[Federal Register Volume 89, Number 85 (Wednesday, May 1, 2024)]
[Rules and Regulations]
[Pages 35384-35439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08196]



[[Page 35383]]

Vol. 89

Wednesday,

No. 85

May 1, 2024

Part III





Department of Energy





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10 CFR Parts 433 and 435





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

  Federal Register / Vol. 89 , No. 85 / Wednesday, May 1, 2024 / Rules 
and Regulations  

[[Page 35384]]


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DEPARTMENT OF ENERGY

10 CFR Parts 433 and 435

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


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

AGENCY: Federal Energy Management Program, Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (``DOE'') is publishing a rule that 
establishes energy performance standards for the new construction and 
major renovation of Federal buildings, including commercial buildings, 
multi-family high-rise residential buildings, and low-rise residential 
buildings per the Energy Conservation and Production Act (``ECPA''), as 
amended by the Energy Independence and Security Act of 2007 (``EISA''). 
Consistent with the requirements of ECPA and EISA, DOE is establishing 
Federal building energy performance standards that require Federal 
agencies to reduce their use of on-site use of fossil fuels (which 
include coal, petroleum, natural gas, oil shales, bitumens, tar sands, 
and heavy oils) consistent with the targets of ECPA and EISA. This 
final rule also provides processes by which Federal agencies may 
petition DOE for a modification to the final standards.

DATES: The effective date of this rule is July 15, 2024. Compliance 
with revised performance standards established in this rule is required 
for the construction of new and major renovation of Federal buildings, 
including commercial buildings, multi-family high-rise residential 
buildings, and low-rise residential buildings, for which design for 
construction begins on or after May 1, 2025.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index.
    The docket web page can be found at www.regulations.gov/docket/EERE-2010-BT-STD-0031. The docket web page contains instructions on how 
to access all documents, including public comments, in the docket.

FOR FURTHER INFORMATION CONTACT: 
    Mr. Rick Mears, U.S. Department of Energy, Office of the Under 
Secretary for Infrastructure, Federal Energy Management Program, FEMP-
1, 1000 Independence Avenue SW, Washington, DC 20585-0121. Email: [email protected].
    Ms. Laura Zuber, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (240) 306-7651. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
    A. Authority
    B. Background
    C. Final Rule Overview
II. Public Comments on the 2022 SNOPR
III. Discussion of the Final Rule
    A. Scope
    1. Federal Buildings
    2. Calculating Costs
    a. Construction and Major Renovations Costs
    b. Individual Buildings
    c. Major Renovations
    d. Energy Conservation Measures
    3. Fossil Fuel-Generated Energy Consumption
    a. Limitation to On-Site Use of Fossil Fuels
    b. Exemptions and Exceptions
    B. Performance Standards for Fossil Fuel-Generated Energy 
Consumption
    1. New Construction and Major Renovations of a Whole Building
    2. Major Renovations Within a Building
    3. Shift Adjustment Multiplier
    4. Compliance Date
    C. Petitions for Downward Adjustment
    1. DOE Review of Petitions
    2. Making Petitions for Downward Adjustment Public
    3. Bundling Petitions
    4. GSA Tenant Agencies
    5. Petitions Submitted by the Department of Defense
    D. Definitions
IV. Additional Issues Raised by Commenters
    A. Authority
    B. APA Concerns
V. Methodology, Analytical Results, and Conclusion
    A. Cost-Effectiveness
    B. Emissions Analysis
    1. Air Quality Regulations Incorporated in DOE's Analysis
    C. Monetizing Emissions Impacts
    1. Monetization of Greenhouse Gas Emissions
    a. Social Cost of Carbon
    b. Social Cost of Methane and Nitrous Oxide
    c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates
    2. Monetization of Other Emissions Impacts
    D. Public Comment
    E. Conclusion
    F. Reference Resources
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866, 13563, and 14094
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Information Quality
VII. Approval of the Office of the Secretary

I. Introduction

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

A. Authority

    Section 305 of ECPA established energy conservation requirements 
for Federal buildings. 42 U.S.C. 6834. Section 433(a) of EISA amended 
section 305 of ECPA and directed DOE to establish regulations that 
require certain new Federal buildings and Federal buildings undergoing 
major renovations to reduce their fossil fuel-generated energy 
consumption. 42 U.S.C. 6834(a)(3)(D)(i). The fossil fuel-generated 
energy consumption reductions only apply to Federal buildings that: (1) 
are ``public buildings'' (as defined in 40 U.S.C. 3301) \1\ with 
respect to which the

[[Page 35385]]

Administrator of General Services is required to transmit a prospectus 
to Congress under 40 U.S.C. 3307; \2\ or (2) those that cost at least 
$2,500,000 in costs adjusted annually for inflation. 42 U.S.C. 
6834(a)(3)(D)(i).
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    \1\ Under 40 U.S.C. 3301(a)(5), ``public building'' is a 
building, whether for single or multitenant occupancy, and its 
grounds, approaches, and appurtenances, which is generally suitable 
for use as office or storage space or both by one or more Federal 
agencies or mixed-ownership Government corporations. ``Public 
building'' includes Federal office buildings, post offices, 
customhouses, courthouses, appraisers stores, border inspection 
facilities, warehouses, record centers, relocation facilities, 
telecommuting centers, similar Federal facilities, and any other 
buildings or construction projects the inclusion of which the 
President considers to be justified in the public interest. The 
definition does not include a building or construction project that 
is on the public domain (including that reserved for national 
forests and other purposes); that is on property of the Government 
in foreign countries; that is on Native American and Native Alaskan 
property held in trust by the Government; that is on land used in 
connection with federal programs for agricultural, recreational, and 
conservation purposes, including research in connection with the 
programs; that is on or used in connection with river, harbor, flood 
control, reclamation or power projects, for chemical manufacturing 
or development projects, or for nuclear production, research, or 
development projects; that is on or used in connection with housing 
and residential projects; that is on military installations 
(including any fort, camp, post, naval training station, airfield, 
proving ground, military supply depot, military school, or any 
similar facility of the Department of Defense); that is on 
installations of the Department of Veterans Affairs used for 
hospital or domiciliary purposes; or the exclusion of which the 
President considers to be justified in the public interest.
    \2\ 40 U.S.C. 3307 describes the minimum construction, 
alteration, and lease costs that would trigger a prospectus to 
Congress.
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    For these buildings, section 305 of ECPA, as amended by EISA, 
mandates that the buildings be designed so that a building's fossil 
fuel-generated energy consumption is reduced as compared with such 
energy consumption by a similar building in fiscal year (``FY'') 2003 
(as measured by Commercial Buildings Energy Consumption Survey 
(``CBECS'') or Residential Energy Consumption Survey (``RECS'') data 
from the DOE's Energy Information Administration (``EIA'') by 55 
percent beginning in FY 2010, 65 percent beginning in FY 2015, 80 
percent beginning in FY 2020, 90 percent beginning in FY 2025, and 100 
percent beginning in FY 2030, also shown in Table I.1. 42 U.S.C. 
6834(a)(3)(D)(i)(I).

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

    In addition, ECPA, as amended by EISA, permits DOE to adjust the 
applicable numeric reduction requirement downward with respect to a 
specific building, if the head of the Federal agency requesting the 
downward adjustment certifies in writing that meeting such requirement 
would be technically impracticable in light of the agency's specified 
functional needs for that building and DOE concurs with the agency's 
conclusion. 42 U.S.C. 6834(a)(3)(D)(i)(II). Such an adjustment does not 
apply to the General Services Administration (``GSA''). Id.

B. Background

    In this final rule, DOE establishes regulations that require 
certain new Federal buildings and Federal buildings undergoing major 
renovations to be designed to reduce their fossil fuel-generated energy 
consumption and provides a process for Federal agencies to petition for 
a downward adjustment from these requirements if applicable. This rule 
amends the regulations governing energy efficiency in Federal buildings 
found in 10 CFR parts 433 and 435.
    DOE previously published a notice of proposed rulemaking (``NOPR'') 
in the Federal Register on October 15, 2010, which proposed a rule to 
implement section 433 of EISA. 75 FR 63404. A public meeting on the 
NOPR was held on November 12, 2010, and public comments were accepted 
through December 14, 2010. DOE received several comments expressing 
concern and encouraging DOE to re-examine the proposed regulations.\3\ 
In response to these comments, DOE identified additional areas for 
clarification and consideration that would benefit from further public 
comment. DOE issued a supplemental notice of proposed rulemaking 
(``2014 SNOPR'') on October 14, 2014. 79 FR 61694. Comments were 
accepted through December 15, 2014. Id. DOE received comments 
requesting reconsideration of key issues.
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    \3\ Complete contents of the docket folder may be found at 
www.regulations.gov/#!docketDetail;D=EERE-2010-BT-STD-0031.
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    DOE revisited its proposed rule and issued a second SNOPR on 
December 21, 2022 (``2022 SNOPR''). 87 FR 78382. The rule proposed in 
the 2022 SNOPR differed from the rule proposed in the 2014 SNOPR. 
Specifically, the rule proposed in the 2022 SNOPR:
    Limited its application to on-site fossil fuel usage or Scope 1 GHG 
emissions in CO2e (``Carbon Dioxide Equivalent Gases'').
    Introduced a shift multiplier for Federal commercial buildings that 
operate on extended schedules compared to the private sector buildings 
sampled in CBECS.
    Revised the calculation of fossil fuel usage to be consistent with 
how DOE measures fossil fuel usage and greenhouse gas emissions in 
reporting related to Section 432 of EISA.
    Clarified that the rule applies to EISA-subject major renovations 
for (1) all on-site fossil fuel-using systems, (2) on-site fossil fuel-
using system level renovations, and (3) on-site fossil fuel-using 
component level renovations.
    Clarified when the rule applies to leased Federal facilities.
    Refined an approach to determine required fossil fuel-generated 
energy consumption levels for EISA-subject major renovations that are 
limited to system or component level retrofits.
    Provided an alternative compliance method for buildings with 
process loads that are not included in CBECS and RECS.
    Clarified that process loads of building types not included in 
CBECS are not subject to the fossil fuel reduction requirements.
    Stated that certain renewable fuels are exempt from the calculation 
of fossil fuel usage.
    Identified information Federal agencies must provide when 
petitioning for a downward adjustment.
    A public meeting on the 2022 SNOPR was held on January 5, 2023, and 
public comments were accepted through March 23, 2023. 87 FR 78382; 88 
FR 12267. The comment period was extended to accommodate requests from 
stakeholders to provide additional time to analyze the information 
presented in the 2022 SNOPR and accompanying technical support 
document.

C. Final Rule Overview

    The final rule adopts energy performance standards for new 
construction and major renovation of Federal buildings. The final rule 
adds standards for the maximum emissions resulting from on-site fossil 
fuel usage, language related to the purpose of these new standards, 
definitions associated with these standards, and a detailed process for 
Federal agencies petitioning for a downward adjustment from these 
standards to 10 CFR parts 433 (Federal commercial and multi-family 
high-rise residential buildings) and 435 (Federal low-rise residential 
buildings). The final rule adds the following provisions to 10 CFR 
parts 433 and 435:
    Adds a paragraph to the purpose and scope provisions which states 
that the regulation also establishes the maximum allowable fossil fuel-
generated energy consumption standard for EISA-subject Federal 
buildings.
    Adds and revises definitions applicable to 10 CFR parts 433 and 
435.
    Adds subpart B that outlines the fossil fuel-generated energy 
consumption requirement, the process for determining a Federal 
building's fossil fuel-generated energy consumption, and the process 
for petitioning for a downward adjustment.
    Adds Appendix A to Subpart B that identifies the targets for 
specific building types and climate zones for FY 2020-2024 and FY 2025-
2029.
    After considering the comments submitted in response to the 2022 
SNOPR, DOE makes the following substantive revisions to the rule 
proposed in the 2022 SNOPR:
    Revises the definitions of ``construction cost'' and ``major

[[Page 35386]]

renovation cost'' so that the definitions list similar costs associated 
with the construction or major renovation of EISA-subject buildings.
    Shortens the review period for the FEMP Director to review 
petitions for downward adjustment related to construction of new 
Federal buildings or major renovations from 45 days to 30 days.
    Adds regulatory language that clarifies when Federal agencies may 
bundle petitions for downward adjustments.
    Additionally, DOE updated the datasets used for the underlying 
modeling impact analysis. The final rule is discussed in greater detail 
in section VII of this document.

II. Public Comments on the 2022 SNOPR

    DOE received comments in response to the 2022 SNOPR from the 
individuals and interested parties listed in Table II-1.\4\ These 
comments are available in the public docket for this rulemaking. The 
specific issues relating to the final rule raised by the commenters are 
addressed in section III of this document. Additional concerns raised 
by the commenters relating to DOE's authority to promulgate these 
standards or potential procedural issues are addressed in Section IV of 
this document. A parenthetical reference at the end of a comment 
quotation or paraphrase provides the location of the item in the public 
record.\5\ DOE also held a public meeting webinar on January 5, 2023, 
where it sought input from stakeholders regarding its proposed rule. 
DOE focuses on written comments in this final rule, as only one 
stakeholder (Sierra Club) opted to speak during the public meeting 
webinar, and its verbal comments were consistent with its written 
comments later submitted.
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    \4\ DOE received comments from an individual on April 11, 2023, 
after the re-opened comment period closed. Doc. No. 127. Despite the 
fact that these comments were filed late, DOE considered the issues 
raised in these comments when reviewing the rule.
    \5\ The parenthetical reference provides a reference for 
information located in the docket for this rulemaking. (Docket No. 
EERE-2010-BT-STD-0031, which is maintained at www.regulations.gov). 
The references are arranged as follows: (commenter name, comment 
docket ID number, page of that document).

            Table II-1--December 2022 SNOPR Written Comments
------------------------------------------------------------------------
         Commenter(s)                 Abbreviation         Document No.
------------------------------------------------------------------------
A J..........................  .........................             118
Abbi J.......................  .........................             119
Aeroseal.....................  .........................              97
Alliance to Save Energy......  ASE......................              76
American Chemistry Council...  ACC......................              88
American Council for an        ACEEE et al..............             126
 Energy-Efficient Economy,
 Earthjustice, Rewiring
 America, Rocky Mountain
 Institute, & Sierra Club.
American Gas Association.....  AGA......................             100
American Institute of          AIA......................             114
 Architects.
American Public Gas            APGA.....................             102
 Association.
The American Society of        ASHRAE...................              96
 Heating, Refrigerating and
 Air-Conditioning Engineers.
Anonymous....................  .........................              82
Bloom Energy.................  .........................              85
Build SMART..................  .........................             111
Business Council for           BCSE.....................             115
 Sustainable Energy.
Celsius Energy...............  .........................             117
Coalition of 66..............  .........................              95
Combined Heat and Power        CHPA.....................             104
 Alliance.
Federal Bureau of              FBI......................              84
 Investigation.
Fuel Cell & Hydrogen Energy    FCHEA....................             106
 Association.
Geothermal Exchange..........  .........................             103
Green Buildings Institute....  GBI......................             120
Institute for Policy           .........................              93
 Integrity at New York
 University School of Law.
International Association of   SMART....................              91
 Sheet Metal, Air, Rail and
 Transportation Workers.
International Code Council...  ICC......................              98
Jenna B......................  .........................              80
Lauren Schwarze..............  .........................              79
Local Officials..............  .........................             125
Michael Ladach...............  .........................             122
Microgrid Resources Coalition  MRC......................             105
Middle Tennessee Natural Gas   .........................             112
 Utility District.
National Electrical            NECA.....................             123
 Contractors Association.
National Propane Gas           NPGA.....................              90
 Association.
Philadelphia Gas Works.......  PGW......................             116
Polyisocyanurate Insulation    PIMA.....................              83
 Manufacturers Association.
Rinnai America Corporation...  .........................             121
S. McKnight..................  .........................             127
Samuel Smith.................  .........................             110
Sarah Lance..................  .........................              81
Sierra Club members..........  .........................             124
Think Microgrid..............  .........................              92
U.S. Green Building Council..  .........................             107
View Inc.....................  .........................              86
Washington Gas Light Company.  WGL......................             101
Gas Associations.............  .........................              99
------------------------------------------------------------------------


[[Page 35387]]

III. Discussion of the Final Rule

    The following section discusses the final rule. The final rule 
introduces energy performance standards for new construction and major 
renovation of Federal buildings. The final rule adds standards for the 
maximum emissions resulting from on-site fossil fuel usage, language 
related to the purpose of these new standards, definitions associated 
with these standards, and a detailed process for Federal agencies 
petitioning for a downward adjustment from these standards to 10 CFR 
parts 433 (Federal commercial and multi-family high-rise residential 
buildings) and 435 (Federal low-rise residential buildings). The 
revisions to 10 CFR parts 433 and 435, as summarized in this section, 
are presented at the end of this document.

A. Scope

1. Federal Buildings
    This final rule applies to a defined subset of new Federal 
buildings and major renovations to Federal buildings, as specified in 
section 433 of EISA. See 42 U.S.C. 6834(a)(3)(D)(i). The term ``Federal 
building'' means ``any building to be constructed by, or for the use 
of, any Federal agency [including] buildings built for the purpose of 
being leased by a federal agency, and privatized military housing.'' 42 
U.S.C. 6832(6). However, the rule would not apply in cases of Federal 
agencies leasing space in buildings where the Federal Government does 
not lease the entire building. Accordingly, if the building at issue is 
not entirely leased to the Federal Government at the time of 
renovation, the final energy performance standards do not apply.
    The subset of Federal buildings to which this rule applies fall 
under two categories and will be referred collectively to as ``EISA-
subject buildings.'' The first qualifying category of EISA-subject 
buildings includes any new Federal buildings or major renovations to 
Federal buildings that are public buildings, as defined in 40 U.S.C. 
3301, for which transmittal of a prospectus to Congress is required 
under 40 U.S.C. 3307. Under 40 U.S.C. 3307(a)(1), a transmittal of a 
prospectus to Congress is required if a total expenditure in excess of 
$1,500,000 is required to construct, alter, or acquire the public 
building.\6\ Under 40 U.S.C. 3307(h), the GSA Administrator may adjust 
this value annually to account for construction cost increases. GSA's 
annual prospectus threshold for FY 2024 is $3,613,000.\7\ GSA also 
provides a separate dollar threshold for alterations in leased public 
buildings for which a prospectus is required; in FY 2024, this 
threshold is $1,806,500.
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    \6\ 40 U.S.C. 3307(a) also contains a second prospectus 
threshold in 40 U.S.C. 3307(a)(3), which applies to alterations of 
buildings that are leased by the Federal Government for use for a 
public purpose if the cost of the alteration will exceed $750,000. 
This threshold is one-half of the threshold for all other new 
construction or alterations of existing buildings.
    \7\ See GSA Annual Prospectus Thresholds, available at 
www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.
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    The second qualifying category of EISA-subject buildings includes 
any new Federal buildings or major renovations to Federal buildings 
that are not public buildings and for which the construction cost or 
major renovation cost is at least $2,500,000 (in 2007 dollars, adjusted 
for inflation).\8\ For the purposes of calculating this threshold, 
agencies should use the inflated value of the $2,500,000 as of October 
of the FY during which the design for construction of the project 
begins. DOE is adopting a methodology that allows for a constant 
inflator to be applied during the entirety of the year. By this 
methodology, an agency should set the Bureau of Labor and Statistics 
CPI Inflation calculator to $2,500,000 in October 2006 for the value of 
the original cost threshold. As of the most recent update, October 
2023, $2.5 million in 2007 dollars, when adjusted for inflation, is 
$3,811,583. DOE revises regulatory text in Sec. Sec.  433.200(a) and 
435.200(a) to clarify how the cost thresholds for new public and non-
public buildings should be adjusted for inflation.
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    \8\ To find the adjusted cost threshold, go to data.bls.gov/cgi-bin/cpicalc.pl.
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    As noted previously, GSA also provides a separate dollar threshold 
for alterations in leased public buildings ($1,806,500 in FY 2024). DOE 
will use both thresholds (i.e., the $2,500,000 in 2007 dollars 
threshold (adjusted for inflation) for Federal buildings that are not 
public buildings, and the $1,806,500 in FY 2024 dollars threshold for 
leased public buildings) for this second category of EISA-subject 
buildings (i.e., buildings for which a prospectus is not required). 
Using the lower GSA prospectus threshold for leased public buildings is 
consistent with: (1) current agency practice for such buildings, and 
(2) the scheme Congress established in EISA section 433 where the 
prospectus dollar thresholds (e.g., $2,500,000 in 2007 dollars) are 
also applied to buildings and renovations for which a prospectus is not 
required.

        Table III-1--Cost Thresholds for FY2024 (Million Dollars)
------------------------------------------------------------------------
                                              Public        Non-Public
                                             buildings       buildings
------------------------------------------------------------------------
Construction or Major Renovation to             * $3.613       ** $3.812
 Federally Owned Buildings..............
Major Renovation of Federally Leased      [dagger] 1.806  [dagger][dagge
 Buildings..............................                        r] 1.806
------------------------------------------------------------------------
* Cost threshold for buildings that are owned public buildings, as
  defined in 40 U.S.C. 3301, is determined by the GSA annual prospectus
  thresholds published for each FY at www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.
** Cost threshold for any new construction or major renovation that is
  in an owned, non-public building is determined by adjusting the
  $2,500,000 in 2007$ for inflation to the current FY. DOE sets the
  inflated value for the entire FY based on the value reported in
  October of that FY in the Bureau of Labor and Statistics CPI Inflation
  calculator www.bls.gov/data/inflation_calculator.htm.
[dagger] Cost threshold for major renovations within leased buildings is
  determined by the GSA annual prospectus thresholds published for each
  FY at www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.
[dagger][dagger] Cost threshold for major renovations within leased
  buildings is determined by the GSA annual prospectus thresholds
  published for each FY at www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.

    For example, a building in the first category would include a 
federal office building for which design for construction began in FY 
2024 and with construction or renovation costs that are more than 
$3,613,000. A building in the second category would include a 
residential building (which is excluded from the definition of ``public 
building'' under 40 U.S.C. 3301) with construction or renovation costs 
of at least $3,811,583 in FY 2024 ($2,500,000 in 2007 dollars, adjusted 
for inflation). DOE expects that most low-rise residential buildings 
that meet the cost threshold will be low-rise

[[Page 35388]]

multi-family buildings or low-rise dormitories as Federal low-rise 
single-family homes are not likely to meet the cost threshold.
    The International Code Council (ICC) stated that this final rule 
should apply to all new Federal buildings and major renovation 
projects. ICC, Doc. No. 98, pg. 2. ICC asserted that doing so would 
maximize the long term ecological and economic benefits of the rule. 
Id. However, DOE notes that section 433 of EISA clearly identifies the 
buildings to which the energy performance standards are to apply. Thus, 
although DOE encourages Federal agencies consider these energy 
performance standards holistically in developing their construction and 
renovation plans, the final rule only applies to EISA-subject 
buildings.
2. Calculating Costs
    The final rule also outlines which costs Federal agencies must 
include when calculating construction or major renovation costs to an 
EISA-subject building.
a. Construction and Major Renovations Costs
    In the final rule, DOE revises the definitions of ``construction 
cost'' and ``major renovation cost'' proposed in the 2022 SNOPR. The 
2022 SNOPR proposed to define ``construction cost'' as ``all costs 
associated with design and construction of a federal building. It 
includes the cost of design, permitting, construction (materials and 
labor), and building commissioning.'' 87 FR 78382, 78420. However, the 
2022 SNOPR explicitly stated that ``construction cost'' does not 
include legal or administrative fees, or the cost of acquiring the 
land. Id.
    The 2022 SNOPR proposed to define ``major renovation cost'' as 
costs associated with the ``[r]epairing, remodeling, improving, or 
extending, or other changes in, a public building as per 40 U.S.C. 
3301(a)(1).'' These costs included costs associated with the 
``[p]reliminary planning, engineering, architectural, legal, fiscal[] 
and economic investigations and studies, surveys, designs, plans, 
working drawings, specifications, procedures, and other similar actions 
necessary for the alteration of a public building[.]'' Id.
    One individual commented on the definition of ``construction cost'' 
proposed on the 2022 SNOPR. Doc. No. 127, pg. 2. They stated that 
``construction cost'' should include administrative and legal fees 
because it would increase the number of buildings to which these energy 
performance standards apply as more construction projects would meet 
the threshold. Id. In addition, they claimed that including 
administrative and legal fees when calculating construction costs would 
promote fiscal responsibility with public funds. Id. This commenter 
also argued that land acquisition costs should be included in the 
definition of ``construction cost'' because doing so would 
``incentivize project managers to prioritize the use of existing 
Federal lands and renovations of existing buildings, rather than buying 
new spaces'' Id.
    After reviewing the definitions proposed in the 2022 SNOPR and 
stakeholder comments, DOE amends the definitions of ``construction 
cost'' to include a similar list of costs that DOE included in the 
definition of ``major renovation cost.'' This includes, but is not 
limited to, the costs of preliminary planning, engineering, 
architectural, permitting, fiscal and economic investigations and 
studies, surveys, designs, plans, working drawings, specifications, 
procedures, and other similar actions necessary for the construction of 
a new Federal building. Additionally, DOE amends the definition of 
``construction cost'' to remove the language specifically excluding 
legal or administrative fees from the calculation of ``construction 
cost.'' If legal or administrative fees are associated with the 
construction of a new Federal building, such as permitting fees, then 
these costs must be included in the calculation of construction costs. 
However, DOE notes that most administrative or legal costs are 
generally part of overhead costs and are not associated with the 
construction of a new Federal building.
    DOE declines to adopt the commenter's suggestion that the cost of 
acquiring the land should be included in the definition of 
``construction cost.'' DOE previously stated that many new Federal 
buildings are built on land already owned by the Federal Government. 79 
FR 61694, 61698. Thus, including the land costs in the definition of 
``construction cost'' is unnecessary and would have little practical 
effect. Moreover, not including land costs for new Federal buildings in 
the threshold calculation would be consistent with the threshold 
calculation for major renovations, for which land costs are not 
included.
    In addition, DOE also amends the definition of ``major renovation 
cost'' so that it aligns with the revised definition of ``construction 
cost.'' First, the revised definition of ``major renovation cost'' 
provides a general description of major renovation costs--i.e., cost 
associated with the repairing, remodeling, improving, extending, or 
other changes in a federal building. Second, the revised definition 
then lists specific associated costs included in the definition of 
``major renovation costs.'' Third, the revised definition replaces 
references to ``public buildings,'' as defined in 40 U.S.C. 3301(a)(1), 
to ``Federal buildings,'' as defined in the final rule so that the 
definition applies to both categories of EISA-subject buildings.
b. Individual Buildings
    The final rule applies the cost thresholds to individual buildings 
rather than multiple buildings in a single project. A commenter urged 
DOE to reconsider the proposed definition of ``buildings'' to apply to 
multiple buildings that are located within the grounds of another 
public building, meaning that the standard would apply to multiple 
buildings and ``projects'' would be the unit of analysis. Doc. No. 127, 
pg. 1. However, the statute authorizes DOE to establish Federal 
building energy efficiency performance standards that reduce fossil 
fuel-generated energy consumption for ``new Federal buildings and 
Federal buildings undergoing major renovations'' not ``projects'' that 
could include multiple buildings or major renovations. 42 U.S.C. 
6834(a)(3)(D)(i). The cost threshold and public building determination 
stipulated in the statutory language is also specific to individual 
buildings. Furthermore, the date that design for construction begins 
(to determine the appropriate reduction target) is also building 
specific. Thus, when calculating the costs to determine whether the 
final rule applies, Federal agencies should calculate the costs for 
individual buildings.
c. Major Renovations
    In establishing these standards, DOE is sensitive to the notion 
that Federal agencies might break up their major renovations into 
smaller pieces to prevent associated costs from exceeding the 
applicable threshold. DOE discourages the practice of ``breaking up 
renovation projects to get around the cost threshold'' and intends to 
further address this topic as part of the Department's implementation 
guidance. Even in cases of replacing individual systems or equipment, 
for which this rule applies, DOE believes agencies should prioritize 
pairing energy efficiency measures with reducing fossil fuel use. DOE 
notes that Section 433 of EISA states that ``[i]n establishing criteria 
for identifying major renovations that are subject to the requirements 
of this subparagraph,

