Efficiency of Energy Efficiency: Improving Preemption of Local Energy Conservation Programs, The


The United States consumes an enormous amount of energy via our buildings and cars. Buildings and light vehicles in the U.S. use forty-six quadrillion British Thermal Units (BTUs) in an average year, which represents over 10% of the total energy consumed worldwide. As global energy demands rise, climate change advances, and new technologies enter the marketplace, many states and localities have tried to push their economies in a greener direction. Often, these measures are centered on increasing energy efficiency forbuildings (via new building codes) and cars (by regulating taxicabs). But state and local governments face a series of barriers to this effort, erected by federal courts announcing broad preemption decisions under the Clean Air Act (CAA) and Energy Policy and Conservation Act (EPCA). This article identifies and argues against these high barriers to increasing energy efficiency.

Buildings consume 40% of our nation’s energy, the largest share of any sector of the economy, and produce an equally large percentage of our carbon emissions. Light vehicles make a substantial contribution as well, consuming about 16% of our energy and producing about 7% of U.S. greenhouse gas emissions. Increasing energy efficiency has been described as an extremely cost-effective way to cut emissions: “[E]nergy efficiency isn’t just low hanging fruit; it’s fruit lying on the ground,” said Stephen Chu, while he was Secretary of Energy. Thus, to make a meaningful impact, any government programs to conserve energy and limit emissions will necessarily require more efficient buildings (in large part via more efficient appliances) and cars. The CAA, EPCA, and subsequent amendments make clear that the federal government will set the standards in these areas, preempting “relate[d]” state requirements and those “concerning” the same subject area.  However, the case law on preemption of state and local energy efficiency programs in the areas of building codes and taxicabs has become more extensive in recent years, and has often prevented economically efficient local policies from taking effect.

The text of the relevant provisions in the CAA and EPCA is straightforward and simple. But that simplicity masks any indication of congressional intent, and leaves courts uncertain of the scope of the preemption. In Metropolitan Taxicab Board of Trade v. City of New York (Metro Taxicab II) and Association of Taxicab Operators v. Dallas (ATO), the courts came to opposite conclusions on whether local incentive schemes for hybrid taxicabs were preempted by federal standards. The courts in Building Industry Association of Washington v.Washington State Building Code Council (BIAW) and Air Conditioning, Heating, and Refrigeration Institute v. City of Albuquerque (ACHRI) similarly came down on different sides regarding green building codes.

The preferable policy approach is not always clear, either: a scheme that preempts both stronger and weaker state standards (known as floor-and-ceiling preemption) creates economic benefits like protecting economies of scale in manufacturing and avoiding discrimination among states. But it also eliminates the potential for local tailoring and experimentation, and blocks local policymakers from prodding the federal government to maintain optimal standards.

Preemption doctrine should seek sensible policy outcomes, as opposed toeasily administrable judicial rules. Rather than a static standard based only on textual analysis, courts should apply the principles that will promote overall economic efficiency when the statutory text itself does not precisely address the subject of the preemption inquiry. Since the main benefit of uniform standards is that they prevent localities from externalizing costs onto other states, that concern should be the focal point of a preemption analysis. If the disputed local policy does not implicate that concern, then federal law should not preempt the policy unless the statutory text unambiguously requires preemption.Unfortunately, courts have continued to undertake increasingly strained textual analyses rather than favoring good policymaking. This must change.

This article has two purposes. First, this article describes the current state ofpreemption jurisprudence in the automobile and building code energy efficiencyareas. I highlight the different judicial interpretations of the same statutory text to show that, despite what courts may claim, the statutory preemption clauses are ambiguous as they relate to hybrid incentive schemes and flexible green building codes. Second, in this article I argue that courts should adopt a narrower and more nuanced approach to preemption in these areas. Rather than attempt to determine Congress’s intended scope, the courts should readily declare the scope ambiguous and adopt a presumption against preemption in energy efficiency cases, allowing that presumption to be overcome only if courts find that the local scheme will lead to externalized costs that inhibit overall economic efficiency. This approach would diminish the scope of preemption under the CAA andEPCA and lead to better overall maintenance of energy efficiency standards.

Part II provides background on energy use and the merits of energy efficiency as a policy, including concerns about both the rebound effect and the energy paradox. Part III lays out the theoretical principles behind this article’sproposed approach to preemption. Part IV examines recent preemption decisionson hybrid taxi regulations. Part V reviews the recent case law on green buildingcodes and preemption of appliance efficiency standards. Finally, Part VI arguesfor a more pragmatic and deferential approach to preemption in those two areas.

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