A coalition of attorneys general from 15 states and the National Association of Home Builders (NAHB) have filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) over energy-efficiency standards for newly constructed homes that were finalized in April 2024.
The standards were said to fulfill a requirement laid out in a 2007 law that directs the departments to adopt the most recently published energy-efficiency standards following reviews by the U.S. Department of Energy (DOE) and HUD. The rule was published in the Federal Register in April and went into effect on May 28, 2024.
The rule is based on energy-efficiency standards developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the International Energy Conservation Code (IECC).
But the state AGs and NAHB argue that the resulting energy codes are unconstitutional and will stifle the production of critically needed affordable housing stock.
Led primarily by Texas Attorney General Ken Paxton and former Utah Attorney General Sean Reyes, the suit was filed in the U.S. District Court for the Eastern District of Texas and seeks a jury trial for relief, according to the complaint submitted to the court and reviewed by HousingWire.
The other AGs joining the suit include those from Alabama, Arkansas, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, South Carolina, Tennessee and West Virginia. All 15 AGs are members of the Republican Party.
“Compliance with the 2021 IECC can add more than $22,000 to the price of a new home, but in practice, home builders have estimated increased costs of up to $31,000,” NAHB Chair Carl Harris said in a statement.
“Along with 15 state attorneys general, NAHB is the only private entity in this lawsuit seeking to halt HUD and USDA from adopting the 2021 IECC because home builders can document how this egregious regulation will needlessly raise housing costs and hurt the nation’s most vulnerable home buyers and renters,” he added.
Harris contends that the policy will deter new construction “at a time when the nation desperately needs to boost its housing supply to lower shelter inflation costs.” He also contends that it conflicts with current energy codes in most U.S. jurisdictions.
The suit seeks to show that HUD’s and USDA’s contention that they can insure mortgages for new single-family and multifamily properties only if they are built to the new standards was implemented “in an unconstitutional manner.”
The complaint uses HUD data from 2023 and 2024 to describe the persistent issue of homelessness rates, which increased to record levels during that time. Homelessness, the plaintiffs argue, “is tied to the cost of housing. For every $1,000 increase in the median price of a new home, an additional 106,031 American households are priced out of being able to buy that home.”
It is “shocking,” they say, that officials at HUD and USDA “thought it acceptable to impose energy-efficiency requirements they concede will cost low-income homebuyers an extra $8,845, and that homebuilders estimate will actually add up to $31,000 to the price of a new home.”
In a statement published in conjunction with the lawsuit but prior to his exit from office this week, Reyes said the suit comes as the outgoing Biden administration’s agency leaders “are committed to inflicting unwanted and unneeded cost increases on Americans who are already struggling to pay their bills, provide for their families, and secure a brighter future for their children.”
Reyes announced more than a year ago that he would not seek reelection to his office. His successor, fellow Republican Derek Brown, was elected in November and assumed office on Monday, Jan. 6. The suit was initially announced by the state AG’s office under Reyes’ control on Jan. 2, his penultimate day in office.
Prior reporting by The Salt Lake Tribune characterized Reyes as “the third consecutive Utah attorney general to leave office tarnished by scandal.” This stemmed from allegations of luxurious campaign travel, the purported practices of a nonprofit organization he oversaw, and his alleged ties to the head of an anti-sex trafficking organization who was accused of sexual misconduct.
HousingWire inquired to Brown’s office about how it will assume litigation responsibilities now that Reyes is no longer in charge but did not receive an immediate response.
HUD and USDA have yet to formally respond to the accusations in court. A summons has been issued for Merrick Garland, the incumbent U.S. attorney general, along with acting HUD secretary Adrianne Todman and Tom Vilsack, the incumbent agriculture secretary.
But the Biden administration is set to end on Monday, Jan. 20, with the inauguration of President-elect Donald Trump, and none of these leaders are expected to remain in office at that point.
Trump has selected former Florida attorney general Pam Bondi as his nominee to succeed Garland, Scott Turner for HUD secretary, and Brooke Rollins, the former acting director of the Domestic Policy Council, as Vilsack’s successor at USDA.
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