[[Page 35389]]

[DOE] shall take into account the scope, degree, and types of 
renovations that are likely to provide significant opportunities for 
substantial improvements in energy efficiency.'' 42 U.S.C. 
6834(a)(3)(D)(ii). Multiple sequential renovations to the same building 
are likely to provide significant opportunities for substantial 
improvements and their cumulative effect over time should be evaluated 
and utilized to determine the cost of the project for the application 
of this rule. In this final rule, DOE broadly applies the term ``major 
renovations'' to include projects for which Federal agencies can 
practicably implement the energy efficiency and fossil fuel reduction 
goals of ECPA and EISA.
    DOE is clarifying that the energy performance standards being 
adopted in this final rule apply both to whole building retrofits as 
well as multiple minor renovations that occur in phases on the same 
Federal building as long as the building meets the cost thresholds as 
explained above. More specifically, this final rule applies to 
renovations that are so extensive that they replace all on-site fossil 
fuel-using systems in the building, such as comprehensive replacement 
or restoration of most or all major systems, interior work (e.g., 
ceilings, partitions, doors, floor finishes, etc.), or building 
elements and features. DOE refers to such major renovations as ``whole 
building'' renovations throughout this preamble. However, the final 
rule also requires Federal agencies to consider major renovations that 
are less than whole building renovations (i.e., component and system 
level renovations, including multiple sequential renovations) that 
provide significant opportunities for substantial improvements in 
energy efficiency and reduce on-site fossil fuel usage across the 
Federal building portfolio.
d. Energy Conservation Measures
    When designing new or renovated buildings, DOE encourages agencies 
to consider any energy conservation measures (``ECMs'') that have been 
identified in that building and reported to DOE, as per 42 U.S.C. 
8253(f)(3)(A). If identified ECMs include projects that impact on-site 
fossil fuel usage, DOE urges the agency to evaluate and consider the 
total of those project costs bundled together when implementing those 
ECMs to determine whether the total cost meets the thresholds in 
section 433 of EISA. ECMs that impact on-site fossil fuel usage 
include, but are not limited to, adding new fossil fuel-using heating, 
hot water, or cooking systems to an existing building; direct 
replacement of existing fossil fuel-using heating, hot water, or 
cooking systems in an existing building; and modification or 
replacement of any building systems (including systems such as lighting 
or building envelope systems that do not use fossil fuel directly) that 
lead to an increase or decrease in the use of fossil fuel. Considering 
ECM projects in a more comprehensive approach, rather than a piecemeal 
approach, better aligns with the goals of section 433 of EISA.
3. Fossil Fuel-Generated Energy Consumption
a. Limitation to On-Site Use of Fossil Fuels
    Section 433 of EISA directs DOE to establish regulations that 
require certain new Federal buildings and Federal buildings undergoing 
major renovations be designed to reduce their fossil fuel-generated 
energy consumption. 42 U.S.C. 6834(a)(3)(D)(i). The scope of the 
building energy covered by the final rule is limited by the term 
``fossil fuel-generated energy consumption.'' In the 2022 SNOPR, DOE 
noted that this term is not defined in section 433 of EISA and proposed 
to define ``fossil fuel-generated energy consumption'' as on-site 
stationary combustion of fossil fuels that contribute to Scope 1 
emissions for generation of electricity, heat, cooling, or steam as 
defined by ``Federal Greenhouse Gas Accounting and Reporting Guidance'' 
(Council on Environmental Quality, January 17, 2016). This includes, 
but not limited to, combustion of fuels in stationary sources (e.g., 
boilers, furnaces, turbines, and emergency generators). This term does 
not include mobile sources, fugitive emissions, or process emissions as 
defined by ``Federal Greenhouse Gas Accounting and Reporting Guidance'' 
(Council on Environmental Quality, January 17, 2016).
    87 FR 78382, 78421. Pursuant to this proposed definition, the 
standard would apply to energy consumption from fossil fuels used by 
equipment and systems designed to support building operations; that is, 
fossil fuels consumed on site. The proposed definition would not apply 
to the consumption of fossil fuels used to produce electricity off-
site.
    DOE received several public comments in response to 2022 SNOPR's 
proposed definition of ``fossil fuel-generated energy consumption.'' 
Several commenters supported the proposed definition. For example, the 
Green Building Initiative (GBI) expressed support for focusing on on-
site generated energy because ``it presents the best opportunity to 
clearly track improvements and more clearly measure improvements of 
Federal buildings.'' GBI, Doc. No. 120, pg. 3. GBI also acknowledged 
that many factors within off-site generated energy are outside the 
control of the Federal government and that focusing on on-site 
generated energy will assist the Federal government in improving the 
factors that it can control. Id. Furthermore, one commenter urged DOE 
to retain its focus on on-site fossil fuel reduction as it focused the 
standard on outcomes. Doc. No. 79, pg. 4-5.
    DOE also received comments that opposed the definition for ``fossil 
fuel-generated energy consumption'' proposed in the 2022 SNOPR. For 
example, several commenters questioned DOE's authority to define 
``fossil fuel-generated energy consumption.'' See e.g., APGA, Doc. No. 
102, pg. 3; NPGA, Doc. No. 90, pg. 3; AGA, Doc. No.100, pg. 11. NPGA 
and AGA both alleged that DOE does not have authority to define 
``fossil fuel-generated energy consumption'' because the meaning of the 
term is clear. NPGA, Doc. No. 90, pg. 3; AGA, Doc. No.100, pg. 11. They 
argued that the plain text of the statute unambiguously refers to the 
total energy consumption of the buildings, rather than only the on-site 
energy consumption. AGA, Doc. No.100, pg. 11.
    Section 433 of EISA does not define the term ``fossil fuel-
generated energy consumption of the buildings.'' But when the text of 
section 433 is considered as a whole, it is best read to apply 
standards only to the on-site consumption of fossil fuels on the site 
of the Federal building.
    In section 433 of EISA, Congress sought to address how certain 
Federal buildings are designed when they are constructed or undergo 
major renovations. The operative sentence directing the imposition of 
standards states that certain new Federal buildings or Federal 
buildings undergoing major renovations ``shall be designed so that the 
fossil fuel-generated energy consumption of the buildings is 
reduced[.]'' 42 U.S.C. 6834(a)(3)(D)(i)(I) (emphasis added). Section 
433 then prescribes standards that progressively reduce and then 
entirely eliminate ``fossil fuel-generated energy consumption of the 
buildings'' by FY 2030. 42 U.S.C. 6834(a)(3)(D)(i)(II).
    With this text, Congress clearly indicated that section 433 covers 
fossil fuel-generated energy consumption that can be reduced, and 
ultimately eliminated, through building design measures. On-site 
consumption of fossil fuel-generated energy can be reduced, and 
entirely eliminated, through the use of building design measures. Such

[[Page 35390]]

measures may include the installation of electric equipment for space 
and water heating, along with any insulation, ductwork, and electrical 
work necessary to ensure the building's needs are met.
    By contrast, off-site consumption of fossil fuels, such as the 
combustion of natural gas and coal by distant power plants, cannot 
practically be eliminated through building design measures. Building 
design measures can reduce the amount of fossil-fuel derived 
electricity that a federal building draws from the grid through various 
efficiency measures and on-site generation. But such building design 
measures could not eliminate entirely the consumption of fossil-fuel 
derived electricity, as section 433 requires beginning in FY 2030, 
unless section 433 were read to require every Federal building to use 
on-site non-fossil generation to generate all of the electricity that 
would be used by the building. While self-generation could be 
achievable for some Federal facilities, for others it is not. 
Particularly for buildings with high energy demands and limited 
generation and storage space, such as high energy demand buildings with 
small site footprints and/or located in areas with poor solar 
resources, full on-site generation at all times of day could impose 
extreme additional expense or even be technically impracticable. DOE 
therefore finds it highly implausible that Congress intended that 
outcome in adopting the requirement to reduce and eliminate fossil 
fuel-generated energy consumption through the design of Federal 
buildings. No commenter has offered any basis to conclude that it would 
be reasonable to read section 433 as requiring that every new Federal 
building or major renovation subject to EISA be designed to generate 
all of its own electricity by FY 2030.
    Consumers of electricity, including the Federal government, 
sometimes seek to reduce the use of fossil fuels in electricity 
generation through procurement practices, which can include directly 
contracting for non-fossil generation or the purchase of energy 
attribute certificates (EACs). These sorts of electricity procurement 
practices could eliminate the off-site fossil fuel consumption 
attributed to a building's consumption of electricity. Even so, the 
availability of these procurement options does not persuade DOE to 
conclude that section 433 should be read to cover off-site consumption 
of fossil fuels for two reasons. First, again, section 433 states 
clearly that the standards it prescribes are to be achieved through 
design measures in new or renovated buildings. 42 U.S.C. 
6834(a)(3)(D)(i)(I) (``buildings shall be designed so that the fossil 
fuel-generated energy consumption of the buildings is reduced[.]'') 
(emphasis added). A requirement to procure electricity from particular 
sources or to purchase EACs is not a building design requirement. 
Indeed, whether a federal building manager elects to purchase 
electricity from one source or another has nothing to do with how the 
building is designed.\9\
---------------------------------------------------------------------------

    \9\ Further, depending on the geographic location, building 
managers have limited discretion to elect the source from which they 
procure electricity. Federal agencies (with limited exceptions) must 
procure utility services from their serving utility, which may not 
sell non-fossil fuel derived electricity. See 40 U.S.C. 501 & 591; 
FAR Part 41.
---------------------------------------------------------------------------

    Second, a reading that section 433 of EISA, a provision aimed at 
Federal building design, was also intended to encompass the procurement 
of electricity is hard to square with Congress' direct treatment of 
that subject in section 203 of the Energy Policy Act of 2005. That 
provision, enacted just two years earlier, required the Federal 
government to procure renewable energy at levels no less than three 
percent in fiscal years 2007 through 2009, 5 percent in fiscal years 
2010 through 2012, and 7.5 percent in fiscal years 2013 and each fiscal 
year thereafter. 42 U.S.C. 15852. That Congress had addressed renewable 
energy procurement by the Federal Government in explicit terms so 
recently, and had set standards that differ so markedly from those in 
section 433, is yet another reason to disfavor a reading of section 433 
that would necessitate the purchase of non-fossil fuel derived 
electricity as a necessary means of compliance.
    Several commenters noted that the definition for ``fossil fuel-
generated energy consumption'' proposed in the 2022 SNOPR, and the 
scope of the rule, differed from what was proposed in the 2010 NOPR and 
2014 SNOPR. In the 2022 SNOPR, in proposing to limit the scope of the 
rule to only on-site energy consumption from on-site fossil fuel used 
by equipment and systems designed to support the building, DOE 
acknowledged that the proposed definition was a shift from the proposed 
scope of the 2014 SNOPR. 87 FR 78382, 78385. In discussing this shift, 
DOE observed that it received a comment in response to the 2014 SNOPR 
that argued that the term should only apply to the on-site energy 
consumption. 87 FR 78382, 78390, (see American Public Power Association 
(APPA), Doc. No. 71, pg. 2). After considering the comment and 
reviewing the relevant statutory language, DOE agreed with APPA's 
analysis and proposed limiting the scope of the rule accordingly.\10\ 
Upon further review, and as proposed in the 2022 SNOPR, this final rule 
adopts the definition of ``fossil fuel-generated energy consumption'' 
that limits the scope of the rule to on-site energy consumption.
---------------------------------------------------------------------------

    \10\ A key attribute to the notice and comment rulemaking 
process is that agencies invite the public to comment on their 
proposed rules and agencies can benefit from this feedback. 
Accordingly, agencies may revise their proposed rules based the 
feedback they received.
---------------------------------------------------------------------------

    Commenters also stated that the 2022 SNOPR proposed definition of 
``fossil fuel-generated energy consumption'' would have less impact and 
potential savings (particularly in terms of emissions) than the 
potential savings under the definition proposed in the 2010 NOPR and 
2014 SNOPR. ASHRAE Doc. No. 96, pg. 3; BCSE Doc. No. 115, pg. 2; Gas 
Associations, Doc. No. 99, pg. 2; Doc. No 122, pg. 1; Doc. No 80, pg. 
3. These commenters suggested that DOE include all or some off-site 
generated energy (particularly purchased electricity generated by 
fossil fuels) in the definition of ``fossil fuel-generated energy 
consumption.''
    Regarding comments on the effects of focusing the rule on on-site 
energy use, DOE has further analyzed the impacts of the rule. DOE 
projects site energy and full fuel cycle emissions savings even when 
the rule is limited to on-site fossil fuel-generated energy 
consumption. The expected savings are shown in section V.A-C and the 
accompanying technical support document (``TSD''). DOE notes that the 
estimated benefits of the rule are derived from purchasing and 
installing less expensive electric equipment, along with the health and 
climate benefits from the associated emissions reductions, while the 
estimated costs come from the operation of such equipment. DOE also 
expects the net benefits of this rulemaking to increase over time as 
electricity rates decrease relative to those of natural gas and as the 
grid continues to shift to a cleaner mix of generation.
    DOE also notes that there are other tools available to Federal 
agencies to reduce the use of off-site fossil fuel-generated energy, 
such as on-site solar and procurement of renewable EACs. Although 
Federal building managers can procure fossil fuel-free electricity, 
primarily through EACs, such procurement measures are not building 
design measures that reduce on-site fossil fuel-generated energy 
consumption.\11\ Accordingly, requiring

[[Page 35391]]

such actions are outside the scope of DOE's authority under section 433 
of EISA. Further, Congress did not give clear authority for fossil 
fuel-free electricity procurement under section 433 of EISA, as it did 
under the Energy Policy Act of 2005, which set forth the total 
electricity from renewable sources that must be procured by the Federal 
government (see 42 U.S.C. 15852). Therefore, although there are means 
to reduce emissions from the electricity use in buildings, which DOE 
encourages agencies to pursue, this final rule only requires building 
design measures to reduce the use of on-site fossil fuel-generated 
energy.
---------------------------------------------------------------------------

    \11\ Additionally, at the design stage, the agency controlling 
the design process would not necessarily be able to guarantee that 
the building occupant would, in fact, procure the EACs that would be 
necessary to meet the applicable fossil fuel energy standards.
---------------------------------------------------------------------------

    Commenters also argued that the rule's proposed focus on the use of 
on-site fossil fuel-generated energy is a departure from DOE's general 
position of fuel neutrality. AGA, Doc. No. 100, pg. 9; Gas 
Associations, Doc. No. 99, pg. 2 n.8. These commenters cite rulemakings 
related to the energy conservation program for certain consumer and 
commercial appliances under the Energy Policy and Conservation Act 
(EPCA). Pursuant to EPCA, any new or amended energy conservation 
standard must be designed to achieve the ``maximum improvement in 
energy efficiency'' that DOE determines is technologically feasible and 
economically justified. 42 U.S.C. 6295(o)(2)(A). In applying that 
standard, DOE considers the improvement in energy efficiency feasible 
and justified for electric products separately from gas- or oil-fueled 
products, consistent with 42 U.S.C. 6295(q)(1)(A), which required 
establishment of a separate standard for any covered products that 
``consume a different kind of energy from that consumed by other 
covered products within'' the regulated type of products.
    In contrast, the language of section 433 is clearly not ``fuel 
neutral,'' as the text singles out and disfavors fossil fuels relative 
to other sources of energy. Further, as discussed above, the language 
and structure of the statutory text strongly support limiting the scope 
of the requirement to just the use of on-site fossil fuel-generated 
energy. Accordingly, the specific applicable statutory text here 
requires a departure from the fuel neutral approach that DOE uses when 
setting energy conservation standards for certain consumer and 
commercial appliances under EPCA.
    After further considering the proposed approach in light of the 
comments received, DOE determines that focusing on direct emissions 
best aligns with section 433's directive to reduce and ultimately 
eliminate fossil fuel-generated energy consumption through building 
design measures of Federal buildings.
    The final rule adopts the definition of ``fossil fuel-generated 
energy consumption'' as proposed in the 2022 SNOPR, with three 
revisions. First, the final rule revises the term to be defined from 
``Scope 1 fossil fuel-generated energy consumption'' to ``fossil fuel-
generated energy consumption.'' This clarifies that the scope of this 
rule aligns with the directive in section 433 of EISA. Second, the 
final rule revises the definition so that it applies to ``on-site 
stationary consumption'' of fossil fuels. This revision uses language 
that is consistent with section 433 and clarifies that the definition 
includes the on-site consumption of natural gas. Third, the final rule 
deletes, ``for the purposes of this final rule'' from the definition 
because this language is not necessary.
b. Exemptions and Exceptions
    As proposed in the 2022 SNOPR, not all Scope 1 emissions are 
included under this final rule. DOE identifies several on-site uses are 
that exempted or excepted from this final rule. First, the standards 
only apply to on-site fossil fuel use or Scope 1 emissions from 
stationary combustion sources. Again, section 433 of EISA requires that 
certain new Federal buildings and Federal buildings undergoing major 
renovations be designed to reduce fossil fuel-generated energy 
consumption. As such, this rule does not apply to emissions associated 
with natural gas for alternatively fueled vehicles (``AFVs'') (or any 
other ``alternative fuel,'' defined at 42 U.S.C. 13211) because 
building design measures do not include use of AFVs. In addition, DOE 
notes that because the CBECS and RECS data that provide the energy use 
targets for this rule do not contain manufacturing or industrial 
process loads, DOE excludes these loads from the scope of the energy 
performance standards at this time. For buildings with such process 
loads, the process loads will need to be accounted for in the analysis 
of the building's fossil fuel consumption and GHG emissions, but such 
loads would not be subject to the percentage reductions in fossil fuel-
generated energy consumption (Scope 1 GHG emissions) required for the 
building related loads as related to this rule.
    Second, this final rule does not apply to the on-site consumption 
of fossil fuel (or the subsequent emissions) from energy generation 
associated with the supply of emergency backup electricity. Again, 
section 433 of EISA requires building design measures for certain 
Federal buildings to reduce fossil fuel-generated energy consumption. 
Thus, this rule is focused on the use of on-site energy as designed for 
standard building operations. Emergency backup generation is generally 
used infrequently and for short periods, for emergency services only 
when Federal buildings are not operating as designed. In addition, 
given their limited use, the impact from emergency backup generators, 
in terms of both direct fossil fuel consumption and emissions, is 
usually quite small relative to the impact from ongoing building 
operations. However, non-emergency generation from backup generators 
(such as those for peak shaving or peak shifting) is within in the 
scope of this rule. DOE also notes that if Federal agencies use their 
backup generators for both purposes, they will be required to calculate 
the fraction of their backup generator emissions that is associated 
with emergency use and the fraction associated with non-emergency use.
    Third, the final rule does not apply to on-site energy generation 
or Scope 1 emissions associated with biomass fuels because biomass 
fuels are not fossil fuels. Because EISA directed DOE to establish 
regulations that require fossil fuel-generated energy consumption 
reductions, and biomass is not a fossil fuel, DOE has intentionally 
left biomass fuels out of the CBECS and RECS targets developed for this 
rule. DOE acknowledges that guidance from the Council on Environmental 
Quality \12\ takes a somewhat different approach on biomass fuels, but 
DOE believes CEQ's guidance is complementary to this final rulemaking. 
CEQ's guidance states that the CO2 emissions from biomass 
and biofuel combustion are considered biogenic and are reported 
separately from fossil fuel-generated GHGs and biomass and biofuel-
generated CH4 and N2O. This CEQ guidance ensures 
that any GHG emissions associated with biomass or biofuel use at a 
covered Federal building are still taken into account in reporting 
emissions (though reported separately). This rule does not cover such 
fuels, however, as they are not fossil fuel derived and therefore fall 
outside the statutory authority.
---------------------------------------------------------------------------

    \12\ Federal Greenhouse Gas Accounting and Reporting Guidance,'' 
Council on Environmental Quality (CEQ), January 17, 2016 (CEQs 
guidance).
---------------------------------------------------------------------------

    DOE received numerous comments on the exemptions and exceptions 
included in the final rule. These comments ranged from supporting 
limiting the application of the standards to stationary combustion 
sources and the exemptions for emergency backup

[[Page 35392]]

generators \13\ and the exception of biomass fuels, to urging DOE to 
adopt additional exemptions or opposing some of the exemptions.
---------------------------------------------------------------------------

    \13\ WGL, Doc. No. 101, pg. 5.
---------------------------------------------------------------------------

    Two commenters opposed exempting backup generators from the final 
rule. CHP Alliance and MRC both noted that emergency backup generators 
run on fossil fuel. CHP Alliance, Doc. No. 104, pg. 4; MRC, Doc. No. 
105, pg. 8. MRC also stated that that emergency backup generators must 
run on a regular basis to keep them in good operating condition.\14\ 
CHP Alliance argued that reducing GHG emissions from this type of 
fossil fuel-generated energy consumption is the purpose of section 433 
of EISA. CHP Alliance, Doc. No. 104, pg. 4. Thus, these commenters 
argued, exempting backup generators is counter to the entire purpose of 
the final rule.
---------------------------------------------------------------------------

    \14\ MRC, Doc. No. 105, pg. 8. MRC asserted that this results in 
approximately 0.79 metric tons of GHG per MWh of backup supply.
---------------------------------------------------------------------------

    DOE notes that although this rule exempts emergency backup systems, 
this exemption is limited to when these generators are used solely for 
emergencies. Therefore, any use of these backup generators for peak 
shaving, peak shifting, or other demand management activities must be 
included in the building energy consumption.
    An individual commenter urged DOE to reconsider the exception for 
emissions resulting from biomass fuel. Doc. No. 79, pg. 3. Although 
this commenter acknowledged that biomass fuel is not fossil fuel-based, 
the commenter argued that the rule should apply to biomass fuels 
because they still emit GHG. Id. However, as previously noted, biomass 
fuels are not fossil fuels. Because EISA directed DOE to establish 
regulations that require Federal agencies to reduce their fossil fuel-
generated energy consumption, and biomass fuels are not fossil fuel-
based, Congress intentionally excluded biomass fuels from the targets 
developed for this rule.
    DOE received several comments urging DOE to exclude renewable fuels 
such as biomethane (renewable natural gas), biopropane (renewable 
propane), and clean hydrogen from the final rule. AGA and NPGA stated 
that it is appropriate for DOE to exclude biomass fuels from this rule, 
but argued that DOE should also consider excluding other renewable 
fuels. AGA; Doc. No. 100, pg. 32-34; NPGA, Doc. No. 90, pg. 8; see WGL, 
Doc. No. 101; pg. 6. Specifically, AGA and NPGA noted that there have 
been developments in the production of synthetic hydrocarbon. AGA; Doc. 
No. 100, pg. 32-34; NPGA, Doc. No. 90, pg. 8. Similarly, CHP Alliance 
observed that combined heat and power (CHP) systems are extremely 
efficient and some approach 90-percent efficiency. CHP Alliance, Doc. 
104, pg. 5.
    DOE acknowledges that purely renewable fuels would not fall within 
the scope of this rulemaking as long as they are not fossil fuel-based 
or made from blends that contain fossil fuels. A Federal building may 
use renewable fuels if the Federal agency is able to verify the use of 
such fuels on-site do not also include fossil fuels in their mixture. 
Additional specification about fuel content of biofuels will be 
provided in a companion implementation guidance.
    DOE also received several comments on the NOPR and the 2014 SNOPR 
about differentiating between fossil fuels used to generate purchased 
electricity (i.e., natural gas versus crude oil). DOE notes that 
because the rule is now focused on on-site fossil fuel use only, these 
comments no longer apply. DOE acknowledges that the source emission 
factors related to electricity are used in DOE's analysis of the 
impacts of the rule and notes that DOE will use the latest available 
source emission factors from DOE and EPA.
    DOE also received several comments on the treatment of distributed 
energy resources (DERs) in the 2022 SNOPR suggesting that DOE treat 
DERs as a ``Scope 2'' impact and, thus, exempt DERs from these 
standards. These commenters argued that because emissions from DERs are 
considered Scope 2 emission for reporting purposes, these emissions 
should also be considered as Scope 2 emissions for the purposes of this 
rule.
    DOE does not agree with this interpretation because the energy 
generated by DERs is generated on-site and is consumed directly by one 
building. Accordingly, the energy consumed by building processes 
supplied by DERs and generated from fossil fuels falls within the 
definition of ``fossil fuel-generated energy consumption.'' When an 
EISA subject building is connected to an existing DER resource that is 
located off the building site and is servicing more than one building 
it may then be treated as energy generated off-site and the energy 
stream would not be subject to this rule. New DER resources, when 
qualified as an EISA-subject building, would be subject to this final 
rule. Additionally, DOE notes that the terms ``Scope 1'' and ``Scope 
2'' are more commonly utilized when performing GHG emissions 
calculations and reporting. Here, DOE uses these terms to help describe 
the scope of building energy use covered by this rule (as discussed in 
Section III.A). The statutory authority for this rulemaking is based 
upon the fossil fuel consumption of the energy source and systems that 
service an applicable building, and the building must be subject to the 
reduction targets, regardless of how subsequent emissions may be 
accounted.

