SF 3429

Introduction - 94th Legislature (2025 - 2026)

Posted on 04/25/2025 09:48 a.m.

A bill for an act
relating to energy; requiring certain buildings to meet energy performance
standards; requiring reports; appropriating money; proposing coding for new law
in Minnesota Statutes, chapter 216C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [216C.332] BUILDING ENERGY PERFORMANCE STANDARDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Building type" means a category of buildings similar in design, function, and energy
use.
new text end

new text begin (c) "Covered building" has the meaning given to "covered property" in section 216C.331,
subdivision 1.
new text end

new text begin (d) "Energy" has the meaning given in section 216C.331, subdivision 1.
new text end

new text begin (e) "Energy Star Portfolio Manager" has the meaning given in section 216C.331,
subdivision 1.
new text end

new text begin (f) "Energy use intensity" or "EUI" has the meaning given in section 216C.331,
subdivision 1.
new text end

new text begin (g) "Final performance standard" means the numeric value of a performance metric that
covered buildings must meet by 2045.
new text end

new text begin (h) "Financial distress" means that a covered building:
new text end

new text begin (1) is the subject of a qualified tax lien sale or public auction due to property tax
arrearages;
new text end

new text begin (2) is controlled by a court-appointed receiver based on financial problems;
new text end

new text begin (3) is owned by a financial institution through default by the borrower;
new text end

new text begin (4) has been acquired by deed in lieu of foreclosure; or
new text end

new text begin (5) has a senior mortgage that is subject to a notice of default.
new text end

new text begin (i) "Greenhouse gas emissions" means emissions of carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride resulting from energy
used at a building site.
new text end

new text begin (j) "Interim performance metric" means the numeric value of a performance metric that
covered properties must meet every five years until 2045.
new text end

new text begin (k) "Multifamily affordable housing" means a covered building that:
new text end

new text begin (1) contains five or more dwelling units;
new text end

new text begin (2) meets the eligibility standards established by the commissioner under section
216B.2403, subdivision 5, paragraph (e), for multifamily buildings to participate in energy
conservation programs provided to low-income households; and
new text end

new text begin (3) receives or received government financing or financial assistance at the county, state,
or federal level.
new text end

new text begin (l) "Owner" means an individual or entity that possesses the title to a covered building
or an agent that the individual or entity has authorized to act on behalf of the individual or
entity.
new text end

new text begin (m) "Total floor area" has the meaning given in section 216C.331, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Establishment. new text end

new text begin The commissioner must establish and maintain a building
energy performance standards program. The purpose of the program is to reduce:
new text end

new text begin (1) the amount of energy used to (i) heat and cool buildings, and (ii) provide other energy
services; and
new text end

new text begin (2) greenhouse gas emissions from covered buildings by 90 percent from a 2005 baseline
by 2045.
new text end

new text begin Subd. 3. new text end

new text begin Classification of covered buildings. new text end

new text begin For the purposes of this section, a covered
building is classified as follows:
new text end

new text begin Class new text end	new text begin Ownership new text end	new text begin Total floor area (square feet) new text end
new text begin 1 new text end	new text begin City, state, county, school district, metropolitan council new text end	new text begin 100,000 or more new text end
new text begin 2 new text end	new text begin City, state, county, school district, metropolitan council new text end	new text begin 50,000 to 99,999 new text end
new text begin 3 new text end	new text begin Private new text end	new text begin 100,000 or more new text end
new text begin 4 new text end	new text begin Private new text end	new text begin 50,000 or more new text end

new text begin Subd. 4. new text end

new text begin Final EUI standards; establishment. new text end

new text begin (a) No later than January 1, 2026, the
commissioner must establish final EUI standards for all covered buildings. The commissioner
must establish final EUI standards at a level at which, if the EUI standards are met by all
covered buildings, the aggregated greenhouse gas emissions from all covered buildings is
reduced by 90 percent by 2045 from a 2005 baseline.
new text end

new text begin (b) When establishing final EUI standards, the commissioner may utilize the building
types used in the Energy Star Portfolio Manager benchmarking tool or other building types.
new text end

