Green Building Series: Are State and Local Green Building Laws and Ordinances Preempted by Federal Law? One Federal Court Says, “Maybe.”

On October 3, 2008, the United States District Court for the Southern District of New Mexico enjoined the enforcement of three new City of Albuquerque ordinances that impose minimum energy efficiency standards for commercial and residential buildings. Local and regional distributors of heating, ventilation, air conditioning, and water heating products, as well as three national HVAC trade associations, asked the court for the injunction. The plaintiffs argue that the Albuquerque ordinances are preempted by Federal law.

The Energy Policy and Conservation Act (EPCA) is a federal law that establishes a national standard for the energy efficiency of major commercial and residential appliances and equipment, including HVAC equipment. The Department of Energy is responsible for maintaining and updating these standards. The EPCA contains a provision that expressly prohibits state and local regulation concerning the energy efficiency, energy use, or water use of any product covered by the act.

The new City of Albuquerque ordinances cover both new construction and renovations to existing buildings. They also cover commercial, multi family, and single family projects. Depending on the type of project, there are various ways that a project can achieve compliance with the new ordinances. These include achievement of LEED Silver certification, demonstrating a measured 30% increase in system efficiency over a baseline standard, compliance with modified ASHRAE standards, or compliance with the Build Green New Mexico program – a sustainability accreditation developed by the New Mexico Home Builders’ Association. There is also a prescriptive compliance option available to all types of Projects. Under this option, the individual components of the system must be evaluated against Albuquerque’s new standards, most of which are stricter than federal standards.

In finding that the Plaintiffs were entitled to the injunction, the court came to several conclusions. First, the court found that Albuquerque’s new ordinances would require defendants to increase warehouse space, carry additional stock, and decipher the new code to meaningfully assist customers in selection of compliant equipment. The court found that these new requirements would cause the plaintiffs economic harm that is irreparable because the City of Albuquerque is protected by sovereign immunity and cannot be sued by plaintiffs who suffer economic losses due to the new laws. The court further found that the injunctions would not pose a hardship on the City since it would merely require maintenance of the status quo. The court also referenced Congress’ comments to the existing federal legislation which found that uniform national requirements favor public interest.

Finally the court found that “at a mimimum” the prescriptive paths to compliance require the use of appliances with standards in excess of federal efficiency standards. The court continued, “[w]hile it is less clear that Plaintiffs will prevail on their challenge to the performance-based options, Plaintiffs, at a minimum, have raised questions that are “serious, substantial, difficult and doubtful.”’

The final paragraph of the court’s opinion is perhaps most telling,

The City’s goals in enacting Albuquerque’s Energy Conservation Code and the Albuquerque High Performance Buildings Ordinance are laudable. Unfortunately, the drafters of the Code were unaware of the long-standing federal statutes governing the energy efficiency of certain HVAC and water heating products and expressly preempting state regulation of these products when the Code was drafted and, as a result, the Code, as enacted, infringes on an area preempted by federal law.

If these federal standards were unknown to the drafters of the Albuquerque ordinances, then they may have also been unknown to the drafters of similar laws and ordinances around the country. Accordingly, the preemption contemplated by the New Mexico court may apply to other codes from other states and cities.

The injunction granted by the New Mexico court is temporary. Whether or not it will become permanent depends on the final outcome of the New Mexico case. However, at this point in the underlying litigation, the court does not seem optimistic that the ordinances, as written, will ever be enforceable. If the court permanently enjoins enforcement of the statute, this case could become a precedent that causes similar laws around the country to come under scrutiny.

Posted by: Christopher J. Dutton