On June 25, 2012, the Ninth Circuit affirmed a district court decision that found that an energy efficient building energy code adopted by the Washington Building Code Council in 2009 met the requirements for obtaining an exemption under the Energy Policy and Conservation Act (EPCA). Specifically, the court held that the 2009 Code met all seven requirements for obtaining a building code exemption under the statute.
In 2006, the Council adopted a building energy code for new construction in the state which did not exceed federal requirements. In 2009, the Council revised the building energy code to add a 15% annual net energy consumption reduction requirement to be achieved through a point system whereby credits can be earned by making certain improvements to the efficiency of a building’s shell, heating equipment, and other energy consuming devices. The revised standard is stricter than what is required under EPCA. The revised standards were to take effect July 1, 2010, but were delayed until January 1, 2011.
EPCA sets federal energy efficiency guidelines for residential appliances used in buildings, including heating, ventilation and air conditioning equipment. EPCA also requires that states adopt and periodically revise their building energy codes to comply with the International Energy Conservation Code (IECC). While EPCA prohibits imposing state regulations that are stricter than those set by the IECC, it does allow for exceptions for state energy codes as long as they meet seven enumerated requirements.
In May 2010, the Building Industry Association of Washington (BIAW) filed a lawsuit in the Western District of Washington seeking to enjoin the enactment of certain provisions of the 2009 Code on the grounds that they were preempted by EPCA.
The lawsuit alleged that the 2009 Code, as passed by the Council, required new buildings to have HVAC, plumbing, or water heating equipment whose efficiency levels exceed those set by EPCA. The lawsuit further alleged that the BIAW had made investments in inventories of equipment which comply with the federal standards, the sales of which would be disrupted if the state energy code goes into effect. At issue is a provision of EPCA, 42 U.S.C. 6297(f)(3), which allows an exemption for state and local building codes provided that the codes meet the seven requirements set forth in this provision. The two requirements at issue in this case are 6297(f)(3)(B) and (C), which are forth below:
(B) The code does not require that the covered product have an energy efficiency exceeding the applicable energy conservation standard established in or prescribed under section 6295 of this title, except that the required efficiency may exceed such standard up to the level required by a regulation of that State for which the Secretary has issued a rule granting a waiver under subsection (d) of this section.
Plaintiffs alleged that some of the options required by the Code to reduce a building’s energy use happen to be cheaper than other options, and thus contended that they were being required to use these products
(C) The credit to the energy consumption or conservation objective allowed by the code for installing covered products having energy efficiencies exceeding such energy conservation standard established in or prescribed under section 6295 of this title or the efficiency level required in a State regulation referred to in subparagraph (b) is on a one-for-one equivalent energy use or equivalent cost basis.
Plaintiffs alleged the Code did not allow credits on a one-for-one equivalent use basis.
The District Court Decision
In February 2011, the district court held that the Council did not violate EPCA when it enacted the 2009 Code. Specifically, the court held that the 2009 Code met all seven of EPCA’s requirements to obtain a building code exception under the statute. The court rejected plaintiff’s argument with respect to subsection (B), noting that the Code did not require products with higher efficiency than mandated by federal standards as the only way to comply with the Code. It also rejected plaintiff’s arguments with respect to subsection (C), explaining that while there is some disparity in credits, EPCA did not require identical energy savings.
Plaintiffs appealed the decision to the Ninth Circuit.
The Ninth Circuit Decision
In affirming the district court decision, the Ninth Circuit largely agreed with its rationale. With respect to subsection (B), the court held that that a builder is not “required” to select an option simply because there is an economic incentive to do so. The court reasoned that the subsection is violated when a code requires a builder, as a matter of law, to select a particular product or option. With respect to subsection (C), the court held that BIAW’s argument that the Code does not satisfy this condition relies solely on a BIAW member’s declaration, noting that the district court rejected it given that the witness was not qualified as an expert to challenge the state’s calculations of equivalent energy use savings. It held that the court did not abuse its discretion in doing this. The court concluded that the fact that each option did not have an exact match in terms of energy savings was an inevitable result when comparing different methods that use different product to obtain an energy conservation goal, and that this did not equate to a violation of the statute.
This decision is a welcome one for states, like Washington, that are looking for ways to make buildings more energy efficient and should provide interested states with a roadmap for how to structure energy efficient building codes in ways such that they do not run afoul of EPCA.