B. Performance Standards for Fossil Fuel-Generated Energy Consumption

    To provide flexibility, the final rule establishes standards for a 
fossil fuel-generated energy consumption metric expressed in thousand 
British thermal units (``kBtu'') per square foot (``ft\2\'') of 
building gross area and provides an equivalent conversion of the energy 
metric measured in greenhouse gas (``GHG'') metrics. DOE opted to 
include the GHG metric, which will measure Scope 1 emissions, because 
agencies are already required to track and report their GHG emissions 
annually utilizing CEQ's guidance. The final rule aligns the 
quantifications and terminologies with those established in the Federal 
Greenhouse Gas Accounting and Reporting Guidance. Although CEQ's 
guidance categorizes Scope 1 emissions as ``Generation of electricity, 
heat, cooling, or steam'', ``Mobile sources'', ``Fugitive emissions'', 
or ``Process emissions,'' this final rule focuses only on the on-site 
fossil fuel use associated with the ``Generation of electricity, heat, 
cooling, or steam''.
    This final rule provides agencies with two separate but equivalent 
sets of fossil fuel generated energy consumption targets--(1) fossil 
fuel-generated energy consumption based on a summation of on-site 
fossil fuel usage expressed in kBtu per ft\2\ of building gross area, 
and (2) a new carbon dioxide equivalent (``CO2e'') per ft\2\ 
metric based on the emissions associated with the on-site fossil fuel-
generated energy consumption. Agencies may use either metric for their 
design targets. The CO2e metric is based upon the stationary 
combustion of natural gas and is most appropriate when that is the only 
fossil fuel being utilized. When a building is burning fuels other than 
standard natural gas, it would be most appropriate to use the on-site 
fossil fuel energy metric in units of kBtu per ft\2\ of building gross 
area.
    To develop these fossil fuel generated energy consumption targets, 
DOE utilized CBECS and RECS data to determine the on-site fossil fuel 
usage by fossil fuel type for each building type in CBECS or RECS. The 
CBECS and RECS data was parsed into the format commonly utilized by DOE 
to evaluate building energy codes and standards,

[[Page 35393]]

such as organizing by climate zone, which aligns with the technical 
analysis methodology used to evaluate the Federal baseline standards 
for commercial and multi-family high-rise residential buildings, which 
rely on Standard 90.1-2019, as well as the Federal baseline standards 
for low-rise residential buildings, which rely on the 2021 IECC.
    DOE determined the kBtu per square foot targets by dividing fossil 
fuel consumption data by the building area, applying the weighting 
factors associated with the building, and assigning each building to 
one of the building type/climate zone categories. DOE determined the 
CO2e (in metric tons of CO2e) per square foot 
targets by multiplying the fossil fuel usage for each fuel type by the 
applicable GHG coefficient (from the CEQ guidance for each fuel type), 
dividing by the building area, applying the weighting factors 
associated with the building, and assigning each building to one of the 
building type/climate zone categories. The resulting targets are shown 
in Table A-1a and Table A-1b of appendix A to subpart B of parts 433 
and 435.
    For the purposes of establishing the targets, the final rule 
identifies and defines 16 categories of commercial buildings and five 
categories of residential dwelling units that cover all relevant 
buildings in the Federal building portfolio, including low-rise 
(single-family and multi-family), mid-rise apartment buildings, and 
high-rise apartment buildings, to be utilized when referencing the 
target defining tables in the regulatory text.
    The 16 categories of commercial buildings defined are education, 
food sales, food service, health care (inpatient), health care 
(outpatient), laboratory, lodging, mercantile (enclosed and strip 
shopping malls), office, public assembly, public order and safety, 
religious worship (not applicable), retail (other than mall), service, 
and warehouse and storage. Many of these commercial building categories 
are further divided into building types, providing a total of 48 
commercial building types. These building categories and building types 
represent the high-level Principle Building Activity (``PBA'') and low-
level Principle Building Activity Plus categories in the 2003 CBECS.
    The five categories of residential buildings are: mobile home, 
multi-family in 2-4-unit buildings, multi-family in 5 or more-unit 
buildings, single-family attached, and single-family detached. These 
building types represent the housing unit types in the 2005 RECS (DOE 
chose to use 2005 RECS data because the RECS was conducted in 2001 and 
2005 but not 2003). Residential buildings that fall under 10 CFR part 
435 and multi-family mid-rise and high-rise buildings that fall under 
10 CFR part 433 will use these same categories. In analyzing the rule, 
DOE assumes that most multi-family high-rise residential buildings will 
fall into the ``multi-family in 5 or more-unit buildings'' category 
based on the most typical buildings representative of the Federal 
buildings.
    Federal agencies must select from these 53 building categories 
(including commercial building subcategories) to identify the fossil 
fuel-generated energy consumption target (expressed in both kBtu per 
ft\2\ and Scope 1 GHG emissions in CO2e per ft\2\) for a 
specific building. DOE notes that the building types available from 
CBECS and RECS do not correspond directly to the building types used in 
the Federal Real Property Profile (``FRPP'') and that agencies should 
exercise their best judgement to select the building category that best 
matches the building's intended use. Additionally, some buildings may 
be mixed use, so agencies may need to area-weight the floor space of 
these CBECS and RECS targets for Federal buildings that do not 
correspond directly to the CBECS or RECS building types. For example, a 
Department of Defense (``DOD'') Post Exchange building might have 
aspects of Food Sales, Food Service, and Mercantile, necessitating the 
development of an area-weighted target. Similarly, a DOD barracks 
building might include aspects of Lodging or Residential, Education, 
and Warehouse, again necessitating the use of an area-weighted mapping.
1. New Construction and Major Renovations of a Whole Building
    DOE developed quantitative requirements to determine compliance 
with the fossil fuel reduction targets within the revised energy 
performance standards for new construction and major renovations (i.e., 
major renovation of on-site fossil fuel-using systems or components in 
a building) of EISA-subject buildings. The adopted quantitative 
requirements require agencies to calculate the on-site fossil fuel-
generated energy consumption in kBtu of fossil fuels or the Scope 1 GHG 
emissions in CO2e of their proposed building design and 
compare that estimate to the allowable fiscal year percentage reduction 
target found in the target tables in appendix A of subpart B to 10 CFR 
parts 433 and 435. This is done by identifying the allowable target (in 
either kBtu of on-site fossil fuels or Scope 1 GHG emissions attributed 
to the generation of electricity, heat, cooling, or steam) for 
stationary combustion sources as per the ``Federal Greenhouse Gas 
Accounting and Reporting Guidance.'' The agencies then divide the kBtu 
values or the metric tons of CO2e Scope 1 emissions by the 
floor area of the building to calculate the per square foot (metric 
tons of CO2e per square foot) value to compare with the 
target values in appendix A. For buildings that combine two or more 
building types, area-weighted averaging by square footage for each 
building type will be used to calculate the maximum allowable fossil 
fuel-generated energy consumption of the combined building.
2. Major Renovations Within a Building
    DOE developed streamlined prescriptive requirements to determine 
compliance with the energy performance standards for major renovations 
of systems or components within EISA-subject buildings. Such 
prescriptive requirements include requiring the systems within the 
building undergoing major renovation to be brought up to the 
performance requirements of the individual sections of Standard 90.1-
2019 (chapters 5-10). Under the rule, agencies will begin implementing 
the energy performance standards upon the effective date of the rule. 
For major renovations in EISA-subject buildings that meet the project 
cost threshold and coverage requirements and are less than whole 
building renovations (i.e., projects within the existing building 
comprising retrofits to a single system or component, such as a HVAC 
system or a chiller), agencies are required to adhere to the following 
requirements.
    For component level renovations, meaning an individual product or 
piece of equipment, the final rule requires agencies to utilize 
electric or non-fossil fuel-using Federal Energy Management Program 
(``FEMP'') designated or ENERGY STAR equipment, which follow existing 
Federal requirements for equipment efficiency (found in 10 CFR part 
436, subpart C, ``Agency Procurement of Energy Efficient Products'').
    For system level renovations, meaning a group of equipment pieces 
that function together to satisfy a building load, agencies must 
utilize electric or non-fossil fuel-using FEMP designated or ENERGY 
STAR equipment, in alignment with 10 CFR part 436, subpart C and must 
also meet the system level requirements for the systems being 
renovated, as specified in the model energy codes used to establish 
baseline energy efficiency standards for Federal buildings (i.e., the 
current Standard 90.1

[[Page 35394]]

for Federal commercial and high-rise multi-family buildings covered 
under 10 CFR part 433 or the current IECC for Federal low-rise 
buildings covered under 10 CFR part 435).
    DOE received three comments in response to the 2022 SNOPR from 
BCSE, Polyisocyanurate Insulation Manufacturers Association (PIMA), and 
Aeoroseal stating that DOE should require agencies to implement energy 
efficiency upgrades before undertaking larger scale electrification 
renovations. BCSE, Doc. No. 115, pg. 2; PIMA, No. 83, pg. 2; Aeroseal, 
No. 97, pg. 3. DOE agrees with the commenters that energy efficiency is 
a key component of decarbonization. Not only does energy efficiency 
provide more traditional payback periods from operational cost savings, 
but it can often result in additional capital savings, such as when 
equipment can be downsized due to the associated energy load 
reductions. Additional details on the order of application will be 
provided in separate implementation guidance, but DOE encourages 
agencies and individual project teams to meet the energy efficiency 
requirements of 10 CFR parts 433 and 435 prior to applying additional 
design changes to meet the emissions reduction targets defined in this 
final rule.
    Although this final rule only covers systems and components that 
utilize on-site fossil fuels, agencies should ensure that projects that 
could have secondary impacts on fossil fuel-using equipment, such as 
lighting, appliance or window replacement projects, are considered. DOE 
encourages agencies to consider whole building optimization for any 
type of major renovation project to ensure no adverse impacts to on-
site fossil fuel use. DOE also encourages on-site renewables such as 
solar and energy storage systems as good practice. DOE is not including 
on-site solar as a means to offset on-site fossil fuel consumption 
because it will not reduce the overall on-site contribution of fossil 
fuels directly consumed, even though on-site solar is a means to reduce 
emissions from the electricity use in buildings.
    In response to the 2022 SNOPR, DOE received multiple comments 
discussing the base reference code for Federal building efficiency, 
noting that newer and different codes or above-code programs (e.g., 
Standard 90.1-2022 or Passive House) may be able to demonstrate 
additional energy savings. NECA, Doc. No. 123, pg. 2; Build SMART, Doc. 
No. 111, pg. 1. In response, DOE acknowledges that ECPA establishes 
energy performance requirements for Federally owned residential and 
commercial buildings, based on the IECC and Standard 90.1, 
respectively. The statutory authority for this rule is an amendment to 
the existing requirements for Federal buildings, as established by 
Section 305 of the ECPA, and it does not change the reference code in 
question. In fact, under ECPA, minimum standards, including the 
reference code (IECC or Standard 90.1), must be satisfied, and then in 
addition the fossil fuel reduction targets must be applied and adhered 
to by the building design. DOE does, however, generally encourage the 
use of updated and advanced building energy codes, innovative codes, 
and standards, which achieve increased levels of energy efficiency, 
thereby decreasing fossil fuel use in accordance with the objectives of 
EISA and this rule.
3. Shift Adjustment Multiplier
    In the 2022 SNOPR, because many types of Federal buildings are 
operated for longer hours than typical for private sector buildings 
covered in CBECS and RECS, DOE introduced a shift adjustment 
multiplier. 87 FR 78382, 78391. In addition, DOE notes that hours of 
operation are already considered in tools such as ENERGY STAR Portfolio 
Manager, which agencies must use as part of their building benchmarking 
activities. 42 U.S.C. 8253(f)(8). A building's hours of operation are 
also implicit in any whole building simulation done on a building 
design, with longer hours of operation typically leading to higher 
energy usage.
    The shift multiplier \15\ in this final rule is based on analysis 
by Oak Ridge National Laboratory and was originally developed for 
ASHRAE Standard 100-2018. It is expressed in ``number of operating 
shifts,'' as opposed to actual hours of operation. Shift multipliers 
vary by building type. For example, for government offices, operating 
the building for two shifts does not increase the energy usage, but 
operating the building for three shifts increases the energy use by a 
multiplier of 1.4. Because residential buildings by their very nature 
are already considered to be 24-hour operation, the final rule only 
applies the shift multiplier to Federal commercial buildings regulated 
under 10 CFR part 433.
---------------------------------------------------------------------------

    \15\ Sharp, Terry, ORNL/TM-2014/215, Derivation of Building 
Energy Use Intensity Targets for ASHRAE Standard 100, August 31, 
2011; https://info.ornl.gov/sites/publications/files/Pub49965.pdf.
---------------------------------------------------------------------------

4. Compliance Date
    The final rule provides individual fossil fuel generated energy 
consumption phase down targets (mandated by EISA) that apply to EISA-
subject buildings depending on whether the design for construction or 
major renovations began in FY 2024, FY 2025 to FY 2029, or during or 
after FY 2030. The date after which all EISA-subject buildings that 
have not yet begun design for construction must comply with this final 
rule is one year after is published in the Federal Register.
    For buildings for which design for construction or whole building 
renovation began in FY 2024 or during the FY 2025 to FY 2029 range, 
phase down target tables of the maximum allowable on-site fossil fuel-
generated energy consumption (expressed in both kBtu per ft\2\ and 
Scope 1 GHG emissions in CO2e per ft\2\) by building type 
and climate zone are provided in Appendix A of 10 CFR parts 433 and 
435, subpart B. The values in the tables come from DOE's EIA CBECS (for 
commercial buildings) and RECS (for multi-family high-rise and low-rise 
residential buildings), both of which are converted from site energy 
consumption to kBtu and Scope 1 GHG emissions in CO2e. For 
EISA-subject buildings for which design for construction or whole 
building renovation begins in FY 2030 or later, the fossil fuel-
generated energy consumption of the building must be zero for all 
building types and climate zones, based on the calculation established 
in the regulations.
    DOE received comments regarding the compliance dates proposed in 
the 2022 SNOPR. Washington Gas Light Company (WGL) noted that the rule 
is overdue and that the directive in Section 433 of EISA assumed that 
DOE would promulgate energy efficiency performance standards to meet 
the emission reduction targets in December 2008. WGL, Doc. No. 101, pg. 
6. WGL expressed concern that the standards proposed in the 2022 SNOPR 
``sets up an unrealistic expectation that [F]ederal agencies can 
achieve a sharp reduction in onsite fossil fuel energy consumption in 
less than 7 years.'' Id.
    In response WGL's comment, DOE is issuing this final rule to meet 
its statutory obligations under EISA and cannot change the clearly 
delineated dates for fossil fuel consumption reductions. The 
performance standards in this final rule will enable Federal agencies 
to meet the reduction targets established in EISA. Furthermore, DOE 
notes that the final rule does not require all Federal buildings to 
meet the performance standards. These requirements only apply to 
certain new Federal buildings or Federal buildings undergoing major 
renovations. Thus, if an existing Federal building is not being 
renovated, then the performance standards do not apply. Also, as 
discussed below, DOE is confident that

[[Page 35395]]

as a practical matter, agencies can meet the requirements of the final 
rule.
    In addition, if Federal agencies (other than GSA) are unable to 
meet the energy performance standards adopted by this final rule, they 
may petition DOE to adjust the applicable standard. 42 U.S.C. 
6834(a)(3)(D)(i)(II). DOE may adjust the applicable standard if it 
believes that it is technically impracticable for the agency to meet 
the energy performance standards.
    The Alliance to Save Energy (ASE) stated that DOE should finalize 
this rule only when DOE feels that agencies can meet the requirements 
in the rule, especially for the requirements in year 2030 and beyond. 
ASE, Doc. No. 76, pg. 1. Others, such as ACEEE et al. stated that the 
final rule is overdue, and that DOE should require compliance as soon 
as possible.
    In response to these comments, DOE believes that agencies can meet 
the requirements of this revised final rule, especially considering the 
focus on on-site fossil fuel usage, and the widespread availability of 
electrified appliances (such as heat pumps and electrified cooking 
equipment) that can completely substitute for fossil fuel-generated 
energy consumption on-site. The ENERGY STAR program provides extensive 
details and lists of commercially available electric appliances and 
equipment, including air source heat pumps that can be found at https://www.energystar.gov/products/air_source_heat_pumps, commercial heat 
pump and VRF equipment that can be found at https://www.energystar.gov/products/heating_cooling/light_commercial_heating_cooling/light_commercial_hvac_key_product_criteria, and electric cooking 
products that can be found at https://www.energystar.gov/products/electric_cooking_products. These technologies have now become far more 
well known and commercially available than they were at the time 
Congress adopted the requirements in EISA. It is also worth noting that 
the rule's requirements apply at the design for construction stage, 
when an agency has the maximum flexibility to develop a design for a 
new building that will meet the standards, or has the flexibility to 
select an approach to a major renovation that will meet the more 
limited requirements that apply to major renovations. Not only are the 
standards in the final rule required by the statute, they are also 
reasonable and achievable, given the point in the design and 
construction process when the standards become applicable and the real 
world options now available for agency compliance.

C. Petitions for Downward Adjustment

    Under section 433 of EISA, agencies other than GSA may petition DOE 
for an adjustment to the fossil fuel-generated energy performance 
standard with respect to a specific building if meeting the requirement 
is technically impracticable in light of the agency's functional needs 
for the building. 42 U.S.C. 6834(a)(3)(D)(i)(II). As proposed in the 
2022 SNOPR, the final rule allows GSA tenant agencies that have 
significant control over building design to petition DOE. This rule 
specifies the information petitioning agencies must provide when 
requesting a downward adjustment. Specifically, as proposed in the 2022 
SNOPR, the final rule requires petitioning agencies to describe the 
building and associated components and equipment; explain why 
compliance with the requirements is technically impracticable 
considering the functional needs of the building; demonstrate that all 
cost-effective energy efficiency and on-site renewable energy measures 
were included in the building design; provide the largest feasible 
reduction in fossil fuel-generated energy consumption that can 
reasonably be achieved; and discuss measures that were evaluated but 
rejected.
    When filing petitions for downward adjustment related to new 
construction, Federal agencies must include the maximum applicable 
allowable fossil fuel-generated energy consumption for the proposed 
building, the requested alternative allowable fossil fuel-generated 
energy consumption for the building, the estimated fossil fuel-
generated energy consumption of the proposed building, the total 
estimated project cost, and a description of the building and the 
building energy systems. A description of the building includes, but is 
not limited to, location, use type, floor area, stories, expected 
number of occupants and occupant schedule, functional needs of the 
building, and any other information the agency deems pertinent. Federal 
agencies must describe the HVAC systems and service water heating 
system, as well as the loads in the building, including any specialized 
process, specialized research loads, electric vehicle charging 
stations, alternatively fueled vehicle fueling stations, emergency 
backup generators and other energy consuming systems or components. 
This information will provide DOE the necessary information to review 
petitions, and help agencies address key questions and options during 
the design process.
    This final rule adopts the standard and requires information for 
downward adjustment related to major renovations. For major renovations 
that are whole building renovations, a downward adjustment would be 
provided at a level equal to the energy efficiency level that would be 
achieved were the proposed building designed to meet the baseline 
energy efficiency standard applicable to new construction in 10 CFR 
parts 433 or 435. For whole building renovations, Federal agencies must 
provide the same information that is required for new construction. DOE 
believes the cost of processing the petitions will be de minimis, as 
DOE already works extensively with Federal agencies on energy-
efficiency and decarbonization efforts.
    For major renovations that are limited to system or component level 
retrofits, DOE will provide downward adjustments at a level equal to 
the energy efficiency level that would be achieved through the use of 
commercially available systems and/or components by using ENERGY STAR 
or FEMP designated products. Unlike the required standard, however, the 
ENERGY STAR or FEMP designated products are not required to be electric 
or non-fossil fuel based. A major renovation that is limited to a 
single system or multiple systems could receive a downward adjustment 
equal to the energy efficiency level that would be achieved through the 
use of the same ENERGY STAR or FEMP designated products as required for 
component renovations and through use of the system level requirements 
for renovations found in the baseline energy efficiency standards in 10 
CFR part 433 (Standard 90.1-2019) or 10 CFR part 435 (2021 IECC).
    DOE received a comment that supported the changes made to the 
petition requirements proposed in the 2022 SNOPR from the American 
Council for an Energy-Efficient Economy (ACEEE), Earthjustice, Rewiring 
America, RMI, and Sierra Club. They stated that requiring Federal 
agencies to submit the information proposed in the 2022 SNOPR ``will 
help ensure the petition process meets EISA requirements.'' ACEEE et 
al., Doc. No. 126, pg. 3.
    However, other commenters expressed concern with the required 
information Federal agencies must file with their petitions. CHP 
Alliance stated that the rule proposed in the 2022 SNOPR is flawed 
because the new building baseline energy efficiency standard for major 
renovation is based on replacing all equipment included in the 
renovation with ENERGY STAR or

[[Page 35396]]

FEMP designated products. CHP Alliance, Doc. No. 104, pg. 6. CHP 
Alliance noted that this requirement excludes CHP systems from being 
both an onsite power and heating/cooling source option for major 
renovations because neither ENERGY STAR nor FEMP have products 
designated for CHP systems. Id. CHP Alliance urged DOE to eliminate 
this requirement or immediately designate CHP systems that use 
renewable fuels or non-fossil fuels as products which Federal agencies 
can use. Id.
    DOE requires the use of FEMP and ENERGY STAR designated products 
when such designations are available as specified in 10 CFR part 436 
subpart C because when setting efficiency requirements, both FEMP and 
ENERGY STAR have integrated life-cycle cost effectiveness into their 
guiding principles that demonstrate compliance with 10 CFR part 436 
subpart A. As such, Federal buyers can have confidence that required 
products have both good energy performance and a total cost of 
ownership that is equal to or less than products below set 
efficiencies.
    Although there are no such FEMP or ENERGY STAR designated products 
for CHP systems, this does not preclude an agency from utilizing such 
systems. If an agency determines that it would like to utilize a CHP 
system in an EISA-subject building, it may do so but must ensure that 
the fossil fuel utilization of the system complies with the energy 
performance standard. This can be done by utilizing renewable, non-
fossil fuel based fuels and is discussed in more detail in section 
III.A.3.b. Defining Technical Impracticability.
    In the 2022 SNOPR, DOE proposed that a ``technical 
impracticability'' exists when achieving the fossil fuel-generated 
energy consumption targets would:
    (1) not be feasible from an engineering design or execution 
standpoint due to existing physical or site constraints that prohibit 
modification or addition of elements or spaces; (2) significantly 
obstruct building operations and the functional needs of a building, 
specifically for industrial process loads, critical national security 
functions, mission critical information systems as defined in NIST SP 
800-60 Vol. 2 Rev. 1, and research operations; or (3) significantly 
degrade energy resiliency and energy security of building operations as 
defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 101(e)(7) respectively.
    87 FR 78382, 78421 and 78430. Upon determination that complying 
with these standards is technically impracticable, the building is 
still required to reduce fossil fuel consumption to the maximum extent 
practicable. Technical impracticability may include technology 
availability and cost considerations but may not be based solely on 
cost considerations.
    In response to the 2022 SNOPR, DOE received one comment on this 
topic that claimed that the definition of ``technical 
impracticability'' is too ambiguous and could lead to agencies taking 
advantage of loopholes. Doc. No. 79, pg. 4. DOE notes that Congress 
directed DOE to base its petition adjudication decisions on agency 
determinations of technical impracticability. Due to the range of 
issues and challenges related to technical impracticability that could 
be faced by agencies, DOE will review each petition on a case-by-case 
basis and make the ultimate determination as to whether meeting the 
applicable standard is technically impracticable for that building and 
project. DOE may also provide further guidance on this topic via an 
implementation guidance.
1. DOE Review of Petitions
    In the 2022 SNOPR, DOE proposed that the Director of FEMP will 
review the petitions for downward adjustment and make a best effort to 
return the complete petition within 45 calendar days of submittal. 87 
FR 78382, 78397. DOE stated that it would review petitions in a timely 
manner and if the petitioning agency has demonstrated the need for a 
downward adjustment per the previous discussion, DOE will concur with 
the agency's conclusion and notify the agency in writing. Id. If DOE 
does not concur, it would forward its reasons to the petitioning 
agency.
    In this final rule, DOE is modifying the proposed timing. DOE will 
make a best effort to notify an agency within 30 calendar days of 
submittal whether a petition is approved or rejected. However, the 
timeframe does not apply to incomplete petitions, which may result in 
delays. Complete petitions are described in the regulatory text at the 
end of this final rulemaking notice, specifically sections Sec.  
433.202 and Sec.  435.202. DOE recognizes that agencies want assurance 
that DOE will respond to petitions in a timely manner in order to avoid 
project delays. If DOE rejects the petition, it will include its 
reasons for doing so in its response to the agency.
    Additionally, in the 2022 SNOPR, for new construction or major 
renovations of the whole building, DOE proposed that DOE could 
establish an adjusted value of on-site fossil fuel-generated energy 
consumption standard, other than the adjusted value requested in a 
petition. 87 FR 78382, 78424. DOE is finalizing this provision. If DOE 
finds that the petition does not support the requested adjusted value 
but that the statutorily required level was nonetheless technically 
impracticable, DOE can establish a new adjusted value. 87 FR 78382, 
78424. DOE intends this provision to provide flexibility in the 
petition process and reduce the need for agencies to resubmit petitions 
in the instance of a rejection. In addition, this provision will likely 
reduce the likelihood of an agency disagreeing with the result of its 
petition request, as it will be an active participant in an exchange of 
information with DOE.
2. Making Petitions for Downward Adjustment Public
    Throughout this rulemaking proceeding, DOE received comments urging 
DOE to make petitions for downward adjustment publicly available. In 
the 2022 SNOPR, DOE stated that it will publish any petitions that are 
filed, deemed complete, and screened for national security reasons for 
downward adjustment that are received (subject to potential filtering 
for national security reasons) to the DOE website. 87 FR 78382, 78396. 
ACEEE et al. supports making petitions for downward adjustments and DOE 
responses subject to public scrutiny. ACEEE et al., Doc. No. 126, pg. 
3-4. However, ACEEE noted that the 2022 SNOPR did not propose 
regulatory text requiring such public scrutiny and urged DOE to include 
such language in the final rule.
    DOE opts not to include regulatory language requiring it to make 
petitions public. DOE notes there is nothing in the statutory text that 
requires the information be made publicly available. In addition, there 
are instances where information included with the petitions for 
downward adjustment cannot be made public (e.g., information with 
national security implications). However, DOE acknowledges the 
importance of transparency and will make its best effort to publish any 
petitions for downward adjustment that are filed, deemed complete, and 
screened for national security concerns.
3. Bundling Petitions
    DOE will allow agencies to bundle petitions for new buildings or 
whole renovations to buildings that are the same design, have the same 
set of reduction targets, and would require similar measures to reduce 
fossil fuel-generated energy consumption. The bundled petitions must 
clearly state any differences between the buildings and explain why the 
differences do not warrant the submission of separate

[[Page 35397]]

evaluations. For component-level major renovations, DOE will allow 
bundling petitions that are of the same component and building type. 
DOE will provide more specific details on the bundling process and 
criteria in the accompanying implementation guidance.
4. GSA Tenant Agencies
    ECPA, as amended, precludes GSA from petitioning DOE for a downward 
adjustment of the applicable percentage reduction requirement. 42 
U.S.C. 6834(a)(3)(D)(i)(II). In the 2022 SNOPR, DOE noted although ECPA 
prohibits GSA from petitioning DOE for a downward adjustment, it makes 
no reference to GSA tenant agencies. 87 FR 78382, 78396. DOE stated 
that allowing GSA tenant agencies to submit a petition for downward 
adjustment will provide an option for some buildings for which the 
required fossil fuel-generated energy consumptions reductions may be 
technically impracticable in light of the building's functional needs, 
but for which GSA may not submit a petition. Id. In the 2022 SNOPR, DOE 
proposed that for construction of a new Federal building or major 
renovations of a federal building, if a GSA tenant agency is providing 
substantive and significant design criteria in the design process, the 
tenant agency may petition DOE for a downward adjustment of the 
applicable percentage reduction requirements. Id.
    DOE received one comment on this topic in response to the 2022 
SNOPR. ACEEE et al. commented that DOE may not allow GSA tenant 
agencies to petition for downward adjustments because ECPA specifically 
excludes GSA from the downward adjustment petition process. ACEEE et 
al., Doc. No. 126, pg. 4. They stated that allowing GSA tenant agencies 
to petition DOE for downward adjustment would expand the number of 
buildings eligible for such adjustments in a manner that directly 
contravenes the ECPA. Id.
    DOE reiterates that although the statute prohibits GSA from 
petitioning DOE for a downward adjustment, it makes no reference to GSA 
tenant agencies. The statute allows for an ``agency'' to petition for a 
downward adjustment. The term ``Federal agency'' means any department, 
agency, corporation, or other entity or instrumentality of the 
executive branch of the Federal Government, including the United States 
Postal Service, the Federal National Mortgage Association, and the 
Federal Home Loan Mortgage Corporation. 42 U.S.C. 6832(5). As the ACEEE 
notes, the statute only prohibits GSA from submitting a petition. Thus, 
in cases in which the GSA tenant agency exercises significant control 
of design choices in the building, and GSA does not, it makes little 
sense to prohibit the GSA tenant agency from petitioning for a downward 
adjustment if such a prohibition is not required by statute. Moreover, 
these petitions are still subject to the same criteria and review 
process as other petitions, including that meeting the requirement 
would be technically impracticable, which is defined as achieving the 
fossil fuel-based energy consumption targets would (1) not be feasible 
from an engineering design or execution standpoint due to existing 
physical or site constraints that prohibit modification or addition of 
elements or spaces; (2) significantly obstruct building operations and 
the functional needs of a building, specifically for industrial process 
loads, critical national security functions, mission critical 
information systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and 
research operations; or (3) significantly degrade energy resiliency and 
energy security of building operations as defined in 10 U.S.C. 
101(e)(6) and 10 U.S.C. 101(e)(7) respectively. DOE does not expect 
that GSA tenant agencies would commonly be able to make such showings 
for the more generic types of buildings typical of GSA's holdings. 
Rather, DOE expects this petition process to be applied in the rare 
situations where building design needs specific to a GSA tenant 
agency's unique situation make application of the percentage reduction 
requirements technically impracticable.
5. Petitions Submitted by the Department of Defense
    DOE also considered whether it should have a separate petition 
process for Department of Defense or other agency projects that serve 
critical national security functions whereby classified or sensitive 
information can be withheld, and such petitions will not be subject to 
public disclosure.
    Two commenters stated that DOE should not have a separate petition 
process for buildings serving national security functions. An 
individual commenter argued that instead of exempting buildings with 
national security risks, the Federal government must navigate and 
balance these national security challenges with policies to reduce 
fossil fuel-generated energy consumption. Doc. No. 81, pg. 2. 
Similarly, ACEEE et al. commented that buildings serving national 
security functions must be subject to the same petition review process 
and policies as other Federal buildings. ACEEE et al., Doc. No. 126, 
pg. 5.
    DOE agrees that there will be no blanket exemptions for national 
security sites. Section 433(a) of EISA does not provide an exemption 
from the standard for national security. For some buildings, it may be 
technically impracticable to achieve the consumption targets so the 
petition process may be appropriate.\16\ Each agency must provide a 
petition if they believe their facility cannot meet the statutory 
requirements due to technical impracticability. DOE intends to review 
all petitions using the same process. DOE believes the petition process 
will sufficiently vet buildings and agencies' proposed reasoning as to 
why achieving the reductions will be technically impracticable.
---------------------------------------------------------------------------

    \16\ The definition of ``technical impracticability'' in this 
rule is defined as achieving the fossil fuel-based energy 
consumption targets would (1) not be feasible from an engineering 
design or execution standpoint due to existing physical or site 
constraints that prohibit modification or addition of elements or 
spaces; (2) significantly obstruct building operations and the 
functional needs of a building, specifically for industrial process 
loads, critical national security functions, mission critical 
information systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and 
research operations; or (3) significantly degrade energy resiliency 
and energy security of building operations.
---------------------------------------------------------------------------

    In addition, DOE is sensitive to classification issues and will 
work with agencies to ensure that sensitive information is treated 
appropriately. DOE also recognizes that agencies may need flexibility 
in defining what buildings or projects serve critical national security 
functions, and that a pending petition may delay projects that serve 
critical national security functions. DOE intends to work closely with 
agencies pertaining to petitions for projects with critical national 
security functions as part of its implementation guidance following 
publication of the rule.

