(a) By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses.

(b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the state’s building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board.

(c) The framework developed pursuant to subdivision (a) shall include both of the following:

(1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings.

(2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust material life-cycle assessment approaches that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient material life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues.

(d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision.

(e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (2) of subdivision (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision does not affect the project’s status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i).

(f) As used in this section the following terms have the following meanings:

(1) “Feasibility,” in regard to the use of a material, means all of the following:

(A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors.

(B) The material does not harm the health or safety of those who install the materials or occupy the building.

(C) The building using the material can be designed to provide an equivalent function and, at a minimum, the same useful life, performance, and durability as the building made with baseline materials.

(D) The material is commercially available to the region of the project.

(E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation.

(F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material.

(2) (A) “Cost impact” means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material.

(B) As used in subparagraph (A), “significant” means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project, as applicable.

(g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board.

(h) The targets established by this section shall begin to apply no sooner than January 1, 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit.

(i) (1) For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible.

(2) An entity undertaking the construction of a project may seek to achieve the applicable target through the use of materials or methods pursuant to this section and, if an embodied carbon trading system is established or other alternative compliance method, pursuant to Section 38561.6, separately or in combination, as determined by the available compliance methods. If the entity undertaking the construction of a project uses materials or methods described in this section, Section 38561.6, or both, subject to the feasibility criteria and up to the cost impact limit, and the entity finds that it is still unable to achieve the applicable target due to unfeasibility or cost impact, then the project shall be deemed to comply with the applicable target. In that case, the entity undertaking the construction of a project shall provide the state board with documentation that shall be specified in the reporting and recordkeeping regulations that will be established by the state board.

(3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility.

(4) The state board shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project.

(5) Manufacturers of building materials shall be required to report data to the state board to ensure that their products comply with applicable reduction targets in accordance with reporting and compliance requirements that will be established by the state board.

(j) This section does not apply to appliances.

(k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section.

(l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following:

(1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state.

(2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of the following measures:

(A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services.

(B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies.

(C) Measures to provide consumer access to building material embodied carbon data reported to the state board.

(m) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act.

(n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state board’s development and approval of the framework and comprehensive strategy developed pursuant to this section.

(o) Paragraphs (1) and (2) of subdivision (i) apply when the state board adopts any mechanism, standard, requirement, regulation, rule, protocol, framework, strategy, credit, target, or establishes an embodied carbon trading system, or alternative incentives or compliance programs, whichever occurs first.

(p) Penalties relating to the use or failure to use low-carbon building materials, or the failure to achieve the applicable target, may not be applied to an entity undertaking the construction of a project that is deemed to comply pursuant to paragraphs (1) and (2) of subdivision (i).

(q) Except as otherwise provided in subdivision (p), penalties for a violation of this section are limited to the penalties described in subdivisions (a) and (d) of Section 42402, unless the violation shows a disregard for the regulations under this section, extreme negligence, or acts of deceit, in which case the penalties set forth in subdivision (b) of Section 42402 apply.

(r) Notwithstanding any other law, the penalties described in subdivision (q) are the exclusive enforcement mechanism against regulated entities for a violation of this section and Section 38561.6.

(s) As used in this section, “entity undertaking the construction of a project” means a person or entity who owns the real property that is the subject of a development agreement.

(Amended by Stats. 2023, Ch. 316, Sec. 2. (AB 43) Effective January 1, 2024.)