</INF> emissions growth, as well as
equilibrium climate sensitivity (``ECS'')--a measure of the globally
averaged temperature response to increased atmospheric CO<INF>2</INF>
concentrations. These estimates were updated in 2013 based on new
versions of each IAM. In August 2016 the IWG published estimates of the
social cost of methane (``SC-CH<INF>4</INF>'') and nitrous oxide (``SC-
N<INF>2</INF>O'') using methodologies that are consistent with the
methodology underlying the SC-CO<INF>2</INF> estimates. The modeling
approach that extends the IWG SC-CO<INF>2</INF> methodology to non-
CO<INF>2</INF> GHGs has undergone multiple stages of peer review. The
SC-CH<INF>4</INF> and SC-N<INF>2</INF>O estimates were developed by
Marten et al. (2015) and underwent a standard double-blind peer review
process prior to journal publication.
In 2015, as part of the response to public comments received to a
2013 solicitation for comments on the SC-CO<INF>2</INF> estimates, the
IWG announced a National Academies of Sciences, Engineering, and
Medicine review of the SC-CO<INF>2</INF> estimates to offer advice on
how to approach future updates to ensure that the estimates continue to
reflect the best available science and methodologies. In January 2017,
the National Academies released their final report, Valuing Climate
Damages: Updating Estimation of the Social Cost of Carbon Dioxide, and
recommended specific criteria for future updates to the SC-
CO<INF>2</INF> estimates, a modeling framework to satisfy the specified
criteria, and both near-term updates and longer-term research needs
pertaining to various components of the estimation process (National
Academies, 2017).\34\ Shortly thereafter, in March 2017, President
Trump issued Executive Order 13783, which disbanded the IWG, withdrew
the previous TSDs, and directed agencies to ensure SC-CO<INF>2</INF>
estimates used in regulatory analyses are consistent with the guidance
contained in OMB's Circular A-4, ``including with respect to the
consideration of domestic versus international impacts and the
consideration of appropriate discount rates'' (E.O. 13783, Section
5(c)). Benefit-cost analyses following E.O. 13783 used SC-GHG estimates
that attempted to focus on the U.S.-specific share of climate change
damages as estimated by the models (and so did not reflect many
pathways by which physical impacts outside the United States affect the
welfare of U.S. citizens and residents) and were calculated using two
default discount rates recommended by Circular A-4, 3

[[Page 78407]]

percent and 7 percent.\35\All other methodological decisions and model
versions used in SC-GHG calculations remained the same as those used by
the IWG in 2010 and 2013, respectively.
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\34\ See National Academies of Sciences, Engineering, and
Medicine. 2017. Valuing Climate Damages: Updating Estimation of the
Social Cost of Carbon Dioxide. Washington, DC: The National
Academies Press. <a href="http://doi.org/10.17226/24651">doi.org/10.17226/24651</a>.
\35\ DOE regulatory analyses under E.O. 13783 included
sensitivity

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