new text begin (c) Class 1 covered buildings must meet the final EUI standard no later than 2042. Class
2 covered buildings must meet the final EUI standard no later than 2043. Class 3 covered
buildings must meet the final EUI standard no later than 2044. Class 4 covered buildings
must meet the final EUI standard no later than 2045.
new text end

new text begin (d) The final EUI standard established for a covered property containing more than a
single building type must be calculated on a pro rata basis based on the square footage of
each building type.
new text end

new text begin Subd. 5. new text end

new text begin Interim EUI standards; establishment. new text end

new text begin The commissioner must establish
interim EUI standards that each covered building must meet every five years, beginning in
2028 for class 1 covered buildings and continuing until 2045 for class 4 covered buildings.
The interim EUI standards must be calculated on a straight-line trajectory with respect to
the final EUI standards so that covered buildings meeting the interim EUI standards
demonstrate steady progress toward the final EUI standards in equal increments. Each owner
must submit a report to the commissioner, on a form prescribed by the commissioner,
demonstrating the covered building's progress toward meeting the interim EUI standards.
new text end

new text begin Subd. 6. new text end

new text begin EUI standards; extensions; exemptions; adjustments. new text end

new text begin (a) An owner may
request the commissioner to issue the owner an extension, exemption, or adjustment to an
interim or final EUI standard for a covered building. The commissioner may approve the
request if the commissioner determines that:
new text end

new text begin (1) the covered building is experiencing financial distress or is likely to experience
financial distress within the next 12 months;
new text end

new text begin (2) the covered building:
new text end

new text begin (i) has been less than 50 percent occupied;
new text end

new text begin (ii) does not have a certificate of occupancy or a temporary certificate of occupancy;
new text end

new text begin (iii) was issued a demolition permit that remains current; or
new text end

new text begin (iv) received no energy services for at least 30 days; or
new text end

new text begin (3) meeting the EUI standard is not in the public interest.
new text end

new text begin (b) If an owner submits a request under this subdivision less than one year before the
deadline for the applicable EUI standard, the owner may be subject to a penalty of up to
$1,000, as determined by the commissioner.
new text end

new text begin (c) An owner of multifamily affordable housing is exempt from the requirements of this
section until the owner refinances the building after the effective date of this act, at which
point the multifamily affordable housing is subject to the next sequential EUI standard that
covered buildings are required to meet under subdivision 4 or 5, as applicable.
new text end

new text begin (d) An owner is exempt from the requirements of this section with respect to a covered
building that the commissioner determines is subject to an EUI or other energy-related
standard required by the state or a political subdivision that is more stringent than an EUI
standard established under this section.
new text end

new text begin (e) An owner must provide information requested by the commissioner in order to
evaluate a request made under this subdivision. The commissioner must treat information
an owner provides under this subdivision as not public data under chapter 13.
new text end

new text begin Subd. 7. new text end

new text begin Interface with utility conservation programs. new text end

new text begin Nothing in this section limits
the ability of a public utility or municipal utility to offer programs to covered buildings, or
to claim energy savings resulting from the offered programs, through the utility's energy
conservation and optimization plans approved by the commissioner under section 216B.2403
or 216B.241.
new text end

new text begin Subd. 8. new text end

new text begin Public buildings; portfolio option. new text end

new text begin An owner of multiple class 1 or class 2
buildings may, after receiving the commissioner's approval, elect to meet an applicable EUI
standard by reducing energy use in one or more of the owner's class 1 or class 2 buildings
by an amount that is equal to or greater than the energy use that would have been reduced
had each of the owner's class 1 and class 2 buildings met the applicable EUI standard.
new text end

new text begin Subd. 9. new text end

new text begin Building Performance Advisory Committee. new text end

new text begin (a) No later than August 15,
2025, the commissioner must establish and make appointments to a Building Performance
Advisory Committee consisting of representatives from the following entities and professions:
new text end

new text begin (1) the commissioner, or the commissioner's designee, as a nonvoting member;
new text end

