[Federal Register Volume 88, Number 96 (Thursday, May 18, 2023)]
[Notices]
[Pages 31773-31805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10596]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

DEPARTMENT OF AGRICULTURE

[Docket No. FR-6271-N-01]
RIN 2506-AC55


Adoption of Energy Efficiency Standards for New Construction of 
HUD- and USDA-Financed Housing: Preliminary Determination and 
Solicitation of Comment

AGENCY:  Department of Housing and Urban Development, Department of 
Agriculture.

ACTION: Notice of preliminary determination.

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SUMMARY: The Energy Independence and Security Act of 2007 (EISA) 
establishes procedures for the U.S. Department of Housing and Urban 
Development (HUD) and the U.S. Department of Agriculture (USDA) to 
adopt periodic revisions to the International Energy Conservation Code 
(IECC) and to ANSI/ASHRAE/IES Standard 90.1: Energy Standard for 
Buildings, Except Low-Rise Residential Buildings (ASHRAE 90.1), subject 
to a determination by HUD and USDA that the revised codes do not 
negatively affect the availability or affordability of new construction 
of single and multifamily housing covered by EISA, and a determination 
by the Secretary of Energy that the revised codes ``would improve 
energy efficiency.'' This Notice announces the preliminary 
determination of HUD and USDA, as required under section 481(d)(1) of 
EISA, that the 2021 IECC and ASHRAE 90.1-2019 will not negatively 
affect the affordability and availability of housing covered by EISA. 
In making this preliminary determination, the first step to ultimately 
requiring compliance with these standards in HUD and USDA housing 
covered by EISA, this Notice relies on several studies that show that 
these codes are cost effective in that the incremental cost of the 
additional efficiency measures pays for themselves with energy cost 
savings on a life-cycle basis.

DATES: Comment Due Date: July 17, 2023.

ADDRESSES: Interested persons are invited to submit comments regarding 
this Notice. There are two methods for submitting public comments, 
listed below. All submissions must refer to the above-referenced docket 
number (FR-6271-N-01) and title of this Notice.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD and USDA strongly encourage commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt, and enables HUD and USDA to make them 
immediately available to the public. Comments submitted electronically 
through the www.regulations.gov website can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.
    Submission of Comments by Mail. Comments may be submitted by mail 
to the Regulations Division, Office of General Counsel, Department of 
Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.

    Note: To receive consideration as public comments, comments must 
be submitted

[[Page 31774]]

through one of the two methods specified above. Again, all 
submissions must refer to the docket number and title of this 
Notice.

    No Facsimile Comments. Facsimile comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m., weekdays, at 
the above address. Due to security measures at the HUD Headquarters 
building, an appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). HUD welcomes and is prepared to 
receive calls from individuals who are deaf or hard of hearing, as well 
as individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit 
www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

FOR FURTHER INFORMATION CONTACT: HUD: Michael Freedberg, Office of 
Environment and Energy, Department of Housing and Urban Development, 
451 7th Street SW, Room 7282, Washington, DC 20410; telephone number 
202-402-4366 (this is not a toll-free number). USDA: Meghan Walsh, 
Rural Housing Service, Department of Agriculture, 1400 Independence 
Avenue SW, Washington, DC 20250; telephone number (202) 573-3692 (this 
is not a toll-free number). HUD welcomes and is prepared to receive 
calls from individuals who are deaf or hard of hearing, as well as 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit 
www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:
I. Introduction
    Statutory Requirements
    Covered HUD and USDA Programs
    Current Above-Code Standards or Incentives
II. 2021 IECC Affordability Determination
    A. Overview
    Current HUD-USDA Standard and Subsequent Revisions
    2021 IECC Overview
    Current State Adoption of the 2021 IECC
    Estimated Impacts
    B. 2021 IECC Affordability Analysis
    Cost Benefit Analysis and Results
    Limitations of Cost Saving Models
    Estimated Costs and Savings
    Incremental or Added Costs
    Annual Cost Savings
    Simple Payback
    Total Life Cycle Cost Savings
    Consumer Cash Flows
    Low-Rise Multifamily Buildings
    State-level Results
    Total Costs and Benefits
    C. Preliminary Affordability Determination--2021 IECC
III. ASHRAE 90.1-2019 Affordability Determination
    A. Overview
    Current HUD-USDA Standard and Subsequent Revisions
    ASHRAE 90.1-2019 Overview
    Current State Adoption of ASHRAE 90.1-2019
    Impacted Multifamily Housing
    B. ASHRAE 90.1-2019 Affordability Analysis
    Cost Benefit Analysis
    Building Prototypes
    ASHRAE 90.1-2019 Incremental Costs
    State-Level Results
    Total Life Cycle Cost Savings
    C. Preliminary Affordability Determination--ASHRAE 90.1-2019
IV. Impact on Availability of Housing
    2021 IECC--Single Family
    ASHRAE 90.1-2019 Rental Housing
V. Implementation
VI. Request for Public Comment
VII. Environmental Impact

List of Tables

Table 1. Covered HUD and USDA Programs
Table 2. Current Energy Standards and Incentives for HUD and USDA 
Programs (New Construction Only)
Table 3. Current Adoption of the IECC (September 2022)
Table 4. Number of Units Impacted Annually by 2021 IECC
Table 5A. National Costs and Benefits--2021 vs. 2009 IECC (Single 
Family)
Table 5B. National Cost and Benefits--2021 vs. 2009 IECC (Low-Rise 
Multifamily)
Table 5C. Incremental Costs and Energy Savings of 2021 IECC vs. 2018 
IECC
Table 6. State by State Costs and Benefits (Single-family)
Table 7. Aggregate Estimated Cost and Savings for 2021 IECC (Single-
family and Low-Rise Multifamily)
Table 8. Incremental ASHRAE 90.1.-2019 Construction Costs ($/sf and 
%/sf)
Table 9. Incremental ASHRAE 90.1-2019 Construction Costs ($/
building)
Table 10. Current Adoption of ASHRAE 90.1 (September 2022), 
Multifamily Mid- and High-Rise Buildings
Table 11. High-Rise Multifamily Units Potentially Impacted by ASHRAE 
90.1-2019
Table 12. Mid-Rise Apartment Building Prototype Characteristics
Table 13. ASHRAE 90.1-2019 Added Costs and Savings--National
Table 14. ASHRAE 90.1-2019 Added Costs and Savings--States
Table 15. Total Life Cycle Savings--States ($)
Table 16. Type of Financing for New Single-Family Homes
Table 17. FHA-Insured Single Family Forward Loans, 2021.

List of Figures

Figure 1: IECC Adoption Map (Residential)--Status as of September 
2022
Figure 2. Climate Zone Map
Figure 3. Economic Parameters for Consumer Cash Flows
Figure 4: ASHRAE 90.1 Adoption Map (Multifamily)--Status as of 
September 2022

I. Introduction

Statutory Requirements

    Section 481 of the Energy Independence and Security Act of 2007 
(``EISA,'' Pub. L. 110-140) amended section 109 of the Cranston-
Gonzalez National Affordable Housing Act of 1990 (Cranston-Gonzalez) 
(42 U.S.C. 12709), which establishes procedures for setting minimum 
energy standards for the following three categories of housing financed 
or assisted by HUD and USDA:
    (A) New construction of public and assisted housing and single-
family and multifamily residential housing (other than manufactured 
homes) subject to mortgages insured under the National Housing Act; \1\
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    \1\ This subsection of EISA refers to HUD programs. See Table 1 
for specific HUD programs covered by the Act.
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    (B) New construction of single-family housing (other than 
manufactured homes) subject to mortgages insured, guaranteed, or made 
by the Secretary of Agriculture under title V of the Housing Act of 
1949; \2\ and,
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    \2\ This subsection of EISA refers to USDA programs. See Table 1 
for specific USDA programs covered by the Act.
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    (C) Rehabilitation and new construction of public and assisted 
housing funded by HOPE VI revitalization grants under section 24 of the 
United States Housing Act of 1937 (42 U.S.C. 1437v).
    In addition to these EISA-specified categories, other HUD programs 
apply EISA to new construction projects through their program statutes 
and regulations, including the HOME Investment Partnerships Program 
(HOME) and the Housing Trust Fund. Sections 215(a)(1)(F) and (b)(4) of 
Cranston-Gonzalez (42 U.S.C. 12745(a)(1)(F) and (b)(4)) make new 
construction of rental housing and homeownership housing assisted under 
the HOME program subject to section 109 of Cranston-Gonzalez (42 U.S.C. 
12709) and, therefore, to section 481 of EISA. From the beginning of 
the HOME program, the regulation at 24 CFR 92.251 implemented section 
109 of Cranston-Gonzalez (42 U.S.C. 12709). However, compliance with 
section 109 of Cranston-Gonzalez (42 U.S.C. 12709) was omitted from the 
July 2013 HOME program final rule because HUD planned to update and 
implement energy efficiency standards through a separate proposed rule 
(see the discussion in the preamble to the HOME proposed rule published 
on December

[[Page 31775]]

16, 2011 (76 FR 78344)). Although the energy standards at 24 CFR 
92.251(a)(2)(ii) are reserved in the July 2013 HOME final program rule, 
the statutory requirements of section 109 of Cranston-Gonzalez (42 
U.S.C. 12709) continue to apply to all newly-constructed housing funded 
by the HOME program.
    With regard to the Housing Trust Fund, program regulations at 24 
CFR 93.301(a)(2)(ii) Property Standards, require compliance with the 
minimum standards required under Cranston Gonzalez section 109 (42 
U.S.C. 12709).
    EISA references two standards: the International Energy 
Conservation Code (IECC) and ANSI/ASHRAE/IES Standard 90.1.\3\ The IECC 
standard applies to single-family homes and multifamily low-rise 
buildings (up to 3 stories), while the ASHRAE 90.1 standard applies to 
multifamily residential buildings with 4 or more stories.\4\ For both 
agencies, applicability is limited to newly constructed housing and 
does not include the purchase or repair of existing housing.\5\
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    \3\ ANSI--American national Standards Institute; ASHRAE--
American Society of Heating, Refrigerating, and Air-Conditioning 
Engineers; IES--Illuminating Electrical Society.
    \4\ Note the IECC addresses both residential and commercial 
buildings. ASHRAE 90.1 covers commercial buildings only, including 
multifamily buildings four or more stories above grade. IECC Section 
C 401.2 adopts, by reference, ASHRAE 90.1; that is, compliance with 
ASHRAE 90.1 qualifies as compliance with the IECC for commercial 
buildings.
    \5\ The statute covers rehabilitation as well as new 
construction of housing assisted by HOPE VI revitalization grants; 
however, as noted below, the HOPE VI program is no longer funded.
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    Sections 109(c) and (d) of Cranston-Gonzalez, as amended by EISA, 
establish procedures for updating HUD and USDA energy standards 
following periodic revisions to the IECC and ASHRAE 90.1 codes, 
typically every three years. Specifically, section 109(d) of Cranston-
Gonzalez (42 U.S.C. 12709) provides that revisions to the IECC or 
ASHRAE codes will apply to the three categories of housing financed or 
assisted by HUD or USDA described above if: (1) either agency ``make(s) 
a determination that the revised codes do not negatively affect the 
availability or affordability'' of such housing, and (2) the Secretary 
of Energy has made a determination under section 304 of the Energy 
Conservation and Production Act (42 U.S.C. 6833) that the revised codes 
would improve energy efficiency (42 U.S.C. 12709(d)). The Department of 
Energy (DOE) has published Final Determinations that the 2021 IECC and 
ASHRAE 90.1-2019 standards would improve energy efficiency (86 FR 
40529; July 28, 2021, and 86 FR 40543; July 28, 2021).
    Note that DOE issued a separate final rule under EISA section 413 
that establishes energy conservation standards for manufactured housing 
(42 U.S.C. 17071).\6\ Those standards are based on the 2021 version of 
the International Energy Conservation Code (``IECC'') and feedback 
received during interagency consultation with HUD.
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    \6\ 87 FR 32728 (May 31, 2022); 10 CFR part 460.
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Energy Codes Overview

    There are two primary benefits of adopting energy-saving building 
codes: a private benefit for residents--either homeowners or renters--
in the form of lower energy costs, and the external social value of 
reducing the emission of greenhouse gases (GHGs). Additional benefits 
may include improved health and resilience against extreme hot or cold 
weather events. As discussed in more detail below, states or localities 
typically adopt the IECC and ASHRAE standards on a voluntary basis one 
or more years after their publication. DOE has determined that the 2021 
IECC represents an approximately 40 percent improvement in energy 
efficiency for residential and commercial buildings compared to the 
2006 edition. The 2021 IECC also for the first time includes a Zero 
Energy Appendix. The Appendix is an optional add-on to the 2021 IECC 
that--if adopted by a state or local jurisdiction--will result in 
residential buildings having net zero energy consumption over the 
course of a year. The current state adoption of the IECC and ASHRAE 
standards is as follows:

                        Distribution of State Adoption of IECC and ASHRAE 90.1 Standards
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         IECC * single family and low-rise multifamily          ASHRAE 90.1 * mid-rise and high-rise multifamily
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                                                  Number of                                          Number of
                     Year                           states                    Year                    states
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IECC 2021....................................               3   ASHRAE 90.1-2019................               6
IECC 2018....................................               9   ASHRAE 90.1-2016................               2
IECC 2015....................................               2   ASHRAE 90.1-2013................              19
IECC 2012....................................               0   ASHRAE 90.1-2010................               6
IECC 2009....................................              26   ASHRAE 90.1-2007................               8
Less stringent than IECC 2009, No Statewide                11   Less stringent than ASHRAE 90.1-              10
 Code or Home Rule.                                              2007, No Statewide Code or Home
                                                                 Rule.
----------------------------------------------------------------------------------------------------------------
* As of September 2022.

Covered HUD and USDA Programs

    Table 1 lists the specific HUD and USDA programs covered by EISA, 
with certain exclusions noted, as discussed below. Apart from the HOPE 
VI program, where rehabilitation is referenced, only new construction 
of housing financed or assisted under these programs is covered by 
EISA.

                 Table 1--Covered HUD and USDA Programs
------------------------------------------------------------------------
                                                         Regulations or
         HUD programs               Legal authority          notices
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Public Housing Capital Fund...  Section 9(d) and        24 CFR parts
                                 Section 30 of the       905.
                                 U.S. Housing Act of
                                 1937 (42 U.S.C.
                                 1437g(d) and 1437z-2).
Capital Fund Financing Program  Section 9(d) and        24 CFR part 905
                                 Section 30 of the       subpart E.
                                 U.S. Housing Act of
                                 1937 (42 U.S.C.
                                 1437g(d) and 1437z-2).

[[Page 31776]]

 
* HOPE VI Revitalization of     Section 24 of the U.S.  FR-5415-N-07.
 Severely Distressed Public      Housing Act of 1937
 Housing.                        (42 U.S.C. 1437v).
Choice Neighborhoods            Section 24 of the U.S.  FR-5800-N-11.
 Implementation Grants.          Housing Act of 1937
                                 (42 U.S.C. 1437v).
Section 202 Supportive Housing  Section 202 of the      24 CFR part 891.
 for the Elderly.                Housing Act of 1959
                                 (12 U.S.C. 1701q), as
                                 amended.
Section 811 Supportive Housing  Section 811 of the      24 CFR part 891.
 for Persons with Disabilities.  Cranston-Gonzalez
                                 National Affordable
                                 Housing Act (42
                                 U.S.C. 8013) as
                                 amended.
Rental Assistance               Consolidated and        RAD Notice
 Demonstration (RAD).            Further Continuing      Revision 4 (H
                                 Appropriations Act of   2019-09 PIH
                                 2012 (Pub. L. 112-      2019-23).
                                 55), as amended by
                                 Consolidated
                                 Appropriations Act,
                                 2014 (Pub. L. 113-76)
                                 and subsequent
                                 Consolidated
                                 Appropriations Acts.
FHA Single-family Mortgage      National Housing Act,   24 CFR part 203,
 Insurance Programs.             Sections 203(b) (12     subpart A;
                                 U.S.C. 1709(b)),        203.18(i);
                                 Section 251 (12         203.43i;
                                 U.S.C. 1715z-16),       203.49;
                                 Section 247 (12         203.43h.
                                 U.S.C. 1715z-12),
                                 Section 203(h) (12
                                 U.S.C. 1709(h)),
                                 Housing and Economic
                                 Recovery Act of 2008
                                 (Pub. L. 110-289),
                                 Section 248 of the
                                 National Housing Act
                                 (12 U.S.C. 1715z-13).
FHA Multifamily Mortgage        Sections 213, 220,      24 CFR parts
 Insurance Programs.             221, 231, and 232 of    200, subpart A,
                                 the National Housing    213; 220; 221,
                                 Act (12 U.S.C.1715e,    subparts C and
                                 12 U.S.C.1715v, 12      D; 231; and
                                 U.S.C.1715k, 12         232.
                                 U.S.C.17151, 12
                                 U.S.C.1715w).
HOME Investment Partnerships    Cranston-Gonzalez       Final HOME Rule
 (HOME).                         sections 215(b)(4)      at
                                 and 215(a)(1)(F) (42    www.onecpd.info/
                                 U.S.C. 12745(b)(4)      home/home-final-
                                 and 42 U.S.C.           rule/ reserves
                                 12745(a)(1)(F))         the energy
                                 require HOME units to   standard for a
                                 meet minimum energy     separate
                                 efficiency standards    rulemaking at
                                 promulgated by the      24 CFR 92.251.
                                 Secretary in
                                 accordance with
                                 Cranston Gonzalez
                                 section 109 (42
                                 U.S.C. 12745).
Housing Trust Fund [By          Title I of the Housing  24 CFR
 regulation].                    and Economic Recovery   93.301(a)(2)(ii
                                 Act of 2008, Section    ) Property
                                 1131 (Pub. L. 110-      Standards,
                                 289, 12 U.S.C. 4568.).  requires
                                                         compliance with
                                                         Cranston
                                                         Gonzalez
                                                         section 109 (42
                                                         U.S.C. 12709).
------------------------------------------------------------------------
                              USDA Programs
------------------------------------------------------------------------
Section 502 Guaranteed Housing  Section 502 of Housing  7 CFR part 3550.
 Loans.                          Act (42 U.S.C. 1472).
------------------------------------------------------------------------
Section 502 Rural Housing       Section 502 of Housing  7 CFR part 3550.
 Direct Loans.                   Act (42 U.S.C. 1472).
Section 523 Mutual Self Help    Section 523 of Housing  7 CFR part 1944
 Technical Assistance Grants ,   Act (42 U.S.C. 1472).   subpart-I.
 homeowner participants.
------------------------------------------------------------------------
* Program no longer funded or no longer funds new construction.

    Several exclusions are worth noting. These include the following 
programs which, while classified as public or assisted housing, or may 
be specified in the statute, are no longer funded, or do not fund new 
construction:
    (1) HOPE VI. While EISA references the ``rehabilitation and new 
construction of public and assisted housing funded by HOPE VI 
revitalization grants,'' funding for HOPE VI revitalization grants has 
been discontinued, so the program is therefore not covered by this 
Notice.
    (2) Project-Based Rental Assistance (PBRA). HUD is no longer 
authorized to provide funding for new construction of units assisted 
under the Section 8 PBRA program, except under the Rental Assistance 
Demonstration (RAD). Apart from RAD, current authorization and funding 
that Congress provides for the PBRA program is for the limited purpose 
of renewing expiring Section 8 rental-assistance contracts. 
Accordingly, this Notice does not apply to the Section 8 PBRA program 
except through RAD, as referenced in Table 1.
    Other HUD programs that provide financing for new construction are 
not covered because they do not constitute assisted housing as 
specified in EISA and/or are authorized under statutes not specifically 
referenced in EISA:
    (1) Indian Housing. Indian housing programs are excluded because 
they do not constitute assisted housing and are not authorized under 
the National Housing Act (12 U.S.C. 1701 et seq.) as specified in EISA. 
For example, the Section 184 guaranteed loan program is authorized 
under Section 184 of the Housing and Community Development Act of 1992 
(42 U.S.C. 1715z-13a).
    (2) Community Development Block Grants. Housing financed with 
Community Development Block Grant (CDBG) funds is excluded since CDBG, 
which is authorized by the Housing and Community Development Act of 
1974 (42 U.S.C. 5301 et seq.), is neither an assisted housing program 
nor a National Housing Act mortgage insurance program.

