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. 

 

Congress Introduces New "Energy Efficiency" Legislation

Contrary to common belief that nothing is really happening in green building at the Congressional level these days, I provide the following two counterexamples. Of course, neither of these efforts are designed to promote energy efficiency or green building, but that doesn't mean that nothing is happening.

 An amendment to the Senate Appropriations Bill for Energy and Water introduced by Senators Wicker (R-MS), Boozman (R-AR), and Inhofe (R-OK) would essentially eliminate the use of LEED and Energy Star for DOE green building programs.  According to the NRDC:  

This rider would prevent the Department of Energy (DOE) from using strong green building energy rating standards. The amendment limits DOE to using only green building standards that are developed and approved in accordance with American National Standards Institute (ANSI) rules. Such a requirement would effectively limit DOE to using only the National Association of Home Builders (NAHB) and Green Globes building standards.The amendment would disallow the use of many other strong rating systems, including LEED, EPA Energy Star Portfolio Manager, and EPA Energy Star Homes, which have substantially increased the number of environmentally-friendly buildings in our country.
 

In other news, Rep. Charles J. Fleischmann [R-TN-3] introduced a bill yesterday in the House H.R.3441 to repeal the Department of Energy's home weatherization assistance program.  The DOE weatherization assistance program provides funding to states to weatherize the homes of low income households to make them more energy efficient.  According to the WAP website:

During the past 33 years, WAP has provided weatherization services to more than 6.4 million low-income households. Families receiving weatherization services see their annual energy bills reduced by an average of about $437, depending on fuel prices.  

According to a recent release from the National Association for State Community Services Programs, the WAP received $5b in funding from ARRA, which weatherized 534,208 low-income houses through August 2011. This made the WAP seventh out of approximately 200 federal programs funded by American Recovery and Reinvestment Act (Recovery Act) in jobs created or retained, with 14,090 jobs  for the third quarter beginning July 1 and ending September 30, 2011.

The bill is not yet available from the GPO, but it can be followed on Thomas through this link

 

Green building law has arrived. Is your lawyer ready?

In the past few weeks, the Northland Pines Third Party LEED challenge has exploded, the Washington Building Industry Association sued the State of Washington to enjoin their energy code from taking effect, and a private lawsuit which could potentially turn into green litigation emerged onto the scene.  In other words, the wave of green litigation which I first predicted back in 2007 has arrived. 

What does this mean? 

  1. More third party challenges--For every building project, there are naysayers.  Some will see the Northland Pines challenge as a mechanism for attacking potential development, either during the development process by threatening a challenge, or after the development is completed by filing one.   
  2. Building interest group litigation mushrooming--If the BIAW challenge in Washington holds water, building interest groups nationwide will attack green building regulations where the only true path to compliance is through energy efficient HVAC equipment. 
  3. Private litigation with a green tinge--As people occupy green buildings, typical construction challenges emerge.  Expect these to incorporate challenges to the "greenness" of the building.

These suits will be complex, and will involve not only knowledge of LEED and green building, but also the energy codes and other ancillary regulations implicated in these suits.  Green building law has arrived.  Is your lawyer ready? 

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.

New Green Building Litigation--Washington State Builders Sue To Enjoin Green Building Law From Taking Effect

This just in...According to King5.com:

The Building Industry Association of Washington filed a federal court lawsuit in Seattle to stop new regulations that are set to take effect July 1 for the construction of all new homes. It targets the Washington State Building Code Council, which created the new code that requires higher efficiency furnaces and hot-water heaters and other measures that make the home more enviormentally friendly.

This appears to be similar to AHRI v. Albuquerque, wherein the national trade associations for air conditioning, heating, and refrigeration sued the City of Albuquerque to enjoin their green building code.   The complaint is downloadable here.