D. Definitions

    The final rule adds definitions for ``construction cost,'' ``design 
for renovation,'' ``EISA-subject building or project,'' ``Federal 
building,'' ``Fiscal year (FY),'' ``Fossil fuel-generated energy 
consumption,'' ``Major renovation,'' ``Major renovation cost,'' ``Major 
renovation of all Scope 1 fossil fuel-using systems,'' ``Major 
renovation of a Scope 1 fossil fuel-using building system or 
component,'' ``Multi-family high-rise residential building,'' ``Shift 
adjustment multiplier,'' and ``Technical impracticability,'' and it 
revises the definition for ``proposed building'' to 10 CFR 433.2 and 10 
CFR 435.2. Any comments relating to specific definitions have been 
previously discussed in Section III. In addition to

[[Page 35398]]

the substantive edits to the definitions of ``construction cost,'' 
``fossil fuel-generated energy consumption,'' and ``major renovation 
cost,'' discussed previously, DOE also makes minor revisions to the 
definitions of ``EISA-subject building or project,'' ``Federal 
building,'' ``fiscal year (FY),'' ``major renovation,'' and ``technical 
impracticability'' to remove unnecessary language or to provide 
clarification. These minor revisions do not change the nature of the 
definitions proposed in the 2022 SNOPR.

IV. Additional Issues Raised by Commenters

A. Authority

    AGA argued in its comments that DOE's authority to promulgate 
performance standards to reduce emissions from fossil fuel-generated 
energy consumption expired in December 2008.\17\ AGA noted that section 
433 of EISA directs DOE to establish by rule revised Federal building 
energy efficiency performance standards for both new Federal buildings 
and for Federal buildings undergoing major renovations, ``[n]ot later 
than 1 year after December 19, 2008.'' AGA, Doc. No. 100, pg. 4. 
Because ``agencies may act only when and how Congress lets them [,]'' 
AGA asserted that DOE's authority to establish these standards has 
lapsed. Id., pg. 5 (citing Cent. United Life Ins. Co. v. Burwell, 827 
F.3d 70, 73 (D.C. Cir. 2016)). However, the Supreme Court of the United 
States has routinely held that unless a statute specifies a consequence 
for noncompliance with a statutory deadline, an agency's obligation 
does not disappear when a statutory deadline passes. United States v. 
James Daniel Good Real Prop., 510 U.S. 43, 63 (1993); see Barnhart v. 
Peabody Coal Co., 537 U.S. 149, 159 (2003); Regions Hosp. v. Shalala, 
522 U.S. 448, 459 n.3 (1998). The EISA does not specify any consequence 
for noncompliance with its deadlines.
---------------------------------------------------------------------------

    \17\ AGA, Doc. No. 100, pg. 4. NPGA supported AGA comments with 
respect to ``the questionable foundation on which this rulemaking 
was proposed.'' NPGA, Doc. No. 90, pg. 7.
---------------------------------------------------------------------------

B. APA Concerns

    Two commenters raised procedural concerns related to the 2022 
SNOPR. First, APGA expressed concern that stakeholders were deprived 
from meaningfully commenting on the 2022 SNOPR. APGA, Doc. No. 102, pg. 
9. APGA argued that interested parties needed additional time to review 
the 2022 SNOPR because the rule proposed marked a significant departure 
from the previous proposed rules. Id. In addition, APGA stated that DOE 
failed to provide a timely copy of the transcript of the January 5, 
2023, public meeting, and, as a result, stakeholders that were not able 
to attend the meeting were unable to review the relevant docket 
materials. Id.
    DOE notes that it granted the requests from stakeholders for a 30-
day extension of the public comment period. 88 FR 12267. As a result, 
interested parties had 90 days to review the 2022 SNOPR. Multiple 
parties used this period as an opportunity to file revised comments. 
See e.g., ASHRAE, Doc. Nos. 96 and 113, Business Council for 
Sustainable Energy, Doc. Nos. 87 and 115, and joint comments from local 
officials, Doc. Nos. 94 and 125.
    In addition, a copy of the transcript of the January 5, 2023, 
public meeting is on the docket web page for this rulemaking. Although 
the transcript was posted after the initial 60-day comment period 
closed, it was available when DOE re-opened the comment period for an 
additional 30 days, providing sufficient time for parties to review and 
comment on that material in the docket.

V. Methodology, Analytical Results, and Conclusion

    This final rule implements fossil fuel reduction targets 
established under EISA, which will begin to reduce GHG emissions in the 
near term and prepare Federal buildings for a clean energy future. By 
ensuring that Federal buildings are designed--either from the ground 
up, or when being renovated--to reduce fossil fuel use, the rule 
ensures that long-term, as the electric grid integrates more carbon 
free energies, emissions will be reduced. DOE recognizes that 
exchanging on-site fossil fuel generated energy for increased reliance 
on the electric grid, which may still be generating energy with fossil 
fuels, will not in every application lead to an immediate reduction in 
emissions of GHGs and SO2 and in some cases could result in 
some increase in energy costs. This is explored in more detail in 
Chapter 1, Section 1.8 of the technical support document by examining 
the overall sensitivity of the rule to future grid cleaning scenarios. 
However, agencies must make decisions for the long-term, making capital 
investments today which will have lasting impacts well into the future, 
resulting in net benefits over the time and the life of the asset. Net 
benefits will increase significantly as the grid incorporates cleaner 
sources of electricity, as illustrated by the supporting technical 
analysis. In addition, DOE expects emerging and improving technological 
advancements in electric equipment, such as heat pumps, will lead to 
additional and dramatic site energy savings, further improving the 
emissions and cost savings cases for this rule.

A. Cost-Effectiveness

    DOE conducted an Environmental Assessment (EA) for this final 
rulemaking.\18\ In addition, DOE referenced a previous technical 
analysis conducted by the DOE Building Energy Codes Program that 
evaluated the energy and cost savings impacts, as well as cost 
effectiveness, of Standard 90.1-2019.\19\ As described in the EA, DOE 
identified a rate of new Federal commercial construction of 13.3 
million square feet per year, with a distribution of building types as 
shown in Table V-1. Starting in 2030, section 205(c)(ii) of Executive 
Order 14057, ``Catalyzing Clean Energy Industries and Jobs Through 
Federal Sustainability'' (December 8, 2021), requires agencies to 
``design new construction and modernization projects greater than 
25,000 gross square feet to be net-zero emissions by 2030.'' This 
effectively reduces the impact of this rule to apply to new 
construction and major renovation projects that fall above the cost 
threshold but are also below 25,000 gross square feet. For the year 
2030 and beyond, DOE estimated new Federal commercial and multi-family 
high-rise residential building construction volume will be 2.2 million 
square feet per year, with a distribution of building types as shown in 
Table V-2. The distribution of building types is based on an extraction 
of the latest 10 years of new construction data entered into the 
Federal Real Property Portfolio Management System (``FRPP MS'') that 
meets the required cost threshold of the final rule for cases both 
before and after the 25,000 Sf minimum triggering E.O. 14057 
compliance.\20\
---------------------------------------------------------------------------

    \18\ The Environmental Assessment (EA) (DOE/EA-2165) is 
entitled, ``Environmental Assessment for Final Rule, 10 CFR part 
433, `Energy Efficiency Standards for New Federal Commercial and 
Multi-Family High-Rise Residential Buildings' Baseline Standards 
Update.'' The EA may be found in the docket for this rulemaking and 
at www.energy.gov/node/472482.
    \19\ See DOE's analysis of the cost savings of the 2016 and 2019 
ASHRAE 90.1 Standards at www.energycodes.gov/sites/default/files/2020-07/90.1-2016_National_Cost-Effectiveness.pdf and 
www.energycodes.gov/sites/default/files/2021-07/90.1-2019_National_Cost-Effectiveness.pdf, respectively.
    \20\ See www.realpropertyprofile.gov/FRPPMS/FRPP_Login.
---------------------------------------------------------------------------

    Additionally, DOE identified an estimated rate of Federal major 
renovation projects that would be influenced by this rule. To do so, 
DOE utilized data from the Federal

[[Page 35399]]

Compliance Tracking System (``CTS'') where agencies report data on 
building efficiency improvement projects. The data from CTS was queried 
to include only those projects that would meet the cost threshold and 
have impacts on site fossil fuel energy consumption. As not all 
agencies are compliant in reporting data into CTS, results were scaled 
up to account for agencies out of compliance. As CTS does not supply 
data on the types of buildings for the reported projects, the 
distribution of eligible Federal buildings for a renovation that would 
meet the cost threshold was applied to the estimated total project 
square footage. DOE identified an estimated rate of new Federal major 
renovation construction of 1.36 million square feet per year with a 
distribution of building types as shown in Table V-1. As noted above, 
Executive Order 14057 effectively reduces the impact of this rule to 
apply only to new construction and major renovation projects that fall 
above the cost threshold but are also below 25,000 gross square feet. 
Taking this into account for the year 2030 and beyond, the estimated 
new Federal commercial and multi-family high-rise residential building 
major renovation construction volume per year will be 0.4 million 
square feet per year, with a distribution of building types as shown in 
Table V-1 and Table V-2 of this document.
    These tables also show the prototype buildings incorporated into 
simulations that are used to estimate energy use in each building type. 
DOE derived these prototype buildings from 16 building types in 17 
climate zones \21\ using its Commercial Prototype Building models.\22\ 
Of the 16 prototype buildings, DOE developed costs for 6 prototype 
buildings that represent the majority of the building types used by 
Federal agencies to determine the cost effectiveness of Standard 90.1-
2016 and Standard 90.1-2019.\23\ DOE then extracted the cost-
effectiveness information for those prototype buildings and weighted 
those values as appropriate to obtain an average cost effectiveness 
value for building types found in the Federal commercial sector.
---------------------------------------------------------------------------

    \21\ Briggs, R.S., R.G. Lucas, and Z.T. Taylor. 2003. ``Climate 
classification for building energy codes and standards: Part 1--
Development Process.'' ASHRAE Transactions 109(1): 109:121. American 
Society of Heating, Refrigerating and Air-Conditioning Engineers. 
Atlanta, Georgia.
    \22\ DOE's prototype buildings are described at 
www.energycodes.gov/prototype-building-models.
    \23\ See DOE's technical support document chapter 1 for more 
information on DOE's analysis of building prototypes.

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


[[Page 35400]]


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

    DOE has determined estimated incremental construction first cost 
information for the building types and climate zones analyzed for 
buildings compliant with this final rule (compliant buildings) versus 
Standard 90.1-2019 (see Table V-3).\24\
---------------------------------------------------------------------------

    \24\ Note that the values in Table V-3 have been adjusted to 
reflect 2022$ from the table that appears in DOE's determination of 
energy savings for Standard 90.1-2019, which were in 2020$. This 
adjustment was made using the GDP deflator value to correct for 
inflation between 2020 and 2022. Organization for Economic Co-
operation and Development, GDP Implicit Price Deflator in United 
States, retrieved from FRED, Federal Reserve Bank of St. Louis; 
fred.stlouisfed.org/series/USAGDPDEFAISMEI. These values have also 
been adjusted to reflect the same underlying economic assumptions as 
the 2019 version, and sales tax has also been removed.

  Table V-3--Incremental Construction First Cost (2022$) for Compliant Building Design Under the Final Rule vs.
                                               Standard 90.1-2019
----------------------------------------------------------------------------------------------------------------
                                                                      ASHRAE Climate Zone *
          Prototype                  Value      ----------------------------------------------------------------
                                                      2A           3A           3B           4A           5A
----------------------------------------------------------------------------------------------------------------
Small Office.................  First Cost......         $673         $584         $515       $1,666         $641
                               /ft\2\..........         0.12         0.11         0.09         0.30         0.12
Large Office.................  First Cost......      261,781      268,194      196,408      354,808      223,553
                               /ft\2\..........         0.52         0.54         0.39         0.71         0.45
Stand-alone Retail...........  First Cost......       19,608       20,240       19,740       21,563       19,363
                               /ft\2\..........         0.79         0.82         0.80         0.87         0.78
Primary School...............  First Cost......    (126,946)    (121,994)    (116,139)     (94,722)    (122,894)
                               /ft\2\..........       (1.72)       (1.65)       (1.57)       (1.28)       (1.66)
Small Hotel..................  First Cost......    (104,866)    (104,624)    (104,396)    (101,194)    (103,044)
                               /ft\2\..........       (2.43)       (2.42)       (2.42)       (2.34)       (2.38)
Mid-rise Apartment...........  First Cost......     (18,343)     (17,490)     (18,113)     (12,445)     (25,126)
                               /ft\2\..........       (0.54)       (0.52)       (0.54)       (0.37)       (0.74)
----------------------------------------------------------------------------------------------------------------
* Negative costs (shown in parentheses) indicate a reduction in cost due to changes in the code, usually due to
  reduced HVAC capital cost and reduction of venting required for on-site combustion.


[[Page 35401]]

    DOE used data from Table V-3 to calculate preliminary values for 
overall estimated incremental first cost of construction for Federal 
commercial and high-rise, multi-family residential buildings. DOE 
calculated the incremental first cost of the Federal building types 
based on the DOE cost prototypes shown in the far-right column of Table 
V-1 of this document. DOE then calculated the weighted average 
incremental cost for mapped Federal building types based on their 
corresponding prototypes, which represent an estimated 79.3 percent of 
new Federal construction. This weighted incremental cost was assigned 
to un-mapped Federal building types, and a total weighted incremental 
cost was calculated by multiplying the incremental cost for each 
Federal building type by the fraction of Federal construction shown in 
Table V-1.
    The estimated national incremental first cost for building types 
was developed by multiplying the average (across climate zones) 
incremental first cost of the prototypes Standard 90.1 cost-
effectiveness analysis by the fraction of the Federal sector 
construction volume shown in Table V-1, and then multiplying that by 
the total estimate of Federal new construction floorspace.\25\ DOE 
estimates that total first cost outlays for new Federal buildings will 
be less under compliant designs than under Standard 90.1-2019, 
primarily due to lower HVAC equipment costs for some building types 
(see Table V-3). The decrease in capital cost is primarily driven by 
lower equipment cost as well as the avoidance of gas infrastructure 
costs, which can include gas lines and venting. See Chapter 1, section 
3 of DOE's technical support document for more information. The 
resulting total incremental first cost estimate is a savings of $8.44 
million per year. The average first cost decrease is $1.82 per square 
foot. These first cost decreases are a result of the lower capital 
costs of the assumed electric equipment types as dictated in the ASHRAE 
and IECC energy codes (as mandated in 10 CFR part 433 and 10 CFR part 
435 and are the baseline for this modified building efficiency 
standard). Minimally compliant electric equipment was assumed in the 
proposed case as hitting the ``30% better'' (than baseline) performance 
goal as generally required by regulation, but include a cost 
effectiveness caveat that can reduce the goal down to minimal 
compliance. As can be seen in Table V-4,\26\ most building types are 
projected to switch their space heating systems from a fossil fuel 
burning system over to an electric resistance-based system.
---------------------------------------------------------------------------

    \25\ For the Federal office building, the small and large office 
prototype first costs were averaged. For the Federal education 
building, the primary school prototype first cost was used. For the 
Federal dormitories/barracks building type, the small hotel and mid-
rise apartment prototype first costs were averaged.
    \26\ See Chapter 1 of DOE's technical support document 
supporting this rulemaking for more information.

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

    An estimated 17.7 percent of the projects would utilize heat pumps 
in their proposed ``all electric'' case (those that map to Stand Alone 
Retail and Mid-Rise Apartment prototype models) with assumed efficiency 
performance metrics as noted. Service hot water systems (when not 
already specified as an electric system per the 10 CFR parts 433 and 
435 requirements) are similarly assumed to be minimally compliant 
electric resistance systems with 99-percent efficiencies. Cooking 
systems, where present, are assumed to switch from 40-percent efficient 
gas systems to 70-percent standard efficiency electric systems.
    It should be noted that in all cases higher efficiency electric 
equipment is available on the market, but the statutory authority of 
this rule is limited to total building reduction targets and does not 
specify specific equipment types or efficiency levels. An agency is 
free to design a project per their own site, cost, and usage specific 
needs, while complying with applicable efficiency targets. As such, the 
analysis presented in this final rule intends to capture the base-level 
compliance cases only. DOE encourages agencies to carefully consider 
and select higher efficiency equipment (such as even higher efficiency 
heat pumps and/or more widespread adoption) to the greatest extent 
possible, given project-specific needs and constraints. Higher 
efficiency equipment can often provide projects with a lifecycle cost 
effective solution that saves even more energy and emissions 
(potentially with higher up-front capital costs) than agencies would 
achieve through just base compliance with this rule.
    DOE also analyzed the relative impact of the final rule on the 
first cost of newly constructed Federal buildings as

[[Page 35402]]

a percentage of the overall annual cost of newly constructed Federal 
commercial and high-rise buildings. In order to estimate the total cost 
of construction for new Federal buildings, DOE obtained estimated 
construction costs for new Federal commercial and high-rise multifamily 
buildings from RS Means (2020) \27\ for the six building types analyzed 
in DOE's cost-effectiveness report. These new construction costs were 
weighted by the percent of Federal floorspace to develop an estimated 
average cost of a new Federal building of $198 per square foot, as 
shown in Table V-5. This average construction cost may be multiplied by 
the overall total of 19.54 million square feet of new Federal 
construction per year used in this rulemaking to estimate the annual 
total cost of all new Federal commercial and high-rise multi-family 
construction, which is $3.86 billion. As previously noted, first cost 
savings associated with this rulemaking are estimated at $8.62 million 
per year, indicating a potential cost reduction in new Federal 
construction costs of 0.223 percent ($8.62 million divided by $3.86 
billion).
---------------------------------------------------------------------------

    \27\ RS Means. 2020. RS Means Building Construction Cost Data, 
78th Ed. Construction Publishers & Consultants. Norwell, MA.

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

    DOE determined that the total incremental first cost estimate for 
Federal buildings (as mapped to the prototype buildings in Table V-1) 
is a savings of $149.2 million (at a 3-percent discount rate) and a 
savings of $91.5 million (based on a 7-percent discount rate), with an 
average first cost decrease of $1.07 per square foot (at a 3-percent 
discount rate) and $0.66 per square foot (at a 3-percent discount 
rate).
    For annualized energy cost savings, DOE used a similar approach to 
that used for incremental first cost. That is, DOE developed the 
national annualized energy cost savings \28\ for building types by 
multiplying the average (across climate zones) energy cost savings 
(determined from the same Standard 90.1 cost-effectiveness analysis) by 
the fraction of the Federal sector construction volume shown in Table 
V-1, and then multiplying that by the total estimate of Federal new 
construction floorspace.\29\ DOE notes that it used the best publicly-
available data in its analysis, but data about the location of future 
new construction or major renovations in the Federal sector are 
limited. Table V-6 shows the estimated annual energy cost savings by 
prototype buildings for a compliant building compared to buildings 
meeting only Standard 90.1-2019. This comparison shows projected 
increases in energy costs across the board because despite the 
increases in equipment efficiency and overall site energy savings, the 
projected difference between the cost of fossil fuels (primarily 
natural gas) and purchased electricity, when evaluated at a national 
level, are too high for the improvements to overcome. EIA's Annual 
Energy Outlook for 2023 (AEO 2023) \30\ outlook rate projections 
indicate that for the same amount of site energy consumed, electricity 
is about 3.68 times more expensive than natural gas. This number is 
projected to gradually fall over time to 3.34 times more expensive by 
the year 2050.
---------------------------------------------------------------------------

    \28\ The energy costs used were the national average energy 
costs used by ASHRAE in the development of Standard 90.1-2019. To 
quote the cost-effectiveness analysis report ``Energy rates used to 
calculate the energy costs from the modeled energy usage were $0.98/
therm for fossil fuel and $0.1063/kWh for electricity. These rates 
were used for the Standard 90.1-2019 energy analysis and derived 
from the EIA data. These were the values approved by the SSPC 90.1 
for cost-effectiveness for the evaluation of individual addenda 
during the development of Standard 90.1-2019.''
    \29\ For the Federal office building, the small and large office 
prototype LCCs were weighted by estimated fraction of small and 
large offices observed in the FRPP MS database over the past 10 
years of construction. For the Federal education building, the 
primary school prototype LCC was used. For the Federal dorm/barracks 
building type, the small office, small hotel, and mid-rise apartment 
prototype LCCs were averaged.
    \30\ DOE--U.S. Department of Energy. 2022. Annual Energy Outlook 
2023 with Projections to 2050. Washington, DC. Available at 
www.eia.gov/outlooks/aeo/.
---------------------------------------------------------------------------

    As it did for the incremental cost analysis, DOE adjusted the 2019 
energy cost savings analysis to use the same underlying economic 
assumptions for its analysis of compliant building designs, including 
fuel prices, fuel price escalations, labor and material costs, and the 
removal of sales tax. The resulting total annualized energy cost 
impacts for the affected buildings' 14.7 million square feet of annual 
construction for years 2025-2029 and 2.6 million square feet of annual 
construction for years 2030-2054 was estimated to be an additional cost 
of $11.05 million per year (at a 3-percent discount rate) and $8.43 
million per year (at a 7-percent discount rate). The annualized energy 
cost impacts were estimated to be an additional $2.38 per square foot 
(at a 3-percent discount rate) and an additional $1.82 per square foot 
(at a 7-percent discount rate). The annual energy cost impacts are 
estimated for one year of Federal commercial and high-rise multi-family

[[Page 35403]]

residential construction, and those impacts accumulate over the 
evaluation period.

         Table V-6--Annualized Energy Costs (2022$) for Compliant Building Design vs. Standard 90.1-2019
----------------------------------------------------------------------------------------------------------------
                                               Annualized energy cost savings    Annualized energy cost savings
                                    Total                 (M$2022)                    intensity (M$2022/SF)
       Building prototype         prototype  -------------------------------------------------------------------
                                  usage (%)     3% Discount      7% Discount      3% Discount      7% Discount
                                                    rate             rate             rate             rate
----------------------------------------------------------------------------------------------------------------
Small Office...................        14.78          ($1.63)          ($1.25)          ($0.35)          ($0.27)
Medium Office..................         5.53           (0.61)           (0.47)           (0.13)           (0.10)
Large Office...................         2.26           (0.25)           (0.19)           (0.05)           (0.04)
Stand-Alone Retail.............         8.76           (0.97)           (0.74)           (0.21)           (0.16)
Strip Mall.....................         0.00             0.00             0.00             0.00             0.00
Primary School.................         1.02           (0.11)           (0.09)           (0.02)           (0.02)
Secondary School...............        18.06           (2.00)           (1.52)           (0.43)           (0.33)
Outpatient Health Care.........         5.76           (0.64)           (0.49)           (0.14)           (0.10)
Hospital.......................        12.68           (1.40)           (1.07)           (0.30)           (0.23)
Small Hotel....................         1.18           (0.13)           (0.10)           (0.03)           (0.02)
Large Hotel....................         0.00             0.00             0.00             0.00             0.00
Quick-service Restaurant.......         0.00             0.00             0.00             0.00             0.00
Full-service Restaurant........         0.00             0.00             0.00             0.00             0.00
Mid-Rise Apartment.............         8.95           (0.99)           (0.75)           (0.21)           (0.16)
High-Rise Apartment............         7.90           (0.87)           (0.67)           (0.19)           (0.14)
Non-Refrigerated Warehouse.....        13.12           (1.45)           (1.11)           (0.31)           (0.24)
                                --------------------------------------------------------------------------------
    Total......................       100.00          (11.05)           (8.43)           (2.38)           (1.82)
----------------------------------------------------------------------------------------------------------------
Note: Negative numbers (shown in parentheses) represent an increased cost.