Current Above-Code Standards or Incentives

    Some HUD and USDA competitive grant programs covered by EISA (as 
well as other programs) already require grantees to comply with energy 
efficiency standards or green building requirements with energy 
performance requirements that exceed state or locally-adopted IECC and 
ASHRAE 90.1 standards, while other programs provide incentives to do 
so. A list of current programs that require or incentivize a green 
building standard is shown in Table 2. This standard is typically 
Energy Star Certified New Homes for single-family properties, Energy 
Star for Multifamily New Construction, or a green building standard 
recognized by HUD that includes a minimum energy

[[Page 31777]]

efficiency requirement. Nothing in this Notice will preclude HUD or 
USDA competitive programs from maintaining these higher standards or 
raising them further, or for HUD or USDA programs to provide incentives 
for above-code energy requirements.
    Table 2 includes a listing of current HUD and USDA programs with 
requirements or incentives for funding recipients to build to standards 
above the current 2009 IECC and/or ASHRAE 90.1 standards (see ``Already 
Exceeds Current Energy Standard'' column). Contingent on the energy 
efficiency or green building standard selected, and the minimum energy 
efficiency requirements established for each standard, projects built 
to these above-code standards may also exceed the proposed 2021 IECC 
and ASHRAE 90.1-2019 standards discussed in this Notice (see ``Meets or 
Exceeds Proposed Energy Standard'' column). HUD and USDA are requesting 
comments in this Notice on the current energy efficiency requirements 
included in the green building standards incentivized or required by 
these programs. (See Section V. Implementation, Alternate Compliance 
Pathways, and Section VI, Request for Public Comment, Question 8). 
These green building or energy performance typically have multiple 
certification levels with varying energy baselines and these baselines 
change over time at varying points after publication of newer editions 
of the energy codes. HUD and USDA will seek certifications from the 
standard-setting bodies that each of these programs meet the 
requirements of this Notice.

                   Table 2--Current Energy Standards and Incentives for HUD and USDA Programs
                                             [New construction] \7\
----------------------------------------------------------------------------------------------------------------
                                                                                                  Already meets
                                                   Current energy efficiency    Exceeds current     or exceeds
           Program                   Type         requirements and incentives        energy      proposed energy
                                                                                   standards        standards
----------------------------------------------------------------------------------------------------------------
                                            Programs Covered by EISA
----------------------------------------------------------------------------------------------------------------
HUD:
    Choice Neighborhoods       Competitive      Required: Requirements of       Exceeds 2009     May meet or
     Implementation.            Grant.           Energy Star Single Family New   IECC/ASHRAE      exceed
                                                 Homes or Multifamily New        90.1-2007.       proposed 2021
                                                 Construction. Plus                               IECC/ASHRAE
                                                 certification by recognized                      90.1-2019
                                                 green rating such as Energy                      standard.
                                                 Star Indoor Air Plus,
                                                 Enterprise Green Communities,
                                                 National Green Building
                                                 Standard, LEED-H, LEED-NC, or
                                                 regional standards such as
                                                 Earthcraft or Built Green.
                                                 Use Energy Star products.
    Choice Neighborhoods--     Competitive      Required: Eligible for Stage 1  Exceeds 2009     May meet or
     Planning.                  Grant.           Conditional Approval LEED for   IECC/ASHRAE      exceed
                                                 Neighborhood Development        90.1-2007.       proposed 2021
                                                 (LEED-ND) or equivalent. Plus                    IECC/ASHRAE
                                                 certification by recognized                      90.1-2019
                                                 green rating program.                            standard.
    Section 202 Supportive     Competitive      Required: 2021 IECC and ASHRAE  Exceeds 2009     Meets and may
     Housing for the Elderly.   Grant.           90.1-2019.                      IECC/ASHRAE      exceed
                                                Incentive: Additional            90.1-2007.       proposed 2021
                                                 competitive rating points for                    IECC/ASHRAE
                                                 developments that meet a                         90.1-2019
                                                 green building or energy                         standard.
                                                 performance standard that
                                                 includes a Zero Energy Ready
                                                 or Net Zero Energy
                                                 requirement..
    Section 811 for Persons    Competitive      Energy Star Certified New       Exceeds 2009
     with Disabilities.         Grant.           Construction.                   IECC/ASHRAE
                                                                                 90.1-2007.
    Rental Assistance          Conversion of    2009 IECC or ASHRAE 90.1-2007
     Demonstration (RAD).       Existing Units.  or any successor code adopted
                                                 by HUD; applicants encouraged
                                                 to build to Energy Star
                                                 Certified New Construction.
                                                 Minimum WaterSense and Energy
                                                 Star appliances required and
                                                 the most cost-effective
                                                 measures identified in the
                                                 Physical Condition Assessment.
    FHA Multifamily Mortgage   Mortgage         Incentive: Discounted Mortgage  Incentives       May meet or
     Insurance.                 Insurance.       Insurance Premium (MIP) for a   exceed 2009      exceed
                                                 recognized Green Building       IECC/ASHRAE      proposed 2021
                                                 Standard. Energy Star Score     90.1-2007.       IECC/ASHRAE
                                                 of at least 75 in EPA                            90.1-2019
                                                 Portfolio Manager.                               standard.
    FHA Single Family          Mortgage         2009 IECC.....................
     Mortgage Insurance.        Insurance.
    HOME Investment            Formula Grant..  2009 IECC/ASHRAE 90.1-2007....
     Partnerships Program.
    Housing Trust Fund.......  Formula Grant..  2009 IECC/ASHRAE 90.1-2007....
    Public Housing Capital     Formula Grant..  2009 IECC/ASHRAE 90.1-2010 or
     Fund.                                       successor standards.
                                                Energy Star appliances also
                                                 required unless not cost
                                                 effective..
USDA:
    Section 502 Guaranteed     Loan Guarantee.  2009 IECC at minimum. Stretch
     Housing Loans.                              ratio of 2 percent on
                                                 mortgage qualifications for
                                                 complying with above-code
                                                 standards.

[[Page 31778]]

 
    Section 502 Rural Housing  Direct Loan....  2009 IECC at minimum. Stretch
     Direct Loans.                               ratio of 2 percent on
                                                 mortgage qualifications for
                                                 complying with above-code
                                                 standards.
    Section 523 Mutual Self    Grant Program..  2009 IECC at minimum. State
     Help.                                       adopted versions of more
                                                 recent codes vary.
----------------------------------------------------------------------------------------------------------------
                                          Programs Not Covered by EISA
----------------------------------------------------------------------------------------------------------------
    HUD CDBG-DR, CDBG-MIT....  Grants to        For new construction of         Exceeds 2009     May meet or
                                states or        substantially damaged           IECC/ASHRAE      exceed
                                localities.      buildings, meet a minimum       90.1-2007        proposed 2021
                                                 energy standard and green       requirements.    IECC/ASHRAE
                                                 building standard recognized                     90.1-2019
                                                 by HUD.                                          standard.
    USDA Multifamily Sec. 515  Direct Loans,    Meet minimum state or local     Incentives       May meet or
     New Construction, Sec      Guaranteed       energy codes.                   exceed 2009      exceed
     514/516 Farmworker         Loans and       Incentive for Secs 514/515/      IECC/ASHRAE      proposed 2021
     Housing, Sec 538           Grants.          516: Energy Star Certified      90.1-2007.       IECC/ASHRAE
     Guaranteed Loans.                           New Homes, Enterprise Green                      90.1-2019
                                                 Communities, NGBS, DOE Zero                      standard.
                                                 Energy Ready, LEED, Passive
                                                 House, Living Building
                                                 Challenge..
----------------------------------------------------------------------------------------------------------------

II. 2021 IECC Affordability Determination
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    \7\ Table 2 includes HUD and USDA programs supporting new 
construction with energy code requirements. Does not include other 
HUD or USDA programs that may have appliance or product standards or 
requirements only.
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A. Overview

    The IECC is a model energy code developed by the International Code 
Council (ICC) through a public hearing process involving national 
experts for single-family and low-rise residential buildings as well as 
commercial buildings.\8\ The code contains minimum energy efficiency 
provisions for residential buildings, defined as single-family homes 
and low-rise multifamily buildings (up to three stories). The code 
offers both prescriptive and performance-based approaches. The 
efficiency standards associated with the IECC set benchmarks for a 
structure's walls, floors, ceilings, lighting, windows, doors, duct 
leakage, and air leakage
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    \8\ The IECC covers both residential and commercial buildings. 
States that adopt the IECC (or portions thereof) may choose to adopt 
the IECC for residential buildings only or may extend the code to 
commercial buildings (which include multifamily residential 
buildings of four or more stories). Chapter 4 of the IECC Commercial 
Code allows compliance with ASHRAE 90.1 as an optional compliance 
path.
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    Revised editions of the IECC are typically published every three 
years. Full editions of its predecessor, the Model Energy Code, were 
first published in 1989, and new editions of the IECC were published 
every three years beginning in 1998. The residential portion of the 
IECC was heavily revised in 2004: the Climate Zones were completely 
revised (reduced from 17 Zones to the current eight primary Zones) and 
the building envelope requirements were restructured into a different 
format.\9\ The post-2004 code became much more concise and simpler to 
use, but these changes complicate comparisons of State codes based on 
pre-2004 versions of the IECC to the more recent editions.
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    \9\ In the early 2000s, researchers at the U.S. Department of 
Energy's Pacific Northwest National Laboratory prepared a simplified 
map of U.S. climate zones. The map was based on analysis of the 
4,775 U.S. weather sites identified by the National Oceanic and 
Atmospheric Administration, as well as widely accepted 
classifications of world climates that have been applied in a 
variety of different disciplines. This PNNL-developed map divided 
the United States into eight temperature-oriented climate zones. See 
https://www1.eere.energy.gov/buildings/publications/pdfs/building_america/4_3a_ba_innov_buildingscienceclimatemaps_011713.pdf.
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    For single family housing, the IECC is one component of the larger 
International Residential Code (IRC). Each version of the IRC, 
beginning with the 2015 edition, has the corresponding version of the 
IECC embedded directly into that code (Chapter 11). A majority of 
states have adopted some version of the IRC. For other building types, 
including multifamily housing, the equivalent building code is the 
International Building Code (IBC), which also refers to other codes 
such as the International Plumbing Code, the International Electrical 
Code or, in this case, the IECC. Those codes also then embody or refer 
to other codes in the industry, such as ASHRAE 90.1. In this hub and 
spoke model, there is even more differentiation between states 
regarding which versions of which codes are adopted as a suite of codes 
at any given point in time. Even with the adoption of the IRC, the all-
in-one code that is focused on single-family housing, states and local 
areas sometimes make adjustments to the code, removing and in some 
cases adding requirements for some building elements.
Current HUD-USDA Standard and Subsequent Revisions
    In May 2015, HUD and USDA published a Final Determination that 
established the 2009 IECC as the minimum standard for both new single-
family housing built with HUD and USDA assistance and new HUD-assisted 
or FHA-insured low-rise multifamily housing.\10\ HUD and USDA estimated 
that 3,200 multifamily units and 15,000 single family units per year 
could potentially be impacted in the 16 states that had not yet adopted 
either of these codes. The average incremental cost of

[[Page 31779]]

the higher standard was estimated to be $1,019 per unit, with
---------------------------------------------------------------------------

    \10\ Federal Register Notice 80 FR 25901, May 6, 2015.
---------------------------------------------------------------------------

    average annual savings of $215, for a 5-year payback and a 1.3-year 
net positive cash flow. HUD and USDA determined that adoption of the 
2009 IECC would not negatively impact the affordability and 
availability of the covered housing. The 2009 IECC represented a 
significant increase in energy efficiency of 7.9 percent and a 10.8 
percent cost savings over the previous (2006) code.
    Since HUD and USDA's adoption of the 2009 IECC, there have been 
four revisions to the IECC.\11\ No action was taken by the prior 
Administration to comply with the statutory requirements to consider or 
adopt these updated codes.
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    \11\ IECC 2012, 2015, 2018, and 2021.
---------------------------------------------------------------------------

    The figure below shows the average national energy cost savings 
estimated with each version of the IECC. The greatest incremental 
savings come from the 2012 IECC (23.9%), followed by the 2009 IECC 
(10.8% over the 2006 IECC), followed by the 2021 IECC (8.7%). The 
Department of Energy's Pacific Northwest National Laboratory (PNNL) 
provided HUD with cost and benefit estimates for adopting the 2021 IECC 
from a baseline of the 2009 IECC and has made publicly available 
estimates for adopting the 2021 IECC from a 2018 IECC baseline. For 
states that have adopted standards equivalent to the 2012 or 2015 IECC, 
HUD and USDA use the estimates for the adoption from the 2018 to the 
2021 IECC, as the 2012 and 2015 IECC both are closer to the 2018 IECC 
than the 2009 IECC.
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    \12\ Sources: DOE, 2012: https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-22068.pdf; 2015: https://www.energycodes.gov/sites/default/files/2021-07/2015_IECC_FinalDeterminationAnalysis.pdf; 2018: https://www.energycodes.gov/sites/default/files/2021-07/EERE-2018-BT-DET-0014-0008.pdf, 2021: https://www.regulations.gov/document/EERE-2021-BT-DET-0010-0006.

      Incremental Energy Savings Associated With Each IECC Version
                           [2006 to 2021] \12\
------------------------------------------------------------------------
                                                               National
                                                 Comparison    weighted
                 Year of code                       year     energy cost
                                                             savings (%)
------------------------------------------------------------------------
2009..........................................         2006         10.8
2012..........................................         2009         23.9
2015..........................................         2012          0.7
2018..........................................         2015          2.0
2021..........................................         2018          8.7
------------------------------------------------------------------------

    Each successor edition since the 2009 IECC has increased energy 
efficiency and offered cost savings to consumers in varying degrees:
    (1) The 2012 IECC was published in May 2011, representing a 
significant increase of 23.9 percent in energy cost savings over the 
2009 IECC.13 14 Key changes in the 2012 edition included: 
increased stringency for opaque thermal envelope components; 
clarification that sun rooms enclosing conditioned spaces must meet the 
thermal envelope provisions; requirements for a blower door test to 
determine the air leakage rate and limits for the number of prescribed 
air changes per hour (ACH) per climate zone; insulation to at least R-3 
for hot water piping; and an increase in the minimum number of high-
efficacy electrical lighting sources from 50 percent to 75 percent of 
permanent fixtures or lamps in permanent fixtures.15 16 This 
translated into an estimated $500 or 32.1 percent annual cost savings 
per unit over the 2006 IECC.\17\
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    \13\ U.S. Department of Energy, ``Updating State Residential 
Building Energy Efficiency Codes: Notice of Final Determination.'' 
Federal Register Notice 77FR 29322, May 17, 2012. http://www.gpo.gov/fdsys/pkg/FR-2012-05-17/pdf/2012-12000.pdf.
    \14\ Pacific Northwest National Laboratory, Cost-Effectiveness 
Analysis of the 2009 and 2012 IECC Residential Provisions--Technical 
Support Document, U.S. Department of Energy, PNNL-22068, April 2013. 
https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-22068.pdf.
    \15\ Pacific Northwest National Laboratory, Guide to the Changes 
between the 2009 and 2012 International Energy Conservation Code, 
U.S. Department of Energy, PNNL-21435, May 2012. http://www.pnnl.gov/main/publications/external/technical_reports/PNNL-21435.pdf.
    \16\ Pacific Northwest National Laboratory, Energy savings for a 
Typical New Residential Dwelling Unit Based on the 2009 and 2012 
IECC as Compared to the 2006 IECC, Letter Report, PNNL-88603, April 
2013, Table 1.
    \17\ Pacific Northwest National Laboratory, Cost-Effectiveness 
Analysis of the 2009 and 2012 IECC Residential Provisions--Technical 
Support Document, U.S. Department of Energy, PNNL-22068, Tables 8.1 
and 8.4, April 2013.
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    (2) The 2015 IECC was substantially the same as the 2012 edition, 
with a modest increase in energy efficiency of just 0.87 percent over 
the 2012 IECC.\18\ Revisions in this edition included: revised 
provisions for existing buildings; removal of exemption for historic 
buildings; revised requirements for building envelope and duct leakage 
testing and hot water distribution efficiency. The most notable 
innovation was the introduction of a new Energy Rating Index (ERI) 
performance path that utilizes the Home Energy Rating System (HERS) 
Index.
---------------------------------------------------------------------------

    \18\ U.S. Department of Energy, Determination Regarding Energy 
Efficiency Improvements in the 2015 International Energy 
Conservation Code, EERE-2014-BT-DET-0030-0007, June 2015. 80 FR 
33250, June 11, 2015. http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-DET-0030-0007.
---------------------------------------------------------------------------

    (3) The 2018 IECC also saw limited changes to the prior edition. In 
its efficiency determination for the 2018 IECC, DOE found site energy 
savings over the prior code of just 1.68 percent; 1.91 percent source 
energy savings; and 1.97 percent annual energy cost savings.\19\ Of the 
47 changes in this edition, most were expected to have a neutral impact 
on energy efficiency, with two changes making up most of the energy 
savings associated with the updated code: (1) lower fenestration U-
factors in Climate Zones 3 through 8, and (2) an increase in high-
efficacy lighting from 75 percent to 90 percent of permanently 
installed fixtures in all climate zones.
---------------------------------------------------------------------------

    \19\ DOE, ``Final Determination Regarding energy efficiency 
Improvements in the 2018 International Energy Conservation Code,'' 
Federal Register Notice, 84 FR 67435 (December 10, 2019). https://www.federalregister.gov/documents/2019/12/10/2019-26550/final-determination-regarding-energy-efficiency-improvements-in-the-2018-international-energy; also PNNL for DOE, Energy Savings Analysis: 
2018 IECC for Residential Buildings, November 2019, https://www.energycodes.gov/sites/default/files/2021-07/EERE-2018-BT-DET-0014-0008.pdf.
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2021 IECC--Overview
    As required by statute, this Notice addresses the most recent 
edition of the IECC, the 2021 IECC.\20\ In its efficiency determination 
for this standard, DOE determined that this edition would result in 
significant savings relative to the 2018 IECC: 9.4 percent savings in 
annual site energy use intensity (EUI); 8.8 percent in annual source 
EUI; 8.7 percent in annual energy cost savings; and 8.7 percent 
reduction in carbon emissions.\21\ The 2021 standard will yield a 
national weighted energy cost savings of 34.4 percent over the current 
USDA-HUD baseline 2009 standard.
---------------------------------------------------------------------------

    \20\ International Code Council, 2021 International Energy 
Conservation Code, January 29, 2021. https://codes.iccsafe.org/content/IECC2021P1.
    \21\ 86 FR 40529 (July 28, 2021), Analysis Regarding Energy 
Efficiency Improvements in the 2021 International Energy 
Conservation Code (IECC) https://www.federalregister.gov/documents/2021/07/28/2021-15969/analysis-regarding-energy-efficiency-improvements-in-the-2021-international-energy-conservation-code; 
also PNNL, Preliminary Energy Savings Analysis: 2021 IECC for 
Residential Buildings, April 2021, https://www.energycodes.gov/sites/default/files/2021-07/2021_IECC_PreliminaryDetermination_TSD.pdf.
---------------------------------------------------------------------------

    In their qualitative assessment of the code, PNNL identified a 
total of 114 approved code changes or addenda in this edition of the 
code over the prior edition, of which 35 will have a direct impact on 
energy use in residential buildings. Of these, 29 are expected to

[[Page 31780]]

reduce energy use, while six are expected to increase energy use.\22\
---------------------------------------------------------------------------

    \22\ 79 additional changes were determined to be administrative 
or impact non-energy portions of the code.
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    The following are the primary technical changes in the 2021 IECC 
over the previous edition:
     Building Envelope. Building envelope revisions include 
increased insulation requirements; more efficient U factors and Solar 
Heat Gain Coefficients (SHGCs) for windows and fenestration; maximum 
air leakage rate of 5 Air Changes per Hour (ACH) at 50 pascals for all 
compliance paths, with 3 ACH for Climate Zones 3-8 following the 
prescriptive path. Testing alternatives are provided for smaller homes 
and attached single-family and multifamily buildings.\23\
---------------------------------------------------------------------------

    \23\ AMCA International, International Energy Conservation Code: 
2021 Changes, Getting Involved in the 2024 Process, May 5, 2021, 
https://www.amca.org/assets/resources/public/assets/uploads/FINAL-_ICC_Webinar-_presentation_May_5__2021.pdf.
---------------------------------------------------------------------------

     Heating, Ventilation and Air Condition (HVAC). Mechanical 
ventilation in Climate Zones 7 and 8 provided by a Heat Recovery 
Ventilator (HRV) or Energy Recovery Ventilator (ERV) is required for 
the prescriptive compliance path.\24\
---------------------------------------------------------------------------

    \24\ Northeast Energy Efficiency Partnerships, Key Changes in 
the 2021 IECC for the Northeast and Mid-Atlantic, https://neep.org/sites/default/files/media-files/2021_iecc_one-pager_.pdf.
---------------------------------------------------------------------------

     Additional Efficiency Options. Additional efficiency 
options in the 2021 IECC include an enhanced envelope performance 
option--a 5 percent improvement in proposed home UA value (R408.2.1); a 
more efficient HVAC equipment option (highlighted above); a reduced 
energy use in service water heating option 0.82 EF for fossil fuel, 2.0 
EF for electric fuels or 0.4 solar fraction water heater (R405.2.3); a 
more efficient duct thermal distribution system option--100 percent of 
ducts in conditioned space or ductless systems (R405.2.4); and an 
improved air sealing and efficient ventilation option--air leakage at 
3.0 ACH50 with ERV or HRV with 75 percent Sensible Recovery Efficiency 
(SRE) (R405.2.5).
     Lighting Changes. The efficacy value of high-efficacy 
lamps increases to 70 lumens/watt (100 percent of lighting), a 10 
percent increase over the 2018 standard.
     Renewables. The 2021 IECC revises the definition for ``on-
site renewables'' for consistency with other national standards; adds a 
definition for biogas and biomass; requires that Renewable Energy 
Certificates (RECS) be retired with the homeowner when using the ERI 
compliance approach.\25\
---------------------------------------------------------------------------

    \25\ New Buildings Institute, 2021 IECC National Model Energy 
Code (Base Codes). https://newbuildings.org/code_policy/2021-iecc-base-codes/.
---------------------------------------------------------------------------

     Zero Energy Appendix. In addition to these technical 
changes, the 2021 IECC for the first time includes a Zero Energy 
Appendix that requires compliance with an ERI score without considering 
renewables and then achieving a score of ``0'' with renewables. This 
provides jurisdictions with an opportunity to adopt a base or stretch 
code that achieves zero energy in homes and low-rise multifamily 
buildings.\26\
---------------------------------------------------------------------------

    \26\ Ibid.
---------------------------------------------------------------------------

     Building Electrification. While the 2021 IECC did not 
include building electrification provisions in the final version of the 
code, provisions are available for adoption by states as amendments to 
the 2021 IECC: RE147-19, Electrification-Ready; RE126-19. Energy 
Efficient Water Heating, RE107-19, Eliminate Continuous Burning Pilot 
Light.
     Compliance Pathways. There are three compliance pathways 
in the 2021 IECC: Prescriptive, Performance, and Energy Rating Index or 
ERI, which reverted to IECC 2015 levels. The prescriptive paths can 
follow the R-value minimum table, the U-Factor equivalent table, or the 
UA equivalent alternative. All compliance pathways now have required 
Additional Efficiency Options (AEOs) to achieve five percent greater 
energy efficiency than base levels. The 2021 IECC lowers the 
performance path ERI scores compared to the 2018 IECC.
Current State Adoption of the 2021 IECC
    There is typically a lag time between the publication of a new 
edition of the IECC and state adoption of the code: Table 3 and Figure 
1 show that, as of September 2022, while all but eight states have 
adopted a version of the IECC, only three states (California, 
Washington, and Vermont) have adopted the 2021 IECC or its 
equivalent.\27\
---------------------------------------------------------------------------

    \27\ California's Title 24 2019 Building Energy Efficiency 
standard, Washington's 2018 State Energy Code, and Vermont's 
amendments to the 2018 IECC were determined to meet or exceed the 
2021 IECC.
---------------------------------------------------------------------------

    Overall, thirty-nine states plus the District of Columbia have 
adopted a version of the code that is equivalent to or higher than the 
current HUD-USDA standard of the 2009 IECC. Of these, only 11 states 
plus the District of Columbia have adopted a code above the 2009 IECC 
(the 2018 IECC, the 2015 IECC or equivalent to the 2021 IECC),\28\ 
while 26 states have set their codes at the equivalent of the 2009 
IECC. The remaining 11states have either adopted standards that pre-
date the 2009 IECC (3 states) or have no state-wide codes (8 states).
---------------------------------------------------------------------------

    \28\ PNNL, State Level Residential Codes Energy Use Index, FY 
2023Q2, Excel File at https://www.energycodes.gov/state-portal. Note 
that as of March 2023, two additional states have adopted the 2021 
IECC.
---------------------------------------------------------------------------

    Based on historical experience, and the fact that an additional six 
states are currently considering the adoption of the 2021 IECC for 
adoption in 2023, it is anticipated that over time additional states 
are likely to adopt the 2021 IECC, either as published by the ICC or 
with amendments.

