In October, Chief District Judge Martha Vazquez of U.S. District Court for the District of New Mexico issued an order that granted a preliminary injunction in favor of the plaintiffs in AHRI et al. vs. City of Albuquerque. The green-building community has been monitoring this lawsuit with much interest. The case involves the novel application of federal preemption doctrine, in which federal law trumps state or local law, in the context of local-level green-building legislation. The order could have significant implications for other state- and local-level greenbuilding regulations.

The lawsuit was filed in July by the Arlington, Va.-based Air Conditioning, Heating and Refrigeration Institute; Arlington-based Air Conditioning Contractors of America; Columbus, Ohio-based Heating, Airconditioning & Refrigeration Distributors International; and 11 HVAC product distributors and contractors. The plaintiffs allege that current federal regulations promulgated by the Washington, D.C.-based U.S. Department of Energy, including the Energy Policy and Conservation Act and the National Appliance Energy Conservation Act, already set standards for energy efficiency for the same HVAC equipment that Albuquerque seeks to regulate through its proposed Energy Conservation Codes. Because the federal statutes include provisions that expressly prohibit state- and local-level regulations applying to the equipment in the absence of a waiver of preemption from Congress, the plaintiffs allege the city's attempt to increase the energy-efficiency standards beyond what is required by the federal statutes is therefore prohibited. The plaintiffs had worked with local officials since the disputed legislation was signed into law back in January to hammer out a compromise, but because deadlines were extended through the spring without an agreement, the lawsuit was filed. In their complaint, the plaintiffs expressed concern that if the city legislation was enforced, it would, among other things, increase the costs of local projects by requiring manufacturers to build and supply equipment that would need to comply with multiple standards.

“Congress recognized that a successful national energy-efficiency policy required that it protect the appliance industry from having to comply with a patchwork of numerous conflicting state requirements,” the plaintiffs observe in the complaint. One of the purposes of preemption doctrine is to prevent this scenario; if the federal government has acted to regulate a certain area of law with the intention that its legislation is to be exclusive, local governments are barred from acting in the absence of a federal waiver or demonstration of a “compelling” state or local-level interest. Preemption is not limited to energy-efficiency regulations; many well-known statutes, such as the Employee Retirement Income Security Act, explicitly state they shall “supersede any and all State laws insofar as they may now or hereafter relate to” the subject matter of the statute. In a portion of her 24-page decision that granted the preliminary injunction, pending resolution of the underlying lawsuit, Judge Vazquez wrote that “[t]he city’s goals [in enacting the disputed code] 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.”

What may wind up becoming problematic for greenbuilding legislation generally is that the lawsuit could create more preemption challenges to other local laws if regulatory activity at the federal level increases. One murky area of preemption case law is implied preemption, in which courts may determine that Congress simply intends for federal regulation to supersede state law without explicitly saying so. There is no formal barometer by which courts can evaluate an implied preemption claim, but the Supreme Court has held that preemption will exist if “the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained.” If the federal government moves to more proactively and uniformly regulate the built environment, the AHRI plaintiffs may have helped jeopardize a significant number of stateand local-level green-building laws that have been enacted to date.

The more practical implication of the decision in AHRI is that future legal challenges to state- and local-level green-building legislation may not be limited to preemption. Judge Vazquez explicitly noted in her opinion that legislators actually were ”unaware” of the potential for a preemption challenge. In the haste to legislate green-building mandates, many local governments have failed to consider the legal ramifications of their regulatory regimes or drafted legislation that omits or fails to define key terms. For example, the Wethersfield-based Connecticut Construction Industries Association, or CCIA, recently voiced concerns about proposed state-level legislation that would mandate the Washington-based U.S. Green Building Council’s LEED Silver certification—or its ”equivalent”— for public- and private-sector projects costing more than $5 million. (This will change to projects of more than $2 million in 2009.) CCIA pointed out the legislation's ambiguity, noting there is no definition or guidance within the legislation with respect to what an ”equivalent” rating to LEED might be.

What remains to be seen is whether AHRI is the shot across the bow of green-building legislation or a quirk in a muddled area of the law. Nevertheless, prior to AHRI, most industry groups were reluctant to resort to litigation to resolve disputes about green-building legislation, fearing the negative backlash a lawsuit might prompt for green building. If that barrier now has disappeared, a group like CCIA might challenge the Connecticut legislation on the basis that its failure to define an equivalent rating system to LEED makes it void for vagueness. Similar legislation across the country that lawmakers did not sufficiently vet with preemption, constitutional and even antitrust considerations in mind also could become fair game. Therefore, municipalities must be extremely careful to evaluate all the legal permutations of green-building regulatory schemes they consider to protect themselves from the potential for litigation, particularly as the regulatory climate across all levels of government continues to increase.

STEPHEN T. DEL PERCIO is a construction attorney with Arent Fox LLP in Manhattan and the publisher of www.greenbuildingsNYC.com, which profi les green buildings in New York City while focusing on broad legal and business implications for sustainability. Del Percio can be reached at delpercio. stephen@arentfox.com or (212) 457-5542.