November 28, 2021

Volume XI, Number 332

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New Legislation (AB 802) To Replace Existing Energy Use Disclosure Law (AB 1103)

On Thursday, October 8, 2015, Governor Jerry Brown signed into law Assembly Bill 802 (AB 802). AB 802 creates a new energy use disclosure program for the State of California, and replaces the existing law, Assembly Bill 1103 (AB 1103), which was codified in Public Resource Code Section 25402.10. The key implications of AB 802 on California real estate transactions are: 

  1. AB 1103 will remain in effect until December 31, 2015, and until such time, the disclosure of building energy use shall continue to be required in connection with a sale, lease, finance, or refinance of an entire building. 

  2. AB 1103 will be repealed effective January 1, 2016, meaning the statute and regulations will no longer be in effect after such date. 

  3. There will be no statewide energy use disclosure requirement in 2016. 

  4. In 2016, the California Energy Commission (CEC) will engage in a public process to develop regulations and establish a new reporting infrastructure for the new program under AB 802. 

  5. The CEC anticipates that new regulations will be in effect by January 1, 2017.

The Existing Law – AB 1103

California's existing energy use disclosure program, AB 1103, has been plagued with implementation problems since the enactment of the law in 2007.
Under AB 1103, utilities are required to maintain records of the energy consumption of certain nonresidential buildings. Utilities are required to make the energy consumption data available upon request of a building owner or operator. An owner or operator in turn is required to disclose benchmarking data and ratings for a building for the most recent 12 months to a prospective buyer, lessee, or lender. (Public Resources Code §25402.10.)

In practice, however, it has been difficult for building owners and operators to obtain the data from the utilities due to, among other things, the demands made by utilities for authorization from tenants, which in many cases has been difficult or even impossible to obtain.

The New Law - AB 802

AB 802 was enacted in response to these and other concerns with AB 1103. The stated intent of the Legislature in enacting AB 802 is that the CEC create a benchmarking and disclosure program which will allow owners and operators of commercial and multifamily buildings containing 50,000 square feet and more to better understand their energy consumption through standardized energy use metrics.

Under the new program, a utility must maintain energy usage data for all buildings served by that utility for at least the most recent 12 complete calendar months. A utility would need to provide the benchmark data to a building owner or operator within four weeks of a request. In addition, AB 802 requires the CEC to develop regulations to govern the delivery of benchmark data to the CEC and the public disclosure of such data.

AB 802 eliminates the private disclosure made between parties to a transaction under AB 1103, and instead will require the public disclosure of certain operating performance data. AB 802 also applies to multifamily buildings, whereas AB 1103 did not.

Thus, while AB 802 does not impose any transactional burdens on building owners and operators – a welcome change from AB 1103 – it will require the disclosure of certain energy use data that was not previously available to the public.

Timing of Implementation

It is important to note that AB 1103 will remain in effect until December 31, 2015, which means that building energy use disclosure continues to be required for the sale, lease, finance, or refinance of certain non-residential buildings until the end of the year. AB 1103 will be repealed effective January 1, 2016, and there will be no statewide energy use disclosure requirement in 2016. The CEC anticipates that regulations for the new AB 802 program will be in effect by January 1, 2017. 

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume V, Number 296
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About this Author

Emily L. Murray, Environmental litigation Attorney, Allen Matkins Law Firm
Partner

Emily Murray, chair of the firm’s Land Use Practice Group, represents private and public sector clients in legal and business matters related to land use and environmental law.

From the timely securing of permits, approvals, and entitlements in land use transactions to helping clients buy, sell, or lease environmentally contaminated sites, resolve enforcement actions, or litigate environmental disputes, Emily has the ability to distill complicated concepts into practical business strategies and solutions that she can apply for her clients to achieve favorable outcomes.

213-955-5584
Matthew R. Fogt, Renewable Energy, Land Use Lawyer, Allen Matkins law firm
Partner

Matthew Fogt is a multidimensional dealmaker. He combines land use, real estate, environmental, natural resource, and energy law knowledge with business acumen, negotiation skills, and rigor to address California real estate development projects from all angles. He works to get the best terms and provisions in land use entitlements and real estate transactions while managing client investment and project constraints, and takes the necessary steps to ensure his clients’ developments can proceed in a timely manner, following acquisition.

...

949-851-5453
Heather S. Riley, Environmental Attorney, Allen Matkins Law Firm, Writ Litigator
Partner

Heather S. Riley is senior counsel in our San Diego office, where her practice involves a variety of land use and environmental matters, with a particular emphasis on writ litigation. She has extensive experience with the California Environmental Quality Act. Heather has defended numerous private clients and public entities in land use and environmental actions in both state and federal courts.

Heather's other practice areas include water law and endangered species law. She has experience with large and small-scale residential, commercial, mixed...

619-235-1564
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