The National Association of Home Builders (NAHB) and 15 state attorneys general are suing the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) over the adoption of energy codes, impacting the availability of affordable housing.
Plaintiffs are suing for declaratory and injunctive relief related to Section 109 of the Cranston-Gonzalez Act and the HUD and USDA’s decision to adopt updated energy-efficiency standards “purportedly pursuant to that provision.”
The Cranston-Gonzalez Act mandates the Secretary of HUD to establish energy-efficiency standards for housing financed through mortgages under the National Housing Act.
In their litigation, filed January 2, the plaintiffs argue that it is unconstitutional for Congress to delegate authority to private entities—in this case, the International Code Council (ICC) and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE)—to update statutory energy efficiency standards if administrative agencies declined to do so.
HUD and the USDA finalized the new standards back in April 2024. The Department of Energy previously estimated the new standards, known as the 2021 International Energy Conservation Code (IECC), would result in a 10.6% energy cost savings over the previous codes.
The filing alleges that ICC and ASHRAE have “pecuniary interests in promulgating revised building codes regardless of actual need.”
“But, as amended, Section 109 of the Cranston-Gonzalez Act requires HUD and USDA to adopt standards set by the ICC or the ASHRAE if HUD and USDA determine the revised codes do not negatively affect the availability or affordability of new construction of covered housing.”
Further, the HUD and USDA “do not have the ability to pick and choose between specific amendments to the code,” read the lawsuit.
“Put succinctly, the ICC and ASHRAE do not function subordinately to an agency with authority and surveillance over them.”
According to the complaint, the new energy-efficiency requirements imposed by HUD and USDA will cost low-income homebuyers an extra $8,845, and homebuilders estimate it will actually add up to $31,000 to the price of a new home.
Carl Harris, NAHB chairman, said in a statement that the adoption of the 2021 IECC will hurt the nation’s most vulnerable homebuyers and renters.
“This ill-conceived policy will act as a deterrent to new construction at a time when the nation desperately needs to boost its housing supply to lower shelter inflation costs,” he said. “It is also in direct conflict with the current energy codes in the majority of jurisdictions around the country.”
The HUD and USDA claim that the adoption of the 2021 IECC will “diminish, and maybe even reverse, the contraction of new construction from higher minimum energy standards,” according to the court filing.
Further, the defendants speculate that any “adverse impacts on availability would be diminished where there is a perceptible demand for energy-efficient homes.”
According to the filing, the HUD and USDA estimate that the adoption of the 2021 IECC will impact approximately 151,300 units of HUD- and USDA-financed or insured housing in states and territories that have yet to adopt the energy code. Texas alone accounts for 41,230 of those units.
In 2020, just one of the programs covered by Section 109—FHA-insured loans— financed 18.3% of newly-built homes nationwide, and 24.5% of newly-built homes in the South, according to the court filing. In 2023, 32% of FHA-insured mortgages were made to borrowers with incomes less than 80% of the area median income.
The 15 states involved in the lawsuit, which have not adopted the 2021 IECC, include: Utah, Texas, Alabama, Arkansas, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, South Carolina, Tennessee and West Virginia.
In 2024, more than 770,000 people were reported as homeless—an 18% increase from 2023. In the complaint, the plaintiffs “state the obvious” in saying that homelessness is tied to the cost of housing.
The plaintiffs seek the following relief from the Court:
- A declaration that section 109 of the Cranston-Gonzalez Act is unconstitutional to the extent it delegates to the ICC or ASHRAE the authority to set energy efficiency standards for covered housing.
- A declaration that the 2024 final determination is arbitrary, capricious, an abuse of discretion and contrary to law.
- That the Court set aside the 2024 final determination.
- An order enjoining defendants from applying energy-efficiency standards to covered housing where such standards are not consistent with the constitutional provisions of section 109 of the Cranston-Gonzalez Act.
- An order awarding plaintiffs attorneys’ fees and costs to the extent provided by law.
- Any further relief as the Court may deem just and proper.
Read the full litigation here.
