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Fight over state green building codes heats up.

Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington

IN THE FIRST CASE OF ITS TYPE AT THE federal appellate level, a 9th Circuit panel in Building Industry Association of Washington et at v. Washington State Building Code Council upheld on June 25 Washington's amended building code requiring new construction to meet increased energy conservation goals.

The Building Industry Association of Washington (BIAW), along with individual builders and contractors, challenged 2009 amendments to the Washington State Energy Code slated to take effect the following July. The May 2010 complaint contended that the 1975 federal Energy Policy and Conservation Act (EPCA), as amended by the National Appliance Energy Conservation Act of 1987 and the Energy Policy Act of 1992, preempted the state code changes.

EPCA establishes nationwide energy efficiency standards for certain consumer and commercial products including heating, ventilation and air conditioning (HVAC) equipment; appliances such as washers and dryers, ranges, and refrigerators; and plumbing fixtures such as faucets and showerheads. It preempts state building standards requiring greater efficiency for such covered products than the federal standards. The federal statute nonetheless exempts from such preemption state building codes promoting energy efficiency, so long as those codes meet seven statutory conditions.

The district court in Building Industry Association of Washington held that the Washington state code satisfied all of EPCA's conditions for exemption, and therefore federal laws did not preempt it. The court granted the state's motion for summary judgment.

On appeal, the plaintiffs argued the state had not satisfied two conditions of the EPCA exemption provision, but the 9th Circuit disagreed.

Costly Options

One of the conditions upon which the plaintiffs based their appeal says that a state building code cannot require the use of products that exceed the federal energy standards and must provide for alternative ways to reach its energy targets.

The plaintiffs acknowledged the Washington state code does not mandate use of HVAC products exceeding federal standards, but they argued that they were required to use costly options to meet the state's standard of a 15 percent reduction in new buildings' energy consumption, compared with a 2006 baseline.

Goodstein Law Group attorney Timothy Harris, who represented the plaintiffs on the appeal, said the 9th Circuit rejected several points of his argument. The court disregarded his point that the Washington code's compliance options are "so costly that builders are economically coerced and hence required to select the higher efficiency options," he says.

The 9th Circuit held that a builder is not "required" to select an option simply because there is an economic incentive to do so. The appeals court said that EPCA is violated only when the code requires a builder, as a matter of law, to select a particular product or option. It cited the 2005 Supreme Court case Bates v. Dow Agrosciences, which interpreted the term "requirement" to mean "a rule of law that must be obeyed." The gth Circuit held that the plaintiffs were not "required" to choose any particular option.

The plaintiffs also said the state had not complied with a condition of EPCA's preemption exception that requires building codes to allow builders to meet energy efficiency objectives through a system of credits for solutions that save either energy use or energy cost.

"The Washington code has a point system, where different building techniques, including the installation of energy efficient HVAC, achieved different scores," says Shari Shapiro, an attorney with the energy, environment and utilities practice at Cozen O'Connor.

If a builder chooses to use a standard HVAC system with products at the federal efficiency standard, he must select from an array of other options to achieve the required points, such as a geothermal heat pump or a ventilator system supplying an otherwise well-sealed house with fresh air, to meet the Washington code. Because the options could cost

more than HVAC systems that exceed federal energy standards, this creates a de facto penalty for not installing products exceeding the standards, Shapiro says.

Murky Law

The 9th Circuit's analysis in Building Industry Association of Washington did not differentiate the Washington code from codes that other courts said federal law preempted, Shapiro says.

"In my opinion, the 9th Circuit did not articulate clearly what type of code is safe for local governments to adopt, and not risk a preemption fight," she says. "We will continue to see conflict between federal and local standards for HVAC energy efficiency, unless a nationwide energy efficiency building code is enacted."

As more state and local governments seek to regulate energy efficiency through greener building codes, Stephen Del Percio, construction counsel for URS Corp., an engineering and construction company, predicts more lawsuits will follow.

"More suits could also encourage Congress to clarify the EPCA seven-part building code preemption exemption to give better guidance to both courts and policymakers seeking to implement state- and local-level energy efficiency codes," he says. "While the purpose of federal preemption is clear in avoiding patchwork legislation, which increases the costs of doing business, the murky area of law and legislation in this important area is not in anyone's best interests."

RELATED ARTICLE: Building a Case

CONGRESS ENACTED THE FEDERAL ENERGY POLICY AND CONSERVATION Act (EPCA) in 1975. Thirty-seven years is a long time after the enactment of a federal statute for a first appellate opinion, but for much of that time, state and local building codes didn't collide with the federal statute.

"People really did not care about energy efficiency that much, and the HVAC industry and the building industry are strong and well-organized, so the [state and local] standards were not updated," says Shari Shapiro, an attorney with the energy, environment and utilities practice at Cozen O'Connor. "When codes and standards started to reemerge as a means for local governments to implement energy efficiency mandates in about 2005, the building industry started looking for avenues to attack."

EPCA's preemption provision provided one such avenue.

"My guess is some smart lawyer somewhere in Washington dug around and found the EPCA preemption-exemption section. It was brilliant lawyering, in my opinion," she says.
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Title Annotation:9th CIRCUITS
Author:Kozubek, Michael
Date:Aug 31, 2012
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