Incorporated Standards in a Federal System

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When state and local officials incorporate voluntary codes and standards, they still need to watch out for federal preemption.

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The tax incentives in the recently passed Inflation Reduction Act should help make significant progress toward achieving the Biden Administration’s climate goals. But it also appears unlikely to be enough, raising an important question for the future: How can further climate progress be made?

The answer on many policymakers’ and activists’ minds lies outside of Washington, D.C., in the centers of state and local government around the United States. Sure, some federal regulatory options still exist, but they are more limited today due to the U.S. Supreme Court’s decision last June in West Virginia v. Environmental Protection Agency.

A major opportunity for state and local regulation rests with further efforts to regulate the built environment.

Historically, state and local governments have borne responsibility for regulating buildings and their construction. And the nation’s office buildings, apartment complexes, shopping malls, and single-family houses are all major contributors to greenhouse gas emissions. The places where people live and work generate about 40 percent of all greenhouse gas emissions in the United States, and they consume roughly the same proportion of the nation’s energy.

In recent decades, state and local building codes have made some strides toward promoting sustainable building design and encouraging the use of more energy efficient heating, ventilation and air conditioning systems. But in the coming years, expect to see increased interest in these standards—and in making them even tighter.

When states and localities use their building codes to promote energy efficiency in the years ahead, they will likely continue a longstanding practice known as incorporation by reference—that is, putting into binding law the standards created by nongovernmental standard-setting organizations, such as the American Society for Heating, Refrigeration and Air Conditioning (ASHRAE) and the International Code Council (ICC).

Organizations like these bring together professionals who work collaboratively to establish detailed standards for all facets of building construction, including design, structural materials, plumbing and electrical systems, fire and earthquake protection, and heating and air conditioning. These standard-setting organizations regularly update their standards to keep pace with advances in technology.

At the time of their creation, these standards are voluntary. But once they are later incorporated by reference into building codes by state and local legislatures and administrative agencies, they create binding obligations that architects and builders must follow.

But by incorporating these standards, states and localities can also create legal risks for themselves. One of the main legal risks derives from the Supremacy Clause of the U.S. Constitution, which holds that federal law generally preempts conflicting state laws.

When incorporating energy efficiency standards for appliances and equipment used in buildings, state and local governments need to manage the risk of federal preemption with special care. Federal statutes and regulations adopted by the U.S. Department of Energy already govern the energy efficiency of some of the most common appliances and equipment used in commercial and residential buildings. And federal legislation sets specific criteria that states need to follow to keep from having their efforts to improve buildings’ energy efficiency preempted by federal law.

As detailed further in a set of case study materials on the Penn Program on Regulation’s resource website about voluntary codes and standards, failure to take care when incorporating voluntary building standards and crafting energy efficiency codes can lead to litigation, delay, and ultimately court orders blocking state and local codes from taking effect.

The city of Albuquerque, New Mexico learned this lesson the hard way. In 2005, Democrat Martin Chávez won what was then an unprecedented second consecutive term as Albuquerque mayor, hoping to make Albuquerque the “greenest city” in the United States. Drawing on input from a variety of industry leaders and city officials, Albuquerque adopted a progressive green building code that incorporated into city law some state-of-the-art standards developed by ASHRAE and ICC.

After the city council approved the new building code, three national trade associations and a dozen local builders and suppliers took the city to court, arguing that federal law preempted the city’s code. The federal district court in New Mexico ruled that the parts of the code that incorporated ASHRAE and ICC standards prescribe the use of equipment that exceeded federal standards—and various other parts of the code could not spare the code of the conflict created by its prescriptive provisions. The court issued a preliminary injunction barring implementation of the code. Two years later, in a separate decision, it granted summary judgment to the industry plaintiffs.

Had Albuquerque more carefully considered a possible federal preemption challenge, it might have seen its green code provisions sustained. In fact, the state of Washington successfully managed to add demanding new energy efficiency standards to its building code a few years after Albuquerque’s attempt. When faced with litigation by some of the same kind of industry plaintiffs that had taken Albuquerque to court, the state of Washington prevailed—both at the trial court level and on appeal.

The contrasting outcomes in these two case studies, which are featured on the Penn Program on Regulation’s website, offer an important lesson to policymakers and activists who seek to make states and localities the center of climate policy in the years ahead. This lesson is important even for issues outside of green building codes. In the coming years, federal preemption arguments are likely to become more prevalent on issues as varied as abortion, drones, and fintech.

To move forward wisely and effectively on these issues, as well as to address the imperatives created by climate change, states will need to navigate the path ahead with due care. Even though the Supreme Court’s decision in West Virginia may have pulled back federal regulatory authority to some degree, federal law will remain relevant for those seeking to pursue policy objectives through subnational regulation.

Cary Coglianese is the Edward B. Shils Professor of Law and the Director of the Penn Program on Regulation at the University of Pennsylvania. He serves as the faculty advisor to The Regulatory Review.

Neharika Goyal is a student at the University of Pennsylvania Carey Law School.

This essay is part of a six-part series entitled