                  Table 3--Current Adoption of the IECC
                         [As of September 2022]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
            Above Current HUD-USDA Standard (14 states + DC)
------------------------------------------------------------------------
                       2021 IECC or Equivalent (3)
------------------------------------------------------------------------
California                               Vermont.
Washington.............................
------------------------------------------------------------------------
                 2018 IECC or Equivalent (8 states + DC)
------------------------------------------------------------------------
Oregon                                   Nebraska.
Maryland                                 Delaware.
Massachusetts                            New York.
District of Columbia                     New Hampshire.

[[Page 31781]]

 
Pennsylvania...........................
------------------------------------------------------------------------
                              2015 IECC (3)
------------------------------------------------------------------------
Maine                                    Hawaii.*
Texas..................................
------------------------------------------------------------------------
         Current HUD-USDA Standard 2009 IECC or Equivalent (25)
------------------------------------------------------------------------
Alabama                                  Oklahoma.
Connecticut                              Nevada.
Florida                                  New Jersey.
Georgia                                  New Mexico.
Idaho                                    North Carolina.
Illinois                                 Ohio.
Indiana                                  Rhode Island.
Iowa                                     South Carolina.
Kentucky                                 Virginia.
Louisiana                                West Virginia.
Michigan                                 Wisconsin.
Minnesota                                Utah.
Montana................................
------------------------------------------------------------------------
             Older than 2009 IECC Or No Statewide Codes (11)
------------------------------------------------------------------------
                         Less Than 2009 IECC (3)
------------------------------------------------------------------------
Arkansas                                 Tennessee.
Arizona *..............................
------------------------------------------------------------------------
                     Home Rule/No statewide code (8)
------------------------------------------------------------------------
Alaska                                   Colorado.
Missouri                                 Kansas.
Wyoming                                  North Dakota.
South Dakota                             Mississippi.
------------------------------------------------------------------------
                            U.S. Territories
------------------------------------------------------------------------
American Samoa--No Code                  N. Mariana Islands (2003 IECC
                                          equivalent).
Guam--2009 IECC                          Puerto Rico (2011 PR Building
                                          Standard).
U.S. Virgin Islands--2009 IECC
------------------------------------------------------------------------
* A review of the codes in place across the state indicates that 86
  percent (Hawaii) and 82 percent (Arizona) of the population is covered
  by codes at this level.

    This tabulation is drawn from DOE's tracking of state adoptions of 
the IECC, available at DOE's state portal at https://www.energycodes.gov/state-portal. For the purpose of this Notice, HUD 
and USDA rely on the status map maintained by DOE at this site. Figure 
1 displays the state IECC adoption status shown in Table 3.

[[Page 31782]]

[GRAPHIC] [TIFF OMITTED] TN18MY23.002

    Note that states often adopt amendments to the code as published by 
the ICC. In some cases, these amendments will sufficiently alter the 
IECC code as published, such that the energy performance of buildings 
meeting the amended code provisions may be equivalent to that of a 
prior code. The DOE code adoption map, and the adopted codes listed in 
Table 3, reflect DOE/PNNL's analysis of state codes as amended and DOE/
PNNL's assessment of their equivalent code. Accordingly, 22 states have 
adopted the 2012, 2015 or 2018 IECC with amendments and were determined 
by PNNL to be equivalent to the 2009 IECC. These are therefore shown in 
Table 3 and Figure 1 as at the 2009 IECC level.\29\ Ohio, for example, 
adopted the 2018 IECC with amendments to basement and crawl space wall 
R-values, air leakage rates and the allowance to utilize framing 
cavities as return ducts.\30\ DOE/PNNL determined that the Ohio code as 
adopted with amendments is equivalent to the 2009 IECC.\31\ New Mexico 
adopted the New Mexico Energy Conservation Code, based on the 2018 
IECC, with state-specific amendments which were determined by DOE/PNNL 
to yield a performance standard equivalent to the 2009 IECC. On the 
other hand, if the new code is less than one percent more efficient 
than the prior code then DOE counts the newer code as equivalent to the 
previous code--hence Texas is credited here with the 2018 standard 
rather than the code they adopted (2015 IECC). California has adopted 
its own standard, Title 24, which DOE has determined meets or exceeds 
the 2021 IECC.
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    \29\ The 21 states deemed equivalent to the 2009 IECC are: CT, 
FL, GA, IA, ID, IL, IN, MI, MN, MT, NC, NH, NJ, NM, NV, OH, PA, RI, 
UT, VA. See Table for a listing of these code equivalents at https://www.energycodes.gov/state-portal and ``Residential State Level 
Results'' Excel file at ``Available Data'' for detailed DOE/PNNL 
analysis.
    \30\ ACEEE, State Scorecard Ranking, https://database.aceee.org/state/ohio.
    \31\ See ``Residential State Level Results'' at https://www.energycodes.gov/state-portal.
---------------------------------------------------------------------------

    In certain cases, home rule cities or counties within a State may 
adopt a different code from the rest of the State. For example, Austin, 
Texas has adopted the 2021 IECC energy code, thereby exceeding the 
minimum Texas statewide code of the 2015 IECC, equivalent to the 2018 
IECC.\32\ In instances where a local entity has a more stringent 
standard, the affordability impacts within a State will differ.\33\
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    \32\ City of Austin, Building Technical Codes. https://www.austintexas.gov/department/building-technical-codes.
    \33\ HUD and USDA do not maintain a list of local communities 
that may have adopted a different code than their state code. See 
ACEEE, State and Local Policy Database for codes adopted by 
individual cities. https://database.aceee.org/city/energy-code-stringency.
---------------------------------------------------------------------------

Estimated Impacts
    Table 4 provides an estimate of the average number of units that 
may be impacted annually by adoption of the 2021 IECC. HUD and USDA 
used prior-year production for these programs in order to estimate 
future annual production for these programs.\34\ Based on average 
annual production for the past three years (2019-21), the agencies 
estimate that a total of approximately 161,700 units of HUD- and USDA-
financed or insured housing may be impacted by the 2021 IECC, of which 
151,300 are in the 47 states plus DC and U.S. territories that have not 
yet adopted this standard.
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    \34\ Three-year averages were used (2019-21) for all programs, 
except for public housing which used 2016-2020 averages since 
limited data were available for the three-year period. Prior-year 
production data provided by program offices using internal tracking 
or reporting systems.

[[Page 31783]]



                                            Table 4--Estimated Number of Units Impacted Annually by 2021 IECC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 USDA       USDA       FHA
                                                      FHA     guaranteed   direct    single    Public              Housing            Low-rise
                State or territory                  single       loan       loan    family--   housing    HOME      trust      RAD     multi-     Total
                                                    family     program     program   condos                        fund *              family
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK...............................................        42           27        19         3         0        35        19        25         0       170
AL...............................................     1,975          611        27         0        52        60         0         0       321     3,046
AR...............................................     1,024          453        52         0         0       145        12        16       164     1,866
AZ...............................................     4,595          391        90        54         0        97         0        38       432     5,697
CA (2021)........................................     5,629          136       339       803        12       880         0        12       166     7,977
CO...............................................     2,701          151        42        65        13       199         1        10       682     3,864
CT...............................................        70            9         0         7        23        42         0         0       125       276
DC...............................................        17            0         0         8        12         0         0         0       137       174
DE...............................................       584          179        25        20         0         5         0        48         0     860.5
FL...............................................    19,178        1,119       189        24       146       366        87        21     1,477    22,607
GA...............................................     7,977          731        45        17        32       139         0         0       795     9,736
HI...............................................        77           61        39        40         3        33         0         0         0       253
IA...............................................       224           44         5         0         0        16         5         0         0       294
ID...............................................       812          134        13         0         0        56        29        73        11     1,128
IL...............................................       750           10         2         4        35        96         0         0       404     1,301
IN...............................................     1,890          205       137         1         0       121         0         0        49     2,403
KS...............................................       161           29         1         0         0        39        30         0        55       315
KY...............................................       798          277        66        13         0        71         0         2       188     1,415
LA...............................................     2,181        1,036        42         0        12       189         2         3       124     3,589
MA...............................................       174            7         7        11         0        20         0        35       491       745
MD...............................................     2,073          171         5       150         0       143         0         0       849     3,391
ME...............................................       116           48        16         0         0        40        30        24        15     288.5
MI...............................................       227           73        32       234        16        93         0         0       102       777
MN...............................................       542           99        16         1         3       120         0         5       607     1,393
MO...............................................       896          306         6         2         0       236         2         0       444     1,892
MS...............................................     1,048          304        43         2         1         0         0         0         0     1,398
MT...............................................       120           50        22         0         0        35         3        21        68     318.5
NC...............................................     4,977        1,211       165         2         7       724        25         0     1,321     8,432
ND...............................................       112           14         1         0         0        27        13         0         0       167
NE...............................................       177            9         1         0         0        17         0         0       297       501
NH...............................................        69            5         1         2         0        50         6        46       106       285
NJ...............................................       477            8         3        43        42       151         0         0        50       774
NM...............................................       751           21        26         0         0        11        15        12       115     950.5
NV...............................................     1,642           52         6       101         4       408         3         1        92     2,309
NY...............................................       233            5         6         3        15       262         0        27     1,445     1,996
OH...............................................     1,339           51        17        25        10       229         0         0       105     1,776
OK...............................................     1,464          288        41         0         0        34        13        10        81     1,931
OR...............................................       703          127        31        22         0       142        12        30        38     1,105
PA...............................................       697           78        13         4        43        90         0         0        85     1,010
RI...............................................        64            0         3         1         0         3        23         2        35     130.5
SC...............................................     4,169          992        87         3         0        44         0         0       236     5,531
SD...............................................       148           49        16         1         0       124        75        37        12     461.5
TN...............................................     3,355          644        55         9         2        39        30       103       751     4,988
TX...............................................    32,070        1,670        98       325        83       243        57         0     6,684    41,230
UT...............................................     1,679          417       127       103         0         7         0        17       476     2,826
VA...............................................     2,119          416        71       178        12        85        45         0       924     3,850
VT (2021)........................................        10            4         2         0         0        59        24         0         9       108
WA (2021)........................................     1,529          128        81        45        15       107         6        31       413     2,355
WI...............................................       168           24         7         0         5        85         0         0       173       462
WV...............................................       298          221         3         0         0        12        10         5        71       620
WY...............................................        55           32         3         0         0        16         1         0        18       125
Territories:
    Guam.........................................  ........  ...........         8  ........  ........        18  ........  ........  ........        26
    Mariana Isl..................................  ........  ...........         9  ........  ........         3  ........  ........  ........        12
    Puerto Rico..................................       186          284        53  ........        53         5  ........  ........  ........       581
                                                  ------------------------------------------------------------------------------------------------------
        Total....................................   114,372       13,411     2,214     2,326       651     6,271       578       645    21,243   161,711
47 states........................................   107,204       13,143     1,792     1,478       624     5,225       548       603    20,655   151,272
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 4 includes both single-family and low-rise multifamily 
housing. Of the total, in the 47 states and the U.S. territories that 
have not yet adopted the 2021 IECC, approximately 107,200 units are 
estimated to be FHA-insured new single-family homes; approximately 
13,100 units are USDA Section 502 direct loans, and 1,800 units are 
Section 502 guaranteed loans. The remaining single-family units are 
financed through the HOME program (5,200 units), HUD's Public and 
Indian Housing (PIH) programs (approximately 600 units through the 
Choice Neighborhoods and Capital Fund Financing Programs, and 500 units 
through the Housing Trust Fund program). Also included in Table 4 are 
some 20,600 FHA-insured multifamily housing units financed with FHA 
multifamily insurance that are

[[Page 31784]]

estimated to be low-rise multifamily and therefore covered under the 
2021 IECC.\35\ When adjusted to exclude units in states that have 
already adopted codes equivalent to the 2021 IECC (California, Vermont, 
Washington), the total potential number of estimated units potentially 
impacted decreases to around 151,000 units.
---------------------------------------------------------------------------

    \35\ In order to derive the number of low-rise multifamily 
units, the following assumptions were made: for FHA units, 50 
percent of all multifamily units are assumed to be low-rise; for 
public housing units, all units coded as ``multifamily/walkup 
apartments'' are assumed to be low-rise; and for HOME units, all 
units in multifamily developments with less than 100 units are 
assumed to be low-rise, as well as 50 percent of all units in 
developments with more than 100 units.
---------------------------------------------------------------------------

    Note that the volume of estimated production is not evenly 
distributed across the states but reflects historic demand for FHA and 
USDA financing for one or more of the agencies' programs: two states, 
Texas (24 percent) and Florida (14 percent), account for almost 40 
percent of potentially impacted units based on prior-year production. 
Along with Georgia (6 percent), North Carolina (6 percent) and 
California (5 percent), five states account for more than half of all 
potentially impacted units (56 percent). Note that historical 
production is used as a guide to future production; actual state by 
state unit counts in the future may vary from these estimates, based on 
actual supply and demand.

B. 2021 IECC Affordability Analysis

    In this Notice, HUD and USDA address two aspects of housing 
affordability in assessing the impact that the revised code will have 
on housing affordability. As described further below, the primary 
affordability test is a life-cycle cost savings (LCC) test, i.e., the 
extent to which the additional, or incremental, investments required to 
comply with the revised code are cost effective inasmuch as the 
additional measures pay for themselves with energy cost savings over a 
typical 30-year mortgage period. A second test is whether the 
incremental cost of complying with the code as a share of total 
construction costs--regardless of the energy savings associated with 
the investment--is affordable to the borrower or renter of the home.
    Note that there may be other benefits associated with energy 
efficient homes in addition to energy cost savings. A study by the 
University of North Carolina (UNC) Center for Community Capital and the 
Institute for Market Transformation (IMT) shows a correlation between 
greater energy efficiency and lower mortgage default risk for new 
homes. The UNC study surveyed 71,000 Energy Star-rated homes and found 
that mortgage default risks are 32 percent lower for these more energy 
efficient homes than homes without Energy Star ratings.\36\ In 
addition, studies show that added energy efficiency may also yield 
improved health outcomes.\37\
---------------------------------------------------------------------------

    \36\ UNC Center for Community Capital, Institute for Market 
Transformation, ``Home Energy Efficiency and Mortgage Risks,'' March 
2013, Available at: http://www.imt.org/uploads/resources/files/IMT_UNC_HomeEEMortgageRisksfinal.pdf.
    \37\ See, for example, DOE, Jonathan Wilson et al, Home Rx: The 
Health Benefits of Home Performance, December 2016; HUD, BRIGHT 
Study Finds Improved Health at Boston Housing Authority's Old Colony 
Homes, https://www.huduser.gov/portal/casestudies/study-05042017.html.
---------------------------------------------------------------------------

Cost Benefit Analysis and Results
    The core analysis used for this Determination is the PNNL study 
prepared for DOE, National Cost Effectiveness of the Residential 
Provisions of the 2021 IECC, published in June 2021. This analysis 
estimates annual energy and cost savings as well as life-cycle cost 
(LCC) savings that assume initial costs are mortgaged over 30 
years.\38\ The study provides an assessment of both the initial costs 
as well as the long-term estimated savings and cost-benefits associated 
with complying with the 2009 IECC.
---------------------------------------------------------------------------

    \38\ PNNL, Salcido et al, National Cost Effectiveness of the 
Residential Provisions of the 2021 IECC, June 2021. https://www.energycodes.gov/sites/default/files/2021-07/2021IECC_CostEffectiveness_Final_Residential.pdf.
---------------------------------------------------------------------------

    The LCC method used by DOE is a ``robust cost-benefit metric that 
sums the costs and benefits of a code change over a specified time 
frame. LCC is a well-known approach to assessing cost-effectiveness'' 
\39\ and reflects extensive prior public comment and input. In 
September 2011, DOE solicited input on their proposed cost-benefit 
methodology \40\ and this input was incorporated into the final 
methodology posted on DOE's website in April 2012 and further updated 
in August 2015.41 42
---------------------------------------------------------------------------

    \39\ Department of Energy, National Energy and Cost Savings for 
new Single- and Multifamily Homes: A Comparison of the 2006, 2009 
and 2012 Editions of the IECC. April 2012. p. A-1 Available at: 
https://www.energycodes.gov/sites/default/files/2020-06/NationalResidentialCostEffectiveness_2009_2012.pdf.
    \40\ 76 FR 56413 (September 13, 2011).
    \41\ Pacific Northwest National Laboratory for the Department of 
Energy (Z. Taylor, R. Lucas, N. Fernandez) Methodology for 
Evaluating Cost-Effectiveness of Residential Energy Code Changes. 
April 2012. Available at: http://www.energy.sc.gov/files/view/Taylor%202012.pdf.
    \42\ Pacific Northwest National Laboratory for the Department of 
Energy (V. Mendon, R. Lucas, S. Goel), Cost-Effectiveness Analysis 
of the 2009 and 2012 IECC Residential Provisions--Technical Support 
Document. April 2013, Available at https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-22068.pdf.
---------------------------------------------------------------------------

    For this analysis, DOE calculates energy use for new homes using 
EnergyPlusTM energy modeling software, Version 9.4.\43\ Two 
buildings are simulated: (1) a two-story single-family home, with 2,376 
square feet of conditioned floor area, excluding the conditioned 
basement (if any), and a window area equal to 15 percent of the 
conditioned floor area; and (2) a low-rise apartment building (a three-
story multifamily prototype with six 1,200 square-foot dwelling units 
per floor) with a window area of approximately 23 percent of the 
exterior wall area. DOE combines the results into a composite average 
dwelling unit based on Census building permit data for each State and 
for eight Climate Zones. Single-family home construction is more common 
than low-rise multifamily construction; the results are weighted 
accordingly to reflect this for each Climate Zone as well as each 
state.
---------------------------------------------------------------------------

    \43\ Pacific Northwest National Laboratory for the Department of 
Energy (Z. Taylor, V. Mendon, N. Fernandez), Methodology for 
Evaluating Cost-Effectiveness of Residential Energy Code Changes. 
August 2015, Available at https://www.energycodes.gov/sites/default/files/2021-07/residential_methodology_2015.pdf.
---------------------------------------------------------------------------