    For LCC net savings, DOE used a similar approach to that used for 
incremental first cost and first year energy cost savings. That is, DOE 
developed the national annual LCC net savings \31\ for the entire rule 
by multiplying the average (across climate zones) LCC net savings 
(determined from the same Standard 90.1 cost-effectiveness analysis) by 
the fraction of the Federal sector construction volume shown in Table 
V-1, and then multiplying that result by the total estimate of Federal 
new construction floorspace.\32\ DOE only used the climate zones per 
table V-3 to help further estimate first cost of equipment given 
variances in equipment type requirements per building type per climate 
zone. Table V-7 shows annual LCC net savings by prototype buildings for 
the compliant buildings compared to buildings meeting only Standard 
90.1-2019. As DOE did for the incremental cost analysis, DOE adjusted 
the 2019 LCC analysis to use the same underlying economic assumptions 
as the compliant buildings, including fuel prices, fuel price 
escalations, labor and material costs, and the removal of sales tax. 
The resulting total LCC net savings for 14.7 million square feet of 
annual construction for years 2025-2029 and 2.6 million square feet of 
annual construction for years 2030-2054 was estimated to be a cost of 
$54.87 million (at a 3-percent discount rate) and a savings of $0.089 
million (based on a 7 percent discount rate). The average LCC net 
impacts in year 1 was estimated to be a cost o- $2.97 million (at a 3 
percent discount rate) and a savings of $0.01 million (based on a 7-
percent discount rate. The annual LCC savings are for one year of 
Federal commercial and high-rise multi-family residential construction, 
and those savings would accumulate over the LCC evaluation period. For 
the purpose of this analysis, DOE relied on a 30-year period.\33\
---------------------------------------------------------------------------

    \31\ The energy costs used were the national average energy 
costs used by ASHRAE in the development of Standard 90.1-2019. To 
quote the cost-effectiveness analysis report ``Energy rates used to 
calculate the energy costs from the modeled energy usage were $0.98/
therm for fossil fuel and $0.1063/kWh for electricity. These rates 
were used for the Standard 90.1-2019 energy analysis and derived 
from the EIA data. These were the values approved by the SSPC 90.1 
for cost-effectiveness for the evaluation of individual addenda 
during the development of Standard 90.1-2019.''
    \32\ For the Federal office building, the small and large office 
prototype LCCs were weighted by estimated fraction of small and 
large offices observed in the FRPP MS database over the past 10 
years of construction. For the Federal education building, the 
primary school prototype LCC was used. For the Federal dorm/barracks 
building type, the small office, small hotel, and mid-rise apartment 
prototype LCCs were averaged.
    \33\ Lavappa, P and J Kneifel. 2021. Energy Price Indices and 
Discount Factors for Life-Cycle Cost Analysis-2021 Annual Supplement 
to NIST Handbook 135.

         Table V-7--Annual Net Life-Cycle Cost (LCC) (2022$) for Compliant Building Design vs. Standard
                                                    90.1-2019
----------------------------------------------------------------------------------------------------------------
                                                Cumulative LCC cost savings,      Annualized LCC cost savings,
                                    Total                 (M$2022)                     annualized (M$2022)
       Building prototype         prototype  -------------------------------------------------------------------
                                    usage       3% Discount      7% Discount      3% Discount      7% Discount
                                                    rate             rate             rate             rate
----------------------------------------------------------------------------------------------------------------
Small Office...................        14.78          ($8.11)           $0.013          ($0.44)          $0.0015
Medium Office..................         5.53           (3.03)            0.005           (0.16)           0.0006
Large Office...................         2.26           (1.24)            0.002           (0.07)           0.0002
Stand-Alone Retail.............         8.76           (4.81)            0.008           (0.26)           0.0009

[[Page 35404]]

 
Strip Mall.....................         0.00             0.00            0.000             0.00           0.0000
Primary School.................         1.02           (0.56)            0.001           (0.03)           0.0001
Secondary School...............        18.06           (9.91)            0.016           (0.54)           0.0018
Outpatient Health Care.........         5.76           (3.16)            0.005           (0.17)           0.0006
Hospital.......................        12.68           (6.96)            0.011           (0.38)           0.0013
Small Hotel....................         1.18           (0.65)            0.001           (0.04)           0.0001
Large Hotel....................         0.00             0.00            0.000             0.00           0.0000
Quick-service Restaurant.......         0.00             0.00            0.000             0.00           0.0000
Full-service Restaurant........         0.00             0.00            0.000             0.00           0.0000
Mid-Rise Apartment.............         8.95           (4.91)            0.008           (0.27)           0.0009
High-Rise Apartment............         7.90           (4.33)            0.007           (0.23)           0.0008
Non-Refrigerated Warehouse.....        13.12           (7.20)            0.012           (0.39)           0.0013
                                --------------------------------------------------------------------------------
    Total......................       100.00          (54.87)            0.089           (2.97)           0.0100
----------------------------------------------------------------------------------------------------------------
Note: Negative numbers (shown in parentheses) represent an increased cost or disbenefit.

    DOE calculated the net present value (``NPV'') of the change in 
equipment cost and reduced operating cost associated with the 
difference between the compliant case and Standard 90.1-2019. The NPV 
is the value in the present of a time-series of costs and savings, 
equal to the present value of savings in operating cost minus the 
present value of the increased total equipment cost.
    DOE determined the total increased equipment cost for each year of 
the analysis period (2024-2053) using the incremental construction cost 
described previously. DOE determined the present value of operating 
cost savings for each year from the beginning of the analysis period to 
the year when all Federal buildings constructed by 2054 have been 
retired, assuming a 30-year lifetime of the building.
    The average annual operating cost includes the costs for energy, 
repair, or replacement of building components (e.g., heating and 
cooling equipment, lighting, and envelope measures), and maintenance of 
the building. DOE determined the per-unit annual increase in operating 
cost based on the differences in energy costs plus replacement and 
maintenance cost savings, which were calculated in the underlying cost-
effectiveness analysis by DOE's Building Energy Codes Program. While 
DOE used the methodology and prices described above to calculate first 
year energy cost savings and LCC net savings, for the NPV calculations, 
DOE determined the per-unit annual savings in operating cost by 
multiplying the per square foot annual electricity and natural gas 
savings in energy consumption by the appropriate energy price from AEO 
2023. DOE forecasted energy prices based on projected average annual 
price changes in AEO 2023 to develop the operating cost savings through 
the analysis period.
    DOE uses national discount rates to calculate national NPV. DOE 
estimated NPV using both a 3-percent and a 7-percent real discount 
rate, in accordance with the Office of Management and Budget's guidance 
to Federal agencies on the development of regulatory analysis, 
particularly section E therein: Identifying and Measuring Benefits and 
Costs.\34\ The NPV is the sum over time of the discounted net savings.
---------------------------------------------------------------------------

    \34\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf (Last accessed Oct. 23, 2023).
---------------------------------------------------------------------------

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

B. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential Federal building energy 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential Federal 
building energy standards on emissions of two additional greenhouse 
gases, CH4 and N2O, as well as the changes to 
emissions of other gases due to ``upstream'' activities in the fuel 
production chain. These upstream activities comprise extraction, 
processing, and transporting fuels to the site of combustion.
    The analysis of electric power sector emissions of CO2, 
NOX, SO2, and Hg uses emissions factors intended 
to represent the marginal impacts of the change in electricity 
consumption associated with Federal building energy standards. The 
methodology is based on results published for the AEO 2023, including a 
set of side cases that implement a variety of efficiency-related 
policies. The analysis presented in this notice uses projections from 
AEO 2023. Power sector emissions of CH4 and N2O

[[Page 35405]]

from fuel combustion are estimated using Emission Factors for 
Greenhouse Gas Inventories published by the Environmental Protection 
Agency (``EPA'').\35\
---------------------------------------------------------------------------

    \35\ Available at www.epa.gov/sites/production/files/2023-04/documents/emission-factors_apr2023.pdf (last accessed July 12, 
2023).
---------------------------------------------------------------------------

    To demonstrate this final rule's effects under the Biden-
Administration clean-electricity goals, DOE analyzed an additional case 
where the future grid emission factors were assumed to follow a ``100% 
reduction by 2035'' (100 by 2035) profile as utilized in the National 
Renewable Energy Lab's 100% Clean Electricity by 2035 Study and as 
defined in NREL's ``Cambium 2022 Scenario Descriptions and 
Documentation'' report \36\ detailed in the accompanying TSD for this 
final rule. This case represents a change in national electricity 
generation that assumes national power sector CO2 emissions 
reach 100-percent below 2005 levels by 2035. This more aggressive case 
results in the final rule producing immediate decreases in 
CO2e gas emissions on a yearly basis (starting in the first 
analysis year of 2025). Details of this analysis can be found in 
Chapter 1 of the TSD for this final rule.
---------------------------------------------------------------------------

    \36\ Available at www.nrel.gov/analysis/100-percent-clean-electricity-by-2035-study.html (last accessed January 19, 2024).
---------------------------------------------------------------------------

    Until 2030, the on-site operation of construction subject to this 
final rule allows combustion of fossil fuels and results in emissions 
of CO2, NOX, SO2, CH4, and 
N2O where these products are used. Site emissions of these 
gases were estimated using Emission Factors for Greenhouse Gas 
Inventories and, for NOX and SO2 emissions 
intensity factors from an EPA publication.\37\
---------------------------------------------------------------------------

    \37\ U.S. Environmental Protection Agency. External Combustion 
Sources. In Compilation of Air Pollutant Emission Factors. AP-42. 
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter 
1. Available at www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors (last 
accessed April 15, 2022).
---------------------------------------------------------------------------

    Full fuel cycle upstream emissions, which include emissions from 
fuel combustion during extraction, processing, and transportation of 
fuels, and ``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2, are estimated based on the 
methodology described in Chapter 1 of the TSD.
    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. For power sector 
emissions, specific emissions intensity factors are calculated by 
sector and end use. Total emissions changes are estimated using the 
energy savings calculated in the national impact analysis with energy 
savings derived from a load shifting modeling analysis of the Standard 
90.1-2019 prototype models.
1. Air Quality Regulations Incorporated in DOE's Analysis
    DOE's analysis for the electric power sector reflects the AEO, 
which incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2023 reflects, to the extent possible, 
laws and regulations adopted through mid-November 2022, including the 
emissions control programs discussed in the following paragraphs and 
the Inflation Reduction Act.\38\
---------------------------------------------------------------------------

    \38\ For further information, see the Assumptions to AEO 2023 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/.
---------------------------------------------------------------------------

    SO2 emissions from affected electric generating units 
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions 
cap on SO2 for affected EGUs in the 48 contiguous States and 
the District of Columbia (``D.C.''). 42 U.S.C. 7651 et seq. 
SO2 emissions from numerous States in the eastern half of 
the United States are also limited under the Cross-State Air Pollution 
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these 
States to reduce certain emissions, including annual SO2 
emissions, and went into effect as of January 1, 2015. The AEO 2023 
incorporates implementation of CSAPR, including the update to the CSAPR 
ozone season program emission budgets and target dates issued in 2016. 
81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among 
EGUs and is enforced through the use of tradable emissions allowances. 
Under existing EPA regulations, for states subject to SO2 
emissions limits under CSAPR, any excess SO2 emissions 
allowances resulting from the lower electricity demand caused by the 
adoption of an efficiency standard could be used to permit offsetting 
increases in SO2 emissions by another regulated EGU.
    However, beginning in 2016, SO2 emissions began to fall 
as a result of the Mercury and Air Toxics Standards (``MATS'') for 
power plants. 77 FR 9304 (Feb. 16, 2012). The final MATS rule 
establishes power plant emission standards for mercury, acid gases, and 
non-mercury metallic toxic pollutants. Because of the emissions 
reductions under the MATS, it is unlikely that excess SO2 
emissions allowances resulting from the lower electricity demand would 
be needed or used to permit offsetting increases in SO2 
emissions by another regulated EGU. DOE estimated SO2 
emissions impacts using emissions factors based on AEO 2023.
    CSAPR also established limits on NOX emissions for 
numerous States in the eastern half of the United States. Federal 
building energy standards would have little effect on NOX 
emissions in those States covered by CSAPR emissions limits if excess 
NOX emissions allowances resulting from the lower 
electricity demand could be used to permit offsetting increases in 
NOX emissions from other EGUs. In such case, NOX 
emissions would remain near the limit even if electricity generation 
goes down. Depending on the configuration of the power sector in the 
different regions and the need for allowances, however, NOX 
emissions might not remain at the limit in the case of lower 
electricity demand. That would mean that Federal building energy 
standards might reduce NOX emissions in covered States. 
Despite this possibility, DOE has chosen to be conservative in its 
analysis and has maintained the assumption that Federal building energy 
standards will not reduce NOX emissions in States covered by 
CSAPR. Federal building energy standards would be expected to reduce 
NOX emissions in the States not covered by CSAPR. DOE used 
AEO 2023 data to derive NOX emissions factors for the group 
of States not covered by CSAPR.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's Federal building energy 
standards would be expected to slightly reduce Hg emissions. DOE 
estimated mercury emissions reduction using emissions factors based on 
AEO 2023, which incorporates the MATS.

C. Monetizing Emissions Impacts

    As part of the development of this final rule, for the purpose of 
complying with the requirements of Executive Order 12866, DOE 
considered the estimated monetary benefits from the reduced emissions 
of CO2, CH4, N2O, NOX, and 
SO2 that are expected to result from the energy performance 
standards considered. This section summarizes the basis for the values 
used for monetizing the emissions benefits and presents the values 
considered in this final rule.
    To monetize the benefits of reducing GHG emissions, this analysis 
uses the interim estimates presented in the Technical Support Document: 
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates 
under Executive Order 13990, published in February 2021 by the 
Interagency Working Group on the Social Cost of

[[Page 35406]]

Greenhouse Gases (``IWG'') (``February 2021 SC-GHG TSD'').
1. Monetization of Greenhouse Gas Emissions
    DOE estimates the monetized benefits of the reductions in emissions 
of CO2, CH4, and N2O by using a 
measure of the social cost (``SC'') of each pollutant (e.g., SC-
CO2). These estimates represent the monetary value of the 
net harm to society associated with a marginal increase in emissions of 
these pollutants in a given year, or the benefit of avoiding that 
increase. These estimates are intended to include (but are not limited 
to) climate-change-related changes in net agricultural productivity, 
human health, property damages from increased flood risk, disruption of 
energy systems, risk of conflict, environmental migration, and the 
value of ecosystem services.
    DOE exercises its own judgment in presenting monetized climate 
benefits as directed by applicable Executive orders, and DOE would 
reach the same conclusion presented in this rule in the absence of the 
social cost of greenhouse gases. That is, the social costs of 
greenhouse gases, whether measured using the February 2021 interim 
estimates presented by the Interagency Working Group on the Social Cost 
of Greenhouse Gases or by another means, did not affect the rule 
ultimately finalized by DOE because section 433 of EISA specifically 
directs DOE to establish regulations that require certain new Federal 
buildings and Federal buildings undergoing major renovations to reduce 
their on-site fossil fuel-generated energy consumption by specific 
amounts and by specific dates; that is, the achievable emissions 
reductions, and their monetized benefits, would not have changed the 
energy-consumption reductions required by this rule.
    DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions using SC-GHG values that 
were based on the interim values presented in the February 2021 SC-GHG 
TSD. The SC-GHG is the monetary value of the net harm to society 
associated with a marginal increase in emissions in a given year, or 
the benefit of avoiding that increase. In principle, the SC-GHG 
includes the value of all climate change impacts, including (but not 
limited to) changes in net agricultural productivity, human health 
effects, property damage from increased flood risk and natural 
disasters, disruption of energy systems, risk of conflict, 
environmental migration, and the value of ecosystem services. The SC-
GHG therefore, reflects the societal value of reducing emissions of the 
gas in question by one metric ton. The SC-GHG is the theoretically 
appropriate value to use in conducting benefit-cost analyses of 
policies that affect CO2, N2O and CH4 
emissions. As a member of the IWG involved in the development of the 
February 2021 SC-GHG TSD, DOE agreed that the interim SC-GHG estimates 
represent the most appropriate estimate of the SC-GHG until revised 
estimates were developed reflecting the latest, peer-reviewed science. 
See 87 FR 78382, 78406-78408 for discussion of the development and 
details of the IWG SC-GHG estimates.
    There are a number of limitations and uncertainties associated with 
the SC-GHG estimates. First, the current scientific and economic 
understanding of discounting approaches suggests discount rates 
appropriate for intergenerational analysis in the context of climate 
change are likely to be less than 3-percent, near 2-percent or lower. 
Second, the IAMs used to produce these interim estimates do not include 
all of the important physical, ecological, and economic impacts of 
climate change recognized in the climate change literature and the 
science underlying their ``damage functions''--i.e., the core parts of 
the IAMs that map global mean temperature changes and other physical 
impacts of climate change into economic (both market and nonmarket) 
damages--lags behind the most recent research. For example, limitations 
include the incomplete treatment of catastrophic and non-catastrophic 
impacts in the integrated assessment models, their incomplete treatment 
of adaptation and technological change, the incomplete way in which 
inter-regional and intersectoral linkages are modeled, uncertainty in 
the extrapolation of damages to high temperatures, and inadequate 
representation of the relationship between the discount rate and 
uncertainty in economic growth over long time horizons. Likewise, the 
socioeconomic and emissions scenarios used as inputs to the models do 
not reflect new information from the last decade of scenario generation 
or the full range of projections. The modeling limitations do not all 
work in the same direction in terms of their influence on the SC-
CO2 estimates. However, as discussed in the February 2021 
TSD, the IWG has recommended that, taken together, the limitations 
suggest that the interim SC-GHG estimates used in this rule likely 
underestimate the damages from GHG emissions. DOE concurs with this 
assessment.
    DOE's derivations of the SC-GHGs (i.e., SC-CO2, SC-
N2O, and SC-CH4) values used for this rule are 
discussed in the following sections, and the results of DOE's analyses 
estimating the benefits and disbenefits of the changes in emissions of 
these pollutants are presented in section VI.A. of this document.
a. Social Cost of Carbon
    The SC-CO2 values used for this rule were based on the 
values developed for the February 2021 SC-GHG TSD, which are shown in 
Table V-8 in five-year increments from 2020 to 2050. The set of annual 
values that DOE used, which was adapted from estimates published by 
EPA,\39\ is presented in the final rule TSD. These estimates are based 
on methods, assumptions, and parameters identical to the estimates 
published by the IWG, which were based on EPA modeling, and include 
values for 2051 to 2070. DOE expects additional climate benefits to 
accrue for products still operating after 2070, but a lack of available 
SC-CO2 estimates for emissions years beyond 2070 prevents 
DOE from monetizing these potential benefits in this analysis.
---------------------------------------------------------------------------

    \39\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed February 21, 2023).

       Table V-8--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050 (2020$ per Metric Ton CO2)
----------------------------------------------------------------------------------------------------------------
                                                                              Discount rate
                                                       ---------------------------------------------------------
                         Year                                5%           3%          2.5%             3%
                                                       ---------------------------------------------------------
                                                          Average      Average      Average     95th percentile
----------------------------------------------------------------------------------------------------------------
2020..................................................           14           51           76                152
2025..................................................           17           56           83                169

[[Page 35407]]

 
2030..................................................           19           62           89                187
2035..................................................           22           67           96                206
2040..................................................           25           73          103                225
2045..................................................           28           79          110                242
2050..................................................           32           85          116                260
----------------------------------------------------------------------------------------------------------------

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 value for that year in each of the 
four cases. DOE adjusted the values to 2022$ using the implicit price 
deflator for gross domestic product (``GDP'') from the Bureau of 
Economic Analysis. To calculate a present value of the stream of 
monetary values, DOE discounted the values in each of the four cases 
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
    The SC-CH4 and SC-N2O values used for this 
rule were based on the values developed for the February 2021 SC-GHG 
TSD. Table V-9 shows the updated sets of SC-CH4 and SC-
N2O estimates from the latest interagency update in 5-year 
increments from 2020 to 2050. The full set of annual values used is 
presented in the final rule TSD. To capture the uncertainties involved 
in regulatory impact analysis, DOE has determined it is appropriate to 
include all four sets of SC-CH4 and SC-N2O 
values, as recommended by the IWG. DOE derived values after 2050 using 
the approach described above for the SC-CO2.

                        Table V-9--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050 (2020$ per Metric Ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 SC-CH4 Discount rate and statistic                        SC-N2O Discount rate and statistic
                                     -------------------------------------------------------------------------------------------------------------------
                Year                       5%           3%          2.5%             3%              5%           3%          2.5%             3%
                                     -------------------------------------------------------------------------------------------------------------------
                                        Average      Average      Average     95th percentile     Average      Average      Average     95th percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020................................          670         1500         2000               3900         5800        18000        27000              48000
2025................................          800         1700         2200               4500         6800        21000        30000              54000
2030................................          940         2000         2500               5200         7800        23000        33000              60000
2035................................         1100         2200         2800               6000         9000        25000        36000              67000
2040................................         1300         2500         3100               6700        10000        28000        39000              74000
2045................................         1500         2800         3500               7500        12000        30000        42000              81000
2050................................         1700         3100         3800               8200        13000        33000        45000              88000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
change estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE 
adjusted the values to 2022$ using the implicit price deflator for GDP 
from the Bureau of Economic Analysis. To calculate a present value of 
the stream of monetary values, DOE discounted the values in each of the 
cases using the specific discount rate that had been used to obtain the 
SC-CH4 and SC-N2O estimates in each case.
c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates
    In December 2023, EPA issued a new set of SC-GHG estimates (2023 
SC-GHG) in connection with a final rulemaking under the Clean Air 
Act.\40\ These estimates incorporate recent research and address 
recommendations of the National Academies (2017) and comments from a 
2023 external peer review of the accompanying technical report. For 
this rulemaking, DOE used these updated 2023 SC-GHG values to conduct a 
sensitivity analysis of the value of GHG emissions reductions 
associated with alternative standards for energy standards for Federal 
buildings. This sensitivity analysis provides an expanded range of 
potential climate benefits associated with energy standards for Federal 
buildings. The final year of EPA's new 2023 SCGHG estimates is 2080; 
therefore, DOE did not monetize the climate benefits of GHG emissions 
reductions occurring after 2080. The overall climate benefits are 
greater when using the higher, updated 2023 SC-GHG estimates, compared 
to the climate benefits using the older IWG SC-GHG estimates. The 
results of the sensitivity analysis are presented in appendix 2A of the 
final rule TSD.
---------------------------------------------------------------------------

    \40\ See www.epa.gov/environmental-economics/scghg.
---------------------------------------------------------------------------

2. Monetization of Other Emissions Impacts
    For the final rule, DOE estimated the monetized value of 
NOX and SO2 emissions changes from electricity 
generation using benefit-per-ton estimates for that sector from the 
EPA's Benefits Mapping and Analysis Program.\41\ DOE used EPA's values 
for PM2.5-related benefits associated with NOX 
and SO2 and for ozone-related benefits associated with 
NOX for 2025, 2030, and 2040, calculated with 3-percent and 
7-percent discount rates.

[[Page 35408]]

DOE used linear interpolation to define values for the years not given 
in the 2025 to 2040 period; for years beyond 2050 the values are held 
constant (rather than extrapolated) to be conservative. DOE combined 
the EPA regional benefit-per-ton estimates with regional information on 
electricity consumption and emissions from AEO 2023 to define weighted-
average national values for NOX and SO2.
---------------------------------------------------------------------------

    \41\ U.S. Environmental Protection Agency. Estimating the 
Benefit per Ton of Reducing Directly-Emitted PM2.5, 
PM2.5 Precursors and Ozone Precursors from 21 Sectors. 
Available at www.epa.gov/benmap/estimating-benefit-ton-reducing-directly-emitted-pm25-pm25-precursors-andand-ozone-precursors.
---------------------------------------------------------------------------

    DOE also estimated the monetized value of NOX and 
SO2 emissions changes from site use of natural gas in 
buildings impacted by this rule using benefit-per-ton estimates from 
the EPA's Benefits Mapping and Analysis Program. Although none of the 
sectors covered by EPA refers specifically to residential and 
commercial buildings, the sector called ``area sources'' would be a 
reasonable proxy for Federal buildings.\42\ The EPA document provides 
high and low estimates for 2025 and 2030 at 3- and 7-percent discount 
rates.\43\ DOE used the same linear interpolation and extrapolation as 
it did with the values for electricity generation.
---------------------------------------------------------------------------

    \42\ ``Area sources'' represents all emission sources for which 
states do not have exact (point) locations in their emissions 
inventories. Because exact locations would tend to be associated 
with larger sources, ``area sources'' would be fairly representative 
of small dispersed sources like homes, businesses and office 
buildings.
    \43\ ``Area sources'' are a category in the 2018 document from 
EPA, but are not used in the 2021 document cited previously. See: 
www.epa.gov/sites/default/files/2018-02/documents/sourceapportionmentbpttsd_2018.pdf.
---------------------------------------------------------------------------

    DOE multiplied the emissions changes (in tons) in each year by the 
associated $/ton values, and then discounted each series using discount 
rates of 3 percent and 7 percent as appropriate.

D. Public Comment

    DOE received several comments in response to the 2014 and 2022 
SNOPRs relating to methodology. These comments covered potential 
exclusions for thermal and electrical energy storage systems, basing 
this rule on an agency portfolio (as opposed to on a building-by-
building basis), potential credits for nuclear and hydropower 
electricity, and suggesting a need to rewrite the main equation in the 
rule.
    In response to the comments about the role of energy storage 
systems in limiting fossil fuel generated energy consumption from 
purchased electricity, DOE's decision in the final rule to focus only 
on on-site combustion of fossil fuels makes discussion of electrical 
energy storage irrelevant. For example, if an agency chooses to burn 
fossil fuels to store heat in a thermal energy storage system, that 
fossil fuel use would be counted as part of the consumption of the 
building. DOE also notes that this rule applies to individual buildings 
based on statutory requirements, so DOE cannot change this rule to a 
portfolio approach.
    DOE also notes that credits for nuclear and hydropower electricity 
are no longer relevant to this final rule and that the governing 
equation in this final rule has been extensively rewritten and 
simplified in accordance with the change of scope to focus on only on-
site fossil fuel use.

E. Conclusion

    Table V-10 provides DOE's estimate of cumulative emissions changes 
expected to result from this rulemaking. DOE recognizes exchanging on-
site fossil fuel generated energy for reliance on the electric grid, 
which may still be generating energy with fossil fuels, does not 
necessarily lead to an immediate reduction in emissions of GHGs and 
SO2 in all cases. In some areas, there will likely be an 
immediate reduction in GHG emissions, while in other areas, emissions 
will fall over time as the amount of clean energy on the grid 
increases. By ensuring that Federal buildings are designed--either from 
the ground up, or when being renovated--to reduce fossil fuel use, the 
rule ensures that long-term, as the grid integrates more renewable 
energies, emissions will be reduced.

     Table V-10--Cumulative Physical Emissions Changes in 2025-2084
------------------------------------------------------------------------
                        Pollutant                              Total
------------------------------------------------------------------------
                    Primary (plant) Emissions Changes
------------------------------------------------------------------------
CO2 (million metric tons)...............................             0.7
Hg (tons)...............................................         -0.0028
NOX (thousand tons).....................................             1.1
SO2 (thousand tons).....................................            -0.4
CH4 (thousand tons).....................................            -0.1
N2O (thousand tons).....................................           -0.01
------------------------------------------------------------------------
                       Upstream Emissions Changes
------------------------------------------------------------------------
CO2 (million metric tons)...............................             0.1
Hg (tons)...............................................        -0.00001
NOX (thousand tons).....................................             2.3
SO2 (thousand tons).....................................           -0.01
CH4 (thousand tons).....................................            15.8
N2O (thousand tons).....................................         -0.0001
------------------------------------------------------------------------
                         Total Emissions Changes
------------------------------------------------------------------------
CO2 (million metric tons)...............................             0.9
Hg (tons)...............................................          -0.003
NOX (thousand tons).....................................             3.3
SO2 (thousand tons).....................................            -0.4
CH4 (thousand tons).....................................            15.8
N2O (thousand tons).....................................          -0.009
------------------------------------------------------------------------
Negative values refer to an increase in emissions.
Numbers may not sum due to rounding.


