In 2023, Oregon passed House Bill 3409, establishing a new Building Performance Standard (“BPS”) for many existing commercial buildings across the state. The program, administered by the Oregon Department of Energy (“ODOE”), is intended to improve energy efficiency and reduce long-term utility costs. It also creates new reporting and compliance obligations for covered building owners and authorizes ODOE to impose financial penalties for noncompliance. Penalties currently apply only to Tier 1 buildings and may reach up to $5,000 plus $1 per square foot annually. 

While many BPS compliance deadlines are still several years away, ODOE is currently accepting applications for its Early Compliance Action and Planning (“ECAP”) incentive program through July 10, 2026. Approximately $2 million in funding was made available through ECAP to help covered building owners offset early-stage compliance costs, including energy benchmarking, utility data analysis, energy audits, operational and maintenance planning, energy management planning, and other technical assessments required under the BPS program. For Oregon’s hospitality industry, particularly lodging operators, now is likely the time to evaluate whether property is covered, what future obligations apply, and whether applying for early incentive funding could help offset initial planning costs. 

Oregon’s BPS applies to certain existing commercial buildings classified as either Tier 1 or Tier 2, primarily based on building size and use, as demonstrated by ODOE’s graphic above. Hotel and motel buildings between 20,000 and 35,000 square feet (excluding parking garages) may qualify as Tier 2 buildings depending on building use and configuration. Nonresidential, hotel, and motel buildings over 35,000 square feet may qualify as Tier 1. Mixed-use properties may require additional analysis, particularly where multiple buildings share utility metering or operate together as part of the same complex. 

Some buildings may qualify for exemptions, including certain agricultural or manufacturing buildings, buildings without occupancy certificates, properties with high vacancy rates, or buildings experiencing financial hardship. In addition, the BPS “hotel” definition may not apply where more than 50% of the building consists of non-covered fractional ownership units such as condominiums, vacation timeshares, or private residences used for short-term rentals. Exemption applications generally must be submitted at least 180 days before the applicable compliance deadline. 

The first major compliance deadlines begin between 2028 and 2030 depending on building size and classification, although some covered buildings may begin submitting compliance materials as early as July 1, 2026. As an initial step, covered building owners will need to benchmark building energy usage, collect at least 12 continuous months of utility data, and work with qualified energy professionals to calculate Energy Use Intensity (“EUI”) and determine applicable EUI targets for reporting to ODOE. Tier 1 buildings are subject to additional planning and operational requirements, including preparation of:

• An operations and maintenance plan;
• An energy management plan; and 
• In some cases, a decarbonization plan for grouped buildings with district systems.

Buildings that are not expected to meet applicable targets must notify ODOE at least 180 days before the compliance deadline. In some circumstances, Tier 1 building owners may also be required to engage a qualified energy auditor to complete an energy audit and life-cycle-cost assessment. Because these technical evaluations often require advance coordination, utility analysis, and operational review, building owners should consider beginning the assessment process early.

To help offset some of these early compliance costs, ODOE established the ECAP incentive program. Funding is awarded through a competitive review process and may support BPS-related planning activities such as benchmarking, energy audits, and more. Building owners may submit separate incentive requests for completed compliance actions, with a maximum of two applications in each round of applications. Current maximum incentive amounts include:

• $50,000 for Tier 1 buildings equal to or greater than 200,000 square feet; 
• $35,000 for Tier 1 buildings equal to or greater than 35,000 square feet but less than 200,000 square feet;
• $10,000 for all Tier 2 buildings; or
• $10,000 for the energy benchmarking and reporting compliance actions.

Applications for the current ECAP funding round must be submitted to ODOE by 5:00 p.m. PST on July 10, 2026. Applications are evaluated using a scoring system that prioritizes buildings with higher EUIs, nonprofit organizations, smaller buildings, rural properties, and multifamily affordable housing. During the first funding round, hotel industry applicants alone received approximately $85,000 of the $833,850 awarded. The second and final funding round presents another opportunity for impacted building owners to secure funding and begin preparing for future compliance obligations before mandatory deadlines arrive.

Given the technical and operational complexity of the BPS and ECAP programs, building owners may benefit from early coordination with legal counsel, energy consultants, and qualified building performance professionals to assess what properties are covered and develop long-term compliance strategies. In addition to the resources available through ODOE, organizations such as Energy Trust of Oregon offer educational materials, technical assistance, and individualized compliance planning support. 

For additional questions regarding Oregon’s BPS program, please contact us at Jordan Ramis PC. | Matthew Lowe & Sarah Carlson