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.