That is the message Judge Martha Vazquez, of the Federal District Court for the District of New Mexico, shared in her Jan. 25 ruling in AHRI v. City of Albuquerque.

Vazquez ruled that provisions of the 2007 Albuquerque Energy Conservation Code relating to the energy efficiency of federally covered residential and commercial HVAC equipment and water heaters are preempted by federal law, specifically the Energy Policy and Conservation Act (EPCA).

The 2007 Albuquerque code mandated 14 SEER and 90 percent AFUE for all installed residential and commercial new construction, remodels, and replacements. These requirements were more stringent than applicable federal minimum standards, set at 13 SEER and 78 percent AFUE by the EPCA.

“We are gratified that Judge Vazquez agreed with AHRI that regardless of intentions, the law must be followed,” said AHRI general counsel Joseph Mattingly. “Our member companies produce very energy-efficient equipment and are at the forefront of popular efforts to curb energy use, but we have maintained all through this case that federal law is very clear, and we are happy that the judge agreed with us.”

Industry Reaction

Heating, Airconditioning & Refrigeration Distributors International (HARDI) executive vice president Talbot Gee said the ruling sets a very important precedent for the industry.

“This is a significant decision because just about every one of our distributor members services more than one municipality. Had the City of Albuquerque been able to enact codes preempting federal law, the floodgates would have opened to other cities and counties to establish their own product standards,” said Gee. “Distributors would have incurred immeasurable costs and burdens trying to supply and comply with these patchworks of standards.

“As an organization, this issue, and the successful outcome we were able to help achieve, is important because it tied the power of an international organization like HARDI to very local issues our distributors deal with every day. This is a big reason why HARDI exists, and I’m especially proud of how our staff and volunteer leadership were able to get involved and react so quickly and effectively.”

Paul Stalknecht, president and CEO of the Air Conditioning Contractors of America (ACCA) also applauded the judge’s decision.

“Federal law is clear and was upheld in the case,” said Stalknecht. “States and localities cannot set their own standards that are higher than the federal standards without a waiver from preemption. The resulting patchwork quilt of minimum efficiency standards would be confusing to consumers and impossible to enforce.”

Stalknecht said he was very proud of the bravery exhibited by several local HVAC distributors and contractors as they were named plaintiffs and testified in the case.

“I want to recognize the contribution of ACCA members Affordable Services Inc. and Thompson Heating and Air Conditioning, who stood up for the industry and agreed to be a named plaintiff in a case against the city they work in every day,” said Stalknecht.

Mattingly believes that regionalized standards could fracture the national marketplace.

“If the court had found that the prescriptive standards in the Albuquerque code were not preempted by federal law, there would no longer be any reason for the industry to support federal appliance and equipment efficiency standards,” said Mattingly.

“Industry support for federal standards is premised on strong federal preemption of state and local regulation so that there re-
mains a national marketplace for our products. What is the point of federal standards if state and local governments are able to regulate appliance and equipment efficiency any way they see fit?”

The ruling was well received by several Albuquerque-based contractors and distributors.

“I just want to thank HARDI for their quick response once they learned of this issue. It was amazing to have HARDI, ACCA, and of course AHRI so involved and literally hands on,” said John Richardson, Gorman Industries sales manager.

“This is a victory not only for Albuquerque, but for distributors, contractors, and even homeowners and businesses across the country.”

Mike Salmon, Anderson Air Corps president, said the 2007 code was not well thought out, lacked input, and led to a great deal of uncertainty in the local industry.

“This code created a specialized market in Albuquerque,” said Salmon. “We all want a more energy-efficient environment, but we don’t want to take it to that extreme. In retrospect there was a lot of good that came out of this because it raised our awareness for energy efficiency, but thank goodness we were able to get this defeated.”

History of the Case

Under the tutelage of then-mayor Martin Chavez, the City of Albuquerque adopted its 2007 Energy Conservation Code Sept. 17, 2007. The code included a number of administrative and technical regulations related to building construction. The code was implemented to permit the use of innovative approaches toward energy efficiency and was one part of Chavez’s vision to ensure that new buildings were carbon neutral by 2030.

