WSR 11-11-063

OFFICE OF THE GOVERNOR


[ Filed May 16, 2011, 9:25 a.m. ]


NOTICE OF APPEAL

RCW 34.05.330(3)



Pursuant to RCW 34.05.330(3), you are hereby notified for publication in the Washington State Register that:

On March 30, 2011, the Governor's Office received an appeal from Mr. John Neff relating to the Washington State Building Code Council's denial of a petition to repeal WAC 51-11, 2009 Edition. The Governor denied the appeal on May 13, 2011.

DATE: May 13, 2011

Narda Pierce

General Counsel to the Governor


May 13, 2011


John P. Neff, CBO

2315 Buckingham Drive SE

Olympia, WA 98501


RE: Administrative Rule Appeal -- WAC 51 -- 2009 Edition


Dear Mr. Neff:


I am writing in response to your letter appealing the denial of your petition to the Washington State Building Code Council under RCW 34.05.330(1). This petition requested repeal of the 2009 Washington State Energy Code. You have appealed the Council's denial to the Governor under RCW 34.05.330(3). After careful consideration of your petition and the response of the Washington State Building Code Council, I am denying your appeal.


In petitioning for repeal of this rule, you have outlined your contentions that: 1) the rule is not authorized; 2) the rule is not needed and does not serve the purposes for which it was adopted; 3) the rule conflicts with or duplicates other federal, state, or local laws; 4) alternatives to the rule exist that will serve the same purpose at less cost, and that the costs imposed by the rule are unreasonable; 5) the rule is not clearly and simply stated; and 6) the rule was not adopted according to all applicable provisions of law. This letter will address each of these contentions in turn.


1. Contention that the rule is not authorized: Your appeal states that current law requires the Council to review the existing energy code every three years and limits its amendment of the code to no more frequently than every three years. You also state that my request to the Council to fully consider a 30% increase in energy efficiency, based on the recommendations of my Climate Action Team, does not provide authority for agency rulemaking. You further state that a letter from the sponsors of Engrossed Second Substitute Senate Bill (ESSSB) 5854 (2009) does not exclusively establish legislative intent. I agree with all of these statements, yet disagree with your conclusion.


On review of the law, I find that ESSSB 5854 did not repeal the existing and explicit statutory authority of the Council to adopt amendments to the energy code that is found in RCW 19.27A.025 and RCW 19.27A.045. These statutes provide that the Council may, by rule adopted pursuant to chapter 34.05 RCW, amend the energy code requirements for new nonresidential buildings and residential buildings to increase energy efficiency. Although the legislature mandates that the Council adopt state energy codes from 2013 through 2031 that incrementally move towards achieving the seventy percent reduction in annual net energy consumption, it did not withdraw the Council's authority to amend the energy code prior to 2013. These laws provide full authority for the Council's rulemaking.


Your appeal further asserts that the Council's actions did not meet the statutory requirement to "evaluate and consider adoption of the International Energy Conservation Code in Washington state in place of the existing state energy code." However, the record reflects that the Council considered the International Energy Conservation Code (IECC) in its process of developing the 2009 code and devoted a special meeting and public hearing to that topic. These efforts built upon prior review and detailed comparisons between the state energy code and the international code, both in 2003 and 2006. The Council was informed about the provisions of the IECC by both the technical advisory group and expert testimony provided to the Council. The Council remains active in the ongoing development of the international code and has committed to a detailed review of the 2012 IECC. In my view, the Council's actions met this requirement of the statute.


2. Contention that the rule is not needed and does not serve the purposes for which it was adopted: Your appeal states the rule is not needed because, in your view, the state would be better off by adopting the IECC. You suggest the IECC would be simpler and cheaper to implement and would allow access to federal support for implementation. Also, you cite to the energy use of existing buildings as a greater problem than new construction.


Adopting the IECC would not achieve energy efficiency comparable to the 2009 Washington State Energy Code, and therefore I cannot say that the state would be better off by adopting that code. Additionally, while the United State Department of Energy provides model codes, other technical assistance is needed. The state has already invested resources in the effective implementation of the 2009 state energy code by providing training and guides for builders and local government inspectors through the Washington State University energy program. While there are always tradeoffs in benefits and costs, the Council has considered those tradeoffs here.