    Four heating systems are considered for modeling the energy savings 
in these building prototypes: natural gas furnaces, oil furnaces, 
electric heat pumps, and electric resistance furnaces. The market share 
of heating system types is obtained from the U.S. Department of Energy 
Residential Energy Consumption Survey (2015). Domestic water heating 
systems are assumed to use the same fuel as the space heating system.
Limitations of Cost Savings Models
    HUD and USDA are aware of studies that discuss limitations 
associated with cost-savings models such as those developed by PNNL for 
DOE. For example, Allcott and Greenstone suggest that ``it is difficult 
to take at face value the quantitative conclusions of the engineering 
analyses'' associated with these models, as they suffer from several 
empirical problems. The authors cite two problems in particular. First, 
engineering costs typically incorporate upfront capital costs only and 
omit opportunity costs or other unobserved factors. For example, one 
study found that nearly half of the investments that engineering 
assessments showed in energy audits for medium-size businesses that 
would have short payback periods were not adopted due to unaccounted 
physical costs, risks, or opportunity costs. Second, engineering

[[Page 31785]]

estimates of energy savings can overstate true field returns, sometimes 
by a large amount, and some engineering simulation models have still 
not been fully calibrated to approximate actual returns.\44\ HUD and 
USDA nevertheless believe that the PNNL-DOE model used to estimate the 
savings shown in this Notice represents the current state-of-the art 
for such modeling, is the product of significant public comment and 
input, is now the standard for all of DOE's energy code simulations and 
models, and presents a reliable and validated methodology for 
estimating energy code costs and benefits.
---------------------------------------------------------------------------

    \44\ Hunt Allcott and Michael Greenstone, ``Is there an energy 
efficiency gap?'' Journal of Economic Perspectives, Volume 26, 
Number 1,Winter 2012, pp. 3-28.
---------------------------------------------------------------------------

Estimated Costs and Savings
    For all 50 states and the District of Columbia, DOE estimates that 
for a weighted average of both single-family and low-rise multifamily 
housing, the 2021 IECC saves 9.38 percent of energy costs for heating, 
cooling, water heating, and lighting over the 2018 IECC.\45\ For the 
purposes of this Notice, DOE provided HUD and USDA with a special 
tabulation that disaggregates this analysis into each building type 
(single family and low-rise multifamily). The disaggregated data are 
shown in Tables 5A (single family) and 5B (low-rise multifamily) for 
the following data points: LCC savings, incremental cost, annual 
mortgage increase, down-payment and other up-front costs, net first 
year annual cash flow, years to positive cash flow and simple payback 
for the 2021 IECC in relation to the current HUD-USDA baseline of the 
2009 IECC. Tables 5A and 5B provide both national average costs and 
benefits, as well as for each climate zone.
---------------------------------------------------------------------------

    \45\ PNNL, Salcido et al., 2021
---------------------------------------------------------------------------

    Figure 2 provides a map of the Climate Zones. There are eight 
Climate Zones, further subdivided to represent moist, dry or marine 
climates, that are listed here with representative cities: 1A Very hot 
humid; 2A Hot Humid; 2B Hot Dry; 3A Warm Humid; 3B Warm Dry; 3C Warm 
Marine; 4A Mixed Humid, 4B Mixed Dry; 4C Mixed Marine; 5A Cool Humid; 
5B Cool Dry; 6A Cold Humid; 6B Cold Dry; 7 Very Cold; and 8 Subarctic/
Arctic. Zone 1 includes Hawaii, Guam, Puerto Rico and the Virgin 
Islands. Almost all of Alaska is in Zone 7.
[GRAPHIC] [TIFF OMITTED] TN18MY23.003

    Tables 5A and 5B show the economics of adopting the 2021 IECC 
nationally and in each Climate Zone, relative to the 2009 IECC 
baseline. Table 5C shows costs and savings against the 2018 IECC 
baseline. Data points provided include, incremental or first costs, 
annual energy savings, increased debt service on a thirty-year 
mortgage, estimated down payment and closing costs, net annual cash 
flow in the first year, and simple payback on the initial 
investment.\46\
---------------------------------------------------------------------------

    \46\ The 2009 standard is used as the primary baseline for this 
analysis since, as shown in Table 3, 36 states are still at the 2009 
baseline, which is also the most recent baseline established by HUD 
and USDA, while only eight states have adopted the 2018 standard. 
(Note that Table 6 below shows 2018 baseline data for individual 
states, per data provided by DOE/PNNL).
---------------------------------------------------------------------------

Incremental or Added Costs
    Tables 5A shows the average per-unit incremental cost of adopting 
the 2021 IECC over the current HUD-USDA 2009 IECC baseline for single 
family homes, both nationally and for each Climate Zone: a national 
average of an estimated $5,554 per unit for single family housing,\47\ 
ranging from a low of $2,813 in Climate Zone 1, to a high of almost 
$6,800 in Climate Zones 7 and 8. Cost data sources used to derive these 
costs include: Building Component Cost Community (BC3) data repository; 
construction cost data collected by Faithful+Gould under contract with 
PNNL; RS Means Residential Cost Data; National Residential Efficiency 
Measures Database; and price data from

[[Page 31786]]

nationally recognized home supply stores.\48\
---------------------------------------------------------------------------

    \47\ Source: Data provided by DOE to HUD and USDA showing 
disaggregated LCC Savings, Incremental Cost, and Annual Energy 
Savings for single-family and low-rise multifamily homes.
    \48\ See for example, PNNL, Alaska Cost Effectiveness Analysis, 
https://www.energycodes.gov/sites/default/files/2021-06/AlaskaResidentialCostEffectiveness_2018.pdf.

                                     Table 5A--National Costs and Benefits--2021 IECC vs. 2009 IECC (Single Family)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Annual       Annual     Down  payment                   Years  to
                                                LCC      Incremental     energy      mortgage   and other  up-    Net  annual     positive      Simple
                                              savings      cost  ($)    savings      increase     front costs    cashflow for     cashflow     payback
                                                ($)                       ($)          ($)            ($)        year one  ($)    (years)      (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
National..................................    14,536.42     5,554.63       751.78       247.30          715.44          422.76            2          7.6
Climate Zone 1............................     9,080.84     2,813.49       474.75       125.26          362.38          308.10            2          6.1
Climate Zone 2............................     7,536.81     4,176.67       474.92       185.95          537.96          227.52            3          9.1
Climate Zone 3............................    13,753.10     6,175.22       750.85       274.93          795.37          385.08            3          8.5
Climate Zone 4............................    19,730.66     6,617.71       956.49       294.63          852.36          564.50            2          7.1
Climate Zone 5............................    17,368.88     5,954.78       851.84       265.12          766.98          499.12            2          7.2
Climate Zone 6............................    27,560.65     5,290.90     1,179.24       235.56          681.47          865.84            1          4.6
Climate Zone 7............................    35,673.62     6,794.41     1,544.15       302.50          875.12        1,141.69            1          4.5
Climate Zone 8............................    46,836.58     6,796.21     1,926.36       302.58          875.35        1,523.79            1          3.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

Annual Cost Savings
    Table 5A summarizes the first-year annual energy cost savings per 
single family dwelling unit for the 2021 IECC compared to the 2009 
IECC, aggregated over 16 single family residential prototype buildings 
modeled by DOE/PNNL.\49\ Modeled energy savings are converted to cost 
savings using the most recent residential fuel prices from DOE's Energy 
Information Administration (EIA).\50\ Cost savings stated are time zero 
dollars not adjusted for inflation or fuel price escalation. The per-
unit annual energy cost savings for single-family homes is estimated to 
be $752 per unit, ranging from $474/unit in Climate Zones 1 and 2, to a 
high of $1,926 in Climate Zone 8.
---------------------------------------------------------------------------

    \49\ For residential buildings, PNNL uses two base prototypes to 
simulate (1) a single-family detached house and (2) a multifamily 
low-rise apartment building. These prototypes are modified to 
accommodate four different heating system types and four foundation 
types typically found in residential new construction. The result is 
an expended set of 32 models (16 for each building type) which is 
then simulated across 18 climate locations for each edition of the 
IECC. This results in a set of 3,552 energy models in EnergyPlus 
Version 9.5).
    \50\ U.S. Energy Information Administration, Washington, DC 
Natural Gas Prices, https://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_m.htm. Electric Power Monthly, https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_b. 
Petroleum and Other Liquids. https://www.eia.gov/dnav/pet/PET_PRI_WFR_A_EPD2F_PRS_DPGAL_W.htm.
---------------------------------------------------------------------------

Simple Payback
    Simple payback is a commonly used measure of cost effectiveness, 
defined as the number of years required for the sum of the annual 
returns on an investment to equal the original investment. The simple 
payback for adoption of the 2021 IECC code is an estimated 7.6 years 
for single-family homes, ranging from 3.6 years in Climate Zone 8 to 
9.1 years in Climate Zone 2.
Total Life Cycle Cost Savings
    LCC analysis computes overall cost savings per dwelling unit 
resulting from implementing efficiency improvements. LCC savings are 
based on the net change in overall cash flows (energy savings minus 
additional costs) resulting from implementing the new code. LCC savings 
are a sum over an analysis period of 30 years: future cash flows vary 
from year to year and are discounted to present values using a discount 
rate that accounts for the changing value of money over time. LCC is 
the primary metric used by DOE to determine the cost effectiveness of 
the code or specific code changes. The economic analysis assumes that 
initial costs are mortgaged, that homeowners take advantage of the 
mortgage interest deduction, that short-lived efficiency measures are 
replaced at the end of the useful life of the equipment, and that all 
efficiency measures with useful life remaining at the end of the 30-
year period of analysis retain a residual value at that point.\51\
---------------------------------------------------------------------------

    \51\ PNNL, Salcido et al., 2021.
---------------------------------------------------------------------------

    Life cycle cost savings shown in Table 5A averages $14,536 per 
housing unit for adoption of the latest 2021 IECC. LCC savings vary 
considerably by climate zone, from as low as $7,536 in Climate Zone 2, 
to a high of $46,836 in Climate Zone 8.
Consumer Cash Flows
    Converting first costs and annual savings to Consumer Cash Flows is 
an important component of the affordability analysis. Consumer Cash 
Flow results are derived from the year-by-year calculations that 
underlie LCC savings and provide an assessment of how annual cost 
outlays are compensated by annual energy savings and the time required 
for cumulative energy savings to exceed cumulative costs, including 
both increased mortgage payments and down payment and other up-front 
costs.
    The financial and economic parameters used by DOE/PNNL in 
calculating LCC savings and annual cash flow are based on the latest 
DOE cost-effectiveness methodology; these are shown in Figure 3 below.

          Figure 3--Economic Parameters for Consumer Cash Flows
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Mortgage interest rate (fixed rate).......  5.0%.
Loan fees.................................  1% of mortgage amount.
Loan term.................................  30 years.
Down payment..............................  12% of home value.
Nominal discount rate (equal to mortgage    3.0%.
 rate).
Inflation rate............................  1.4%.
Marginal Federal income tax...............  12%.
Marginal State income tax.................  % varies by State.
Property tax..............................  % varies by State.
------------------------------------------------------------------------
Source: PNNL, Salcido et al., 2021.

    Annual cash flow is defined as the net difference between annual 
energy savings and annual cash outlays (mortgage payments, etc.), 
including all tax effects but excluding up-front costs (mortgage down 
payment, loan fees, etc.). Only first year net cash flow is reported: 
subsequent years' cash flow will differ due to the effects of inflation 
and fuel price escalation, changing income tax effects as the mortgage

[[Page 31787]]

interest payments decline, etc. Assuming a five percent, 30-year fixed 
mortgage, and a 10 percent down payment, increased annual debt service 
is shown in Table 5A to be an average of $247/unit, or $20.58/month, 
with annual energy savings three times that amount: $751, or $62.50/
month. This translates into an annual positive cash flow in Year One of 
$422 or $35.10/month. Years to Positive Cash Flow, i.e., the number of 
years needed to recoup the cost of the initial down payment and first-
year debt service with annual savings, is just two years on average.
Low-Rise Multifamily Buildings
    Table 5B shows costs and savings for low-rise multifamily housing 
similar to those shown in Table 5A for single family homes. The costs 
and savings shown are aggregated over 16 low-rise multifamily 
residential prototype buildings modeled by DOE/PNNL.\52\ The 
incremental costs for this housing type, as well as associated savings, 
are generally lower than for single family homes, as a result of both 
differences in unit size and building type. Incremental costs average 
$2,306/unit nationally, approximately half of the $5,556 per unit cost 
for single family housing only. LCC savings of $5,265 for low-rise 
multifamily housing are also projected to be significantly lower than 
for single-family housing only ($14,536/unit).
---------------------------------------------------------------------------

    \52\ See Footnote 47 for methodology for prototype buildings.
---------------------------------------------------------------------------

    First year increased debt service for low-rise multifamily housing 
is estimated to be $102/unit, while savings are three times that 
amount: $314/year, for a net annual cash flow of $178/year. While costs 
and savings differ, Years to Positive Cash Flow are similar to that of 
single-family homes (2 years), and the national Simple Payback average 
of 7.5 years is also comparable. Simple paybacks range from a low of 
5.1 years in Climate Zone 8 to a high of 8.1 years in Climate Zones 2 
and 3. LCC savings vary considerably from $4,064 in Climate Zone 2 to a 
high of $15,452 in Climate Zone 8. Higher incremental or added costs 
typically translate into higher annual savings, with annual positive 
cash flows ranging from $145 to $525.

                                     Table 5B--National Cost and Benefits--2021 vs. 2009 IECC (Low-Rise Multifamily)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Down
                                                LCC                         Annual       Annual      payment      Net  annual    Years  to      Simple
                                              savings      Incremental      energy      mortgage    and other    cashflow  for    positive     payback
                                                ($)         cost  ($)      savings      increase     up-front    year one  ($)    cashflow     (years)
                                                                             ($)          ($)       costs  ($)                    (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
National..................................     5,265.55        2,306.50       314.77       102.69       297.08          178.15            2          7.5
Climate Zone 1............................     4,798.90        1,685.89       280.05        75.06       217.14          180.19            2          6.2
Climate Zone 2............................     4,064.66        2,138.91       271.97        95.23       275.49          145.27            2          8.1
Climate Zone 3............................     4,983.81        2,472.83       312.80       110.09       318.50          166.32            2          8.1
Climate Zone 4............................     5,994.21        2,372.29       339.34       105.62       305.55          198.82            2          7.2
Climate Zone 5............................     5,156.91        2,309.78       307.22       102.83       297.50          170.41            2          7.7
Climate Zone 6............................     8,231.86        2,147.46       407.58        95.61       276.59          280.38            1          5.4
Climate Zone 7............................    11,082.93        3,647.16       592.12       162.38       469.75          376.09            2          6.3
Climate Zone 8............................    15,452.48        3,646.44       741.63       162.34       469.66          525.64            1          5.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 5C shows the energy savings and incremental costs of 
construction for the average housing unit (average of single family and 
multifamily). First costs average $2,372 per unit, well below the 
average first cost of $5,550 against the 2009 baseline. As would be 
expected, annual savings are similarly lower, and the resulting average 
payback is higher than the 2009 IECC--at 10.5 years vs. 7.6 years 
against the 2009 IECC. Simple paybacks vary considerably across Climate 
Zones, from 4.7 years in Climate Zone 1 to 16.5 years in Climate Zone 
5.
---------------------------------------------------------------------------

    \53\ HUD does not have PNNL estimates of energy savings 
disaggregated by single-family and multifamily for the 2021 IECC 
relative to the 2018 standard. HUD computed a weighted average of 
the incremental cost of construction. The weights used by PNNL in 
their analysis are 66 percent for single-family units and 34 percent 
for low-rise multifamily units.

                  Table 5C--Incremental Costs and Energy Savings of IECC 2018 to IECC 2021 \53\
----------------------------------------------------------------------------------------------------------------
                                                                                    First year
                                   Upfront  cost   Upfront  cost   Upfront  cost      energy          Simple
              Area                 for  single-     for  condo     for  average     savings for    payback  for
                                    family  ($)         ($)          unit  ($)     average unit    average  unit
                                                                                        ($)           (years)
----------------------------------------------------------------------------------------------------------------
National Average................           2,372           1,316           2,013             191            10.5
Climate Zone 1: Very Hot........             936             933             935             200             4.7
Climate Zone 2: Hot.............           1,530           1,146           1,400             192             7.3
Climate Zone 3: Warm............           1,859           1,192           1,632             200             8.2
Climate Zone 4: Mixed...........           3,687           1,533           2,956             205            14.4
Climate Zone 5: Cool............           3,569           1,487           2,862             173            16.5
Climate Zone 6: Cold............           1,477           1,102           1,350             123            11.0
Climate Zone 7: Very Cold.......           2,980           2,603           2,852             306             9.3
Climate Zone 8: Subarctic/Arctic           2,982           2,603           2,853             411             6.9
----------------------------------------------------------------------------------------------------------------
Notes: Single Family cost and condo cost and average energy savings from PNNL. Upfront cost derived by HUD and
  simple payback calculated by HUD. HUD does not have disaggregated estimates for single family and multifamily
  units for the update from 2018, only the average across single family and low-rise multifamily.


[[Page 31788]]

State-Level Results
    Table 6 provides a state-by-state breakout of estimated costs and 
savings, for single family homes only. This Table provides a more 
granular breakout of estimated costs and savings than the national and 
Climate Zone averages shown in Table 5A above, using the HUD-USDA 2009 
IECC baseline for those states that have not yet adopted this standard 
or its equivalent as well as a 2018 IECC baseline for the 12 states 
plus the District of Columbia that have adopted the 2018 IECC or its 
equivalent.54 55
---------------------------------------------------------------------------

    \54\ Cost benefit data are not available for three states 
(California, Washington and Oregon). According to DOE, these codes 
``deviate significantly from the model codes'' and as a result DOE 
has historically not analyzed those states.
    \55\ The 2018 data shown in Table 6 are aggregated single family 
and low-rise multifamily data adjusted for the weighted averages 
used by PNNL for the 2009 IECC.

                               Table 6--State by State Costs and Benefits (Single Family) 2021 IECC vs. 2009 or 2018 IECC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Incremental   Increase  down      Annual      Annual  energy   LCC  savings       Payback
            State                    Baseline code           cost  ($)      payment  ($)   mortgage  ($)    savings  ($)        ($)           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK..........................  No Code...................           8,854           1,140             394           2,225          53,213             4.1
AL..........................  2009......................           4,865             627             217             727          15,778             6.9
AR..........................  <2009.....................           5,358             690             239             775          16,713             7.1
AZ..........................  <2009.....................           4,163             536             185             499           9,125             8.6
CA..........................  2021......................  ..............  ..............  ..............  ..............  ..............  ..............
CO..........................  No Code...................           5,788             746             258             549           9,699            10.9
CT..........................  2009......................           6,616             852             295           1,028          21,114             6.6
DC..........................  2018......................             397              13             138             397           6,864             8.0
DE..........................  2018......................             424              16             146             298           4,636            11.4
FL..........................  2009......................           3,369             434             150             440           7,818             7.9
GA..........................  2009......................           5,228             673             233             756          15,657             7.1
HI..........................  2015......................           2,340             301             104           1,057          27,120             2.3
IA..........................  2009......................           5,694             733             253             998          22,037             5.9
ID..........................  2009......................           5,291             682             236             493           8,485            11.1
IL..........................  2009......................           6,487             836             289             679          11,067             9.8
IN..........................  2009......................           6,207             800             276             696          13,176             9.2
KS..........................  No Code...................           5,842             753             260             925          19,859             6.5
KY..........................  2009......................           6,373             821             284             959          20,899             6.8
LA..........................  2009......................           3,955             509             176             448           8,397             9.1
MA..........................  2018......................           6,680             860             297           1,142          25,281             6.0
MD..........................  2018......................             395              30             136             324           5,224             9.7
ME..........................  2009......................           4,933             635             220           1,155          27,551             4.4
MI..........................  2009......................           5,807             748             259             936          19,542             6.4
MN..........................  2009......................           5,826             750             259           1,141          26,059             5.3
MO..........................  No Code...................           6,701             863             298             827          16,518             8.4
MS..........................  No Code...................           4,865             627             217             669          13,865             7.5
MT..........................  2009......................           4,935             636             220             562          10,617             9.0
NC..........................  2009......................           5,188             668             231             749          15,680             7.1
ND..........................  No Code...................           5,123             660             228             976          21,463             5.4
NE..........................  2018......................             427              61             148             211           1,040            16.2
NH..........................  2009......................           5,542             714             247             995          21,242             5.7
NJ..........................  2009......................           7,473             963             333             989          18,531             7.8
NM..........................  2009......................           5,888             758             262             549           9,746            11.1
NV..........................  2009......................           6,685             861             298             608           9,778            11.3
NY..........................  2018......................             473              49             164             386           5,369             9.8
OH..........................  2009......................           5,973             769             266             699          12,845             8.8
OK..........................  2009......................           5,368             691             239             826          17,831             6.7
OR..........................  2018......................  ..............  ..............  ..............  ..............  ..............  ..............
PA..........................  2018......................           4,144             539             187             426           2,535            10.1
PR..........................  ..........................  ..............  ..............  ..............  ..............  ..............  ..............
RI..........................  2009......................           6,372             821             284           1,090          23,668             6.0
SC..........................  2009......................           4,885             629             217             732          15,816             6.9
SD..........................  No Code...................           4,492             579             200             971          22,501             4.8
TN..........................  <2009.....................           5,561             716             248             748          15,424             7.7
TX..........................  2015......................             195              32              68             216           3,311             7.2
UT..........................  2009......................           5,238             675             233             519           9,414            10.4
VA..........................  2009......................           5,897             759             263             904          19,799             6.7
VT..........................  2021......................  ..............  ..............  ..............  ..............  ..............  ..............
WA..........................  2021......................  ..............  ..............  ..............  ..............  ..............  ..............
WI..........................  2006......................           5,823             750             259             862          17,198             7.0
WV..........................  2009......................           6,423             827             286             943          20,790             7.0
WY..........................  None......................           4,913             633             219             712          15,193             7.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Incremental costs for adoption of the 2021 IECC in those states 
currently at the 2009 IECC or its equivalent range from a low of $2,340 
(Hawaii) to a high of $8,854 (Alaska), with most states typically in 
the $5,000 range. Annual

[[Page 31789]]

energy savings exceed added debt service in all states.
    Both incremental costs and savings for the 2021 IECC in the 11 
states plus the District of Columbia that have adopted the 2018 IECC 
are typically lower than for those at the 2009 IECC baseline. 
Incremental first costs are less than $500 first cost/unit against the 
2018 baseline in these states. New York, for example, shows an added 
cost of $473/unit for adoption of the 2021 IECC relative to its current 
2018 baseline, $386 in annual estimated savings, yielding LCC savings 
of $5,369. Delaware shows an added cost of $424/unit, an annual savings 
of $298, and a LCC savings of $4,636.
Total Costs and Benefits
    Table 7 provides estimated up-front costs, annual energy cost 
savings and life cycle cost savings for the 2021 IECC for all 50 states 
and the District of Columbia, weighted by the estimated share of 
single-family and low-rise multifamily units potentially impacted by 
the adoption of the 2021 IECC. As previously shown in Table 4, an 
estimated 140,000 single-family and low-rise multifamily units would be 
impacted annually by this code if adopted today. By multiplying the 
incremental cost/unit per state by the number of units estimated likely 
to be impacted, the total cost of implementing the 2021 IECC is 
preliminarily estimated at $420.5 million, yielding an estimated annual 
savings of $64 million and a life-cycle cost savings of $1.14 billion.