The code provided several prescriptive paths to compliance. Structures certified LEED-Silver or Build Green New Mexico-Silver would be exempted in the code.

Another compliance path required that HVAC systems in small retail and office buildings comply with minimum efficiency standards of 15 SEER and 90 percent AFUE. These requirements were more stringent than applicable EPCA federal minimum standards, set at 13 SEER and 78 percent AFUE.

Recognizing the dangerous precedent that would be set if every jurisdiction sought to establish its own minimum efficiency standards, AHRI decided to challenge the city in court and filed a lawsuit July 3, 2008, asserting that portions of the code were preempted by federal law.

In addition to AHRI, plaintiffs listed in the complaint included ACCA; HARDI; Gorman Industries Inc.; Albuquerque Winair Co.; Action Air Conditioning Inc.; JMT Inc.; Affordable Service Inc.; Morrison Supply Co.; Perry Supply Co. Inc.; Academy Plumbing, Heating, Air Conditioning and Electric Inc.; Thompson Heating and Air Conditioning Inc.; and Comfy Homes LLC.

In an attempt to bring Albuquerque’s new laws into compliance with federal law, ACCA, AHRI, and HARDI welcomed city officials and more than 100 local HVAC representatives to multiple town hall meetings.

The grassroots charge proved somewhat effective, as city council postponed the enactment of the 2007 code from April 1, 2008 to July 1, 2008. After several more meetings, industry pressure was instrumental in city officials reducing the 15 SEER requirement to 14 SEER, which still violated federal standards.

Vazquez issued a preliminary injunction against enforcement of the provisions on Oct. 3, 2008.

The injunction left the City of Albuquerque without an active building and energy code. The city passed an interim code in 2009 that returned the questioned HVAC values to federally established minimums, but included more stringent requirements across windows, light bulbs, roofs, and other categories to make up for the perceived loss of energy efficiency through the preempted HVAC standards.

On Aug. 3, 2009, Albuquerque City Council passed an ordinance establishing a new local energy code based on the 2006 International Energy Conservation Code (IECC). The code included several amendments including more stringent regulations on air filtration testing and duct leakage.

On Oct. 6, 2009, Chavez was defeated in his bid for a third term as mayor by Richard Berry.

On Sept. 10, 2010, Vazquez granted in part and denied in part AHRI’s motion for summary judgment. The ruling stated that the prescriptive energy efficiency standards in the 2007 Albuquerque code that are more stringent than federal minimum efficiency standards are preempted and cannot be saved from federal preemption by the availability of alternative code compliance paths; and that a particular performance-based code compliance option is preempted because it is based on a standard reference design that uses efficiency levels that exceed federal efficiency standards.

The judge upheld her Sept. 10, 2010 findings through her Jan. 25, 2012 decision. A request from the city for reconsideration was denied.

Albuquerque’s Qualm

When developing their 2007 building and energy code, city officials gathered input from several HVAC representatives across the city. Using that input, city council members believed they were presenting a building code that was widely supported by the local industry.

“The local workers had really asked us for this,” said John DuBois, City of Albuquerque legal counsel. “They told us, ‘We don’t want to have to meet computer modeling, so, as far as energy efficiency, just tell us what you want and we’ll be happy to follow.’”

DuBois said as much as 30 percent of manufactured equipment on the market in 2007 exceeded federal standards. Thus, the city added the 15 SEER (later adjusted to 14 SEER) and 90 percent AFUE requirements to the code as a form of innovation.

“Our case was that we had offered a bunch of different paths to compliance. One was a prescriptive path that included equipment that exceeded federal standards, but we were told that was what our local industry wanted to see,” he said. “The smart consumers in our city recognized the rising costs of energy and expressed a willingness to pay a bit extra to purchase higher efficiency equipment. We felt we were, and feel we still are, doing the right thing.”

Publication date: 03/26/2012