You also state that the rule does not serve the purposes for which it was adopted, suggesting the Council ignores the significant energy use of existing buildings and places the burden of the energy code on new construction. A legislature or state council need not address all problems at the same time, but may address itself to phases of the problem. We cannot ignore that today's new construction becomes tomorrow's existing buildings. It is appropriate to require cost effective and technically feasible energy efficiency measures at the time of initial construction, rather than adding to the stock of less efficient buildings that will need to be retrofitted in the future. Additionally, although the primary focus of the state energy code is new construction, the code does apply to alterations of existing buildings and to replacement of building mechanical systems. There are other government and utility programs designed to address the existing stock of buildings, and all involved in energy efficiency understand that existing building energy use is one phrase of the problem. In context, I find that the Council's adopted energy code meets the purposes of energy efficiency for which it was adopted.


3. Contention that the rule conflicts with or duplicates other federal, state, or local laws: Your appeal asserts that Chapter 9 of the state energy code is in conflict with the federal Energy Policy and Conservation Act (42 U.S.C. 6927). As you noted, this issue is the subject of ongoing litigation in federal court. In his February 2011 decision, Judge Robert Bryan of the United States District Court for the Western District of Washington concluded that Chapter 9 meets the tests for exemption from the preemption provisions of the federal Act, granted summary judgment to the Council and dismissed the claims of the plaintiffs. I understand the plaintiffs have appealed the judge's decision, with briefs due this summer. However, based on the current status of the case and the sound analysis of the federal district court, there appears to be no conflict between the state energy code and federal law.


4. Contention that alternatives to the rule exist that will serve the same purpose at less cost and that the costs imposed by the rule are unreasonable: Your appeal states that the law does not require "progress" in terms of improving energy efficiency and that the IECC would be less costly to the state. You also contend that the Council did not properly determine the implementation costs of their rule and did not compare these costs to the costs of implementing the IECC. You cite implementation costs as high as an additional $15,000 for a new house.


It is clear to me that adoption of the IECC would not serve the same purpose as the 2009 Washington State Energy Code. The IECC would not increase the energy efficiency of typical newly constructed buildings as is required for amendments to the code under RCW 19.27A.025 and RCW 19.27A.045. I understand that expert testimony established that the 2009 IECC is approximately 15% less efficient than the 2009 state energy code and comparable in efficiency to the 2006 state energy code. There would be legal impediments to adopting the IECC when it would not meet the requirements of the cited statutes.


Given these limitations, it was rational for the Council to decline to use public resources to conduct a detailed cost comparison between the two codes. While the law directs the Council to evaluate and consider the IECC, a detailed cost comparison cannot be said to be required when other aspects of the evaluation contraindicate its adoption at this time. The Council has reasonably focused its attention on the potential adoption of the 2012 IECC.


Regarding the costs of implementation of the adopted code, every proposed amendment to the state energy code went through the Council's cost analysis review, which considers the costs of construction to builders and the costs of compliance actions by local government. Detailed analysis of the 2009 state energy code indicates construction costs for an average size gas heated home, representing 75% of all new homes in Washington, would cost $1.00 per square foot in most of Washington and $2.04 per square foot in the colder parts of the state. The analysis indicates the energy code adds costs of $2000 to $3000 for a typical home. More importantly, the analysis shows that energy savings will exceed the financed costs of the construction after several years of ownership and will bring long-term benefits to the homeowner. The Council evaluated higher levels of improvement in energy efficiency with the costs and adjusted the increase in efficiency from an early goal of 30% energy savings to an energy code that achieves 15% energy savings, in large part because of considerations of costs. To further mitigate the impacts of implementation costs on a housing market that was destabilized by the economic recession, I asked the Council to delay the effective date of the new energy code. This delay was intended to give the housing industry additional time to stabilize and to ensure that suppliers, builders and local governments were properly trained and equipped to implement the new code requirements.