[[Page 35409]]

    Table V-11 presents the present value of monetized climate 
disbenefits associated with the CO2 emissions changes using 
the full set of SC-CO2 estimates described previously.

 Table V-11--Present Value of Monetized Climate Benefits From Changes in CO2 Emissions for Construction Impacts
                                        2025-2054 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                                SC-CO2 Case
                                                         -------------------------------------------------------
                                                                       Discount rate and statistics
                                                         -------------------------------------------------------
                                                               5%            3%           2.5%           3%
                                                         -------------------------------------------------------
                                                                                                        95th
                                                             Average       Average       Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                  Million 2022$
----------------------------------------------------------------------------------------------------------------
Total...................................................          7.0          31.6          50.1          95.7
----------------------------------------------------------------------------------------------------------------
Note: Climate benefits and disbenefits associated with CO2 emissions changes occur over 2025-2070. DOE expects
  additional climate impacts to accrue from CO2 emissions changes post 2070, but a lack of available SC-CO2
  estimates for years beyond 2070 prevents DOE from monetizing these additional impacts in this analysis.

    Table V-12 presents the monetized climate benefits associated with 
the estimated CH4 emissions reduction, and Table V-13 
presents the monetized climate disbenefits associated with the 
estimated changes in N2O emissions.

   Table V-12--Present Value of Monetized Climate Benefits From Changes in Methane Emissions for Construction
                                    Impacts 2025-2054 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                                SC-CH4 Case
                                                         -------------------------------------------------------
                                                                       Discount rate and statistics
                                                         -------------------------------------------------------
                                                               5%            3%           2.5%           3%
                                                         -------------------------------------------------------
                                                                                                        95th
                                                             Average       Average       Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                  Million 2022$
----------------------------------------------------------------------------------------------------------------
Total...................................................          6.5          19.8          27.8          52.5
----------------------------------------------------------------------------------------------------------------
Note: Climate benefits and disbenefits associated with CH4 emissions changes occur over 2025-2070. DOE expects
  additional climate impacts to accrue from CH4 emissions changes post 2070, but a lack of available SC-CH4
  estimates for years beyond 2070 prevents DOE from monetizing these additional impacts in this analysis.


     Table V-13--Present Value of Monetized Climate Disbenefits From Changes in Nitrous Oxide Emissions for
                             Construction Impacts 2025-2054 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                                SC-N2O Case
                                                         -------------------------------------------------------
                                                                       Discount rate and statistics
                                                         -------------------------------------------------------
                                                               5%            3%           2.5%           3%
                                                         -------------------------------------------------------
                                                                                                        95th
                                                             Average       Average       Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                  Million 2022$
----------------------------------------------------------------------------------------------------------------
Total...................................................          0.0          -0.1          -0.2          -0.3
----------------------------------------------------------------------------------------------------------------
Note: Negative numbers represent an increase cost or disbenefit. Climate benefits and disbenefits associated
  with N2O emissions changes occur over 2025-2070. DOE expects additional climate impacts to accrue from N2O
  emissions changes post 2070, but a lack of available SC-N2O estimates for years beyond 2070 prevents DOE from
  monetizing these additional impacts in this analysis.

    DOE is aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
global and U.S. economy continues to evolve rapidly. DOE, together with 
other Federal agencies, will continue to review methodologies for 
estimating the monetary value of changes in CO2 and other 
GHG emissions. This ongoing review will consider the comments on this 
subject that are part of the public record for this and other 
rulemakings, as well as other methodological assumptions and issues.
    DOE also estimated the monetary value of the health benefits and 
disbenefits associated with changes in NOX and 
SO2 emissions anticipated to result from this rule. The 
dollar-per-ton values that DOE used are discussed in

[[Page 35410]]

section V.C of this document. Table V-14 presents the present value for 
NOX emissions reduction calculated using 7-percent and 3-
percent discount rates, and Table V-15 presents similar results for 
SO2 emissions increases. The results in these tables reflect 
application of EPA's low dollar-per-ton values, which DOE used to be 
conservative.

          Table V-14--Present Value of NOX Emissions Reduction
------------------------------------------------------------------------
                                          3% Discount      7% Discount
                                              rate             rate
------------------------------------------------------------------------
                              Million 2022$
------------------------------------------------------------------------
Total.................................            81.2             28.8
------------------------------------------------------------------------


           Table V-15--Present Value of SO2 Emissions Increase
------------------------------------------------------------------------
                                          3% Discount      7% Discount
                                              rate             rate
------------------------------------------------------------------------
                              Million 2022$
------------------------------------------------------------------------
Total.................................           -25.3            -10.4
------------------------------------------------------------------------
Note: Negative numbers represent an increase cost or disbenefit.

    Not all the public health and environmental benefits from the 
reduction of greenhouse gases, NOX, and SO2 are 
captured in the values above, and additional unquantified benefits from 
the reductions of those pollutants as well as from the reduction of 
direct PM and other co-pollutants may be significant. DOE has not 
included monetary benefits of the reduction of Hg emissions because the 
amount of reduction is very small.
    DOE's analysis estimates the energy impacts, emissions savings, and 
cost savings over a 30-year period. The Federal building energy 
standards in this final rule are projected to result in an estimated 
national increased energy use of 0.029 quads. The increase is for the 
full fuel cycle which is essentially accounting for source energy 
impacts. The actual breakdown is .00221 quads of upstream energy 
savings and an increase of 0.031 quads of primary energy use (energy 
use impacts at the power plants) for a grand total of an increase in 
.029 quads of full fuel cycle energy. However, the Federal building 
energy standards are projected to result in estimated savings of 0.9 
million metric tons (``MMT'') of CO2 emissions according to 
DOE's base analysis, which uses AEO 2023. When combining CO2 
savings with methane (CH4) savings and slight increases 
N2O emissions into a CO2 equivalent metric, there 
results in an overall net savings of CO2e emissions of 
approximately 1.29 MMT CO2e.
    Notably, the recent enactment of the Inflation Reduction Act of 
2022 (Pub. L. 117-169) and the Infrastructure Investment and Jobs Act 
(Pub. L. 117-58) will drive power sector emissions reductions in both 
the near-term and the short-term. With these laws in place, DOE has 
projected that U.S. economy-wide greenhouse gas emissions will decline 
to 35 to 41% below 2005 levels in 2030,\44\ with the power sector 
representing the largest source of these reductions. In contrast to the 
base case presented in this rulemaking, there are alternative scenarios 
for projecting the future emissions associated with grid electricity 
that better align with these new policy drivers. These scenarios, 
discussed in section V.B of this document, have a large effect on the 
net emissions impacts of the rulemakings and present larger 
environmental and overall net benefits. With these policy drivers now 
in place, power sector reductions beyond those projected would only 
further increase the emissions benefits of this rulemaking in the 
future. These scenarios do not present comprehensive profiles for all 
additional climate factors beyond CO2 emissions (such as 
NOX, Hg, N2O, CH4, and 
SO2), and have been presented only in the corresponding TSD 
for reference.
---------------------------------------------------------------------------

    \44\ U.S. Department of Energy's Office of Policy. Investing in 
American Energy, DOE OP Economy Wide Report_0.pdf (energy.gov), 
August 2023.
---------------------------------------------------------------------------

    The cumulative NPV of the final rule for compliant buildings ranges 
from $70 million (at a 7-percent discount rate) to $52 million (at a 3-
percent discount rate). This NPV expresses the estimated total value of 
future operating-costs and the estimated increased capital costs for a 
compliant building constructed in 2025-2054, although in reality, those 
costs will be realized throughout the 30-year project time period 
analyzed.
    In addition, compliant buildings are projected to impact emissions 
of multiple greenhouse gases and other pollutants. DOE estimates that 
the rule would result in cumulative emissions (over the same period as 
for energy savings) impacts of a decrease of 0.9 MMT of carbon dioxide 
(``CO2''), an increase of 0.4 thousand tons of sulfur 
dioxide (``SO2''), a decrease of 3.3 thousand tons of 
nitrogen oxides (``NOX''), a decrease of 15.8 thousand tons 
of methane (``CH4''), an increase of 0.009 thousand tons of 
nitrous oxide (``N2O''), and an increase of 0.003 tons of 
mercury (``Hg'').\45\
---------------------------------------------------------------------------

    \45\ DOE calculated emissions changes relative to the no-new-
standards case, which reflects key assumptions in the AEO2023. AEO 
2023 represents current federal and state legislation and final 
implementation of regulations as of the time of its preparation. See 
section VI.K of this document for further discussion of AEO 2023 
assumptions that effect air pollutant emissions.
---------------------------------------------------------------------------

    DOE estimates the value of climate benefits and disbenefits from a 
change in emissions of greenhouse gases using four different estimates 
of the social cost of CO2 (``SC-CO2''), the 
social cost of methane (``SC-CH4''), and the social cost of 
nitrous oxide (``SC-N2O''). Together these represent the 
social cost of greenhouse gases (``SC-GHG''). DOE used interim SC-GHG 
values developed by the ``IWG''.\46\ The derivation of these values is 
discussed in section V.C of this document. For presentational purposes, 
the climate benefits (including both the climate benefits and 
disbenefits) associated with the average SC-GHG at a 3-percent discount 
rate is $51.3 million, primarily driven by savings in CH4. 
DOE does not have a single central SC-GHG point estimate and DOE 
emphasizes the value of considering the benefits calculated using all 
four SC-GHG estimates.
---------------------------------------------------------------------------

    \46\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021, available at www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf?source=email.
---------------------------------------------------------------------------

    DOE also estimates health benefits and disbenefits from changes of 
SO2 and NOX emissions.\47\ DOE estimates the 
present value of the health benefits would be $18.4 million using a 7-
percent discount rate, and $55.9 million using a 3-percent discount 
rate.\48\ DOE is currently only monetizing PM2.5 precursor 
health effects and (for NOX) ozone precursor health 
benefits, but will continue to assess the ability to monetize other 
effects such as health effects from reductions in direct 
PM2.5 emissions.\49\
---------------------------------------------------------------------------

    \47\ DOE estimated the monetized value of NOX and 
SO2 emissions changes associated with this final rule 
using benefit per ton estimates from the scientific literature. See 
section IV.L.2 of this document for further discussion.
    \48\ DOE estimates the economic value of these emissions changes 
resulting from the considered TSLs for the purpose of complying with 
the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table VI-1 summarizes the economic benefits and costs expected to 
result from this final rule. There are other important unquantified 
effects, including certain unquantified climate benefits, unquantified 
public health benefits from the reduction of toxic air pollutants and 
other emissions, unquantified energy security benefits, and 
distributional effects, among others.

[[Page 35411]]



 Table VI-1--Summary of Monetized Economic Benefits and Costs (2025-2054
                         Plus 30-Year Lifetime)
                             [Million 2022$]
------------------------------------------------------------------------
                                                   Million 2022$
                                         -------------------------------
                                            3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
Capital Cost Savings of Equipment *.....           149.2            91.5
Climate Benefits **.....................            51.3            51.3
Health Benefits ***.....................            55.9            18.4
                                         -------------------------------
    Total Benefits [dagger].............           256.4           161.1
------------------------------------------------------------------------
Operating Costs [dagger][dagger]........          -204.1           -91.4
                                         -------------------------------
    Net Benefits........................            52.3            69.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  compliant buildings built and operated in 2025-2084. These results
  include consumer, climate, and health benefits and disbenefits that
  accrue after 2054 from the buildings constructed or renovated in 2025-
  2054.
* Capital costs are a savings to consumers due to the base level
  efficiency electric equipment being less expensive than equivalent gas
  equipment as well as infrastructure savings from avoided gas line
  installation and exhaust venting.
** Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
  discount rates; 95th percentile at 3-percent discount rate). Together
  these represent the social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3-percent discount rate are shown;
  however, DOE emphasizes the importance and value of considering the
  benefits calculated using all four sets of SC-GHG estimates. To
  monetize the benefits of reducing GHG emissions, this analysis uses
  the interim estimates presented in the February 2021 SC-GHG TSD.
*** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. See section V.C of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
  health benefits that can be quantified and monetized. For presentation
  purposes, total and net benefits for both the 3-percent and 7-percent
  cases are presented using the average SC-GHG with 3-percent discount
  rate.
[dagger][dagger] Negative number indicates an increased cost to building
  owners, driven primarily by higher relative cost of electricity
  compared to natural gas.

    A more detailed discussion of the basis for these tentative 
conclusions is contained in the remainder of this document and the 
accompanying TSD.

F. Reference Resources

    DOE has prepared a list of resources to help Federal agencies 
address the reduction of fossil fuel-generated energy consumption. 
These resources come in many forms such as design guidance, case 
studies and in a variety of media such as printed documents or 
websites. The resources for energy efficiency improvement will also 
provide guidance for fossil fuel-generated energy consumption 
reductions.
    U.S. Department of Energy, Federal Energy Management Program. 
(https://www.energy.gov/femp/federal-energy-management-program). FEMP 
provides access to numerous resources and tools that can help Federal 
agencies improve the energy efficiency of new and existing buildings. 
Specific resources to support this Final Rule will include, but are not 
limited to:

Implementation Guidance
Petition Template

    U.S. Department of Energy, Building Technologies Office. Database 
of high-performance buildings. (https://buildingdata.energy.gov/).
    U.S. Department of Energy, Better Buildings Program. 
Decarbonization Resource Hub. (https://betterbuildingssolutioncenter.energy.gov/carbon-hub).
    New York State Energy Research and Development Authority (NYSERDA). 
Building Decarbonization Insights. (https://www.nyserda.ny.gov/All-Programs/Empire-Building-Challenge/Building-Decarbonization-Insights).
    New Buildings Institute. Zero Energy Buildings Database. (https://newbuildings.org/resource/getting-to-zero-database/).

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving 
`Regulation and Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011) and 
amended by E.O. 14094, ``Modernizing Regulatory Review,'' 88 FR 21879 
(April 11, 2023), requires agencies, to the extent permitted by law, to 
(1) propose or adopt a regulation only upon a reasoned determination 
that its benefits justify its costs (recognizing that some benefits and 
costs are difficult to quantify); (2) tailor regulations to impose the 
least burden on society, consistent with obtaining regulatory 
objectives, taking into account, among other things, and to the extent 
practicable, the costs of cumulative regulations; (3) select, in 
choosing among alternative regulatory approaches, those approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety, and other advantages; distributive impacts; 
and equity); (4) to the extent feasible, specify performance 
objectives, rather than specifying the behavior or manner of compliance 
that regulated entities must adopt; and (5) identify and assess 
available alternatives to direct regulation, including providing 
economic incentives to encourage the desired behavior, such as user 
fees or marketable permits, or providing information upon which choices 
can be made by the public. DOE emphasizes as well that E.O. 13563 
requires agencies to use the best available techniques to quantify 
anticipated present and future benefits and costs as accurately as 
possible. In its guidance, the Office of Information and Regulatory 
Affairs (``OIRA'') in the Office of Management and Budget has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
this regulatory action is consistent with these principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to the Office of Information and 
Regulatory Affairs (``OIRA'') for review. OIRA has

[[Page 35412]]

determined that this regulatory action constitutes a ``significant 
regulatory action'' under section 3(f)(1) of E.O. 12866. Accordingly, 
pursuant to section 6(a)(3)(C) of E.O. 12866, DOE has provided to OIRA 
an assessment, including the underlying analysis, of benefits and costs 
anticipated from the regulatory action, together with, to the extent 
feasible, a quantification of those costs; and an assessment, including 
the underlying analysis, of costs and benefits of potentially effective 
and reasonably feasible alternatives to the planned regulation, and an 
explanation why the planned regulatory action is preferable to the 
identified potential alternatives. These assessments are summarized in 
the tables that follows. Further detail can be found in the TSD 
accompanying this final rule.
    DOE's analyses indicate that the final rule saves a significant 
amount of site energy. Switching from gas loads burned on-site to 
electric loads produced off-site, at national average level emission 
rates, would result in a decrease in CO2, NOX and 
CH4 emissions and an increase of N2O, Hg, and 
SO2 emissions. Electrifying the end-use equipment results in 
emissions that become dependent upon the electricity generation mix 
delivered to the building. Relative to the case without the amended 
standards, compliant buildings constructed in the 30-year period that 
begins in the anticipated year of compliance with the amended standards 
(2025-2034) are projected to result in an increased full fuel cycle 
lifetime energy use of 0.029 quadrillion Btus.
    The benefits and costs of this final rule presented in Section V.A 
can also be expressed in terms of annualized values. The monetary 
values for the total annualized net benefits are (1) the decrease in 
capital cost, (2) the increase in operating costs, plus (3) the 
monetized value of changes in GHG, and NOX, and 
SO2 emissions, all annualized.\50\ The benefits and 
disbenefits associated with estimated changes in emissions as a result 
of the rule are also calculated based on the lifetime of a compliant 
building constructed in 2025-2054.
---------------------------------------------------------------------------

    \50\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in $2022, the year 
used for discounting the NPV of total costs and savings. For the 
benefits, DOE calculated a present value associated with each year's 
construction or renovations in the year in which the construction or 
renovation occur (e.g., 2030), and then discounted the present value 
from each year to 2022. Using the present value, DOE then calculated 
the fixed annual payment over a 30-year period, starting in the 
compliance year, that yields the same present value.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of this final rule are 
shown in Table VI-1 and Table VI-2. The results shown as the primary 
estimate utilize a 7-percent discount rate for operating benefits, 
costs, and health benefits and disbenefits (from changes to 
NOX and SO2 emissions), and a 3-percent discount 
rate case for climate benefits (from GHG emissions) as follows:
    Capital cost of impacts of the standards in this case are estimated 
to be $8.44 million per year in decreased equipment costs.
    Annual operating disbenefits are estimated to be $8.43 million per 
year in increased equipment operating costs, primarily driven by the 
higher relative cost of electricity compared to natural gas.
    Net climate benefits total $2.77 million per year, primarily driven 
by savings from CH4.
    Net health benefits total $1.69 million per year, primarily driven 
by NOX emissions savings overshadowing increased 
SO2 emissions.
    Overall net monetized benefits would amount to a savings of $4.48 
million per year.
    Using a 3-percent discount rate for all benefits, disbenefits and 
costs, the annualized results are as follows:
    Capital cost impacts of the standards in this case are estimated to 
be $8.08 million per year in decreased equipment costs.
    Annual operating disbenefits are estimated to be $11.05 million per 
year in increased equipment operating costs, driven by the higher 
relative cost of electricity compared to natural gas.
    Net climate benefits total $2.77 million per year, primarily driven 
by savings from CH4.
    Net health benefits total $3.03 million per year, primarily driven 
by NOX emissions savings overshadowing increased 
SO2 emissions.
    Overall net monetized benefits would amount to a savings of $2.83 
million per year.

 Table VI-2--Annualized Monetized Benefits and Costs of Final Regulation
                      Base Scenario Using AEO 2023
                             [Million 2022$]
------------------------------------------------------------------------
                                                Million 2022$/year
                                         -------------------------------
                Category                    3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
Capital Costs of Equipment Savings *....            8.08            8.44
Climate Benefits **.....................            2.77            2.77
Health Benefits ***.....................            3.03            1.69
                                         -------------------------------
    Total Benefits [dagger].............           13.88           12.91
------------------------------------------------------------------------
Operating Costs [dagger][dagger]........          -11.05           -8.43
                                         -------------------------------
    Net Benefits........................            2.83            4.48
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with this
  final rule impacted buildings in 2025-2084. These results include
  consumer, climate, and health benefits and disbenefits which accrue
  after 2054 from the buildings constructed in 2025-2054.
* Capital costs of equipment are a savings to consumers due to the base
  level efficiency electric equipment being less expensive than
  equivalent gas equipment as well as infrastructure savings from
  avoided gas line installation and exhaust venting.
** Climate benefits are calculated using four different estimates of the
  SC-GHG (see section V.C of this document). For presentational purposes
  of this table, the climate benefits associated with the average SC-GHG
  at a 3-percent discount rate are shown; however, DOE emphasizes the
  importance and value of considering the benefits calculated using all
  four sets of SC-GHG estimates. To monetize the benefits of reducing
  GHG emissions, this analysis uses the interim estimates presented in
  the February 2021 SC-GHG TSD.
*** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions.
[dagger] Total benefits for both the 3-percent and 7-percent cases are
  presented using the average SC-GHG with 3-percent discount rate.

[[Page 35413]]

 
[dagger][dagger] Negative number indicates an increased cost to building
  owners, driven primarily by higher relative cost of electricity
  compared to natural gas.

    DOE's analysis of the national impacts of the final standards is 
described in sections V.B, and V.C of this document.
    DOE's analysis is sensitive to how emission factors per unit of 
grid electricity purchased change over time. The base case presented in 
this rulemaking utilizes emission factors obtained through AEO 2023. 
AEO 2023 reflects, to the extent possible, laws and regulations adopted 
through mid-November 2022, including the Inflation Reduction Act (IRA). 
This is consistent with the methodology used in other rulemakings 
(including the efficiency portions for the analysis behind 10 CFR parts 
433 and 435) and representative of an expected or ``business as usual'' 
case. However, AEO 2023 does not fully account for President Biden's 
goal to achieve 100-percent carbon pollution-free electricity by 2035. 
Such accelerated clean grid scenarios significantly impact the overall 
emissions profile of the rule allowing for more climate benefits sooner 
in the lifecycle of the expected projects.
    Results and details for a 100-percent reduction by 2035 case are 
presented in the TSD. As noted previously, alternative cases are 
presented to show the emissions and climate impacts of this rule in 
accelerated clean grid scenarios that may flow from recent legislation 
and Administration priorities, but that are not represented in the base 
case utilizing AEO 2023 (the ``business as usual'' case).
    DOE's analysis of the impacts of the final regulation on Federal 
agencies is described in section V.A, Cost Effectiveness, of this 
document.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment, unless 
the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's website (www.energy.gov/gc/office-general-counsel).
    In the 2022 SNOPR, DOE stated that the proposed rule only applies 
to the fossil fuel-generated energy consumption of new Federal 
buildings and Federal buildings undergoing major renovations. 87 FR 
78382, 78417. Thus, the only entities directly regulated by this 
rulemaking would be Federal agencies. Id. Accordingly, DOE determined 
that an IRFA was not required. Id.
    APGA claimed that DOE erred in its determination that the rule 
would not have a significant economic impact on a substantial number of 
small businesses. APGA, Doc. No. 102, pg. 5. APGA asserted most of its 
members are small businesses. Id. APGA stated that ``[r]educing fossil 
fuels to zero will certainly impact the load and revenue of many public 
gas systems across the country.'' Id. Thus, APGA argued that the rule 
would have a significant economic impact on a substantial number of 
small businesses and DOE must prepare an IRFA or withdraw the 2022 
SNOPR. Id.
    This final rule applies only to the fossil fuel-generated energy 
consumption of new Federal buildings and Federal buildings undergoing 
major renovation. As such, the only entities directly regulated by this 
rulemaking would be Federal agencies. Under the Regulatory Flexibility 
Act, an ``agency may properly certify that no regulatory flexibility 
analysis is necessary when it determines that the rule will not have a 
significant economic impact on a substantial number of small entities 
that are subject to the requirements of the rule.'' Mid-Tex Elec. Co-
op., Inc. v. FERC, 773 F.3d 327, 342 (D.C. Cir. 1985) (emphasis added); 
see Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 870 (holding 
that the Regulatory Flexibility Act does not apply to small businesses 
indirectly affected by regulation of other entities).
    On the basis of the foregoing, DOE certifies that this final rule 
will not have a significant economic impact on a substantial number of 
small entities. Accordingly, DOE has not prepared a regulatory 
flexibility analysis for this rulemaking. DOE's certification and 
supporting statement of factual basis was provided to the Chief Counsel 
for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 
605(b).

C. Review Under the Paperwork Reduction Act

    This final rule will impose no new information or record keeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act. 44 U.S.C. 3501 et seq.

D. Review Under the National Environmental Policy Act of 1969

    DOE prepared a draft Environmental Assessment (EA) (DOE/EA-1778) 
entitled, ``Environmental Assessment for Supplemental Notice of 
Proposed Rulemaking, 10 CFR parts 433 and 435, `Clean Energy for New 
Federal Buildings and Major Renovations of Federal Buildings,' '' 
pursuant to the Council on Environmental Quality's (CEQ) Regulations 
for Implementing the Procedural Provisions of the National 
Environmental Policy Act (NEPA) (40 CFR parts 1500-1508), NEPA, as 
amended (42 U.S.C. 4321 et seq.), and DOE's NEPA Implementing 
Procedures (10 CFR part 1021).
    This draft EA addressed the possible environmental effects 
attributable to the implementation of this final rule. The draft EA 
stated that the rule, by its fundamental intent, would have a positive 
impact on the environment and the anticipated impacts of this 
rulemaking would be an overall decrease in CO2 equivalent 
gases (despite modest increases in base CO2 and 
N2O emissions, CH4 emission reductions result in 
net savings) with an additional decrease in NOX emission and 
an increase in SO2 emissions resulting from reduced fossil 
fuel-generated energy consumption in new Federal buildings and major 
renovations of Federal buildings but increased electric purchases from 
the grid. In the draft EA, DOE concluded that the new Federal buildings 
designed and constructed and major renovations of Federal buildings 
designed and completed to be compliant with the proposed rule would not 
have a significant environmental impact.
    DOE posted this draft EA on its Office of NEPA Policy and 
Compliance website on December 7, 2022.\51\ The draft EA requested 
interested parties to submit comments by December 22, 2022. No comments 
were received.
---------------------------------------------------------------------------

    \51\ Available at www.energy.gov/nepa/articles/doeea-2183-draft-environmental-assessment.
---------------------------------------------------------------------------

    DOE recently updated its analysis to included data made available 
since it prepared the draft EA. DOE again

[[Page 35414]]

concludes that the new Federal buildings designed and constructed and 
major renovations of Federal buildings designed and completed to be 
compliant with this rule will not have a significant environmental 
impact in a Finding of No Significant Impact (FONSI).\52\
---------------------------------------------------------------------------

    \52\ Available at www.energy.gov/nepa/listings/findings-no-significant-impact-fonsis.
---------------------------------------------------------------------------

    In its comments on the rule, APGA stated that it is unclear how the 
draft EA addresses the possible environmental affects attributable to 
the implementation of the 2022 SNOPR. APGA, Doc. No. 102, pg. 4. APGA 
asserted that because the rule proposed in the 2022 SNOPR is 
significantly different than the rule proposed in the 2010 NOPR, DOE 
cannot rely on the draft EA that was developed over a decade ago in 
support of the 2010 NOPR. Id. However, as explained in the 2022 SNOPR, 
DOE prepared a new draft EA that considered the possible environmental 
effects attributable to the implementation of the rule proposed in the 
2022 SNOPR. 87 FR 78382, 78417. Thus, DOE did not rely on the draft EA 
prepared in 2010, but rather prepared a new draft EA prior to 
publishing the 2022 SNOPR.