      Table 7--Aggregate Estimated Cost and Savings for 2021 IECC (Single Family and Low-Rise Multifamily)
----------------------------------------------------------------------------------------------------------------
                                                      Total        Total energy
                                                   incremental     cost savings     Life-cycle        Simple
         State               Baseline code       cost per state    per state  ($    cost (LCC)        payback
                                                       (S)           per year)     savings  ($)       (years)
----------------------------------------------------------------------------------------------------------------
AK.....................  NC...................         1,127,393         283,309       6,775,768             4.0
AL.....................  2009.................        18,057,816       2,704,469      55,917,230             6.7
AR.....................  <2009................         8,288,783       1,202,143      23,974,946             6.9
AZ.....................  <2009................        19,883,153       2,386,661      39,378,344             8.3
CA.....................  2021.................                 0               0               0             0.0
CO.....................  NC...................        16,940,650       1,608,095      24,607,251            10.5
CT.....................  2009.................           979,129         149,471       3,309,762             6.6
DC.....................  2018.................            95,717          96,264         845,064             1.0
DE.....................  2018.................           727,164         509,989       7,590,775             1.4
FL.....................  2009.................        59,952,314       7,876,622     125,801,672             7.6
GA.....................  2009.................        41,644,334       6,039,069     109,876,655             6.9
HI.....................  2015.................           492,777         217,851       4,856,670             2.3
IA.....................  2009.................         2,201,675         383,939       7,431,325             5.7
ID.....................  2009.................         4,962,175         461,960       6,750,699            10.7
IL.....................  2009.................         7,824,969         819,313      10,407,259             9.6
IN.....................  2009.................        11,586,682       1,299,580      21,741,652             8.9
KS.....................  NC...................         3,009,893         476,735       7,966,904             6.3
KY.....................  2009.................        11,142,041       1,678,812      28,628,785             6.6
LA.....................  2009.................         9,255,670       1,054,429      20,336,338             8.8
MA.....................  2018.................         2,678,880         450,003       8,594,306             6.0
MD.....................  2018.................         1,077,820         888,574      13,922,015             1.2
ME.....................  2009.................         1,060,695         247,256       5,297,721             4.3
MI.....................  2009.................         3,963,075         631,850      14,160,179             6.3
MN.....................  2009.................         5,459,528       1,018,941      27,561,549             5.4
MO.....................  NC...................         8,703,440       1,078,725      19,861,036             8.1
MS.....................  NC...................         6,258,788         860,339      16,896,275             7.3
MT.....................  2009.................         1,195,888         136,034       2,232,087             8.8
NC.....................  2009.................        31,297,407       4,545,258      88,763,865             6.9
ND.....................  NC...................         1,052,232         200,451       3,162,698             5.2
NE.....................  2018.................           128,294          62,463         356,167             2.1
NH.....................  2009.................         1,035,284         183,401       4,007,029             5.6
NJ.....................  2009.................         4,441,704         588,565       7,189,226             7.5
NM.....................  2009.................         5,754,766         538,116       9,352,990            10.7
NV.....................  2009.................        14,142,779       1,286,230      17,406,347            11.0
NY.....................  2018.................           200,168         162,163       2,611,431             1.2
OH.....................  2009.................         8,873,994       1,037,565      16,123,974             8.6
OK.....................  2009.................         8,877,981       1,365,072      28,580,458             6.5
OR.....................  2018.................                 0               0               0             0.0
PA.....................  2009.................         6,180,500         819,910      14,047,324             7.5
RI.....................  2009.................           518,212          87,987       1,876,922             5.9
SC.....................  2009.................        23,184,247       3,483,230      71,411,236             6.7
SD.....................  NC...................         1,207,381         259,053       4,908,339             4.7
TN.....................  <2009................        22,760,783       3,072,624      58,511,424             7.4
TX.....................  2018.................         6,304,697       6,980,223      96,334,751             0.9
UT.....................  2009.................        12,810,311       1,271,438      21,270,223            10.1
VA.....................  2009.................        17,825,103       2,760,236      58,859,601             6.5
VT.....................  2021.................                 0               0               0             0.0
WA.....................  2021.................                 0               0               0             0.0
WI.....................  2006.................         1,388,510         204,039       3,760,117             6.8
WV.....................  2009.................         3,521,350         517,015      10,091,785             6.8
WY.....................  None.................           560,916          80,664       1,688,720             7.0
----------------------------------------------------------------------------------------------------------------


[[Page 31790]]

    This LCC figure covers a single year's cohort of HUD and USDA 
financed housing. Annual effects will increase as more cohorts are 
added to the stock of new HUD- and USDA-assisted, insured or guaranteed 
energy-efficient housing. In the second year, with two cohorts in 
place, there could be a stream of almost $150 million (future value) of 
energy savings. The number of units affected every year will decline as 
states update their standards to the 2021 IECC, or industry adopts the 
prescribed above-code standards. Thus, we expect the aggregate annual 
incremental effects to taper off. The maximum annual effect of all 
cohorts is not likely to exceed somewhere between three or four times 
the annual effect of a single-year cohort. While a new code edition is 
typically published every three years, since HUD and USDA must consider 
the affordability and availability impacts of each edition when it is 
published, this Notice LCC savings cover one year's cohort. See 
``Aggregate Incremental Impacts of IECC Update'' in the Regulatory 
Impact Analysis (p.39) for further discussion.
    The Regulatory Impact Analysis at www.regulations.gov provides an 
estimated first cost of $553 million, annual energy savings of $73 
million and net LCC savings that range from $971 million (7% discount 
factor) to $1.48 billion (3% discount factor). (See RIA Figures 20 and 
21).

C. Preliminary Affordability Determination--2021 IECC

    Based on the analysis provided above, HUD and USDA have determined 
that adoption of the 2021 IECC will not negatively impact the 
affordability of homes covered by the statute. This conclusion 
recognizes the profile of FHA borrowers, who according to FHA's 2021 
Annual Report are typically first-time home buyers (84 percent) who are 
more likely than repeat buyers to be especially price sensitive. While 
the national average cost shown in Table 5 of adopting this standard is 
$5,500, this represents a 2.1 percent increase in the average cost of a 
new FHA-insured home in 2020, and the incremental costs (shown in Table 
6) exceed $5,000/unit relative to the 2009 IECC baseline in only nine 
states. In all cases this translates into a relatively modest increase 
in down payment and other first costs: a national average of $715, 
which represents approximately 0.3 percent of the average FHA-insured 
new home mortgage, or an average USDA-guaranteed loan.\56\ For 
qualifying purposes, a hypothetical borrower earning $5,000/month with 
a 4.5 percent down payment will require an additional income of $85 
(1.7 percent) a month to qualify for the average new home; and monthly 
payments will increase by $31/month on a 30-year 4.25 percent fixed 
rate mortgage, from $1,800/month to $1,831/month.\57\
---------------------------------------------------------------------------

    \56\ Average USDA Section 502 Direct Loan 2018-20 of $191,100, 
and of Section 502 Guaranteed Loan of $210,700. Incremental cost of 
$5,500 equals 2.9 percent and 2.6 percent respectively of these 
loans; down payment costs are .27 percent and .34 percent. For 
average FHA new home mortgage of $263,000 (2020), added first cost 
equals 2.1 percent, average down payment equals 2.1 percent.
    \57\ See Fannie Mae Financial Calculator, front-end Debt to 
Income ratio, monthly payment includes Principal, Interest, Property 
Taxes of $1,500/year, Insurance of $1,200/year and HOA payment of 
$50/month. https://fm.fanniemae.com/homeownership/resources/financial-calculators.
---------------------------------------------------------------------------

    Unlike other added costs associated with the home purchase 
transaction, these incremental costs yield significant costs savings to 
the borrower. In all Climate Zones, annual energy savings in Year One 
exceeds increases in debt service. Debt service increases average just 
$20/month for net positive cash flows of $35/month after debt service. 
While there is likely to be variability in actual cash flows depending 
on energy use associated with family size and behavior, the data shows 
that on average the adoption of these measures are likely to improve 
overall affordability in light of these positive cash flows.
    An additional affordability consideration is whether increased down 
payment costs due to the added or incremental cost will negatively 
impact home buyers with regard to qualifying for a a mortgage, or down 
payment requirements. This is especially important for first-time home 
buyers who typically have lower cash availability for down payments. 
PNNL estimates increased down payment and other up-front costs range 
from $362 to $875 for conventional mortgages.\58\ Note that these down 
payments assume an average of 10 percent down, whereas the typical FHA 
borrower is likely to pay only 4.5 percent down; \59\ the incremental 
down payment cost is therefore likely to be lower for FHA borrowers 
than the typical homeowner modeled by PNNL, with down payment increases 
ranging from as low as $163 to $393, which represent 0.06-0.15 percent 
of the average cost of an FHA new home in 2020, of $263,000. At 5% 
down, the average downpayment increase is estimated to be $278.
---------------------------------------------------------------------------

    \58\ Average price in 2021 for all FHA-insured purchases, 
including existing homes, was $239,000.
    \59\ HUD, Annual Report to Congress Regarding the Financial 
Status of the Federal Housing Administration Mutual Mortgage 
Insurance Fund, November 2021. https://www.hud.gov/sites/dfiles/Housing/documents/2021FHAAnnualReportMMIFund.pdf.
---------------------------------------------------------------------------

    Note that energy costs and savings are generally not factored into 
current underwriting practices for single family mortgages, i.e., while 
positive cash flows related to improved energy efficiency will be 
realized, they are not specifically included in the Principal Interest, 
Taxes and Insurance (PITI) debt-to-income ratios typically used by 
lenders to qualify borrowers. Conversely, despite the significant cost 
savings likely to be realized from adoption of more efficient energy 
codes, there are generally no direct incentives for borrowers to 
purchase more efficient homes either through lower Mortgage Insurance 
Premiums or lower interest rates. Multifamily financing, on the other 
hand, does take into account energy savings: FHA offers the Green 
Mortgage Insurance Premium to multifamily borrowers who build to a 
green building standard, which may include the most recent energy code 
as a mandatory element, or may offer additional points if the building 
meets or exceeds the latest IECC or ASHRAE 90.1 standard.
Equity Impacts
    The Regulatory Impact Analysis (RIA) that accompanies this Notice 
includes an extensive equity analysis, which discusses the 
disproportionate energy burden experience by low-income borrowers--and 
conversely the increased benefits likely to be realized by low-income 
borrowers from increased efficiency. See the Equity Impacts section of 
the RIA (p.84) at www.regulations.gov.
    Lower-income households face disproportionately higher energy 
burdens; they spend a higher share of their gross household income on 
energy costs.\60\ Two-thirds of low-income households earning up to 200 
percent of the federal poverty level face high energy burdens, spending 
more than 6 percent of their income on energy bills. Black, Hispanic, 
Native American, and older adult households, as well as families 
residing in manufactured housing and low-income households with a 
person with a disability, experience disproportionately high energy 
burdens.
---------------------------------------------------------------------------

    \60\ https://www.energy.gov/scep/slsc/low-income-community-energy-solutions.
---------------------------------------------------------------------------

    Since increasing energy efficient codes will lower the energy 
burden for buyers of energy efficient homes; more efficient codes will 
at the same time be most beneficial to lower-income households. These 
codes typically require added first costs, but HUD and

[[Page 31791]]

USDA single family insured or guaranteed programs include mitigating 
factors which may make this investment more affordable to eligible 
borrowers, e.g., lower down payment requirements (3.5% for FHA-backed 
mortgages compared to 20 percent required for conventional financing), 
as well as more flexible underwriting requirements such as lower 
allowable credit scores. USDA's Direct Loan program serves an 
underserved market, very low or extremely low-income borrowers in rural 
areas, through no- or low-down payment requirements, as well as 
significant interest rate subsidies. FHA's low-rise multifamily housing 
serves a renter population that is not directly responsible for any 
additional first costs.
    The overall conclusion provided in the RIA concerning the equity 
impacts of a minimum energy standard are that lower-income households 
will benefit more from the existence of energy-efficient housing but 
may be challenged in their ability to address first costs. Empirical 
work has shown that residential energy is a necessary good, but that 
reducing its cost through energy efficiency requires an additional 
investment that lower-income households may not have the disposable 
income to accommodate. If, however, the Notice encourages the supply of 
energy efficiency in the affordable housing stock, then low- households 
will gain. Precise impacts are likely to vary by housing market and 
climate zone.

III. ASHRAE 90.1-2019 Affordability Determination

A. Overview

    EISA requires HUD to consider the adoption of revisions to ASHRAE 
90.1 for HUD-assisted multifamily programs.\61\ Published and revised 
every three years in coordination with the publication schedule of the 
IECC, the standard provides minimum requirements for the energy-
efficient design of commercial buildings, including residential 
buildings with more than three stories.\62\
---------------------------------------------------------------------------

    \61\ USDA multifamily programs are not covered by the Act.
    \62\ Standard 90.1 is published in October of the year two years 
before the year listed for the IEC, to allow the latest version of 
standard 90.1 to be submitted to the IECC for inclusion in the 
commercial chapter of the IECC.
---------------------------------------------------------------------------

    ASHRAE 90.1 includes several compliance pathways. The first is the 
prescriptive path, which establishes energy-related criteria for 
individual building components, including minimum insulation levels, 
maximum lighting power, and controls for lighting and heating, 
ventilation, air conditioning, and refrigeration systems. Some 
requirements are considered mandatory, even when one of the optional 
paths is utilized.
    ASHRAE 90.1 also includes two optional whole-building performance 
paths. The first is the Energy Cost Budget method, which allows the 
designer to trade off compliance among various code requirements, using 
established energy modeling protocols. A building is deemed in 
compliance when the annual energy cost of the proposed design is no 
greater than the annual energy cost of the reference building design 
(baseline). ASHRAE 90.1 also includes a second performance approach, 
the Performance Rating Method in Appendix G. Appendix G has been used 
to rate the performance of buildings that exceed the requirements of 
Standard 90.1 for above-code programs, such as LEED, Green Globes, 
ASHRAE Standard 189.1, the International Green Construction Code, the 
National Green Building Standard, and other above-code programs.
Current HUD-USDA Standard and Subsequent Revisions
    In their May 2015 Final Determination, HUD and USDA established the 
2007 edition of ASHRAE 90.1 (ASHRAE 90.1-2007) as the minimum standard 
for HUD-assisted multifamily properties. ASHRAE has revised the code 
four times since the publication of the 2007 edition. ASHRAE 90.1-2010 
was published in October 2010. There were 56 positive changes to the 
2007 edition code, including revised requirements for the building 
envelope, HVAC systems, commissioning, lighting, and power.\63\ DOE 
determined that the 2010 ASHRAE code would yield national energy cost 
savings of 7.72 percent in mid-rise apartment buildings and 6.99 
percent in high-rise apartment buildings over the previous 2007 
code.\64\
---------------------------------------------------------------------------

    \63\ A ``positive change'' is defined as a change to the code 
that results in increased energy efficiency. Other changes might 
include items that are either savings-neutral, or, in rare cases, 
may lower energy efficiency.
    \64\ Pacific Northwest National Laboratory for the Department of 
Energy, Cost-effectiveness of ASHRAE Standard 90.1-2010 Compared to 
ASHRAE Standard 90.1-2007, May 2013, Tables C.2. See http://www.pnnl.gov/main/publications/external/technical_reports/PNNL-22043.pdf.
---------------------------------------------------------------------------

    The next edition, ASHRAE 90.1-2013, published in October 2013, 
included 52 changes over the 2010 edition, most of which were 
determined by DOE to be relatively minor. Only six were applicable to 
residential buildings, including improved lighting controls and 
decreased lighting power densities, increased building envelope 
requirements for ``opaque assemblies and fenestration,'' and increased 
efficiency requirements for smaller air conditioners and heat 
pumps.\65\ These amendments resulted in an average energy savings of 
5.4 percent in mid-rise apartment buildings and 6.9 percent in high-
rise multifamily buildings (site energy) over ASHRAE 90.1-2010.\66\ 
Cost savings were estimated by DOE to be 5.0 percent for mid-rise 
apartments and 8.7 percent for high-rise apartments.
---------------------------------------------------------------------------

    \65\ PNNL, National Cost-effectiveness of ANSI/ASHRAE/IES 
Standard 90.1-2013, January 2015. See https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-23824.pdf.
    \66\ U.S. Department of Energy, Determination Regarding Energy 
Efficiency Improvements in ANSI/ASHRAE/IES Standard 90.1-2013: 
Energy Standard for Buildings, Except Low-Rise Residential Building, 
September 26, 2014. Table IV.5. See https://www.federalregister.gov/documents/2014/09/26/2014-22882/determination-regarding-energy-efficiency-improvements-in-ansiashraeies-standard-901-2013-energy. 
For more detailed analysis, see PNNL, ANSI/ASHRAE/IES Standard 90.1-
2013 Determination of Energy Savings: Quantitative Analysis, August 
2014. Available at https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-23479.pdf.
---------------------------------------------------------------------------

    The following edition, ASHRAE 90.1-2016, yielded an additional 3.6 
percent site energy savings for mid-rise apartment buildings, and 4.0 
percent for high-rise apartment buildings.\67\ Energy cost savings were 
estimated by DOE to be 3.9 percent and 5.1 percent respectively over 
the 2013 edition for these two building types.
---------------------------------------------------------------------------

    \67\ PNNL/DOE Preliminary Energy Savings Analysis, ANSI/ASHRAE/
IES Standard 90.1-2016, June 2017. Available at https://www.energy.gov/sites/default/files/2017/07/f35/Preliminary_90.1-2016_Energy_Savings_Analysis.pdf.
---------------------------------------------------------------------------

    DOE's quantitative analysis concluded that ASHRAE 90.1-2019 for 
mid-rise and high-rise multifamily buildings (representing 11.65 
percent of all commercial buildings) would yield an additional site 
energy savings of 2.65 percent over the 2016 edition, and energy cost 
savings (Energy Cost Index (ECI)) of 2.5 percent.68 69 70
---------------------------------------------------------------------------

    \68\ Op cit., PNNL, Energy Savings Analysis, July 2021.
    \69\ PNNL, Impacts of Model Building Energy Codes--Interim 
Update, July 21, 2021. https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-31437.pdf. For all commercial 
buildings, DOE estimates national site energy savings of 4.7 percent 
and energy cost savings of approximately 4.3 percent.
    \70\ 86 FR 40543 (July 28, 2021), Final Determination Regarding 
Energy Efficiency Improvements in ANSI/ASHRAE/IES Standard 90.1-
2019, https://www.federalregister.gov/documents/2021/07/28/2021-15971/final-determination-regarding-energy-efficiency-improvements-in-ansiashraeies-standard-901-2019.
---------------------------------------------------------------------------

    Tables 8 and 9 show the changes in incremental costs for each code 
cycle since the 2007 edition. Table 8 shows that per square foot costs 
increased for

[[Page 31792]]

the first two cycles (2010 and 2013) in a prototype mid-rise apartment 
building modeled by PNNL in five representative climate zones. In 2013, 
for example, the incremental cost of complying with ASHRAE 90.1 ranged 
from just 0.17 $/sf to 0.69 $/sf, or 0.14 to 0.59 percent of total 
building costs. In contrast, the last two code cycles (both 2016 and 
2019) have seen incremental cost savings rather than cost increases as 
a result of complying with these codes. In all cases, the incremental 
cost, whether a cost increase or a cost savings, is a small fraction of 
the total per building first cost (111 $/sf in 2010 to $218 $/sf in 
2019).