I conclude that the suggested alternative to the rule will not serve the same purpose at less cost, and that the costs required to implement the 2009 state energy code are reasonable.


5. Contention that the rule is not clearly and simply stated: Your appeal says the Council has already amended the state energy code to address issues that were not clear in the original rule. You also say there is confusion over the new code, as noted in the state building officials' blog.


The Council's changes to their original rule were made at the request of builders. After the initial rule was adopted, my office convened a group of builders and state agency staff to discuss concerns about the costs of the new energy code. These discussions led to agreement to request a rule change and several rule interpretations, designed to further mitigate the costs of the rule. These requests were acted on by the Council. A review of the building official's blog indicates ongoing debate about the merits of a state energy code, the costs of the new code, and whether the current economic conditions warrant another delay of the new requirements. If there is confusion, it is not about the contents of the code.


Of course, by its nature, the state energy code deals with technical subject matter. The state energy code provides both prescriptive options to simplify implementation and alternative approaches based on energy performance. The State Building Code Council, Washington State University's energy program, and others have provided extensive training, instruction guides, and other resource materials to facilitate implementation of the new code and they continue to offer technical assistance when asked. Despite the complex topic, the construction industry in our state is well versed in our state energy code and fully capable of implementing the requirements.


RCW 34.05.220(5) provides: "To the extent practicable, any rule proposed or adopted by an agency should be clearly and simply stated, so that it can be understood by those required to comply." I find the adopted code to be well organized, with requirements that are as clear as practicable given the technical subject matter, and capable of being understood by those required to comply.


6. Contention that the rule was not adopted according to all applicable provisions of law: Your appeal asserts that the adoption of the state energy code did not comply with Chapter 19.27A RCW or with RCW 34.05.320 and RCW 19.85.030, as they relate to the requirement to prepare a small business economic impact statement. You further assert that the actions by the technical advisory group did not follow the Council's bylaws in terms of procedures for motions and voting.


As I described above, I find no conflict between Chapter 19.27A RCW and the Council's adoption of the 2009 state energy code.


At the request of the legislative Joint Agency Rules Review Committee, the State Building Code Council prepared a small business economic impact statement (SBEIS). All proposed rule amendments were reviewed by the Council's technical advisory group (TAG), and any amendments with more than a minor cost were further reviewed by the Council's economic and regulatory assessment committee. The committee identified five sections of the proposed rule that could disproportionately impact small businesses. Each of these areas was evaluated in the Council's SBEIS to identify any disproportionate costs, and steps were identified and taken to reduce those costs.


The Council's SBEIS states that the number of jobs created or lost as a result of the proposed rule "is unknown," and that jobs could be created in some specialty trades. The lack of a specific estimate of job numbers was a specific concern of the legislative committee. To address this concern, I asked the economic experts in the forecast division of the Office of Financial Management to conduct a review. The economic experts agreed with the Council - it is not possible to estimate the number of jobs created or lost from the new energy code. In the short term, the incremental costs from the new code would be a relatively small piece of the overall cost of a home and would likely be included in the home financing. Over time, the energy savings would offset the construction and financing costs.


Regarding voting during technical advisory group meetings, I understand that the meetings included both informal and formal methods. The TAG chair would informally poll everyone present to get a sense of the views of all attendees. However, formal voting was done solely by formal TAG members. The Council has produced a record that shows the formal votes on individual energy code amendments addressed by the TAG. The Council bylaws do not appear to address the question of who can second a formal motion during TAG meetings. In addition, the requirement to have a non-voting member present to audit the meeting procedures was recently added to the bylaws, after the TAG had already voted on the 2009 amendments.


For these reasons and for the additional reasons set forth in the Council's response to your petition, I am denying your appeal. I appreciate your concerns regarding proper rule-making authority, cost analyses, and rulemaking processes, but have concluded the Council met all legal requirements with regard to the adoption of the 2009 Washington State Energy Code.


Sincerely,

Christine O. Gregoire

Governor

Reviser's note: The typographical errors in the above material occurred in the copy filed by the Office of the Governor and appear in the Register pursuant to the requirements of RCW 34.08.040.

Washington State Code Reviser's Office