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Building Industry Association of Washington Files Federal Lawsuit to Block Amended State Energy Code

Building Industry Association of WashingtonOn the heels of the lawsuit filed at the LEED Gold-hopeful Riverhouse here in New York City comes another green building-related litigation, this time on the West Coast and filed on May 25 by the Building Industry Association of Washington. The suit seeks to enjoin the pending enactment of certain amendments to Washington’s State Energy Code, and the allegations in the complaint (available for download here) will be familiar to those of you who recall the AHRI v. City of Albuquerque litigation, which we have written about frequently both here at GRELJ and over at gbNYC.

The action is noteworthy because of its similarities to AHRI – where a decision on the plaintiffs’ application for a preliminary injunction remains pending in the District of New Mexico – and the potential it suggests for other similar litigation over state- and local-level green building legislative implementation on the horizon. However, what’s most interesting about the complaint is its level of detail, particularity, and emphasis on the legislative history behind the applicable federal statutes regulating energy efficiency and energy use standards for the residential HVAC and plumbing products which the plaintiffs manufacture.

Filed in United States District Court for the Western District of Washington, Building Industry Association of Washington et al. v. Washington State Building Code Council alleges that certain amendments to the Washington State Energy Code that were passed back in November and slated to take effect on July 1 are preempted by various federal regulations, including the National Appliance Energy Conservation Act of 1987 and the Energy Policy Act of 1992, on the basis that they require homes to have HVAC, plumbing, or water heating equipment whose efficiency exceeds the standards set by the federal government in applicable legislation.

The specific amendments to the Washington code at issue in BIAW propose that single-family residences earn at least 1.0 credits from a list of 9 options that range from 0.5 to 2.0 credits. The complaint alleges that – as drafted – it is not possible to earn 1.0 credits from the 9 options without selecting those options which require higher efficiency equipment. According to allegations in Paragraph 46 of the complaint, the table “outlines a set of false choices. In effect, the ‘options’ in this table mandate the installation of products with efficiency standards in excess of federal standards.”

The economic essence of the preemption argument as alleged in both AHRI and BIAW is also articulated well in Paragraphs 22 through 24 of the BIAW complaint. These allegations are important to consider from an overall policy perspective with respect to why other industry groups may be inclined to spend the time and resources necessary to attack similar legislation in other jurisdictions:

“Plaintiffs, in reliance on the federal energy efficiency and energy use standards, have valuable investments in inventories of equipment and home designs which comply with federal standards but which do not comply with the [disputed amendments to the state energy code]. The state code will disrupt sales of HVAC products, water heaters and plumbing products intended for use in the state due to confusion of manufacturers, distributors and contractors about which standards they must adhere to. Distributors and contractors in neighboring states which have not adopted the same regulatory provisions challenged in this action will not suffer the same or similar adverse effects on their businesses. Those effects place Washington distributors and contractors with a uniquely affected class harmed by the regulations challenged here.”

In Paragraph 53, the complaint also describes in detail the two ways in which a state or local government can avoid federal preemption if legislation does include equipment or products with higher energy efficiencies.

First, as was discussed in AHRI, the state or local government can obtain an express waiver of preemption from the federal government. (An interesting note here is that no state has ever received such a waiver). Alternatively, under the 42 U.S.C § 6297(f) “building code exception,” state and local governments are permitted to set energy efficiency targets for new construction which can be reached with equipment or products whose efficiencies exceed federal standards, provided the enabling legislation also includes other means to achieve the targets with products that do not exceed the federal standards. As the complaint also notes in Paragraph 55, the legislative history to the building code exception states that the “flexibility provided to states in this provision is limited, to ensure that performance-based codes cannot expressly or effectively require the installation of covered products whose efficiencies exceed the applicable federal standard.”

The building code exception’s preemption analysis is performed under what some have described as a “convoluted” 7-part test that is outlined in 42 U.S.C. § 6297(f)(3). That test will be the focus of the Western District’s analysis when it evaluates the merits of the plaintiffs’ application for (i) a declaratory judgment finding that the amendments are preempted and (ii) an injunction preventing the state from enforcing the amendments as drafted.

These preemption issues are fascinating, particularly given the specific allegations in BIAW relating to the building code exception and the amendments’ failure to satisfy the 7-part test. Undoubtedly, similar issues will be raised again in other jurisdictions as additional green building legislation takes effect in 2010 and beyond. As always, we’ll follow up on BIAW here at GRELJ as the litigation moves forward.

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3 Responses to Building Industry Association of Washington Files Federal Lawsuit to Block Amended State Energy Code

  1. Stephen Del Percio June 8, 2010 at 11:06 pm #

    Update – Washington Governor Chris Gregoire announced earlier today that she has requested the Washington State Building Code Council delay the implementation of the amendments for 9 months, though that delay will not take effect until WSBCC takes action:

    http://www.king5.com/news/business/Builders-get-temporary-reprieve-from-new-energy-code-95917849.html

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