E. Review Under Executive Order 13132

    E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes 
certain requirements on Federal agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The Executive order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The Executive order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations. 65 FR 13735. DOE has examined this final rule and has 
tentatively determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, no 
further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil 
Justice Reform,'' imposes on Federal agencies the general duty to 
adhere to the following requirements: (1) eliminate drafting errors and 
ambiguity, (2) write regulations to minimize litigation, (3) provide a 
clear legal standard for affected conduct rather than a general 
standard, and (4) promote simplification and burden reduction. 61 FR 
4729 (Feb. 7, 1996). Regarding the review required by section 3(a), 
section 3(b) of E.O. 12988 specifically requires that executive 
agencies make every reasonable effort to ensure that the regulation: 
(1) clearly specifies the preemptive effect, if any, (2) clearly 
specifies any effect on existing Federal law or regulation, (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction, (4) specifies the retroactive 
effect, if any, (5) adequately defines key terms, and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this final rule meets the 
relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C. 
1531). For a proposed regulatory action likely to result in a rule that 
may cause the expenditure by State, local, and Tribal governments, in 
the aggregate, or by the private sector of $100 million or more in any 
one year (adjusted annually for inflation), section 202 of UMRA 
requires a Federal agency to publish a written statement that estimates 
the resulting costs, benefits, and other effects on the national 
economy. 2 U.S.C. 1532(a), (b). The UMRA also requires a federal agency 
to develop an effective process to permit timely input by elected 
officers of State, local, and Tribal governments on a proposed 
``significant intergovernmental mandate,'' and requires an agency plan 
for giving notice and opportunity for timely input to potentially 
affected small governments before establishing any requirements that 
might significantly or uniquely affect them. On March 18, 1997, DOE 
published a statement of policy on its process for intergovernmental 
consultation under UMRA. 62 FR 12820. DOE's policy statement is also 
available at www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    This final rulemaking contains neither an intergovernmental mandate 
nor a mandate that may result in the expenditure of $100 million or 
more in any year by State, local and Tribal governments, in the 
aggregate, or by the private sector so these requirements under the 
UMRA do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This final rule would not have any impact on the autonomy or integrity 
of the family as an institution. Accordingly, DOE has concluded that it 
is not necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

    Pursuant to E.O. 12630, ``Governmental Actions and Interference 
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15, 
1988), DOE has determined that this final rule would not result in any 
takings that might require compensation under the Fifth Amendment to 
the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under information 
quality guidelines established by each agency pursuant to general 
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 
(Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at

[[Page 35415]]

www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this final rule under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    E.O. 13211, ``Actions Concerning Regulations That Significantly 
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22, 
2001), requires Federal agencies to prepare and submit to OIRA at OMB, 
a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that (1) is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    One commenter raised procedural concerns related to the preparation 
of a Statement of Energy Effects in response to the 2022 SNOPR. APGA, 
Doc. No. 102, pg. 4. Specifically, APGA stated that DOE's conclusion 
that the proposed rule would not have a significant energy impact does 
not mean that it would not, especially when the Federal government is 
the largest energy consumer in the nation, Id., pg. 5.
    Although it may be true that the government as whole is the largest 
energy consumer in the nation, this rule affects a subset of qualified 
new Federal buildings and major renovation projects and does not 
directly affect the supply, distribution, or consumption of energy for 
all Federal buildings. Rather, the impact of this rule is estimated to 
be less than an additional 0.029 quads of full fuel cycle energy. When 
compared with the total estimated use of 22 quads of energy per year in 
the U.S. buildings sector, the impact of this rule only represents 
0.004 percent of the total energy consumption of the sector over the 
30-year analysis period. Furthermore, the rule is not anticipated to 
have any direct effect on energy supplies.
    This final rule would not have a significant adverse effect on the 
supply, distribution, or use of energy. Moreover, as the rulemaking 
would result in increased building level energy efficiency, it would 
not have a significant adverse effect on energy. For these reasons, the 
rulemaking is not a significant energy action. Accordingly, DOE has not 
prepared a Statement of Energy Effects.

L. Information Quality

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (``OSTP''), issued its Final Information 
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan. 
14, 2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, EIA's 
CBECS and RECS are ``influential scientific information,'' which the 
Bulletin defines as ``scientific information that the agency reasonably 
can determine will have or does have a clear and substantial impact on 
important public policies or private sector decisions.'' 70 FR 2664, 
2667 (Jan. 14, 2005). The Academy recommendations have been peer 
reviewed pursuant to section II.2 of the Bulletin. Both surveys are 
peer reviewed internally within EIA and other DOE offices before they 
are published. In addition, both surveys are subject to public comment 
that EIA addresses before finalizing CBECS and RECS.

VII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects

10 CFR Part 433

    Buildings and facilities, Energy conservation, Engineers, Federal 
buildings and facilities, Fossil fuel reductions, Housing, Multi-family 
residential buildings.

10 CFR Part 435

    Buildings and facilities, Energy conservation, Engineers, Federal 
buildings and facilities, Fossil fuel reductions, Housing.

Signing Authority

    This document of the Department of Energy was signed on April 12, 
2024, by Mary Sotos, the Director of the Federal Energy Management 
Program, pursuant to delegated authority from the Secretary of Energy. 
That document with the original signature and date is maintained by 
DOE. For administrative purposes only, and in compliance with 
requirements of the Office of the Federal Register, the undersigned DOE 
Federal Register Liaison Officer has been authorized to sign and submit 
the document in electronic format for publication, as an official 
document of the Department of Energy. This administrative process in no 
way alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on April 12, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons set forth in the preamble, DOE amends parts 433 and 
435 of chapter II of title 10 of the Code of Federal Regulations as set 
forth below:

PART 433--ENERGY EFFICIENCY STANDARDS FOR THE DESIGN AND 
CONSTRUCTION OF NEW FEDERAL COMMERCIAL AND MULTI-FAMILY HIGH-RISE 
RESIDENTIAL BUILDINGS

0
1. The authority citation for part 433 continues to read as follows:

    Authority:  42 U.S.C. 6831-6832, 6834-6835; 42 U.S.C. 7101 et 
seq.

0
2. Amend Sec.  433.1 by adding paragraph (b) to read as follows:


Sec.  433.1  Purpose and scope.

* * * * *
    (b) This part also establishes a maximum allowable fossil fuel-
generated energy consumption standard for new Federal buildings that 
are commercial or multi-family high-rise residential buildings and 
major renovations to Federal buildings that are commercial or multi-
family high-rise residential buildings, for which design for 
construction began on or after May 1, 2025.
* * * * *
0
3. Amend Sec.  433.2 by:
0
a. Adding in alphabetical order the definitions of ``Construction 
cost,'' ``Design for renovation,'' ``EISA-subject building or 
project'', ``Federal building,'' ``Fiscal year (FY),'' ``Fossil fuel-
generated energy consumption,'' ``Major renovation,'' ``Major 
renovation cost,'' ``Major renovation of all Scope 1 fossil fuel-using 
systems in a building,'' ``Major renovation of a Scope 1 fossil fuel-
using building system or Scope 1 fossil-fuel-using component,'' and 
``Multi-family high-rise residential building'';

[[Page 35416]]

0
b. Revising the definition of ``Proposed building''; and
0
c. Adding in alphabetical order the definitions of ``Shift adjustment 
multiplier,'' and ``Technical impracticability''.
    The additions and revision read as follows:


Sec.  433.2  Definitions.

* * * * *
    Construction cost means all costs associated with the construction 
of a new Federal building. It includes, but is not limited to, the cost 
of preliminary planning, engineering, architectural, permitting, fiscal 
and economic investigations and studies, surveys, designs, plans, 
working drawings, specifications, procedures, and other similar actions 
necessary for the construction of a new Federal building. It does not 
include the cost of acquiring the land.
* * * * *
    Design for renovation means the stage when the energy efficiency 
and sustainability details (such as insulation levels, HVAC systems, 
water-using systems, etc.) are either explicitly determined or 
implicitly included in a renovation project cost specification.
    EISA-subject building or project means, for purposes of this rule, 
any new Federal building or renovation project that is subject to the 
cost thresholds and reporting requirements in Section 433 of Energy 
Independence and Security Act of 2007 (EISA) ((Pub. L. 110-140, 
codified at 42 U.S.C. 6834(a)(3)(D)(i))).
* * * * *
    Federal building means any building to be constructed by, or for 
the use of, any Federal agency. Such term shall include buildings built 
for the purpose of being leased by a Federal agency and privatized 
military housing.
    Fiscal year (FY) means the 12-month period beginning on October 1 
of the year prior to the specified calendar year and ending on 
September 30 of the specified calendar year.
    Fossil fuel-generated energy consumption means the on-site 
stationary consumption of fossil fuels that contribute to Scope 1 
emissions for generation of electricity, heat, cooling, or steam as 
defined by ``Federal Greenhouse Gas Accounting and Reporting Guidance'' 
(Council on Environmental Quality, January 17, 2016). This includes, 
but is not limited to, combustion of fuels in stationary sources (e.g., 
boilers, furnaces, turbines, and emergency generators). This term does 
not include mobile sources, fugitive emissions, or process emissions as 
defined by ``Federal Greenhouse Gas Accounting and Reporting Guidance'' 
(Council on Environmental Quality, January 17, 2016).
* * * * *
    Major renovation means either major renovation of all Scope 1 
fossil fuel-using systems in a Federal building or major renovation of 
one or more Scope 1 fossil fuel-using building systems or components, 
as defined in this section.
    Major renovation cost means all costs associated with the 
repairing, remodeling, improving, extending, or other changes in a 
federal building. It includes, but is not limited to, the cost of 
preliminary planning, engineering, architectural, permitting, fiscal 
and economic investigations and studies, surveys, designs, plans, 
working drawings, specifications, procedures, and other similar actions 
necessary for the alteration of a Federal building.
    Major renovation of all Scope 1 fossil fuel-using systems in a 
building means construction on an existing Federal building that is so 
extensive that it replaces all Scope 1 fossil fuel-using systems in the 
building. This term includes, but is not limited to, comprehensive 
replacement or restoration of most or all major systems, interior work 
(such as ceilings, partitions, doors, floor finishes, etc.), or 
building elements and features.
    Major renovation of a Scope 1 fossil fuel-using building system or 
Scope 1 fossil fuel-using component means changes to a federal building 
that provide significant opportunities for energy efficiency or 
reduction in fossil fuel-related energy consumption. This includes, but 
is not limited to, replacement of the HVAC system, hot water system, or 
cooking system, or other fossil fuel-using systems or components of the 
building that have a major impact on fossil fuel usage.
    Multi-family high-rise residential building means a residential 
Federal building that contains 3 or more dwelling units and that is 
designed to be 4 or more stories above grade.
* * * * *
    Proposed building means the design for construction of a new 
Federal commercial or multi-family high-rise residential building, 
proposed for construction, or a major renovation to a Federal 
commercial or multi-family high-rise residential building.
* * * * *
    Shift adjustment multiplier means a multiplication factor that 
agencies may apply to their Maximum Allowable Fossil Fuel-Generated 
Energy Consumption by Building Category target based upon the weekly 
hours of active operation of the building. The weekly hours of 
operation used as a basis for the shift adjustment multiplier lookup 
include the time in which in the building is actively occupied and 
operating per its intended use type and unoccupied hours or other times 
of limited use (such as night-time setback hours).
    Technical impracticability means achieving the fossil fuel-based 
energy consumption targets would:
    (1) Not be feasible from an engineering design or execution 
standpoint due to existing physical or site constraints that prohibit 
modification or addition of elements or spaces;
    (2) Significantly obstruct building operations and the functional 
needs of a building, specifically for industrial process loads, 
critical national security functions, mission critical information 
systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and research 
operations; or
    (3) Significantly degrade energy resiliency and energy security of 
building operations as defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 
101(e)(7) respectively.

0
4. Subpart B is added to part 433 to read as follows:
Subpart B--Reduction in Scope 1 Fossil Fuel-Generated Energy 
Consumption
Sec.
433.200 Scope 1 Fossil fuel-generated energy consumption 
requirement.
433.201 Scope 1 Fossil fuel-generated energy consumption 
determination.
433.202 Petition for downward adjustment.
Appendix A to Subpart B of Part 433--Maximum Allowable Scope 1 
Fossil Fuel-Generated Energy Consumption


Sec.  433.200  Scope 1 Fossil fuel-generated energy consumption 
requirement.

    (a) New EISA-Subject buildings. (1) New Federal buildings that are 
commercial or multi-family high-rise residential buildings, for which 
design for construction began on or after May 1, 2025 must be designed 
to meet the requirements of paragraph (c) of this section if:
    (i) For Federally owned public buildings or leased Federal 
buildings, the construction cost of the new building exceeds GSA's 
Annual Prospectus Thresholds that are found at https://www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds; or
    (ii) For Federally owned non-public buildings, the cost of the 
building is at least $2,500,000 (in 2007 dollars, adjusted for 
inflation). For the purposes of calculating this threshold, projects 
should set the Bureau of Labor and

[[Page 35417]]

Statistics CPI Inflation calculator to $2,500,000 in October of 2006 
(to represent the value of the original cost threshold) and then set 
for October of the FY during which the design for construction of the 
project began or is set to begin.
    (2) [Reserved]
    (b) Major renovations of EISA-Subject buildings. (1) Major 
renovations to Federal buildings that are commercial or multi-family 
high-rise residential buildings, for which design for construction 
began on or after May 1, 2025, must be designed to meet the 
requirements of paragraphs (c) or (d) of this section, as applicable, 
if:
    (i) The renovation is a major renovation to a public building as 
defined in 40 U.S.C. 3301 and for which transmittal of a prospectus to 
Congress is required under 40 U.S.C. 3307; or
    (ii) The cost of the major renovation of a Federally owned building 
is at least $2,500,000 (in 2007 dollars, adjusted for inflation). For 
the purposes of calculating this threshold, projects should set the 
Bureau of Labor and Statistics CPI Inflation calculator to $2,500,000 
in October of 2006 (to represent the value of the original cost 
threshold) and then set for October of the FY during which the design 
for construction of the project began or is set to begin. The cost of a 
major renovation for a Federally leased building is at least the amount 
listed for alterations in leased buildings that would need to transmit 
a prospectus to Congress under section 3307 of title 40. See GSA Annual 
Prospectus Thresholds at https://www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds.
    (2) This subpart only applies to major renovations that meet the 
definition of ``major renovation of all Scope 1 fossil fuel-using 
systems in a federal building'' or ``major renovation of a Scope 1 
fossil fuel-using building system or Scope 1 fossil fuel-using 
component.''
    (3) For leased buildings, this subpart applies to major renovations 
only if the building was originally built for the use of any Federal 
agency, including being leased by a Federal agency.
    (4) This subpart applies only to the portions of the proposed 
building or proposed building systems that are being renovated and to 
the extent that the scope of the renovations permits compliance with 
the applicable requirements of this subpart. Unaltered portions of the 
proposed building or proposed building systems are not required to 
comply with this subpart.
    (c) Federal buildings that are of the type included in appendix A 
of this subpart.
    (1) New Construction and Major Renovations of all Scope 1 Fossil 
Fuel-Using Systems in EISA-Subject Buildings.
    (i) Design for construction began during FY 2024 through FY 2029. 
For new construction or major renovations of all Scope 1 fossil fuel-
using systems in a Federal building for which design for construction 
or renovation, as applicable, began during FY 2024 through 2029, the 
Scope 1 fossil fuel-generated energy consumption of the proposed 
building, based on the building design and calculated according to 
Sec.  433.201(a), must not exceed the value identified in Tables A-1a 
to A-2a (if targets based on emissions are used) or Tables A-1b to A-2b 
(if targets based on kBtu of fossil fuel usage are used) of appendix A 
of this subpart for the associated building type, climate zone, and 
fiscal year in which design for construction begins.
    (A) Federal agencies may apply a shift adjustment multiplier to the 
values in Tables A-1a to A-2a or Tables A-1b to A-2b based on the 
following baseline hours of operation assumed in Tables A-1a to A-2a or 
Tables A-1b to A-2b. To calculate the shift adjustment multiplier, 
agencies shall estimate the number of shifts for their new building and 
multiply by the appropriate factor shown below in Table 1 of this 
section for their building type.
    (B) The Scope 1 fossil fuel-generated energy consumption target for 
the building is the applicable value in either Tables A-1a to A-2a or 
Tables A-1b to A-2b multiplied by the shift adjustment multiplier 
calculated for that building.

                  Table 1--Shift Adjustment Multiplier by Hours of Operation and Building Type
----------------------------------------------------------------------------------------------------------------
                                                                             Weekly hours of operation
                     Building activity type                      -----------------------------------------------
                                                                    50 or less       51 to 167          168
----------------------------------------------------------------------------------------------------------------
Admin/professional office.......................................               1               1             1.4
Bank/other financial............................................               1               1             1.4
Government office...............................................               1               1             1.4
Medical office (non-diagnostic).................................               1               1             1.4
Mixed-use office................................................               1               1             1.4
Other office....................................................               1               1             1.4
Laboratory......................................................               1               1             1.4
Distribution/shipping center....................................             0.7             1.4             2.1
Nonrefrigerated warehouse.......................................             0.7             1.4             2.1
Convenience store...............................................               1               1             1.4
Convenience store with gas......................................               1               1             1.4
Grocery store/food market.......................................               1               1             1.4
Other food sales................................................               1               1             1.4
Fire station/police station.....................................             0.8             0.8             1.1
Other public order and safety...................................             0.8             0.8             1.1
Medical office (diagnostic).....................................               1               1             1.5
Clinic/other outpatient health..................................               1               1             1.5
Refrigerated warehouse..........................................               1               1               1
Religious worship...............................................             0.9             1.7             1.7
Entertainment/culture...........................................             0.8             1.5             1.5
Library.........................................................             0.8             1.5             1.5
Recreation......................................................             0.8             1.5             1.5
Social/meeting..................................................             0.8             1.5             1.5
Other public assembly...........................................             0.8             1.5             1.5
College/university..............................................             0.8             1.3             1.3
Elementary/middle school........................................             0.8             1.3             1.3
High school.....................................................             0.8             1.3             1.3
Preschool/daycare...............................................             0.8             1.3             1.3

[[Page 35418]]

 
Other classroom education.......................................             0.8             1.3             1.3
Fast food.......................................................             0.4             1.1             2.1
Restaurant/cafeteria............................................             0.4             1.1             2.1
Other food service..............................................             0.4             1.1             2.1
Hospital/inpatient health.......................................               1               1               1
Nursing home/assisted living....................................               1               1               1
Dormitory/fraternity/sorority...................................               1               1               1
Hotel...........................................................               1               1               1
Motel or inn....................................................               1               1               1
Other lodging...................................................               1               1               1
Vehicle dealership/showroom.....................................             0.8             1.2             1.8
Retail store....................................................             0.8             1.2             1.8
Other retail....................................................             0.8             1.2             1.8
Post office/postal center.......................................             0.7             1.5             1.5
Repair shop.....................................................             0.7             1.5             1.5
Vehicle service/repair shop.....................................             0.7             1.5             1.5
Vehicle storage/maintenance.....................................             0.7             1.5             1.5
Other service...................................................             0.7             1.5             1.5
Strip shopping mall.............................................               1               1               1
Enclosed mall...................................................               1               1               1
Bar/Pub/Lounge..................................................               1               1             1.4
Courthouse/Probation Office.....................................               1               1             1.4
----------------------------------------------------------------------------------------------------------------

    (ii) Design for construction began during or after FY 2030. For new 
construction or major renovations of all fossil fuel-using systems in 
an EISA-subject building for which design for construction or 
renovation, as applicable, began during or after FY 2030, the Scope 1 
fossil fuel-generated energy consumption of the proposed building, 
based on building design and calculated according to Sec.  433.201(a), 
must be zero.
    (C) Major Renovations of a Federal Building System or Component 
within an EISA-Subject Building. System level renovations shall follow 
the renovation requirements in section 4.2.1.3 of the applicable 
building baseline energy efficiency standards listed in Sec.  433.100 
substituting the ``design for construction'' with ``design for 
renovation'' for the relevant date and shall replace all equipment that 
is included in the renovation with all electric or non-fossil fuel-
using ENERGY STAR or Federal Energy Management Program (FEMP) 
designated products as defined in Sec.  436.42 of this chapter. For 
component level renovations, Agencies shall replace all equipment that 
is part of the renovation with all electric or non-fossil fuel-using 
ENERGY STAR or FEMP designated products as defined in Sec.  436.42 of 
this chapter.
    (D) Mixed-use buildings.
    (1) For Federal buildings subject to the requirements of paragraph 
(c)(1)(A) of this section that combine two or more building types 
identified in Tables 1a to 2a or Tables 1b to 2b of appendix A of this 
subpart, the maximum allowable fossil fuel-generated energy consumption 
of the proposed building is equal to the averaged applicable building 
type values in Tables A-1a to A-2a or Tables A-1b to A-2b weighted by 
floor area of the two or more building types. The equation which 
follows shall be used for mixed use buildings.

Equation 1: Scope 1 Fossil fuel-generated energy consumption for a 
mixed-use building = the sum across all building uses of (the fraction 
of total floor building floor area for building use i times the 
allowable fossil fuel-generated energy consumption for building use i)

    Equation 1 may be rewritten as:
    [GRAPHIC] [TIFF OMITTED] TR01MY24.000
    
    (2) For example, if a proposed building for which design for 
construction began in FY 2026 that is to be built in climate zone 4a 
has a total of 200 square feet--100 square feet of which qualifies as 
College/University and 100 square feet of which qualifies as 
Laboratory--the maximum allowable Scope 1 fossil fuel-generated energy 
consumption is equal to:

[(100 sqft. x 3 kBtu/yr.-sqft.) + (100 sqft x 10 kBtu/yr.-sqft.)]/200 
sqft. = 6.5 kBtu/yr.-sqft.

    (d) Federal buildings that are of the type not included in Appendix 
A of this subpart--
    (1) Process load buildings. For building types that are not 
included in any of the building types listed in Tables A-1a to A-2a or 
A-1b to A-2b of appendix A of this subpart, or for building types in 
these tables that contain significant process loads that are not likely 
to be found in the Commercial Buildings Energy Consumption Survey 
(CBECS) and qualify for exemption per Sec.  433.202, Federal agencies 
must select the applicable building type, climate zone, and fiscal year 
in which design for construction began from Tables 1a to 2a or 1b to 2b 
of appendix A of this subpart

[[Page 35419]]

that most closely corresponds to the proposed building without the 
process load. The estimated Scope 1 fossil fuel-generated energy 
consumption of the process load must be added to the maximum allowable 
Scope 1 fossil fuel-generated energy consumption of the applicable 
building type for the appropriate fiscal year and climate zone to 
calculate the maximum allowable Scope 1 fossil fuel-generated energy 
consumption for the building. The same estimated Scope 1 fossil fuel-
generated energy consumption of the process load that is added to the 
maximum allowable Scope 1 fossil fuel-generated energy consumption of 
the applicable building must also be used in determining the Scope 1 
fossil fuel-generated energy consumption of the proposed building.
    (2) Mixed-use buildings. For buildings that combine two or more 
building types with process loads or, alternatively, that combine one 
or more building types with process loads with one or more building 
types in Tables A-1a to A-2a or A-1b to A-2b of appendix A of this 
subpart, the maximum allowable Scope 1 fossil fuel-generated energy 
consumption of the proposed building is equal to the averaged process 
load building values determined under paragraph (d)(1) of this section 
and the applicable building type values in Tables A-1a to A-2a or A-1b 
to A-2b of appendix A of this subpart, weighted by floor area.


Sec.  433.201  Scope 1 Fossil fuel-generated energy consumption 
determination.

    (a) The fossil fuel-generated energy consumption of a proposed 
building is calculated as follows:

Equation 2: Fossil fuel-generated energy consumption = Direct Scope 1 
Fossil Fuel-Generated Consumption of Proposed Building/Floor Area

Where:

Direct Scope 1 Fossil Fuel-Generated Energy Consumption of Proposed 
Building equals the total Scope 1 fossil fuel-generated energy 
consumption of the proposed building calculated in accordance with 
the method required in Sec.  433.101(a)(5) and measured in thousands 
of British thermal units per year (kBtu/yr), except that this term 
does not include fossil fuel consumption for emergency electricity 
generation. Agencies must include all on-site fossil fuel use or 
Scope 1 emissions associated with non-emergency generation from 
backup generators (such as those for peak shaving or peak shifting). 
Any energy generation or Scope 1 emissions associated with biomass 
fuels are excluded. Any emissions associated with natural gas for 
alternatively fueled vehicles (``AFVs'') (or any other alternative 
fuel defined at 42 U.S.C. 13211 that is provided at a Federal 
building) is excluded. For buildings with manufacturing or 
industrial process loads, the process loads should be accounted for 
in the analysis for the building's fossil fuel consumption and GHG 
emissions, but are not subject to the phase down targets.
Floor Area is the area enclosed by the exterior walls of a building, 
both finished and unfinished, including indoor parking facilities, 
basements, hallways, lobbies, stairways, and elevator shafts.


Sec.  433.202  Petition for downward adjustment.

    (a) New Federal buildings, major renovations of all Scope 1 fossil 
fuel-using systems, and major renovations of a Scope 1 fossil fuel-
using building system or component in an EISA-subject building. (1) 
Upon petition by a Federal agency, the Director of FEMP may adjust the 
applicable maximum allowable Scope 1 fossil fuel-generated energy 
consumption standard with respect to a specific building, upon written 
certification from the head of the agency designing the building or 
major renovation, that the requested adjustment is the largest feasible 
reduction in Scope 1 fossil fuel energy consumption that can 
practicably be achieved in light of the specified functional needs for 
that building, as demonstrated by the following (which is not an 
exhaustive list and whose components may be further modified by 
guidance):
    (i) A statement from the Head of the Agency or their designee 
requesting the petition for downward adjustment for the building or 
renovation, that the building or renovation reduces consumption of 
Scope 1 fossil fuel energy consumption in accordance with the 
applicable energy performance standard to the maximum extent 
practicable and that each fossil fuel using product included in the 
proposed building that is of a product category covered by the ENERGY 
STAR program or FEMP for designated products is an ENERGY STAR product 
or a product meeting the FEMP designation criteria, as applicable;
    (ii) A description of the systems, technologies, and practices that 
were evaluated and unable to meet the required fossil fuel reduction, 
including a justification of why achieving the Scope 1 fossil fuel-
based energy consumption targets would be technically impracticable;
    (iii) Any other information the agency determines would help 
explain its request;
    (iv) A general description of the building or major renovation, 
including but not limited to location, use type, floor area, stories, 
expected number of occupants and occupant schedule, project type, 
project cost, and functional needs, mission critical activity, 
research, and national security operations as applicable;
    (v) The maximum allowable Scope 1 fossil fuel energy consumption 
for the building from Sec.  433.200(c) or (d);
    (vi) The estimated Scope 1 fossil fuel energy consumption of the 
proposed building; and
    (vii) A description of the proposed building's energy-related 
features, such as:
    (A) HVAC system or component type and configuration;
    (B) HVAC equipment sizes and efficiencies;
    (C) Ventilation systems or components (including outdoor air 
volume, controls technique, heat recovery systems, and economizers, if 
applicable);
    (D) Service water heating system or component configuration and 
equipment (including solar hot water, wastewater heat recovery, and 
controls for circulating hot water systems, if applicable);
    (E) Estimated industrial process loads; and
    (F) Any other on-site fossil fuel using equipment.
    (2)(i) Agencies may file one petition for a project with multiple 
buildings if the buildings are
    (A) Of the same building, building system, or component type and of 
similar size, location, and functional purpose;
    (B) Are being designed and constructed to the same set of targets 
for fossil fuel-generated energy consumption reduction; and
    (C) would require similar measures to reduce fossil fuel-generated 
energy consumption and similar adjustment to the numeric reduction 
requirement.
    (ii) The bundled petition must include the information in paragraph 
(a) of this section that pertains to all buildings, building systems, 
or components included in the petition and an additional description of 
the differences between each building, building system, or component. 
The agency is only required to show work for adjustment once.
    (3) Petitions for downward adjustment should be submitted to [email protected], or to: U.S. Department of Energy, FEMP, Director, 
Clean Energy Reduction Petitions, EE-5F, 1000 Independence Ave. SW, 
Washington, DC 20585-0121.
    (4) The Director of FEMP will make a best effort to notify the 
requesting

[[Page 35420]]

agency in writing whether the petition for downward adjustment to the 
numeric reduction requirement is approved or rejected, in 30 calendar 
days of submittal, provided that the petition is complete. If the 
Director rejects the petition or establishes a value other than that 
presented in the petition, the Director will forward its reasons for 
rejection to the petitioning agency.
    (b) Exclusions. The General Services Administration (GSA) may not 
submit petitions under paragraph (a) of this section. Agencies that are 
tenants of GSA buildings for which the agency, not GSA, has significant 
design control may submit petitions in accordance with this section.