The Importance of Aligning Intent With Outcome

In today's News-Tribune of Tacoma, Washington (admittedly not on my usual roundup of morning papers) there was anop-ed piece by a conservative columnist calling for Washington (state) to roll back "green" requirements for schools because they are not creating the energy savings promised when enacted. 

The 2005 law calls for schools to be designed, constructed and certified to LEED Silver standard.  At the time, the Governor Gregoire's press release stated:

According to the State Board of Education and Superintendent of Public Instruction’s office, use of sustainable building designs result in:

  • 20% annual savings in energy costs

  • 20% reduction in water costs

  • 38% in waste water production

  • 22% reduction in construction waste

  • A potential reduction in student absenteeism

  • A potential 5% decrease in teacher turnover rates

  • A potential 5% to 26% improvements in standardized test scores

In an ideal world, meeting LEED Silver standards would result in the predicted energy, water and other efficiencies.  But that is not always the case.  Many factors contribute to efficiency, including construction, operations and maintenance. Further, measurement and verification of energy usage is more art than science--which schools are being compared? by what methodology? Finally, what are the overall environmental implications of the building--were fewer new resources used, for example?

 Many municpalities and companies are using LEED as a shorthand for high performance building to circumvent the difficulties of determining individual targets for resource efficiency and creating long term verification plans. This is shortsighted.  By creating laws which use LEED as a substitute for rigorous environmental standards, well-intentioned municpalities and companies open themselves up to the criticism of the News-Tribune critic--that we shouldn't implement (or we should rescind) green building laws because they don't create environmental efficiency. 

For Green Buildings, Change Has Already Come To Washington

Long the city of high crime, poverty and neglect by the federal government which calls it home, Washington D.C. has passed some of the most progressive sustainability regulations in the country since 2006. For example in December 2006, Washington mandated, among other things, that private buildings 50,000 square feet or larger have to submit a checklist of green features by 2009, and meet LEED NC 2.2 standards by 2012. In addition to green building regulations, Washington has enacted comprehensive sustainability legislation, including a Clean and Affordable Energy Act, a Green Summer Jobs bill, a Climate Initiative and stormwater and water quality regulations.

I spend a lot of time counseling legislators on how to get legislation -- often far less comprehensive -- enacted, so I wanted to speak to the team behind the Washington legislation to find out what was working and what was not, and how it all got legislated in the first place. Alan Heymann, public information officer for the District Department of the Environment (DDOE), set up a conference with Brendan Shane, director of the Office of Policy and Sustainability, Shane Farthing, development coordinator, and Stella Tarnay, green building coordinator, for an inside look at the state of sustainability in the nation's capital.
 

Read the rest of this article at Greenerbuildings.com

Will the surety industry kill Washington's green building law?

Washington DC has one of the most progressive green building laws in the country.  Passed in December 2006, Washington mandates, among other things, that private buildings above 50,000 square feet submit a checklist of green features by 2009, and meet LEED NC 2.2 standards by 2012. To enforce the law, there is a bonding requirement for each project. 

Today's Washington Business Journal [subscription required, but you can get a synopsis of article here] reported that the surety industry is complaining that the enforcement mechanism is flawed: 

Under the new law, if a project does not meet the strict green requirements, the city would receive money from a performance bond that has to be posted for the project in an amount of up to 4 percent of the building costs, or $3 million. Those dollars would be paid into a new city green building fund aimed at helping implement the legislation.

But the bonding mandate has surety companies wondering which party in the project — whether the building owners, the contractors or the designers — must shell out for the performance bond, therefore bearing the risk of noncompliance.

Without support from the sureties, which finance bonds, it will be difficult for Washington to enforce its law because construction projects won't be able to acquire the required bonds.  If there is bond default, litigation will surely follow, funded either by the parties involved, or the surety guaranteeing the bond.  Alternatively, the surety industry may choose to sue Washington, as the HVAC industry associations did to Albuquerque in AHRI v. City of Albuquerque, to enjoin the legislation from taking effect due to the poor drafting of the legislation.