Building Industry Ass'n v. Washington State Building Code Council
2012 WL 2369304, 683 F.3d 1144, 2012 U.S. App. LEXIS 12926 (2012)
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Rule of Law:
The Energy Policy and Conservation Act (EPCA) preempts state energy efficiency standards for covered products that exceed federal standards, but exempts state building codes for new construction if they meet specific statutory conditions, including not requiring products with efficiency exceeding federal standards and granting energy efficiency credits on a one-for-one equivalent energy use or equivalent cost basis.
Facts:
- Congress enacted the Energy Policy and Conservation Act (EPCA) in 1975 to establish nationwide energy efficiency standards for certain residential home appliances, with a provision generally preempting state standards that required greater efficiency.
- EPCA was amended in 1987 to carve out an explicit exemption from preemption for state building codes concerning energy efficiency, provided those codes met seven specific statutory conditions, including that the code "does not require" covered products to exceed federal efficiency standards (subsection B) and that credits for efficiency improvements are on a "one-for-one equivalent energy use or equivalent cost basis" (subsection C).
- The Washington State legislature enacted a regulatory regime to promote energy efficiency goals in new building construction and delegated authority to the Washington State Building Code Council to promulgate and update the statewide building code.
- In 2009, the Council amended the Building Code to require new construction to achieve a 15% reduction in energy consumption compared to a 2006 baseline.
- The 2009 Code offered builders three methods, or "pathways," to achieve this energy reduction; if builders elected Chapter 5 or 6 pathways, they were required to earn one additional "credit" under Chapter 9 by selecting from a menu of options.
- Chapter 9's menu of options (Table 9-1) included some choices that involved installing EPCA-covered products with efficiencies higher than federal standards, and these options were often less costly for builders than other available options.
- Industry groups, including the Building Industry Association of Washington (BIAW), criticized Chapter 9, asserting that it would effectively coerce builders into installing higher-efficiency products due to economic incentives and that the credit values assigned by the state were not accurately proportional to actual energy savings.
Procedural Posture:
- The Building Industry Association of Washington (BIAW) and other plaintiffs filed an action in the United States District Court for the Western District of Washington, seeking declaratory and injunctive relief, alleging that the Washington Building Code was expressly preempted by EPCA.
- The Northwest Energy Coalition, Sierra Club, Washington Environmental Council, and Natural Resources Defense Council moved to intervene on behalf of the Washington State Building Code Council, and the district court granted their motion.
- The Council and intervenors (collectively, "Defendants") filed a joint motion for summary judgment.
- Plaintiffs cross-moved for summary judgment.
- The district court granted summary judgment to the Defendants, holding that the Washington Building Code satisfied EPCA's conditions for exemption from preemption.
- Plaintiffs timely appealed the district court's decision to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does the Washington State Building Code, by offering economically incentivized higher-efficiency options and assigning energy efficiency credits based on average equivalent energy use, "require" covered products exceeding federal standards or fail to provide "one-for-one equivalent energy use or equivalent cost" credits, thereby failing to satisfy EPCA's preemption exemption conditions?
Opinions:
Majority - Schroeder
Yes, the Washington Building Code satisfies the conditions for exemption from EPCA preemption because it does not legally require builders to install higher-efficiency products and its credit system for energy conservation options is based on one-for-one equivalent energy use. The court reasoned that under 42 U.S.C. § 6297(f)(3)(B), a state building code "requires" a product when it imposes a legal compulsion or command, not merely an economic incentive to choose it. Citing the Supreme Court's decision in Bates v. Dow Agrosciences LLC, the court affirmed that the term "requirement" means a rule of law that must be obeyed, not an event or condition that might merely "induce" a particular choice. Unlike an Albuquerque ordinance that imposed legal penalties (additional required products) for not using higher-efficiency products, Washington's code simply offered options, some of which were less expensive and more efficient, without creating any penalty or legal compulsion for choosing other options. Regarding 42 U.S.C. § 6297(f)(3)(C), which mandates that credits be granted on a "one-for-one equivalent energy use or equivalent cost" basis, the court upheld the district court's rejection of the plaintiffs' unqualified expert testimony. Conversely, the court accepted the state's expert evidence, which utilized the SEEM computer model to assign credit values proportionally to the average energy use saved across various building and climatic conditions. The court recognized that exact mathematical perfection is not possible when comparing different energy-saving methods and that "some approximation is necessarily included in the concept of equivalence," as Congress intended to prevent the code from discriminating between products or methods, not to demand absolute identical savings from different options.
Analysis:
This case significantly clarifies the scope of EPCA's preemption exemption for state building codes, particularly in defining what constitutes a "requirement" and the interpretation of "one-for-one equivalent energy use." It establishes that economic incentives alone do not trigger preemption under EPCA, thus offering states flexibility to craft energy efficiency codes that effectively encourage builders towards more efficient options without creating explicit legal mandates or penalties. The ruling also provides important guidance on the evidentiary standards for challenging a state's energy modeling, emphasizing the need for qualified expert testimony and robust, scientifically sound data. This decision ultimately strengthens the ability of states to implement performance-based energy codes that promote conservation, provided they avoid direct legal compulsion or arbitrary credit assignments.