new text begin (2) a public or municipal utility providing natural gas service to Minnesota retail
customers;
new text end

new text begin (3) a public or municipal utility providing electricity service to Minnesota retail
customers;
new text end

new text begin (4) an entity that provides energy efficiency measures to covered buildings;
new text end

new text begin (5) an entity that provides renewable energy facilities to covered buildings;
new text end

new text begin (6) a professional who designs covered buildings;
new text end

new text begin (7) an engineer experienced in operating energy systems in covered buildings;
new text end

new text begin (8) a manager of operations for covered buildings;
new text end

new text begin (9) a labor union representative of workers who operate or service covered buildings;
new text end

new text begin (10) an owner of a covered building containing residences for families;
new text end

new text begin (11) an owner of a covered building providing affordable housing for families;
new text end

new text begin (12) a tenant of multifamily affordable housing;
new text end

new text begin (13) a nonprofit organization that addresses climate change, decarbonization, or green
building issues;
new text end

new text begin (14) a nonprofit organization that addresses environmental justice issues;
new text end

new text begin (15) an expert on sustainable buildings from the University of Minnesota's Center for
Sustainable Building Research; and
new text end

new text begin (16) a local government unit.
new text end

new text begin (b) The Building Performance Advisory Committee must:
new text end

new text begin (1) advise the commissioner on implementing and operating this section;
new text end

new text begin (2) recommend interim and final EUI standards for different building types; and
new text end

new text begin (3) recommend procedures for exemptions, extensions, and adjustments the commissioner
may grant under subdivision 6.
new text end

new text begin (c) The advisory committee must elect a chair by majority vote at the advisory
committee's initial meeting. The advisory committee must meet quarterly. Additional
meetings may be held at the call of the chair. The department must serve as staff to the
advisory committee.
new text end

new text begin (d) Advisory committee members other than state employees are governed by section
15.059.
new text end

new text begin Subd. 10. new text end

new text begin Penalties. new text end

new text begin (a) An owner whose covered building fails to meet an interim or
final EUI standard by the date required, and who has not received a valid extension,
exemption, or adjustment from the commissioner under subdivision 6, must make a
compliance payment to the commissioner under this subdivision.
new text end

new text begin (b) Except as provided in paragraph (c), an owner whose covered building fails to meet
an EUI standard must pay to the commissioner a penalty, as determined by the commissioner,
of up to $....... for each 1,000 British thermal units consumed by the covered building that
exceed the EUI standard. The maximum penalty imposed under this paragraph or paragraph
(c) must increase over time at the same rate as that of the estimate of the social cost of
carbon dioxide emissions most recently adopted by the commission under section 216B.2422,
subdivision 3.
new text end

new text begin (c) An owner may, with the commissioner's approval, elect to be excused from paying
a penalty imposed under paragraph (b). An owner who makes the election under this
paragraph and fails to meet the next scheduled EUI standard for the same covered building
must pay to the commissioner an amount equal to ... percent of the earlier penalty imposed
on the covered building, in addition to a payment for failing to meet the subsequent EUI
standard.
new text end

new text begin (d) A compliance payment must be made under this subdivision each year or portion of
a year during which a covered building fails to meet an EUI standard.
new text end

new text begin (e) When determining the amount of a compliance payment under this subdivision, the
commissioner must consider:
new text end

new text begin (1) the magnitude of the amount by which the covered building's performance exceeds
the level of the applicable EUI standard;
new text end

new text begin (2) the length of time over which the covered building has failed to meet the applicable
EUI standard;
new text end

new text begin (3) the assessed value of the covered building; and
new text end

new text begin (4) the total number of EUI standards the covered building has failed to meet over time.
new text end

new text begin Subd. 11. new text end

new text begin Technical and financial assistance hub. new text end

new text begin The department must contract with
a nonprofit organization with extensive experience implementing energy efficiency programs
in buildings to operate a building performance technical and financial assistance hub. The
hub must assist owners to comply with this section by:
new text end

new text begin (1) offering technical assistance directly to owners regarding energy-saving reduction
measures and strategies;
new text end

