WA builders sue to stop new energy standards

By Adam Wlaters,
Stoel Rives LLP, Attorneys at Law

In November 2009 the Washington State Building Code Council (“WSBCC”) approved amendments to the Washington State Residential Energy Code imposing additional energy efficiency requirements for newly permitted homes.  The controversial changes, found in Chapter 9 of the new Code, are scheduled to take effect on July 1, 2010.

The new regulation at issue requires that “Dwelling units permitted under this Code shall comply with all provisions of Chapter 5 of this Code [building component performance requirements] and develop 1 credit from Table 9-1.”  The requirements thus apply to both new residential units and additions to existing units.  Table 9-1 contains a list of 13 options for achieving energy efficiency in newly permitted homes each of which qualify for between .5 and 2 credits and some of which must be combined with other listed options to qualify.  Most of the options involve increasing the efficiency of HVAC systems, while others address things such as building envelope efficiency, water efficiency and on-site generation of renewable (solar or wind-generated) energy.

Various members of the Washington building industry have strenuously objected to the new regulation on the grounds that it will add to the cost of new homes built in Washington, therefore making them more difficult to sell in a down real estate market and ultimately harming the state’s building industry.

On May 25, 2010, the Building Industry Association of Washington and various building industry participants consisting mainly of residential builders and HVAC consultants and equipment suppliers, sued the WSBCC in the U.S. District Court for the Western District of Washington (Case No. 3:10-cv-05373-RJB).  The complaint requests a temporary injunction prohibiting the State from implementing the new regulation and a declaration that the regulation is unconstitutional.

The Plaintiffs contend that the new energy efficiency regulation violates both the Supremacy Clause (Article VI) and the Interstate Commerce Clause (Article I, Section 8, cl. 3) of the U.S. Constitution. The primary argument set forth in the complaint is that the new regulation has the effect of imposing more stringent energy efficiency standards than those imposed under federal law, and is therefore in contravention of the Supremacy Clause in that such regulations are preempted by the federal Energy Policy Conservation Act of 1975 (EPCA) and similar acts.

Table 9-1 does not directly impose standards higher than those imposed under federal law, but the plaintiffs argue that many of the options listed are impractical and effectively force home builders and buyers to select expensive HVAC, water heating and plumbing equipment that exceeds federal standards, thus contravening the EPCA and adding between $4,000 and $15,000 to the cost of a new home.

The EPCA prohibits states from imposing higher energy efficiency standards than those imposed under the Act but also includes exceptions, including one allowing states to enact performance-based building codes that provide multiple options for compliance.

In response to the complaint, WSBCC may argue that Chapter 9 meets the performance-based building code exceptions of the EPCA and other relevant federal laws, that Table 9-1 provides a number of different ways to achieve one credit of additional energy efficiency, that the options are not impractical or unduly burdensome and/or that the plaintiffs’ allegations regarding the impact on the industry and the cost of new homes in Washington are exaggerated.

The plaintiffs’ complaint spends little time on the Commerce Clause argument, which is that the new regulation will disadvantage the residential building industry in Washington as compared to competitors doing business in other states that have less stringent regulations.

The plaintiffs’ Supremacy Clause argument should garner the most attention from the court and it will be interesting to see how the case is decided.  The decision may come down to a factual analysis of the various options set forth in Table 9-1.  Although the complaint addresses several of the allowed options, it provides little detail as to why the options are impractical.  For instance, the complaint states, without further discussion, that the renewable energy options “are simply not viable for many homes/home sites.” Such factual issues should provide a fertile battleground for the litigants.

As of the date of this Blog, the court has not yet ruled on the request for temporary injunction pending the outcome of the proceedings; however, this may become a moot issue, as it appears that Governor Gregoire has requested that implementation of the new standards be delayed by nine months.

Whatever the outcome, this case is certain to have widespread implications for the Washington residential building industry and could set an important precedent for other states wishing to impose new residential energy efficiency standards.

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