                                                Table 8--Incremental ASHRAE 90.1.-2019 Construction Costs
                                                                     [$/sf and %/sf]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Building           2A              3A              3B              4A              5A
                                                         -----------------------------------------------------------------------------------------------
                          Year                            First cost ($/     Tampa ($/      Atlanta ($/     El Paso ($/    New York ($/     Buffalo ($/
                                                              ft\2\)          ft\2\)          ft\2\)          ft\2\)          ft\2\)          ft\2\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2019....................................................            $218         ($0.36)         ($0.37)         ($0.40)         ($0.30)         ($0.29)
                                                                                  -0.16%          -0.17%          -0.19%          -0.14%          -0.13%
2016....................................................            $194         ($0.54)         ($0.51)         ($0.53)         ($0.37)         ($0.73)
                                                                                  -0.28%          -0.27%          -0.27%          -0.19%          -0.38%
2013....................................................            $117           $0.17           $0.69           $0.69           $0.38           $0.58
                                                                                   0.14%           0.59%           0.59%           0.33%           0.50%
2010....................................................            $111           $0.62           $0.62           $0.62           $0.62           $0.62
                                                                                   0.56%           0.56%           0.56%           0.56%           0.56%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 9 shows building-level incremental cost or cost savings for 
each code cycle since 2007. In Climate Zone 2A (Tampa) for example, the 
incremental cost for the prototype mid-rise building was estimated to 
be $20,858 and $5,711 for the 2010 and 2013 editions respectively, 
followed by a combined savings of $30,167 in the following 2016 and 
2019 codes.

                                                                       Table 9--Incremental ASHRAE 90.1 Construction Costs
                                                                                 [$/Prototype 32-Unit Building]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Prototype bldg first cost                            2A                              3A                     3B           4A
                                                ------------------------------------------------------------------------------------------------------------------ ------------------------------------------
                      Code                                                                                                                                           El    ($/    New   ($/
                                                                                       ($/bldg)          Tampa         ($/bldg)         Atlanta        ($/bldg)     Paso  bldg)  York  bldg)  Buffalo
------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------
2019...........................................  $7.36 million....................       ($11,992)       ($12,389)       ($13,661)        ($9,966)        ($9,674)
2016...........................................  $6.55 million....................       ($18,175)       ($17,353)       ($17,944)       ($12,430)       ($24,614)
2013...........................................  $3.95 million....................          $5,711         $23,214         $23,358         $12,891         $19,577
2010...........................................  $3.75 million....................         $20,858         $20,858         $20,858         $20,858         $20,858
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ASHRAE 90.1-2019 Overview
    This Notice addresses the most recent published edition of ASHRAE 
90.1, ASHRAE 90.1-2019. In its qualitative analysis of the code, DOE 
identified a total of 88 changes, or addenda, to ASHRAE 90.1-
2016.71 72 Twenty-nine changes were determined to have a 
positive impact on energy efficiency (i.e., yield energy savings). 
These include: increased requirement for building vestibules, removal 
of data processing centers from exceptions to HVAC requirements, 
removal of hotel room exceptions to HVAC requirements, modification of 
demand-controlled ventilation requirements, modification of fan power 
limitations, modification of retail lighting requirements, modification 
of cooling tower testing requirements, modification of commercial 
boiler requirements, modification of part load fan requirements, 
modification of opaque envelope requirements, and modification of 
fenestration envelope requirements.
---------------------------------------------------------------------------

    \71\ Pacific Northwest National Laboratory for the U.S. 
Department of Energy, Energy Savings Analysis: ANSI/ASHRAE/IES 
Standard 90.1-2019, July 21, 2021. https://www.energycodes.gov/sites/default/files/2021-07/Standard_90.1-2019_Final_Determination_TSD.pdf.
    \72\ DOE determined that 59 of the 88 addenda will have a 
neutral impact on overall building efficiency; these included 
editorial changes, changes to reference standards, changes to 
alternative compliance paths, and other changes to the text of the 
standard that may improve the usability of the standard, but do not 
generally improve or degrade the energy efficiency of the building. 
Changes with impacts which do not become effective within three 
years from the publication of Standard 90.1-2019 (i.e., until a 
cutoff date of December 31, 2022), are also considered as having no 
impact within the context of this analysis.
---------------------------------------------------------------------------

Current State Adoption of ASHRAE 90.1-2019
    Table 10 shows the current adoption status of ASHRAE 90.1 for mid-
rise or high-rise multifamily buildings. As of September 2022, five 
states have adopted ASHRAE 90.1-2019. A total of 32 states and the 
District of Columbia have adopted an ASHRAE standard that is equivalent 
to or above the current HUD-USDA standard (one of the 2010, 2013, 2016 
or 2019 editions), while 18 states have adopted codes that are 
currently equivalent to or below the current HUD-USDA standard or have 
no statewide codes.\73\
---------------------------------------------------------------------------

    \73\ DOE, Status of State Energy Code Adoption--Commercial, 
https://www.energycodes.gov/status/commercial. Note that the codes 
shown in Table 10 and Figure 4 represent DOE/PNNL's Determination of 
the standard that the state-adopted code is equivalent to, 
reflecting amendments that may have been adopted by each state.

[[Page 31793]]



 Table 10--Current Adoption of ASHRAE 90.1 (September 2022) Multifamily
                      Mid- and High-Rise Buildings
------------------------------------------------------------------------
 
------------------------------------------------------------------------
           Above Current HUD-USDA Standard (32 states and DC)
------------------------------------------------------------------------
                  ASHRAE 90.1 2019 (5 states plus DC )
------------------------------------------------------------------------
Washington                               Oregon
California                               Vermont
Massachusetts                            District of Columbia
------------------------------------------------------------------------
                       ASHRAE 90.1 2016 (2 states)
------------------------------------------------------------------------
New Jersey                               New York
------------------------------------------------------------------------
                          ASHRAE 90.1-2013 (19)
------------------------------------------------------------------------
Alabama                                  Montana
Delaware                                 Nebraska
Florida                                  Nevada
Georgia                                  New Mexico
Idaho                                    Pennsylvania
Illinois                                 Texas
Michigan                                 Utah
Maryland                                 Virginia
Maine                                    Hawaii
Rhode Island...........................
------------------------------------------------------------------------
                          ASHRAE 90.1-2010 (6)
------------------------------------------------------------------------
Connecticut                              Minnesota
New Hampshire                            West Virginia
North Carolina                           Wisconsin
------------------------------------------------------------------------
               At or Below Current HUD-USDA Standard (18)
------------------------------------------------------------------------
                          ASHRAE 90.1-2007 (8)
------------------------------------------------------------------------
Arkansas                                 Louisiana
Iowa                                     Ohio
Indiana                                  South Carolina
Kentucky                                 Tennessee
------------------------------------------------------------------------
                          No Statewide Code (8)
------------------------------------------------------------------------
Alaska                                   Missouri (Home Rule)
Colorado (Home Rule)                     North Dakota (Home Rule)
Kansas (Home Rule)                       South Dakota (Home Rule)
Mississippi                              Wyoming (Home Rule)
------------------------------------------------------------------------
                     Older Than ASHRAE 90.1-2007 (2)
------------------------------------------------------------------------
Arizona (Home Rule)                      Oklahoma
------------------------------------------------------------------------
                             U.S Territories
------------------------------------------------------------------------
Guam                                     N Mariana Islands (2001)
Puerto Rico                              American Samoa
U.S. Virgin Islands....................
------------------------------------------------------------------------


[[Page 31794]]

[GRAPHIC] [TIFF OMITTED] TN18MY23.004

Impacted Multifamily Housing
    Table 11, below, provides the estimated number of new mid-rise or 
high-rise multifamily units that are estimated to be impacted annually 
by the proposed Determination on ASHRAE 90.1-2019. Using a three-year 
average (2019 to 2021) annual production for each program, HUD 
preliminarily estimates that a total of 17,900 new mid- or high-rise 
multifamily units (four or more stories) will be impacted annually in 
the states that had not yet adopted this version of ASHRAE 90.1. This 
includes approximately 13,700 FHA-insured multifamily units, 400 public 
housing units, and approximately 2,800 HOME- and 300 HTF-financed 
units. No USDA-guaranteed multifamily units are impacted since these 
are not covered under this Notice.

                                     Table 11--High Rise Multifamily Units Potentially Impacted by ASHRAE 90.1-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Housing trust                        FHA
                          State                                 PIH            HOME            fund             RAD         multifamily        Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK......................................................               0              18              13              25               0              56
AL......................................................              34              29               0               0             207             270
AR......................................................               0              67               8              16             105             196
AZ......................................................               0              58               0              38             278             374
CA (2019(...............................................               8             378               0              12             107             505
CO......................................................               8              72               0              10             440             530
CT......................................................              15              22               0               0              81             118
DC (2019)...............................................               7               0               0               0              89              96
DE......................................................               0               2               0              48               0              50
FL......................................................              94             124              56              21             953            1248
GA......................................................              21              80               0               0             513             614
HI......................................................               2               0               0               0               0               2
IA......................................................               0               3               3               0               0               6
ID......................................................               0              25              17              73               7             122
IL......................................................              22              56               0               0             260             338
IN......................................................               0              60               0               0              32              92
KS......................................................               0               4              19               0              36              59
KY......................................................               0              34               0               2             122             158
LA......................................................               8             105               1               3              80             197
MA......................................................               0               9               0              35             316             360
MD......................................................               0              77               0               0             547             624
ME......................................................               0              21              19              24              10              74
MI......................................................              11              54               0               0              65             130
MN......................................................               2              73               0               5             391             471
MO......................................................               0             138               1               0             286             425
MS......................................................               0               0               0               0               0               0
MT......................................................               0              19               2              21              44              86
NC......................................................               4              79               0               0             852             935
ND......................................................               0              17               8               0               0              25
NE......................................................               0               0               0               0             191             191
NH......................................................               0              33               4              46              69             152
NJ......................................................              27              75               0               0              32             134
NM......................................................               0               5               9              12              74             100
NV......................................................               3             216               2               1              59             281
NY......................................................              10             156               0              27             932            1125

[[Page 31795]]

 
OH......................................................               7              83               0               0              68             158
OK......................................................               0               0               7              10              52              69
OR (2019)...............................................               0              92               8              30              24             154
PA......................................................              27              45               0               0              54             126
RI......................................................               0               2              15               2              23              42
SC......................................................               0              10               0               0             152             162
SD......................................................               0              63              47              37               8             155
TN......................................................               1               9              16             103             484             613
TX......................................................              54             114              36               0           4,310            4514
UT......................................................               0               1               0              17             307             325
VA......................................................               8              38               9               0             596             651
VT (2019)...............................................               0              38              16               0               5              59
WA (2019)...............................................              10              47               4              31             266             358
WI......................................................               4              41               0               0             111             156
WV......................................................               0               5               6               5              46              62
WY......................................................               0              10               1               0              12              23
Territories.............................................  ..............  ..............  ..............  ..............  ..............  ..............
Puerto Rico.............................................              41              86  ..............  ..............  ..............             127
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................             428           2,793             327             645          13,696          17,889
                                                         -----------------------------------------------------------------------------------------------
    45 states + DC......................................             417           2,229             299             538          13,067          16,550
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. ASHRAE 90.1-2019 Affordability Analysis

Cost Benefit Analysis
    In its Final Determination of improved energy efficiency for 
commercial buildings, including multifamily buildings, DOE completes 
both a ``qualitative'' analysis and a ``quantitative'' analysis to 
assess increased efficiency of ASHRAE Standard 90.1.\74\ In addition to 
a quantitative and qualitative analysis of the new code, PNNL publishes 
a cost benefit analysis of each of the codes, which considers the 
added, or incremental cost for the new standard. In addition, PNNL has 
published its methodology for evaluating the cost-effectiveness of 
commercial energy code changes, including multifamily buildings, and 
that methodology is used by HUD and USDA for this determination.\75\ 
For more detail on the methodology developed by DOE for their cost-
benefit analysis, see PNNL's 2015 cost-effectiveness report.\76\
---------------------------------------------------------------------------

    \74\ 86 FR 40543 (July 28, 2021), Final Determination Regarding 
Energy Efficiency Improvements in ANSI/ASHRAE/IES Standard 90.1-
2019. https://www.govinfo.gov/content/pkg/FR-2021-07-28/pdf/2021-15971.pdf.
    \75\ PNNL, Methodology for Evaluating Cost-Effectiveness of 
Commercial Energy Code Changes, January 2015. https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-23923.pdf.
    \76\ Ibid.
---------------------------------------------------------------------------

    Evaluating cost-effectiveness requires three primary steps: (1) 
evaluating the energy and energy cost savings of code changes, (2) 
evaluating the incremental and replacement costs related to the 
changes, and (3) determining the cost-effectiveness of energy code 
changes based on those costs and savings over time. The DOE methodology 
estimates the energy impact by simulating the effects of the code 
change(s) on typical new buildings, assuming both old and new code 
provisions are implemented fully and correctly. The methodology does 
not estimate rates of code adoption or compliance. Cost-effectiveness 
is defined primarily in terms of LCC evaluation, although the DOE 
methodology includes several metrics intended to assist states 
considering adoption of new codes.
Building Prototypes
    The basis for DOE's ASHRAE cost-benefit analysis are 16 prototype 
building models representing different commercial sector building 
types. Of the 16 prototypes modeled by DOE, two are multifamily 
buildings--a 4-floor mid-rise apartment building and a 10-floor high-
rise apartment building. Table 12 provides detailed characteristics of 
the mid-rise prototype.
---------------------------------------------------------------------------

    \77\ PNNL, Impacts of Standard 90.1-2007 for Commercial 
Buildings at State Level. https://www.pnnl.gov/main/publications/exter00nal/technical_reports/PNNL-18544.pdf.

  Table 12--Mid-Rise Apartment Building Prototype Characteristics \77\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                 GENERAL
------------------------------------------------------------------------
Building Type..........................  Multifamily residential
                                          building.
Gross Floor Area.......................  33,700 sf.
Building Shape.........................  Rectangle.
Aspect Ratio...........................  2.75 (152 ft x 56 ft).
Number of Floors.......................  4.
Activity Area..........................  Each floor has 8 (25' x 38')
                                          apartments, except ground
                                          floor which has 7 apartments
                                          and one lobby/office.
Window-to-Wall Ratio...................  15% (4 ft high view windows).
Floor Height...........................  10 ft.
Floor-to-Ceiling Height................  10 ft (for the office area
                                          only).
Exterior Wall..........................  Steel-framed wall.
Roof...................................  Insulation entirely above deck,
                                          metal deck roof.

[[Page 31796]]

 
Floor..................................  8'' Slab-on-grade.
------------------------------------------------------------------------
                             INTERNAL LOADS
------------------------------------------------------------------------
Occupancy:
    Number of People...................  78 persons total (average 2.5
                                          persons per apartment unit).
Lighting:
    Average Power Density..............   Apartment units: 0.36
                                          w/sf.
                                          Corridors: 0.5 w/sf.
                                          Office area: 1.1 w/sf.
Plug Load:
    Average Power Density..............  0.62 w/sf.
HVAC:
    Heating Type.......................  Gas furnace.
    Cooling Type.......................  Split system DX (one per
                                          apartment).
    Fan Control........................  Constant volume.
    Distribution/Terminal Units........  Single zone/direct air.
    Cooling T-stat.....................  75 [deg]F (no setback assumed).
    Heating T-stat.....................  70 [deg]F (no setback assumed).
------------------------------------------------------------------------
                              WATER HEATER
------------------------------------------------------------------------
Water Heater Type......................  Individual residential electric
                                          storage water heater.
Tank Capacity, gallons.................  20 (per apartment unit).
Supply Temperature, [deg]F.............  120.
------------------------------------------------------------------------

ASHRAE 90.1-2019 Incremental Costs
    Table 13 provides annual cost savings, added construction costs, 
and net LCC savings for the mid-rise multifamily prototype 
building.\78\ Cost estimates typically use current national average 
prices. Labor costs are based on estimated hours and current crew labor 
rates from RS Means. In some cases, cost estimates completed for a 
prior code cycle are still applicable and are adjusted for inflation 
rather than creating a new cost estimate or obtaining current unit 
prices throughout the cost estimate. Where cost estimates are updated, 
inflation factors specific to the equipment are used. These inflation 
factors are developed for each specific equipment or insulation type by 
comparing RS Means from the time of the estimate with the current RS 
Means.
---------------------------------------------------------------------------

    \78\ Special tabulation provided by DOE/PNNL to HUD of costs and 
savings for mid-rise multifamily buildings only, 9/2/21.
---------------------------------------------------------------------------

    Added construction costs average $574/building, or just $18/unit. 
This low average per-unit increase in cost is because in two of the 
climate zones analyzed, construction costs are expected to be lower for 
ASHRAE 90.1-2019 relative to the USDA-HUD 2007 baseline: construction 
costs for ASHRAE 90.1-2019 are projected to decrease by $257/unit in 
Climate Zone 2A, and by $142/unit in Climate Zone 4A. Conversely, the 
highest increase is projected to be $285/unit in Climate Zone 3B, 
followed by $274 per unit in Climate Zone 3A. Added or incremental 
construction cost can be negative for some building types for some of 
the following reasons:
     Fewer light fixtures are required when the allowed 
lighting power is reduced. Also, changes from fluorescent to LED 
technology result in reduced lighting costs in many cases and longer 
lamp lives, requiring fewer lamp replacements.
     Smaller heating, ventilating, and air[hyphen]conditioning 
(HVAC) equipment sizes can result from the lowering of heating and 
cooling loads due to other efficiency measures, such as better building 
envelopes. For example, Standard 90.1-2019 has more stringent 
fenestration U-factors for some climate zones. This results in smaller 
equipment and distribution systems, resulting in a negative first 
cost.\79\
---------------------------------------------------------------------------

    \79\ See, for example, PNNL: https://www.energycodes.gov/sites/default/files/2021-07/Cost-effectiveness_of_ASHRAE_Standard_90-1-2019-NorthCarolina.pdf.
---------------------------------------------------------------------------

    Annual energy cost savings average $7,153 per building, or $224 per 
unit, yielding LCC savings of an estimated $188,337 per building or 
$5,886 per unit. Simple paybacks are immediate in two of the five 
climate zones analyzed, and 0.4 to 1.5 years in the remaining climate 
zones, resulting in an extremely fast average payback of just 0.1 
years.

                          Table 13--ASHRAE 90.1-2019 Added Costs and Savings--National
                                        [2019 Edition vs. 2007 baseline]
----------------------------------------------------------------------------------------------------------------
                                                                Per square foot
                              ----------------------------------------------------------------------------------
         Climate zone              Annual cost     Added construction  Net LCC savings, $/
                                savings, $/ft \2\    cost, $/ft \2\          ft \2\         Simple payback years
----------------------------------------------------------------------------------------------------------------
2A...........................               0.253              -0.244                6.37  Immediate.
3A...........................               0.213               0.260                5.42  1.2.
3B...........................               0.186               0.270                4.89  1.5.
4A...........................               0.206              -0.135                5.68  Immediate.
5A...........................               0.207               0.075                5.44  0.4.
National Weighted Average....               0.212               0.017                5.58  0.1.
----------------------------------------------------------------------------------------------------------------


[[Page 31797]]


 
                                                                           Per building                                      Per unit
                                                         -----------------------------------------------------------------------------------------------
                      Climate zone                            Annual           Added          Net LCC         Annual           Added          Net LCC
                                                            savings  $/    construction     savings  $/     savings  $/    construction     savings  $/
                                                               bldg.       cost, $/bldg.       bldg.           unit        cost, $/unit        unit
--------------------------------------------------------------------------------------------------------------------------------------------------------
2A......................................................           8,536         (8,233)         214,924             267            -257           6,716
3A......................................................           7,187           8,772         182,871             225             274           5,715
3B......................................................           6,276           9,110         164,989             196             285           5,156
4A......................................................           6,950         (4,555)         191,643             217            -142           5,989
5A......................................................           6,984           2,531         183,546             218              79           5,736
National Weighted Average...............................           7,153             574         188,337             224              18           5,886
--------------------------------------------------------------------------------------------------------------------------------------------------------

State-Level Results
    Table 14 provides multifamily added costs and savings for ASHRAE 
90.1-19 over the 2007 edition for individual states.\80\ Most states 
(38 states plus the District of Columbia) show lower per-unit added 
costs for adoption of ASHRAE 90.1-2019 compared to the 2007 standard. 
Incremental cost savings per unit range from a low of $44 in Illinois 
to a high of $425 in Oregon. Only 13 states show increased incremental 
costs: Alabama, California, Georgia, Mississippi, Montana, North 
Carolina, Nevada, Oklahoma, South Carolina, South Dakota, Tennessee, 
Vermont, Wisconsin. For these 13 states, increased costs average $169/
unit, ranging from $22/unit in Nevada to $381/unit in California. The 
average incremental cost for all states is just $18/unit.
---------------------------------------------------------------------------

    \80\ Ibid., DOE/PNNL Special Tabulation provided to HUD 9/2/21.