new text begin (2) connecting owners with other sources of technical assistance, including other covered
building owners who have successfully reduced energy use; and
new text end

new text begin (3) making owners aware of sources of financial assistance, including tax credits, that
are offered by utilities or available through programs administered by local, state, and federal
government entities to support implementing energy-saving measures.
new text end

new text begin Subd. 12. new text end

new text begin Program implementation. new text end

new text begin The commissioner may contract with an
independent third party to implement any or all of the commissioner's duties required under
this section. The commissioner must assist owners to access the technical and financial
assistance hub established under subdivision 11 and the building energy performance
improvement grant program established under subdivision 14 to reduce energy use from
the owners' covered properties through outreach and training. The commissioner must begin
informing owners of this section's requirements in 2025 as part of outreach activities required
under the energy benchmarking program under section 216C.331.
new text end

new text begin Subd. 13. new text end

new text begin Account established. new text end

new text begin (a) A building energy performance standards program
account is established in the special revenue account in the state treasury. The commissioner
must credit to the account appropriations and transfers made to the account and penalties
collected under this section. Earnings, including interest, dividends, and any other earnings
arising from assets of the account, must be credited to the account. Money remaining in the
account at the end of a fiscal year does not cancel to the general fund but remains in the
account. The commissioner must manage the account.
new text end

new text begin (b) Money in the account that is not collected from penalties is appropriated to the
commissioner and must be used only to reimburse the reasonable expenses incurred by the
department to administer the building energy performance standards program under this
section.
new text end

new text begin (c) Money in the account collected from penalties under subdivision 10 is appropriated
to the commissioner and must only be used to award building energy performance
improvement grants under subdivision 14.
new text end

new text begin Subd. 14. new text end

new text begin Building energy performance improvement grants. new text end

new text begin (a) A building energy
performance improvement grant program is established in the department to provide financial
assistance to eligible applicants to make improvements that reduce energy use in order to
achieve the EUI standards established under this section.
new text end

new text begin (b) An application for a grant under this section must be made to the commissioner on
a form developed by the commissioner. The application must be accompanied by
documentation, as required by the commissioner:
new text end

new text begin (1) that the applicant is the owner of a covered building or the owner's agent;
new text end

new text begin (2) that the applicant has had an energy assessment, conducted of the covered building
within the previous 24 months by a qualified person as determined by the commissioner,
indicating the opportunities to reduce the covered building's energy use;
new text end

new text begin (3) indicating the total energy and greenhouse gas emission savings expected from the
proposed improvements; and
new text end

new text begin (4) indicating the total cost to purchase and install the improvements.
new text end

new text begin (c) The commissioner must develop administrative procedures governing the application
and grant award processes.
new text end

new text begin (d) The commissioner may, in consultation with the Building Performance Advisory
Committee, establish preferences for applicants seeking grants for certain building types or
energy-reduction measures.
new text end

new text begin (e) When awarding grants under this subdivision, the commissioner must give priority
to applications that propose to:
new text end

new text begin (1) reduce energy use in multifamily affordable housing; or
new text end

new text begin (2) achieve reductions in energy use greater than or sooner than is required by the
applicable EUI standard.
new text end

new text begin (f) Fifty percent of a grant awarded under this subdivision must be paid to an applicant
prior to the commencement of work. The balance of a grant awarded under this subdivision
must be paid when the work supported by the grant is completed.
new text end

new text begin (g) The commissioner must modify program requirements under this section when
necessary to align with comparable federal programs administered by the department under
the federal Inflation Reduction Act of 2022, Public Law 117-189.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 2026 is appropriated from the general fund to the commissioner of
commerce to administer and enforce the building energy performance standards program
under Minnesota Statutes, section 216C.332. Of this amount:
new text end

new text begin (1) up to $....... may be used to award grants to applicants under the building energy
performance improvement grant program established under Minnesota Statutes, section
216C.332, subdivision 14; and
new text end

new text begin (2) up to $....... may be used to fund the technical and financial assistance hub established
under Minnesota Statutes, section 216C.332, subdivision 11.
new text end