Decision in BIA v. Washington does not clarify when energy efficient codes are preempted by Federal law

On June 26, 2012, the United States Court of Appeals for the Ninth Circuit decided the BIA v. State of Washington case. The opinion can be downloaded here.

 In its decision, the Ninth Circuit held that the Washington State energy efficient building code was not preempted by Federal law.  This ruling was contrary to the ruling in a companion case, AHRI v. City of Albequerque, which was before the Federal District Court for the District of New Mexico. In the Albuquerque case, the court held that the code was preempted. 

Because there was a split, the interesting question is whether the cases, when read together, create a clear legal framework for ensuring that local energy efficient building codes are not preempted. In my opinion, the Washington court did not articulate a clear rule that can be used to guide local governments through the preemption waters. 

Both Albuquerque and the State of Washington passed building codes requiring that new buildings acheive certain levels of energy efficiency. In their suits, the trade associations alleged that the codes were invalid because they were preempted by Federal law.  Specifically, the trade associations alleged that the codes mandated the use of heating, ventilation and air conditioning systems that exceeded the energy efficiency standards set by the Energy Policy and Conservation Act of 1975 ("EPCA"), 42 U.S.C. Sec. 6295, et seq.

The Albuquerque code offered two paths--a prescriptive path, under which the installation of HVAC exceeding the Federal standard was required, and a performance path, under which a builder could choose how to acheive the required level of efficiency.  Early on, the Albequerque court held that the prescriptive path was preempted.  Ultimately, the court found that the performance path was not severable from the prescriptive path, and did not reach a verdict on the preemption of the performance path. 

The Washington code did not have a prescriptive path.  Rather, the Washington code had a point system, where different building techniques, including the installation of energy efficient HVAC systems, acheived different "scores."   

The Washington court differentiated the Washington and Albequerque codes based on the costs imposed on the builder for not using high efficiency HVAC equipment, not to the difference between a prescriptive and a performance standard.  The court reasoned:

Albuquerque’s ordinance imposed costs, as a matter of law, on builders who installed certain covered products meeting federal standards, by requiring the builder to install additional products that would compensate for not using a higher efficiency product. As the [Albequerque] court explained, “if products at the federal efficiency standard are used, a building owner must make other modifications to the home to increase its energy efficiency.” The Albuquerque ordinance thus effectively required use of higher efficiency products by imposing a penalty through the code itself.

Here, by contrast, the Washington Building Code itself imposes no additional costs on builders. The district court noted that there are “substantial differences” between the Washington Building Code and Albuquerque’s ordinance. It correctly rejected the Plaintiffs’ argument concerning subsection (B), explaining that the Washington Building Code created no penalties, and did not require higher efficiency products as the “only way to comply with the code.”

In the Washington code, however, it appears that the same costs are imposed on the builders.  If a builder chooses to use a standard HVAC system, the builder must make other changes to acheive the required points.  Later in the opinion, the Court acknowledged that the cost of adopting the other changes (and not installing more efficient HVAC equipment) could be higher. 

Unfortunately, I do not see how the Washington court's analysis works to differentiate the Albuquerque code from the Washington code.  As a result, it does not make clear what type of structure is "safe" for local governments to adopt, and not risk a preemption fight. 


AHRI defeats the City of Albequerque, Complicating Matters for Local Governments

AHRI vs. City of Albuquerque, a case that I first posted on in 2008, finally reached its conclusion last week.  In line with the preliminary injunction she ordered on October 3, 2008, Judge Martha Vazquez of the District of New Mexico decided that Albuquerque's energy code was preempted by Federal law mandating the energy efficiency of HVAC equipment. 

Appliance Magazine reported:

In the latest opinion, Judge Vazquez confirmed her Sept. 10, 2010, rulings:
(1) The prescriptive energy efficiency standards in the 2007 Albuquerque code that are more stringent than federal minimum efficiency standards are preempted and cannot be saved from federal preemption by the availability of alternative code compliance paths.
(2) A particular performance-based code compliance option is preempted because it is based on a standard reference design that uses efficiency levels that exceed federal efficiency standards. Responding to a summary judgment motion filed by the city that essentially asked Judge Vazquez to reconsider her earlier rulings, she declined to do so and denied the city’s motion.

A similar suit was filed by the Building Industry Association in 2010 to enjoin (or, in regular english, stop) the Washington State Energy Code from taking effect. 

The foundation of both AHRI and BIA is in essence one of preemption--that the federal government has enacted laws that prevent lesser governmental authorities from passing laws on the same subject, here the Federal regulations governing the efficiency of HVAC equipment preempted state and local energy efficiency laws.

Interestingly, in the Washington case, the court found that the Washington State energy code was not preempted.   This creates a split between the District of New Mexico and the Western District of Washington.  In my next post, I will give more detail on the difference between the two cases.  It will make it more difficult for local governments to know the extent to which they can regulate HVAC energy efficiency, which may make local governments shy away from doing so.

BIA v. Washington State Building Council

On Friday, I posted the complaint for BIA v. Washington State Building Council, filed on May 25, 2010 by the Building Industry Association of Washington to enjoin (or, in regular english, stop) the Washington State Energy Code from taking effect on July 1, 2010.  The case is structured similarly to AHRI v. City of Albuquerque, which I have written about extensively on GBLB.

The foundation of both AHRI and BIA is in essence one of preemption--that the federal government has enacted laws that prevent lesser governmental authorities from passing laws on the same subject.  In BIA, the plaintiffs allege that the requirements of the Washington State Energy Code

in conflict with and preempted by federal law and regulations which govern the energy efficiency of certain residential heating, ventilation air conditioning and plumbing product, including the Energy Policy and Conservation Act of 1975 ("EPCA"), as amended by the National Applicance Energy Conservation Act of 1987 ("NAECA"), Public Law No. 100-12, and the Energy Policy Act of 1992 ("EPACT"), Pubilc Law No. 102-486, 42 U.S.C. Sec. 6297.  As a result, Chapter 9 violates the Supremacy Clause in Article VI of the United State Constitution.

What is most interesting about the BIA suit is that the Washington State Energy Code did not mandate enhanced energy efficiency of the HVAC equipment.  Rather, it allowed for a point system whereby energy efficienct HVAC components were one path for compliance with an overall energy efficiency target.  The BIA complaint alleges that it is essentially impossible to comply with the energy efficiency targets without  installing enhanced HVAC equipment.  This is an interesting twist on the AHRI  case, because here it is possible to comply with the Washington State Energy Code without running afoul of federal HVAC energy requirements. 

Another interesting argument is in a footnote.  One path for compliance with the Washington State Energy Code is to build a house less than 1500 square feet.  The complaint states:

Plaintiffs would submit that a blanket regulation forcing individuals to live in or contruct a home of a certain size runs afoul of constitutional protections against unlawful takings.

Two things are true: 1) the Washington State Energy Code is not a blanket regulation forching individuals to construct or live in a home of a certain size, and 2) even a blanket regulation that did not essentially eliminate all value from a property would not be considered a regulatory taking.  So this argument, while appealing at first glance, is probably not very valid. 

One time is an anomaly, twice is a pattern.  As states and local governments seek to regulate energy efficiency, I believe we will see more suits like AHRI and BIA  until the federal government upgrades HVAC energy efficiency requirements (which they are in the process of doing), or a nationwide energy efficiency building code goes into effect.