                                               Table 14--ASHRAE 90.1-2019 Added Costs and Savings--States
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Net LCC savings,   Net LCC savings,
                                         Incremental cost     Energy cost        Energy cost         scenario 1         scenario 2       Simple payback
       State            Current code          $/unit        savings $/bldg./   savings, $/unit/  (publicly-owned),     (privately-          (years)
                                                                   yr                 yr               $/unit         owned), $/unit
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK.................  No Code..........              (319)              7,828                245              9,652              8,604  Immediate.
AL.................  2013.............                210             10,493                328              6,275              5,705  0.9.
AR.................  2007.............               (23)              5,736                179              5,321              4,835  Immediate.
AZ.................  Home Rule........              (234)              5,702                178              6,466              5,938  Immediate.
CA.................  2016.............                381              9,211                288              6,523              6,041  1.6.
CO.................  No Code..........               (72)              6,208                194              5,630              5,201  Immediate.
CT.................  2010.............              (122)              7,322                229              8,055              7,423  Immediate.
DC.................  2016.............              (314)              6,748                211              6,959              6,189  Immediate.
DE.................  2013.............              (347)              6,208                194              6,537              5,778  Immediate.
FL.................  2013.............              (127)              5,871                183              6,657              6,039  Immediate.
GA.................  2013.............                229              9,515                297              5,693              5,213  1.1.
HI.................  Home Rule........              (297)              5,938                186             11,457             10,357  Immediate.
IA.................  2007.............              (117)              5,601                175              5,975              5,458  Immediate.
ID.................  2013.............               (60)              7,592                237              5,135              4,698  Immediate.
IL.................  2013.............               (44)              8,536                267              6,450              6,028  Immediate.
IN.................  2007.............              (182)              5,770                180              6,527              5,970  Immediate.
KS.................  No Code..........              (308)              5,972                187              6,655              6,113  Immediate.
KY.................  2007.............              (328)              9,211                288              5,947              5,377  Immediate.
LA.................  2007.............              (172)              6,782                212              6,237              5,627  Immediate.
MA.................  2016.............              (148)              6,208                194              8,424              7,549  Immediate.
MD.................  2013.............              (303)              5,263                164              6,445              5,848  Immediate.
ME.................  No Code..........               (56)              4,994                156              7,160              6,461  Immediate.

[[Page 31798]]

 
MI.................  2013.............               (88)              6,782                212              6,475              5,978  Immediate.
MN.................  2010.............               (54)              7,659                239              6,915              6,271  Immediate.
MO.................  No Code..........              (333)              7,457                233              6,434              5,902  Immediate.
MS.................  No Code..........                161              8,199                256              5,985              5,527  0.7.
MT.................  2013.............                 94             14,744                461              5,620              5,114  0.5.
NC.................  2010.............                157              4,859                152              5,125              4,699  0.9.
ND.................  No Code..........               (57)              6,276                196              6,220              5,584  Immediate.
NE.................  2013.............              (124)              7,085                221              5,546              5,072  Immediate.
NH.................  2010.............                (6)              7,018                219              7,022              6,394  Immediate.
NJ.................  2016.............              (285)              7,254                227              7,477              6,812  Immediate.
NM.................  2013.............              (305)              7,794                244              5,807              5,300  Immediate.
NV.................  2013.............                 22              6,613                207              5,150              4,758  0.1.
NY.................  2016.............              (305)              6,917                216              8,454              7,754  Immediate.
OH.................  2007.............              (192)              6,984                218              6,151              5,640  Immediate.
OK.................  No Code..........                150              7,389                231              5,330              4,836  0.8.
OR.................  2016.............              (425)              6,276                196              5,878              5,421  Immediate.
PA.................  2013.............              (256)              5,061                158              6,524              5,811  Immediate.
PR.................  2007.............                  0              8,098                253  .................  .................  0.0.
RI.................  2010.............              (200)              5,668                177              8,171              7,518  Immediate.
SC.................  2007.............                186              6,276                196              5,684              5,221  0.9.
SD.................  No Code..........                297              6,343                198              5,359              4,945  1.6.
TN.................  2007.............                118              5,061                158              6,086              5,525  0.5.
TX.................  2013.............              (155)              6,276                196              5,581              5,182  Immediate.
UT.................  2013.............              (104)  .................                  0              5,366              4,930  Immediate.
VA.................  2013.............              (275)              6,006                188              5,297              4,754  Immediate.
VT.................  2016.............                137              7,187                225              7,341              6,652  0.5.
WA.................  2016.............              (432)              8,772                274              5,992              5,481  Immediate.
WI.................  2010.............                 59              5,027                157              6,400              5,909  0.3.
WV.................  2010.............               (96)              6,343                198              6,093              5,479  Immediate.
WY.................  No Code..........              (180)              5,736                179              5,952              5,426  Immediate.
Average............  .................                 18              7,153                224              6,394              5,886  0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Key: No Code = No statewide code; Home Rule = Home Rule state.

    All states show energy cost savings, both those with incremental 
cost increases as well as those that show lower incremental costs. 
Annual energy cost savings average $224/unit, ranging from $156/unit 
(Maine) to $461/unit (Montana). For the prototype 32-unit mid-rise 
building, this translates into an average annual cost savings of 
$7,153/building, ranging from $4,994 annual cost savings in Maine to 
$14,744 in Montana.
    The annual energy cost savings relative to lower incremental costs 
in many states yield ``negative'' simple paybacks in these states; 
where that is the case, Table 15 shows these paybacks as ``immediate.'' 
Average simple payback for all states is just 0.1 years, or 1.2 months. 
The states showing lower incremental costs show immediate paybacks: For 
example, Ohio shows a decrease in first costs of $192 per unit, but 
annual energy cost savings of $218, in which case the payback on this 
investment is immediate.
    Table 14 also shows life cycle cost savings for this investment. 
Average Life Cycle Cost savings for privately owned buildings are 
$5,886/unit, with LCC savings estimated to be highest in Hawaii 
($10,357 per building) and lowest in North Carolina ($4,699 per 
building).
Total Life Cycle Cost Savings
    Table 15 shows total estimated LCC Savings for ASHRAE 90.1-2019 
relative

[[Page 31799]]

to ASHRAE 90.1-2007. For the total estimated units that could be 
impacted by the adoption of this code, incremental costs will be an 
estimated $1.76 million lower than the cost of construction to the 2007 
baseline. Annual energy costs savings are estimated to be $3.37 
million, and national LCC savings $90.87 million for privately owned 
buildings.

                                                   Table 15--Total Life Cycle Savings--States (2020$)
                                                      [ASHRAE 90.1-2019 against 90.1-2007 baseline]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Net LCC savings,   Net LCC savings,
                                                   Annual energy          Added            scenario 1         scenario 2
            State                Total units     cost savings,  $/     construction    (publicly-owned),     (privately-       Simple payback  (years)
                                                       state          cost, $/state         $/state        owned), $/state
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK..........................                 56             18,199           (17,731)            535,672            477,505  Immediate.
AL..........................                270             66,046             56,652          1,694,138          1,540,410  0.9.
AR..........................                196             35,042            (4,535)          1,040,340            945,314  Immediate.
AZ..........................                374             87,032           (87,426)          2,415,231          2,217,933  Immediate.
CA..........................                505  .................  .................  .................  .................  ...........................
CO..........................                530             94,351           (37,964)          2,981,277          2,754,052  Immediate.
CT..........................                118             33,966           (14,432)            950,540            875,890  Immediate.
DC..........................                 96  .................  .................  .................  .................  ...........................
DE..........................                 50              9,603           (17,171)            323,588            286,010  Immediate.
FL..........................              1,248            319,626          (157,840)          8,305,011          7,534,226  Immediate.
GA..........................                614            129,477            140,483          3,495,238          3,200,678  1.1.
HI..........................                  2                922              (595)             22,914             20,714  Immediate.
IA..........................                  6              1,164              (702)             35,851             32,751  Immediate.
ID..........................                122             18,523            (7,332)            626,446            573,192  Immediate.
IL..........................                338             66,286           (14,968)          2,179,969          2,037,417  Immediate.
IN..........................                 92             20,371           (16,781)            600,445            549,228  Immediate.
KS..........................                 59             12,939           (18,165)            392,658            360,683  Immediate.
KY..........................                158             28,987           (51,810)            939,575            849,615  Immediate.
LA..........................                197             44,545           (33,771)          1,225,497          1,105,745  Immediate.
MA..........................                360  .................  .................  .................  .................  ...........................
MD..........................                624            128,954          (188,826)          4,021,926          3,648,880  Immediate.
ME..........................                 74             17,902            (4,107)            526,279            474,899  Immediate.
MI..........................                130             28,099           (11,377)            841,739            777,180  Immediate.
MN..........................                471            102,798           (25,327)          3,256,772          2,953,840  Immediate.
MO..........................                425             83,348          (141,603)          2,734,363          2,508,516  Immediate.
MS..........................  .................  .................  .................  .................  .................  #DIV/0!
MT..........................                 86             15,866              8,023            480,495            437,223  0.5.
NC..........................                935            168,579            146,890          4,792,171          4,393,892  0.9.
ND..........................                 25              4,903            (1,423)            155,494            139,599  Immediate.
NE..........................                191             33,430           (23,764)          1,059,288            968,665  Immediate.
NH..........................                152             38,464              (962)          1,067,365            971,847  Immediate.
NJ..........................                134             31,789           (38,147)          1,001,861            912,850  Immediate.
NM..........................                100             17,625           (30,319)            577,846            527,384  Immediate.
NV..........................                281             44,442              6,222          1,447,028          1,337,109  0.1.
NY..........................              1,125            299,968          (342,651)          9,506,499          8,719,231  Immediate.
OH..........................                158             31,319           (30,320)            971,893            891,097  Immediate.
OK..........................                 69             12,784             10,256            365,096            331,295  0.8.
OR..........................                154  .................  .................  .................  .................  ...........................
PA..........................                126             24,710           (32,283)            822,084            732,143  Immediate.
PR..........................                127  .................  .................  .................  .................  0.0.
RI..........................                 42             11,946            (8,314)            339,113            311,984  Immediate.
SC..........................                162             34,333             30,062            920,830            845,845  0.9.
SD..........................                155             28,996             45,938            828,025            764,005  1.6.
TN..........................                613            137,556             72,330          3,727,585          3,384,017  0.5.
TX..........................              4,514            875,739          (699,639)         25,191,762         23,392,691  Immediate.
UT..........................                325             53,375           (33,872)          1,741,174          1,599,869  Immediate.
VA..........................                651            101,587          (179,150)          3,448,464          3,094,969  Immediate.
VT..........................  .................  .................  .................  .................  .................  ...........................
WA..........................  .................  .................  .................  .................  .................  ...........................
WI..........................                156             33,061              9,211            998,409            921,760  0.3.
WV..........................                 62             12,290            (5,949)            377,780            339,669  Immediate.
WY..........................                 23              4,123            (4,147)            136,895            124,794  Immediate.
National....................             17,889          3,365.065        (1,757,336)         99,102,626         90,886,616  Immediate.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Regulatory Impact Analysis at www.regulations.gov provides a 
more granular analysis of the estimated cost benefits associated with 
building to the ASHRAE 90.1-2019 standard, taking into account each 
state's current baseline code. Using current state baselines, RIA 
Figure 28 estimates a total incremental cost savings of $10.8 million, 
and a LCC savings of $48.1 million (at a 3 percent discount rate).

[[Page 31800]]

[GRAPHIC] [TIFF OMITTED] TN18MY23.005

C. Preliminary Affordability Determination--ASHRAE 90.1-2019

    In light of the significant estimated savings, both annual and LCC 
savings, and the nominal cost increase shown in Tables 13 and 14, HUD 
and USDA have determined that the adoption of ASHRAE 90.1-2019 will not 
negatively impact the affordability of the multifamily housing covered 
by this Notice. As shown in Table 14, the weighted national average 
incremental cost for adoption of this edition is just $18/unit, while 
the annual energy cost savings per unit averages $224/unit. In all but 
13 states, the incremental costs of building to this standard have in 
fact decreased, not increased, relative to the current HUD-USDA ASHRAE 
90.1-2007 standard: in none of these states is the added construction 
cost more than $381/unit, and in that state (California), annual energy 
cost savings are estimated to be $288/year, yielding a rapid Simple 
Payback of just 1.6 years. Average (unweighted) payback for all states 
is 0.1 years (1.2 months), with most states showing an immediate 
payback due to the lower incremental/first costs. Estimated first costs 
are also a nominal fraction of total construction costs: the weighted 
national average of 0.017 $/sf (less than two cents) in added costs 
represents just 0.16 percent of the estimated total building cost of 
$218/sf. Finally in every state analyzed, the net LCC savings are 
positive, with a weighted national average of $5,886 for privately 
owned buildings.

IV. Impact on Availability of Housing

    EISA requires that HUD and USDA assess both the affordability and 
availability of housing covered by the Act. This section of this Notice 
addresses the impact that the EISA requirements would have on the 
``availability'' of housing covered by the Act. ``Affordability'' is 
assumed to be a measure of whether a home built to the updated energy 
code is affordable to potential homebuyers or renters, while 
``availability'' of housing is a measure associated with whether 
builders will make such housing available to consumers at the higher 
code level; i.e., whether the higher cost per unit as a result of 
complying with the revised code will impact whether that unit is likely 
to be built or not. A key aspect of determining the impact on 
availability is the proportion of affected units in relation to total 
units funded by HUD and USDA or total for sale units. These issues are 
discussed below.

2009 IECC--Single Family

    In its 2015 Final Determination adopting the 2009 IECC, HUD 
concluded ``[t]hough both higher construction costs and hedonic 
increases in demand for more energy-efficient housing are expected to 
contribute to an increase in housing prices or contract rents, HUD and 
USDA do not project such higher prices to decrease the quantity of 
affordable housing exchanged in the market.'' \81\
---------------------------------------------------------------------------

    \81\ 80 FR 25901 at 25918 (May 6, 2015).
---------------------------------------------------------------------------

    The current proposed update of IECC requirements constitutes a more 
expansive impact. The per unit cost is greater than for the previous 
rule. PNNL's estimate of the upfront cost of building to 2021 IECC is 
approximately $5,500, ranging from a low upfront incremental cost of 
$3,000 in Climate Zone 1 to a high of $6,800 in Climate Zone 8. 
Likewise, the geographic scope of the impact of the proposed rule is 
also more extensive than in 2015. In 2015, construction only in those 
16 states that had not yet adopted the 2009 IECC or its equivalent was 
directly affected. Conversely, only three jurisdictions have adopted 
the 2021 IECC. Under this Notice, approximately 100,000 newly built 
units would have to comply with the 2021 IECC standard, compared to an 
estimate of 10,000 annually for the 2015 notice that required IECC 2009 
as a minimum standard. This merits a more detailed discussion of the 
potential impacts on the availability of housing to program 
participants as well as the housing market overall. As set forth in 
this section of this Notice, HUD and USDA preliminarily find that there 
would be no noticeable impact on the supply of housing covered by this 
Notice; there are many ways for both homebuyers and builders to address 
the costs of the Notice if buying or building to the 2021 IECC is not 
advantageous; but that, under very specific conditions, availability 
could be constrained.
    The focus of this availability analysis is on the purchase of newly 
built homes by FHA-insured borrowers. While other covered programs are 
important, FHA-insured single-family purchases represent the 
overwhelming majority of units that would be affected by final adoption 
of the proposed standards. Homebuyers and builders of single-family 
homes will be more sensitive to the IECC requirement than renters and 
builders affected by the ASHRAE update because the estimated 
incremental cost for single-family homes is greater than the 
incremental cost of updating ASHRAE.

Builder Impacts

    Builders are required to build to the 2021 IECC standard only if 
they wish to sell the new home to a borrower who has a mortgage insured 
by FHA or guaranteed by USDA. If builders predict that the construction 
costs outweigh the expected private benefits of building to the 2021 
IECC standard, then the supply of newly built homes for FHA-financed 
borrowers would contract. FHA-insured borrowers would still be able to 
find housing within the existing housing stock, but their opportunities 
could be restricted.
    One incentive for builders to build to the 2021 IECC standard is to 
preserve FHA-insured borrowers as potential customers. As shown below, 
in 2020, FHA-insured loans financed 1 percent of the purchases of newly 
built homes in the Northeast, 8.3 percent in the Midwest, 11 percent in 
the West, and

[[Page 31801]]

24.5 percent of purchases in the South. FHA-insured borrowers can be a 
large portion of potential buyers of new construction in some markets.
    The regions where construction activity is high (e.g., South and 
West) are also areas where a higher share of buyers of new construction 
are FHA-insured. In such markets, builders would be more inclined to 
build to the energy code required by this Notice. Having more potential 
customers increases competition for a home and would reduce the 
opportunity costs of time on market.

                                                                     Table 16--Type of Financing of New Single-Family Homes
                                                                             [Homes sold in the United States, 2020]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Thousands of homes                                                               Percent financed
                                                 ----------------------------------------------------------------      Total     ---------------------------------------------------------------
                                                   Conventional         FHA             VA             Cash                        Conventional         FHA             VA             Cash
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast.......................................              25             (Z)               1               2              28            89.3             1.0             3.6             7.1
Midwest.........................................              60               6               2               4              72            83.3             8.3             2.8             5.6
South...........................................             244              96              31              21             392            62.2            24.5             7.9             5.4
West............................................             128              19              18               8             173            74.0            11.0            10.4             4.6
U.S.............................................             457             122              52              35             665            68.6            18.3             7.8             5.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Annual Characteristics of New Housing, U.S. Census.
Z = Less than 500 units or less than 0.5 percent.

    The cost to a developer of adopting the standard includes the added 
building costs, loss of potential customers unwilling to pay the 
additional price, and any other distortions in design introduced by the 
regulation. The builder can reasonably be expected to build an 
affordable home to the 2021 IECC standard if: FHA-insured borrowers are 
a significant part of the market for newly built homes; there is a 
sufficient market return from energy efficiency; and the builder is 
able to pass on some of the cost to the buyer. Under these conditions, 
which will vary by climate zone and the state of the housing market, 
availability is not likely expected to be adversely affected.
    A second possibility is that the builder continues to build 
affordable homes but not to the 2021 IECC. This would be the case when 
and where there are significant profits from building new homes for 
low-income homebuyers, even if not FHA-insured; FHA-insured borrowers 
are not a major part of the market, perhaps because conventional loans 
are relatively more affordable; the unlikely case that lower-income 
homebuyers do not place a significant premium on energy efficiency; or 
the builder is unable to pass on costs to the buyer. Under this 
scenario, the total supply of affordable housing would not necessarily 
be adversely affected, but new construction for FHA borrowers could 
decline.
    A third possibility is that the profit margin from building 
affordable housing is so slim that any change to the market would lead 
to a very different development decision. One alternative may be for 
builders to build housing for higher-income buyers. This strategy could 
place the home out of reach of FHA-insured borrowers and thus reduce 
the availability of affordable housing, albeit not housing for higher-
income borrowers.

