A coalition – including the National Association of Homebuilders, The Restaurant Law Association, the National Federation of Independent Businesses, the Maryland Building Industry Association, Washington Gas, the Philadelphia-Baltimore-Washington Laborers’ District Council and Teamsters Local 96 – has filed suit in federal court to block Montgomery County’s ban on natural gas appliances in new construction.

The groups allege that the federal Energy Policy Act (EPCA) already regulates the efficiency and energy use of appliances, and expressly preempts state and local laws on that subject.

The EPCA regulates the energy efficiency of a wide range of residential, commercial, and industrial appliances and products, including space and water heating equipment, air conditioning systems, clothes washers and dryers, and stoves.

EPCA vests primary responsibility for setting energy efficiency standards with the U.S. Department of Energy (DOE). The federal standard is intended to provide a consistent national approach that explicitly preempts, with limited exceptions, a patchwork of local and state regulations concerning the energy efficiency and energy use of consumer and commercial appliances for which the DOE has set a federal standard.

In March 2023, Montgomery County enacted County Bill 13-22 requiring that the county executive issue all electric building standards for new construction by December 31, 2026.  The law defines an all-electric building as having no combustion equipment, including appliances used for space heating, water heating, clothes drying, or lighting.

The complaint alleges County Bill 13-22 exceeds local authority by regulating the energy efficiency and energy use of appliances that are already regulated by the DOE and the local law is therefore preempted by EPCA.

EPCA provides a narrow set of exceptions which, according to the complaint, do not apply. A state (not a county) may apply for a waiver of the appliance standard preemption based on a finding by the DOE that the state regulation is needed to meet “unusual or compelling state or local water or energy interests that are substantially different in nature or magnitude than those prevailing in the United States generally.”

Similarly, a DOE waiver for performance-based building codes applied to new construction is predicated on providing multiple performance pathways, including options that allow the use of appliances and other products that meet but do not exceed the applicable federal standards.

No waivers have been applied for or granted.

The suit is focused on the natural gas ban in new construction enacted through County Bill 13-22. Although the same preemption arguments likely apply, the suit does not directly challenge Montgomery County’s Building Energy Performance Standard (BEPS) or its regulation of site Energy Use Intensity. (EUI)

EUI is a measurement of a building’s total on-site energy use on a square foot basis. The site EUI limits proposed by the Montgomery County and Maryland state BEPS regulations represent a de facto ban on combustion equipment in buildings whether it be natural gas, propane, fuel oil or other low- and no-carbon fuels.

Even if the court challenge succeeds in blocking the implementation of Montgomery County’s all-electric building code, new and existing buildings with fossil fuel appliances will still be regulated under local and state BEPS in ways that are designed to compel steep energy-use reductions and electrification of mechanical systems.

Both the state of Colorado and the City of Denver have adopted BEPS regulations similar to those proposed by the Maryland Department of the Environment (MDE). Those regulations set limits on direct greenhouse gas emissions of buildings and total energy use per square foot. A complaint filed in federal court on April 22nd alleges that both the Colorado and Denver BEPS regulations are preempted by EPCA.

Along with the Montgomery County lawsuit, the outcome of the Colorado litigation will influence how Maryland proceeds with development and adoption of its own BEPS regulations and determine the direction of future requests for the court to intervene.