Appendix A to Subpart B of Part 433--Maximum Allowable Scope 1 Fossil 
Fuel-Generated Energy Consumption

    (a) For purposes of the tables in this appendix, the climate 
zones are the same as those listed in the performance standards 
required by Sec.  433.100(a)(5)(i).
    (b) For purpose of appendix A, the following definitions apply:
    (1) Education means a category of buildings used for academic or 
technical classroom instruction, such as elementary, middle, or high 
schools, and classroom buildings on college or university campuses. 
Buildings on education campuses for which the main use is not as a 
classroom are included in the category relating to their use. For 
example, administration buildings are part of ``Office,'' 
dormitories are ``Lodging,'' and libraries are ``Public Assembly.''
    (2) Food sales means a category of buildings used for retail or 
wholesale of food. For example, grocery stores are ``Food Sales.''
    (3) Food service means a category of buildings used for 
preparation and sale of food and beverages for consumption. For 
example, restaurants are ``Food Service.''
    (4) Health care (Inpatient) means a category of buildings used 
as diagnostic and treatment facilities for inpatient care.
    (5) Health care (Outpatient) means a category of buildings used 
as diagnostic and treatment facilities for outpatient care. Medical 
offices are included here if they use any type of diagnostic medical 
equipment (if they do not, they are categorized as an office 
building).
    (6) Laboratory means a category of buildings equipped for 
scientific experimentation or research as well as other technical, 
analytical and administrative activities.
    (7) Lodging means a category of buildings used to offer multiple 
accommodations for short-term or long-term residents, including 
skilled nursing and other residential care buildings.
    (8) Mercantile (Enclosed and Strip Malls) means a category of 
shopping malls comprised of multiple connected establishments.
    (9) Multi-Family High-Rise Residential Buildings means a 
category of residential buildings that contain 3 or more dwelling 
units and that is designed to be 4 or more stories above grade.
    (10) Office means a category of buildings used for general 
office space, professional office, or administrative offices. 
Medical offices are included here if they do not use any type of 
diagnostic medical equipment (if they do, they are categorized as an 
outpatient health care building).
    (11) Public assembly means a category of public or private 
buildings, or spaces therein, in which people gather for social or 
recreational activities.
    (12) Public order and safety means a category of buildings used 
for the preservation of law and order or public safety.
    (13) Religious worship means a category of buildings in which 
people gather for religious activities, (such as chapels, churches, 
mosques, synagogues, and temples).
    (14) Retail (Other Than Mall) means a category of buildings used 
for the sale and display of goods other than food.
    (15) Service means a category of buildings in which some type of 
service is provided, other than food service or retail sales of 
goods.
    (16) Warehouse and storage means a category of buildings used to 
store goods, manufactured products, merchandise, raw materials, or 
personal belongings (such as self-storage).
BILLING CODE 6450-01-P

[[Page 35421]]

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[[Page 35433]]



PART 435--ENERGY EFFICIENCY STANDARDS FOR THE DESIGN AND 
CONSTRUCTION OF NEW FEDERAL LOW-RISE RESIDENTIAL BUILDINGS

0
5. The authority citation for part 435 continues to read as follows:

    Authority:  42 U.S.C. 6831-6832; 6834-6836; 42 U.S.C. 8253-54; 
42 U.S.C. 7101 et seq.

0
6. Amend Sec.  435.1, by adding paragraph (b) to read as follows:


Sec.  435.1  Purpose and scope.

* * * * *
    (b) This part also establishes a maximum allowable fossil fuel-
generated energy consumption standard for new Federal buildings that 
are low-rise residential buildings and major renovations to Federal 
buildings that are low-rise residential buildings, for which design for 
construction began on or after May 1, 2025
* * * * *

0
7. Amend Sec.  435.2 by:
0
a. Adding in alphabetical order, the definitions of ``Construction 
cost,'' ``Design for renovation'', ``EISA-subject building or 
project'', ``Federal building,'' ``Fiscal year (FY),'' ``Fossil fuel-
generated energy consumption,'' ``Major renovation,'' ``Major 
renovation cost,'' ``Major renovation of all Scope fossil fuel-using 
systems in a building,'' and ``Major renovation of a Scope 1 fossil 
fuel-using building system or Scope 1 fossil fuel-using component'';
0
b. Revising the definition of ``Proposed building''; and
0
c. Adding in alphabetical order, the definitions of ``Shift adjustment 
multiplier'' and ``Technical impracticability''.
    The additions and revision read as follows:


Sec.  435.2  Definitions.

* * * * *
    Construction cost means all costs associated with the construction 
of a new Federal building. It includes, but not limited to, the cost of 
preliminary planning, engineering, architectural, permitting, fiscal, 
and economic investigations and studies, surveys, designs, plans, 
working drawings, specifications, procedures, and other similar actions 
necessary for the construction of a new Federal building. It does not 
include the cost of acquiring the land.
* * * * *
    Design for renovation means the stage when the energy efficiency 
and sustainability details (such as insulation levels, HVAC systems, 
water-using systems, etc.) are either explicitly determined or 
implicitly included in a renovation project cost specification.
* * * * *
    EISA-subject building or project means, for purposes of this rule, 
any new building or renovation project that is subject to the cost 
thresholds and reporting requirements in Section 433 of EISA ((42 
U.S.C. 6834(a)(3)(D)(i))). The cost threshold referenced in Section 433 
of EISA is $2.5 million in 2007 dollars. GSA provides a table of annual 
updates to this cost threshold at https://www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds. GSA also provides 
a second cost threshold for renovations of leased buildings that is \1/
2\ of the cost threshold for renovation of Federally owned buildings.
* * * * *
    Federal building means any building to be constructed by, or for 
the use of, any Federal agency. Such term shall include buildings built 
for the purpose of being leased by a Federal agency and privatized 
military housing.
    Fiscal Year (FY) means the 12-month period beginning on October 1 
of the year prior to the specified calendar year and ending on 
September 30 of the specified calendar year.
    Fossil fuel-generated energy consumption means the on-site 
stationary consumption of fossil fuels that contribute to Scope 1 
emissions for generation of electricity, heat, cooling, or steam as 
defined by ``Federal Greenhouse Gas Accounting and Reporting Guidance'' 
(Council on Environmental Quality, January 17, 2016). This includes, 
but is not limited to, emissions that result from combustion of fuels 
in stationary sources (e.g., boilers, furnaces, turbines, and emergency 
generators). This term does not include mobile sources, fugitive 
emissions, or process emissions as defined by ``Federal Greenhouse Gas 
Accounting and Reporting Guidance'' (Council on Environmental Quality, 
January 17, 2016).
* * * * *
    Major renovation means either major renovation of all Scope 1 
fossil fuel-using systems in a building or major renovation of one or 
more Scope 1 fossil fuel-using building systems or components, as 
defined in this section.
    Major renovation cost means all costs associated with the 
repairing, remodeling, improving, extending, or other changes in a 
Federal building. It includes, but is not limited to, the cost of 
preliminary planning, engineering, architectural, permitting, fiscal, 
and economic investigations and studies, surveys, designs, plans, 
working drawings, specifications, procedures, and other similar actions 
necessary for the alteration of a Federal building.
    Major renovation of all Scope 1 fossil fuel-using systems in a 
building means construction on an existing building that is so 
extensive that it replaces all Scope 1 fossil fuel-using systems in the 
building. This term includes, but is not limited to, comprehensive 
replacement or restoration of most or all major systems, interior work 
(such as ceilings, partitions, doors, floor finishes, etc.), or 
building elements and features.
    Major renovation of a Scope 1 fossil fuel-using building system or 
Scope 1 fossil fuel-using component means changes to a building that 
provide significant opportunities for energy efficiency or reduction in 
fossil fuel-related energy consumption. This includes, but is not 
limited to, replacement of the HVAC system, hot water system, or 
cooking system, or other fossil fuel-using systems or components of the 
building that have a major impact on fossil fuel usage.
* * * * *
    Proposed building means the design for construction of a new 
Federal low-rise residential building, or major renovation to a Federal 
low-rise residential building, proposed for construction.
    Shift adjustment multiplier means that agencies can apply a 
multiplication factor to their Maximum Allowable Fossil Fuel-Generated 
Energy Consumption by Building Category target based upon the weekly 
hours of active operation of the building. The weekly hours of 
operation to use as a basis for the shift adjustment multiplier lookup 
should be based upon the time in which in the building is actively 
occupied and operating per its intended use type and should include 
unoccupied hours or other times of limited use (such as night-time 
setback hours).
    Technical impracticability means achieving the Scope 1 fossil fuel-
based energy consumption targets would:
    (1) Not be feasible from an engineering design or execution 
standpoint due to existing physical or site constraints that prohibit 
modification or addition of elements or spaces;
    (2) Significantly obstruct building operations and the functional 
needs of a building, specifically for industrial process loads, 
critical national security functions, mission critical information 
systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and research 
operations, or
    (3) Significantly degrade energy resiliency and energy security of

[[Page 35434]]

building operations as defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 
101(e)(7) respectively.

0
8. Subpart B is added to part 435 to read as follows:
Subpart B--Reduction in Scope 1 Fossil Fuel-Generated Energy 
Consumption
Sec.
435.200 Scope 1 Fossil fuel-generated energy consumption 
requirement.
435.201 Scope 1 Fossil fuel-generated energy consumption 
determination.
435.202 Petition for downward adjustment.

Appendix A to Subpart B of Part 435--Maximum Allowable Scope 1 Fossil 
Fuel-Generated Energy Consumption


Sec.  435.200  Scope 1 Fossil fuel-generated energy consumption 
requirement.

    (a) New EISA-Subject buildings. (1) New Federal buildings that are 
low-rise residential buildings, for which design for construction began 
on or after May 1, 2025, must be designed to meet the requirements of 
paragraph (c) of this section if:
    (i) For all leased buildings, the construction cost of the new 
building exceeds GSA's Annual Prospectus Thresholds that are found at 
www.gsa.gov/real-estate/design-construction/gsa-annual-prospectus-thresholds.
    (ii) For all Federally owned non-public buildings, the cost of the 
building is at least $2,500,000 (in 2007 dollars, adjusted for 
inflation). For the purposes of calculating this threshold, agencies 
must set the Bureau of Labor and Statistics CPI Inflation calculator to 
$2,500,000 in October of 2006 (to represent the value of the original 
cost threshold) and then set for October of the FY during which the 
design for construction of the project began or is set to begin.
    (b) Major renovations of EISA-Subject buildings. (1) Major 
renovations to Federal buildings that are low-rise residential 
buildings, for which design for construction began on or after May 1, 
2025, must be designed to meet the requirements of paragraph (c) of 
this section if the cost of the major renovation is at least $2,500,000 
(in 2007 dollars, adjusted for inflation). For the purposes of 
calculating this threshold, projects should set the Bureau of Labor and 
Statistics CPI Inflation calculator to $2,500,000 in October of 2006 
(to represent the value of the original cost threshold) and then set 
for October of the FY during which the design for construction of the 
project began or is set to begin.
    (2) This subpart applies only to the portions of the proposed 
building or proposed building systems that are being renovated and to 
the extent that the scope of the renovation permits compliance with the 
applicable requirements in this subpart. Unaltered portions of the 
proposed building or proposed building systems are not required to 
comply with this subpart.
    (3) For leased buildings, this subpart applies to major renovations 
only if the proposed building was originally built for the use of any 
Federal agency, including for the purpose of being leased by a Federal 
agency.
    (c) Federal buildings that are of the type included in Appendix A 
of this subpart--(1) New Construction and Major Renovations of all 
Scope 1 Fossil Fuel-Using Systems in an EISA-Subject Building.
    (i) Design for construction began during FY 2024 through FY 2029. 
For new construction or major renovations of all fossil fuel-using 
systems in an EISA-subject building, for which design for construction 
or renovation, as applicable, began during FY 2024 through 2029, the 
Scope 1 fossil fuel-generated energy consumption of the proposed 
building, based on the building design and calculated according to 
Sec.  435.201(a), must not exceed the value identified in Tables A-1a 
to A-2a (if targets based on Scope 1 emissions are used) or Tables A-1b 
to A-2b (if targets based on kBtu of fossil fuel usage are used) of 
Appendix A of this subpart for the associated building type, climate 
zone, and fiscal year in which design for construction began.
    (A) Federal agencies may apply a shift adjustment multiplier to the 
values in Tables A-1a to A-2a or Tables A-1b to A-2b based on the 
following baseline hours of operation assumed in Tables A-1a to A-2a or 
Tables A-1b to A-2b.
    (B) To calculate the shift adjustment multiplier, agencies shall 
estimate the number of shifts for their new building and multiply by 
the appropriate factor shown below in Table 1 for their building type. 
The Scope 1 fossil fuel-generated energy consumption target for the 
building would be the value in either Tables A-1a to A-2a or Tables A-
1b to A-2b multiplied by the multiplier calculated in the previous 
sentence.

                  Table 1--Shift Adjustment Multiplier by Hours of Operation and Building Type
----------------------------------------------------------------------------------------------------------------
                                                                             Weekly hours of operation
                     Building activity/type                      -----------------------------------------------
                                                                    50 or less       51 to 167          168
----------------------------------------------------------------------------------------------------------------
Admin/professional office.......................................               1               1             1.4
Bank/other financial............................................               1               1             1.4
Government office...............................................               1               1             1.4
Medical office(non-diagnostic)..................................               1               1             1.4
Mixed-use office................................................               1               1             1.4
Other office....................................................               1               1             1.4
Laboratory......................................................               1               1             1.4
Distribution/shipping center....................................             0.7             1.4             2.1
Nonrefrigerated warehouse.......................................             0.7             1.4             2.1
Convenience store...............................................               1               1             1.4
Convenience store with gas......................................               1               1             1.4
Grocery store/food market.......................................               1               1             1.4
Other food sales................................................               1               1             1.4
Fire station/police station.....................................             0.8             0.8             1.1
Other public order and safety...................................             0.8             0.8             1.1
Medical office (diagnostic).....................................               1               1             1.5
Clinic/other outpatient health..................................               1               1             1.5
Refrigerated warehouse..........................................               1               1               1
Religious worship...............................................             0.9             1.7             1.7
Entertainment/culture...........................................             0.8             1.5             1.5
Library.........................................................             0.8             1.5             1.5
Recreation......................................................             0.8             1.5             1.5
Social/meeting..................................................             0.8             1.5             1.5

[[Page 35435]]

 
Other public assembly...........................................             0.8             1.5             1.5
College/university..............................................             0.8             1.3             1.3
Elementary/middle school........................................             0.8             1.3             1.3
High school.....................................................             0.8             1.3             1.3
Preschool/daycare...............................................             0.8             1.3             1.3
Other classroom education.......................................             0.8             1.3             1.3
Fast food.......................................................             0.4             1.1             2.1
Restaurant/cafeteria............................................             0.4             1.1             2.1
Other food service..............................................             0.4             1.1             2.1
Hospital/inpatient health.......................................               1               1               1
Nursing home/assisted living....................................               1               1               1
Dormitory/fraternity/sorority...................................               1               1               1
Hotel...........................................................               1               1               1
Motel or inn....................................................               1               1               1
Other lodging...................................................               1               1               1
Vehicle dealership/showroom.....................................             0.8             1.2             1.8
Retail store....................................................             0.8             1.2             1.8
Other retail....................................................             0.8             1.2             1.8
Post office/postal center.......................................             0.7             1.5             1.5
Repair shop.....................................................             0.7             1.5             1.5
Vehicle service/repair shop.....................................             0.7             1.5             1.5
Vehicle storage/maintenance.....................................             0.7             1.5             1.5
Other service...................................................             0.7             1.5             1.5
Strip shopping mall.............................................               1               1               1
Enclosed mall...................................................               1               1               1
Bar/Pub/Lounge..................................................               1               1             1.4
Courthouse/Probation Office.....................................               1               1             1.4
----------------------------------------------------------------------------------------------------------------

    (ii) Design for construction began during or after FY 2030. For new 
construction and major renovations of all Scope 1 fossil fuel-using 
systems in an EISA-subject building, the Scope 1 fossil fuel-generated 
energy consumption of the proposed building, based on building design 
and calculated according to Sec.  435.201(a), must be zero.
    (2) Major Renovations of a Scope 1 Fossil Fuel-Using Building 
System or Component within an EISA-Subject Building shall follow the 
renovation requirements in section 4.2.1.3 of the applicable building 
baseline energy efficiency standards listed in Sec.  435.4 substituting 
the term ``design for construction'' with ``design for renovation'' for 
the relevant date, and shall replace all equipment that is included in 
the renovation with all electric or non-fossil fuel-using ENERGY STAR 
or FEMP designated products as defined in Sec.  436.42. For component 
level renovations, Agencies shall replace all equipment that is part of 
the renovation with all electric or non-fossil fuel-using ENERGY STAR 
or FEMP designated products as defined in Sec.  436.42.
    (d) EISA-Subject buildings that are of the type not included in 
Appendix A of this subpart--(1) Process load buildings. For building 
types that are not included in any of the building types listed in 
Tables A-1a to A-2a or A-1b to A-2b of appendix A of this subpart, or 
for building types in these tables that contain significant process 
loads, Federal agencies must select the applicable building type, 
climate zone, and fiscal year in which design for construction began 
from Tables A-1a to A-2a or A-1b to A-2b of appendix A of this subpart 
that most closely corresponds to the proposed building without the 
process load. The estimated Scope 1 fossil fuel-generated energy 
consumption of the process load must be added to the maximum allowable 
Scope 1 fossil fuel-generated energy consumption of the applicable 
building type for the appropriate fiscal year and climate zone to 
calculate the maximum allowable Scope 1 fossil fuel-generated energy 
consumption for the building. The same estimated Scope 1 fossil fuel-
generated energy consumption of the process load that is added to the 
maximum allowable Scope 1 fossil fuel-generated energy consumption of 
the applicable building must also be used in determining the Scope 1 
fossil fuel-generated energy consumption of the proposed building.

    (2) Mixed-use buildings. For buildings that combine two or more 
building types with process loads or, alternatively, that combine one 
or more building types with process loads with one or more building 
types in Tables A-1a toA-2a or A-1b to A-2b of appendix A of this 
subpart, the maximum allowable Scope 1 fossil fuel-generated energy 
consumption of the proposed building is equal to the averaged process 
load building values determined under paragraph (d)(1) of this section 
and the applicable building type values in Tables A-1a toA-2a or A-1b 
to A-2b of appendix A of this subpart, weighted by floor area. Equation 
1 shall be used for mixed use buildings.

Equation 1: Scope 1 Fossil fuel generated energy consumption for a 
mixed-use building = the sum across all building uses of (the fraction 
of total floor building floor area for building use i times the 
allowable fossil fuel-generated energy consumption for building use i)

    Equation 1 may be rewritten as:

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Sec.  435.201  Scope 1 Fossil fuel-generated energy consumption 
determination.

    (a) The Scope 1 fossil fuel-generated energy consumption of a 
proposed design is calculated as follows:

Equation: Scope 1 Fossil Fuel-Generated Energy Consumption = Direct 
Fossil Fuel Consumption of Proposed Building/Floor Area

Where:

Direct Scope 1 Fossil Fuel-Generated Energy Consumption of Proposed 
Building equals the total site Scope 1 fossil fuel-generated energy 
consumption of the proposed building calculated in accordance with 
the method required in Sec.  435.5(d), and measured in thousands of 
British thermal units per year (kBtu/yr), except that this term does 
not include fossil fuel consumption for emergency electricity 
generation. Agencies must include all on-site fossil fuel use or 
Scope 1 emissions associated with non-emergency generation from 
backup generators (such as those for peak shaving or peak shifting). 
Any energy generation or Scope 1 emissions associated with biomass 
fuels are excluded. Any emissions associated with natural gas for 
alternatively fueled vehicles (``AFVs'') (or any other alternative 
fuel defined at 42 U.S.C. 13211 that is provided at a Federal 
building) is excluded. For buildings with manufacturing or 
industrial process loads, such process loads shall be accounted for 
in the analysis for the building's fossil fuel consumption and GHG 
emissions, but the process loads are not subject to the phase down 
targets.
Floor Area is the floor area of the structure that is enclosed by 
exterior walls, including finished or unfinished basements, finished 
or heated space in attics, and garages if they have an uninsulated 
wall in common with the house. Not included are crawl spaces, and 
sheds and other buildings that are not attached to the house.


Sec.  435.202  Petition for downward adjustment.

    (a) New Federal buildings major renovations of all Scope 1 fossil 
fuel-using systems, and major renovations of a Scope 1 fossil fuel-
using building system or component in an EISA-subject building. (1) 
Upon petition by a Federal agency, the Director of FEMP may adjust the 
applicable maximum allowable Scope 1 fossil fuel energy consumption 
standard with respect to a specific building, upon written 
certification from the head of the agency designing the building, that 
the requested adjustment is the largest feasible reduction in Scope 1 
fossil fuel energy consumption that can practicably be achieved in 
light of the specified functional needs for that building, as 
demonstrated by:
    (i) A statement from the Head of the Agency or their designee 
requesting the petition for downward adjustment for the building or 
renovation, that the building or renovation reduces consumption of 
Scope 1 fossil fuel energy consumption in accordance with the 
applicable energy performance standard to the maximum extent 
practicable and that each fossil fuel using product included in the 
proposed building that is of a product category covered by the ENERGY 
STAR program or FEMP for designated products is an ENERGY STAR product 
or a product meeting the FEMP designation criteria, as applicable;
    (ii) A description of the systems, technologies, and practices that 
were evaluated and unable to meet the required fossil fuel reduction 
including a justification of why achieving the Scope 1 fossil fuel-
based energy consumption targets would be technically impracticable; 
and
    (iii) Any other information the agency determines would help 
explain its request.
    (2) The head of the agency designing the building, or their 
designee, must also include the following information in the petition:
    (i) A general description of the building or major renovation, 
including but not limited to location, use type, floor area, stories, 
expected number of occupants and occupant schedule, project type, 
project cost, and functional needs, mission critical activity, 
research, and national security operations as applicable;
    (ii) The maximum allowable Scope 1 fossil fuel energy consumption 
for the building from paragraphs (c) or (d) of this section;
    (iii) The estimated Scope 1 fossil fuel energy consumption of the 
proposed building; and
    (iv) A description of the proposed building's energy-related 
features, such as:
    (A) HVAC system or component type and configuration;
    (B) HVAC equipment sizes and efficiencies;
    (C) Ventilation systems or components (including outdoor air 
volume, controls technique, heat recovery systems, and economizers, if 
applicable);
    (D) Service water heating system or component configuration and 
equipment (including solar hot water, wastewater heat recovery, and 
controls for circulating hot water systems, if applicable);
    (E) Estimated industrial process loads; and
    (F) Any other on-site fossil fuel using equipment.
    (3) (i) Agencies may file one petition for a project with multiple 
buildings if the buildings are
    (A) Of the same building, building system, or component type and of 
similar size and location;
    (B) Are being designed and constructed to the same set of targets 
for fossil fuel-generated energy consumption reduction; and
    (C) Would require similar measures to reduce fossil fuel-generated 
energy consumption and similar adjustment to the numeric reduction 
requirement.
    (ii) The bundled petition must include the information in section 
(a) that pertains to all buildings, building systems or components 
included in the petition and an additional description of the 
differences between each of the buildings, building systems or 
components. The agency is only required to show work for adjustment 
once.
    (4) Petitions for downward adjustment should be submitted to [email protected], or to:
    U.S. Department of Energy, FEMP, Director, Clean Energy Reduction 
Petitions, EE-5F, 1000 Independence Ave. SW, Washington, DC 20585-0121.
    (5) The Director will make a best effort to notify the requesting 
agency in writing whether the petition for downward adjustment to the 
numeric reduction requirement is approved or rejected, in 30 calendar 
days of submittal of a complete petition. If the Director rejects the 
petition or establishes a value other than that presented in the 
petition, the Director will forward the reasons for rejection to the 
petitioning agency.
    (b) Exclusions. The General Services Administration (GSA) may not 
submit petitions under paragraphs (a) of this section. Agencies that 
are tenants of GSA buildings for which the agency, not GSA, has 
significant design control may

[[Page 35437]]

submit petitions in accordance with this section.

Appendix A to Subpart B of Part 435 Maximum Allowable Fossil Fuel 
Generated Energy Consumption

    (a) For purposes of the tables in this appendix, the climate 
zones are listed in the performance standards required by Sec.  
435.4(a)(4)(i).
    (b) For purpose of appendix A, the following definitions apply:
    (1) Mobile Home means a dwelling unit built to the Federal 
Manufactured Home Construction and Safety Standards in 24 CFR part 
3280, that is built on a permanent chassis and moved to a site. It 
may be placed on a permanent or temporary foundation and may contain 
one or more rooms.
    (2) Multi-Family in 2-4 Unit Buildings means a category of 
structures that is divided into living quarters for two, three, or 
four families or households in which one household lives above or 
beside another. This category also includes houses originally 
intended for occupancy by one family (or for some other use) that 
have since been converted to separate dwellings for two to four 
families.
    (3) Multi-Family in 5 or More Unit Buildings means a category of 
structures that contain living quarters for five or more households 
or families and in which one household lives above or beside 
another.
    (4) Single-Family Attached means a building with two or more 
connected dwelling units, generally with a shared wall, each 
providing living space for one household or family. Attached houses 
are considered single-family houses as long as they are not divided 
into more than one dwelling unit and they have independent outside 
entrances. A single-family house is contained within walls extending 
from the basement (or the ground floor, if there is no basement) to 
the roof. Townhouses, row houses, and duplexes are considered 
single-family attached dwelling units, as long as there is no 
dwelling unit above or below another.
    (5) Single-Family Detached means a separate, unconnected 
dwelling unit, not sharing a wall with any other building or 
dwelling unit, which provides living space for one household or 
family. A single-family house is contained within walls extending 
from the basement (or the ground floor, if there is no basement) to 
the roof. This includes modular homes but does not include mobile 
homes.

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[FR Doc. 2024-08196 Filed 4-30-24; 8:45 am]
BILLING CODE 6450-01-P