Single Family Market Impacts

    The change in market quantity depends not only on the decisions of 
builders and the real estate industry more broadly but also on the 
willingness of buyers to absorb a price change. The percentage 
reduction of quantity is greater as demand and supply are more 
responsive to price changes and as the incremental cost constitutes a 
larger portion of the sales price.
    The impact on availability, as measured by the quantity of housing, 
would be given by:
[GRAPHIC] [TIFF OMITTED] TN18MY23.006

    The percentage change in the quantity of housing, [Delta]Q/Q, 
depends on the price elasticity of demand ED (the percentage change in 
quantity demanded from a percentage change in price), the price 
elasticity of supply ES, and the incremental cost [Delta]C, as a 
fraction of the pre-regulation sales price P. The percentage reduction 
of quantity is greater as demand and supply are more responsive to 
price changes (more price elastic), and the incremental cost 
constitutes a larger portion of the sales price before the introduction 
of the cost.\82\
---------------------------------------------------------------------------

    \82\ The pass-through rate is the proportion of the cost paid by 
buyers, which is higher as demand is less price elastic and supply 
is more price elastic.
---------------------------------------------------------------------------

    Estimates from studies of the price elasticities of demand and 
supply vary due to differences in methods, data, and geographies and 
time periods examined. Generally, the estimate of the price elasticity 
of demand for housing is below -1, as low as -0.2 for low-income 
households, but has been estimated to be above -1. Generally, lower 
income households have a lower measured price elasticity of demand for 
housing. The positive association between income and the absolute value 
of price elasticity stems from shelter being a necessary good.\83\
---------------------------------------------------------------------------

    \83\ Mayo (1981) shows this to be the case when a household must 
consume a minimum amount of housing (a Stone-Geary utility 
function).
---------------------------------------------------------------------------

    The price elasticity of supply and demand has been estimated at a 
wide variety of levels for different housing markets, primarily due to 
differences in the ease of building additional units, depending on the 
metropolitan area, neighborhood and even type of housing.\84\ The 
incremental cost of adopting the 2021 IECC is expected to be 
approximately 2 percent of the pre-regulation sales price (a $5,500 
incremental cost and $250,000 sales price). Our most cautious estimate 
is that the approximately 2 percent increase in construction cost would 
reduce the production of homes for FHA-insured borrowers by 1.5 
percent, which represents a 0.2 percent reduction of all homes 
available to FHA-insured homebuyers.
---------------------------------------------------------------------------

    \84\ Gyourko and Saiz (2006) attribute the local variation in 
construction activity to more than the cost of materials but also to 
local wages, local topography, and the local regulatory environment.
---------------------------------------------------------------------------

    This estimate is considered a ``worst-case'' scenario because it 
does not account for any of the positive effects of energy-efficiency. 
Any adverse impacts on availability would be diminished when there is a 
perceptible demand for energy-efficient homes.
    In addition, there would be no adverse effects on availability if 
FHA-insured homebuyers were able to find close substitutes in other 
submarkets. Finding a close substitute may be more difficult in rural 
areas where there is less available housing stock. USDA

[[Page 31802]]

guaranteed and direct loans are limited to eligible areas as defined by 
USDA and exclude central cities. Thus, there could be a greater 
relative burden on Section 502 guaranteed loans: about half of USDA's 
guaranteed and direct home loans are to borrowers in rural areas as 
defined by the 2010 Census as compared to about one-fifth of FHA 
mortgages (AHS, 2019).
    However, adoption of the new code is not expected to have any 
spillover impacts on other housing submarkets given the relatively 
small size of the directly affected FHA and USDA submarkets. The 
purchase of new homes by FHA-insured borrowers represents only 2.3 
percent of all residential sales in 2020. As a portion of all home 
purchases (all homebuyers, new and existing homes), FHA-financed 
purchases of new construction range from slightly more than 0 percent 
in the Northeast to slightly less than 3.6 percent in the South.
    Energy efficiency has also been shown to impart an economic value 
to buildings. The willingness to pay for this benefit will vary among 
homebuyers. If there is a sufficient proportion who expect to realize 
those gains, then there will be a demand for housing built to the 2021 
IECC that could partially counteract any adverse impacts on 
availability. See the discussions in the Regulatory Impact Analysis at 
www.regulations.gov in the ``Capitalization of Energy Efficiency 
Standard'' section (p.74).
    Empirical studies cited in the RIA suggest there is a statistically 
significant and positive influence of energy efficiency on real estate 
values.\85\ One study examining the residential market in California 
found that a green label adds about 2.1 percent to the value of a home. 
This premium is slightly above the costs of bringing a home in 
compliance with the green labels (Energy Star, LEED, and EnergyPoint).
---------------------------------------------------------------------------

    \85\ Laquatra, J., Housing Market Capitalization of Energy 
Efficiency Revisited, 2002.
---------------------------------------------------------------------------

    Another study examined the premium placed on the Energy Star 
certification on homes in Gainesville, Florida and found that there is 
a premium for these homes but that the premium diminishes when the home 
is resold; this finding could suggest that energy efficiency is a 
motivator for buying newly built homes.\86\ Another two studies 
examined the effects of a label, which would be a voluntary option for 
the builder, rather than a code, which is obligatory.\87\ In another 
study, researchers found that energy performance certificates do not 
play a role in determining market value but that energy efficiency 
itself is capitalized into housing sales prices (about 2 percent for 
every 10 percent reduction of energy consumption).\88\
---------------------------------------------------------------------------

    \86\ Bruegge, C., Deryugina, T. and Myers, E., 2019. The 
distributional effects of building energy codes. Journal of the 
Association of Environmental and Resource Economists, 6(S1), pp. 
S95-S127.
    \87\ Bruegge et al., 2016; Kahn, Matthew E., and Nils Kok. ``The 
capitalization of green labels in the California housing market.'' 
Regional Science and Urban Economics 47 (2014): 25-34.
    \88\ Aydin, Erdal, Dirk Brounen, and Nils Kok. ``The 
capitalization of energy efficiency: Evidence from the housing 
market.'' Journal of Urban Economics 117 (2020): 103243.
---------------------------------------------------------------------------

    A survey by the National Association of Home Builders found that 
the median borrower was willing to pay an extra $5,000 upfront to save 
$1000/year in utility bills.\89\ This tradeoff would be equivalent to 
the resident receiving 10 years of benefits at a 20 percent discount 
rate or 30 years of benefits at 25 percent discount rate. A recent 
survey of the National Association of Realtors found that sixty five 
percent of realtors believed that energy efficiency was valuable in 
promoting residential units. (However, the majority of realtors (57 
percent) were ``not sure'' as to the impact of energy efficiency on 
sales price.) \90\
---------------------------------------------------------------------------

    \89\ Ford, Carmel. ``How Much Are Buyers Willing to Pay for 
Energy Efficiency?'' Eye on Housing: National Association of Home 
Builders Discusses Economics and Housing Policy. April 12, 2019. 
https://eyeonhousing.org/2019/04/how-much-are-buyers-willing-to-pay-for-energy-efficiency/.
    \90\ National Association of Realtors, REALTORS and 
Sustainability Report--Residential, 2021, https://www.nar.realtor/sites/default/files/documents/2021-realtors-and-sustainability-report-04-20-2021.pdf.
---------------------------------------------------------------------------

    A study of commercial buildings showed that a study with an Energy 
Star certification will rent for about 3 percent more per square foot 
and sell for as much as 16 percent more. The authors were able to 
disentangle the value of the label itself from the value of energy 
savings stemming from increased energy efficiency. Energy savings were 
important: a 10 percent decrease in energy consumption led to an 
increase in value of about one percent over and above the rent and 
value premium for a labeled building.\91\
---------------------------------------------------------------------------

    \91\ Eichholz, P., N. Kok and J. Quigley, ``Doing Well by Doing 
Good? Green Office Buildings,'' American Economic Review 100:5 
(2010): 2492-2509.
---------------------------------------------------------------------------

    All of this empirical research shows that there are profit 
incentives to providing energy efficiency. Such a price gain would 
diminish any adverse effects on the supply of housing, although it is 
also evidence that bidding for energy efficiency could reduce 
affordability.

Evidence From Prior (2009 IECC) Code Adoption

    Examining FHA new construction loans by the level of a state's 
energy-efficiency standards can provide a rough indicator of the 
potential impact of the IECC on availability. Having required a minimum 
standard equal to the 2009 IECC (in 2015), the FHA-insured purchase of 
new construction could depend on the strictness of the state-wide code 
relative to the 2009 IECC. However, as shown in Table 17, in states 
where the state-wide standard is lower than that required by HUD and 
USDA, the proportion of FHA loans for new construction appears similar 
to states that have adopted stricter codes. For the group where the 
state-wide code is at least as stringent as the 2009 IECC, the 
proportion of FHA-insured new construction loans is 16.9 percent, which 
is slightly higher than the 15.1 percent for the states where energy 
codes are below IECC 2009. Despite the cyclical nature of new 
construction, there is no compelling evidence that the availability of 
newly built owner-occupied housing will be adversely affected.

     Table 17--FHA-Insured Single Family Forward Loans, 2021, Grouped by Region and Strictness of State-Wide
                                             Standard, United States
----------------------------------------------------------------------------------------------------------------
                                                                        New        All purchase     Percent new
                   State-wide energy standard                      construction        loans            (%)
----------------------------------------------------------------------------------------------------------------
Less than IECC 2009.............................................          14,800          98,300            15.1
Same as IECC 2009...............................................          61,900         445,800            13.9
Higher then IECC 2009...........................................          47,000         226,700            21.0
----------------------------------------------------------------------------------------------------------------
                                                      South
----------------------------------------------------------------------------------------------------------------
Less than IECC 2009.............................................           5,400          32,600            16.6

[[Page 31803]]

 
Same as IECC 2009...............................................          49,390         225,000            21.9
Higher than IECC 2009...........................................          37,900         116,000            32.7
----------------------------------------------------------------------------------------------------------------
                                                      West
----------------------------------------------------------------------------------------------------------------
Less than IECC 2009.............................................           8,090          42,275            19.1
Same as IECC 2009...............................................           5,490          32,500            16.9
Higher than IECC 2009...........................................           9,050          73,900            12.3
----------------------------------------------------------------------------------------------------------------
                                                     Midwest
----------------------------------------------------------------------------------------------------------------
Less than IECC 2009.............................................           1,310          23,400             5.6
Same as IECC 2009...............................................           5,650         122,000             4.6
Higher than IECC 2009...........................................             165           3,270             5.1
----------------------------------------------------------------------------------------------------------------
                                                    Northeast
----------------------------------------------------------------------------------------------------------------
Less than IECC 2009.............................................               0               0  ..............
Same as IECC 2009...............................................           1,410          66,000             2.1
Higher than IECC 2009...........................................             500          33,660             1.5
----------------------------------------------------------------------------------------------------------------

    There is some regional variation. In the South, the proportion of 
new construction is much higher in states above the IECC 2009 (32.7 
percent) than in states below (16.6 percent). In the West, the 
proportion of FHA new construction is lower in states with energy codes 
above the IECC 2009 (12.3 percent) than in states below (19.1 percent). 
A clear pattern is not identifiable in either the Northeast or Midwest. 
Diverse climate zones and housing markets could explain why different 
regions appear to respond differently to the energy standard.

Variability in Building Practices in Relation to Energy Codes

    Note that there is wide variability in enforcement of, or 
compliance with, building codes in general. Some states do not adopt 
statewide building codes, others adopt for only certain building types 
that may exclude single family housing, some states adopt codes with 
amendments, while others that have adopted building codes may not 
enforce them, either in their entirety or only for certain building 
types.\92\
---------------------------------------------------------------------------

    \92\ Lawrence Berkeley National Laboratory, The Cost of 
Enforcing Building Codes, Phase I, April 2013. Table 1 shows varying 
compliance rates: https://www.researchgate.net/publication/282136731_The_Cost_of_Enforcing_Building_Energy_Codes_Phase_1.
---------------------------------------------------------------------------

    Conversely, there are a number of above-code energy efficiency or 
green building standards that meet or exceed the 2021 IECC that a 
growing number of builders are incorporating as standard building 
practice. Energy Star for New Homes, historically set at 10 percent 
above the current state energy code, but as of January 2023 set at 10 
percent over the 2015 IECC across all states, has a new construction 
adoption rate of nine percent of all single-family homes nationally. 
There are also a smaller number built to the DOE's Zero Energy Ready 
Home (ZERH) standards. In addition, certain green building standards 
set Energy Star as a minimum requirement. With Infrastructure Reduction 
Act tax credits of $2,500 now available for Energy Star Certified 
Homes, and $5,000 for DOE Zero Energy Ready Homes, the market share for 
these above-code standards is likely to increase.
    There is widespread regional variation in adoption of these 
standards are not typically mandated by municipalities for single 
family home construction. There are regional variations in above-code 
standards among builders as well. For example, for Energy Star New 
Homes, adoption rates in most states are below five percent, with very 
little in the northeast, while in the southwest the share of Energy 
Star new homes is much higher, e.g., Arizona is around 40 percent.\93\
---------------------------------------------------------------------------

    \93\ https://www.energystar.gov/newhomes/energy_star_certified_new_homes_market_share.
---------------------------------------------------------------------------

    In the multifamily sector, some builders build to above code 
standards like LEED, Enterprise Green Communities, ICC 700 National 
Green Building Standard, PHIUS, the Living Building Challenge or 
regional programs like Earthcraft. Most of these programs embed Energy 
Star New Construction within their standards while also addressing 
other areas of health and disaster resilience requirements. Some 
municipalities may require one of these above-code standards for new 
construction of multifamily housing. In the affordable housing sector, 
each state may also drive the choice of compliance with above-code 
standards through their Low-Income Housing Tax Credit Qualified 
Allocation Plans (QAPs). State QAPs may call out these above-code 
standards specifically or may allocate points to other matching funding 
streams that incentivize or require specific above-code standards.

ASHRAE 90.1-2019--Rental Housing

    USDA and HUD have preliminarily determined that in light of the 
extremely small incremental first costs, or, in many cases, negative 
first costs, adoption of ASHRAE 90.1-2019 will not negatively impact 
the availability of multifamily units financed or insured through these 
programs. Simple paybacks times are extremely low for the small number 
of states that will see an increase in first costs, in most cases less 
than one year. The estimate of the direct cost of construction of 
moving to this code is not greater than zero. Even if there were a 
slight increase in construction costs, the estimates of energy savings 
are sizeable enough such that the benefits would offset the costs for 
property managers. There could be some builders of multi-family 
properties who are doubtful of the return and so view the ASHRAE 90.1-
2019 requirement as a net burden. For the hesitant developer, there 
remain other incentives to comply: FHA multifamily loans allow a higher 
LTV than is common and Low-Income Housing Tax Credits that are 
frequently used by

[[Page 31804]]

developers in conjunction with HUD financing often carry a requirement 
or incentive for energy efficiency. In addition, FHA's lower Green 
Mortgage Insurance Premium provides a strong incentive for developers 
to adopt an above-code standard.

V. Implementation

    Section 109(d) of Cranston-Gonzalez (42 U.S.C. 12709) automatically 
applies to all covered programs upon completion and publication of the 
specified affordability and availability determinations by HUD and 
USDA. Accordingly, once a Final Determination has been made by HUD and 
USDA under section 109(d) (42 U.S.C. 12709(d)) and published, 
additional notice and comment rulemaking will not be required for the 
covered programs. The new codes, if found not to negatively affect both 
the availability and affordability of covered housing, will 
automatically apply, subject to administrative actions such as 
mortgagee letters, notices, or amendments to handbooks and conforming 
regulations that may be required by individual programs.
    Based on DOE findings on improvements in energy efficiency and 
energy savings, and a subsequent HUD and USDA Final Determination with 
respect to both housing affordability and availability, HUD and USDA 
programs specified under EISA will implement procedures to ensure that 
recipients of HUD and USDA funding, assistance, or insurance comply 
with the 2021 IECC and ASHRAE 90.1-2019 code requirements, commencing 
no later than 30 days after the date of publication of a Notice of 
Final Determination. HUD and USDA will take such administrative actions 
as are necessary to ensure timely implementation of and compliance with 
the energy codes, to include Mortgagee Letters, Notices, Notices of 
Funding Opportunity (NOFOs), Builder's Certification Form HUD-92541, 
and amendments to relevant handbooks. Conforming rulemaking will be 
required to update FHA's single family minimum property standards at 24 
CFR 200.926d, Public Housing Capital Fund energy standards at 24 CFR 
905, and HOME property standards at 24 CFR 92.251, though as noted 
above, this would not entail notice and comment rulemaking. USDA will 
update minimum energy requirements at 7 CFR part 1924.
    To enable these administrative and conforming rulemaking procedures 
to be implemented and to provide the industry with adequate time to 
prepare for these requirements and incorporate them in project plans 
and specifications, proposals or applications, adoption of the new 
construction standards described in this Notice will take effect as 
follows:
    (1) For FHA-insured multifamily programs, the standards set forth 
by this Notice are applicable to those properties for which mortgage 
insurance pre-applications are received by HUD 90 days after the 
effective date of this Final Determination;
    (2) For FHA-insured and USDA-guaranteed single family loan 
programs, the standards set forth by this Notice are applicable to 
properties for which building permits are issued 180 days after the 
effective date of a Final Determination.
    (3) For the HOME program, the standards set forth by this Notice 
are applicable to residential new construction projects for which HOME 
funds applications are committed by Participating Jurisdictions no 
later than 180 days after the effective date of a Final Determination.
    (4) For Public Housing Capital Fund new construction projects for 
which approvals are submitted the standards set forth by this Notice 
are applicable no later than 180 days after the effective date of a 
Final Determination.

Alternate Compliance Paths

    HUD and USDA will accept certain energy and green building 
certifications as evidence of compliance with the standards addressed 
in this Notice, provided that they require energy efficiency levels 
that meet or exceed the 2021 IECC or ASHRAE 90.1-2019. These may 
include standards referenced in one or more HUD or USDA programs, such 
as the ICC-700 National Green Building Standard, Enterprise Green 
Communities, Energy Star Certified New Homes, Energy Star Indoor Air 
Plus, DOE Zero Energy Ready Homes, Leadership in Energy and 
Environmental Design (LEED), Living Building Challenge or Passive 
House, as well as one or more regional or local standards such as 
Earthcraft, Earth Advantage, or Greenpoint Rated New Home.\94\ HUD and 
USDA will publish a list of those standards that comply with the 
minimum energy efficiency requirements of this Notice. HUD and USDA 
will also accept certifications of compliance of state or local codes 
or standards for which credible third-party documentation exists that 
these meet or exceed the 2021 IECC and ASHRAE 90.1-2019.
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    \94\ Energy Star Certified New Homes Version 3.2 and DOE's Zero 
Energy Ready Homes set the 2021 IECC as the baseline standard.
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VI. Request for Public Comment

    HUD and USDA welcome comments on all aspects of this Preliminary 
Determination, but are especially interested in comments on the 
following subjects:
    (1) HUD and USDA are requesting comments on whether the higher 
first-costs associated with adopting the 2021 IECC over the current 
2009 IECC standard for USDA- or HUD-assisted housing, or relative to 
the most recent 2018 IECC, may lower homebuyer options, despite the 
significant life-cycle cost savings over the life of the mortgage 
described in this Notice, i.e., whether adoption of the 2021 IECC may 
limit the availability of such housing to otherwise-qualified buyers or 
renters.
    (2) HUD and USDA request comments from code officials on the 
current status of code adoption in their states, and the anticipated 
timetable for adopting the next revision of the IECC and/or ASHRAE 
codes, their equivalent, or higher, as well as from code officials in 
home rule jurisdictions that may adopt the codes independently of state 
action. HUD and USDA wish to establish the extent to which adoption of 
the latest IECC and ASHRAE 90.1 standards aligns with state or local 
home rule adoption of these codes.
    (3) HUD and USDA request comments on the cost benefit analysis 
utilized by PNNL as described in Sections II.B and III.B of this 
Preliminary Determination.
    (4) Anecdotal reports suggest that because manually operated 
bathroom fans allowed under the IECC to meet ventilation requirements 
rely on occupant action to operate them, these may impact indoor air 
quality and the health of occupants. HUD and USDA request comments on 
this possible health concern.
    (5) HUD and USDA are requesting comment on the extent to which the 
2021 IECC air leakage requirements (3 air changes per hour or 5 air 
changes per hour at 50 pascals depending on Climate Zone) may present 
fire code issues for attached single family homes or low-rise 
multifamily properties, and, if such issues exist, cost-effective 
solutions that have been developed in the field or are currently being 
developed to address them.
    (6) HUD and USDA seek comment on the time required for builders and 
building designers to familiarize themselves with the new codes, the 
training or technical support that may be required by building 
professionals and local code officials on the new requirements of the 
2021 IECC and ASHRAE 90.1-2019 standards, workforce training needs, and 
any other

[[Page 31805]]

issues related to implementation of these standards. Comments on 
particular challenges or issues facing rural areas in adoption and/or 
implementation of these codes are also requested.
    (7) The construction industry has experienced COVID-related supply 
chain challenges for certain products and materials, particularly but 
not exclusively for lumber products, leading to significant price 
increases in such products as framing lumber, plywood, and oriented 
strand board (OSB).\95\ HUD and USDA solicit comments on the duration, 
persistence and intensity of these price increases, the extent to which 
they may impact the cost of energy related products or materials 
covered by the IECC or ASHRAE energy codes addressed in this Notice, 
and to what extent these supply chain issues may impact implementation 
of the codes addressed by this Notice.
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    \95\ Softwood lumber prices in North America, https://www.nrcan.gc.ca/our-natural-resources/domestic-and-international-markets/current-lumber-pulp-panel-prices/13309#panel.
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    (8) HUD and USDA currently provide incentives or require green 
building standards for some programs. The agencies are seeking to 
maximize alignment between the 2021 IECC and ASHRAE 90.1-2019 and those 
green building standards that are encouraged or incentivized through 
these programs. During the implementation phase of this Notice, HUD and 
USDA will seek certifications from all green building or above-code 
energy performance standard-setting bodies as to their establishing 
2021 IECC and ASHRAE 90.1-2019 standards as the baseline against which 
they measure above-code energy performance. The agencies seek 
preliminary comments from current green building or above-code energy 
performance standard-setting bodies on their (1) current minimum IECC 
and ASHRAE 90.1 requirements; and/or (2) proposed establishment of the 
2021 IECC and ASHRAE 90.1-2019 as the baseline for such standards.

VII. Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50 and 
USDA Rural Development regulations at 7 CFR part 1970, which implement 
section 102(2)(C) of the National Environmental Policy Act of 1969 (42 
U.S.C. 4332(2)(C)). That finding is posted at www.regulations.gov and 
is also available for public inspection between the hours of 8 a.m. and 
5 p.m. weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW, Room 
10276, Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
finding by calling the Regulations Division at 202-402-3055 (this is 
not a toll-free number). HUD welcomes and is prepared to receive calls 
from individuals who are deaf or hard of hearing, as well as 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Adrianne Todman,
Deputy Secretary, U.S. Department of Housing and Urban Development.
Anthony Shea,
Acting Deputy Secretary, U.S. Department of Agriculture.
[FR Doc. 2023-10596 Filed 5-17-23; 8:45 am]
BILLING CODE 4210-67-P