Albuquerque is not the easiest word to spell. Apparently, city officials in the largest city in the state of New Mexico are not easy to deal with, either.

More than a few industry associations are challenging the city’s new Energy Conservation Code, scheduled to go into effect April 1. The code will mandate 15 SEER air conditioning and 90 percent AFUE equipment for all residential and commercial new construction, remodels, and replacements. Since these requirements exceed the federal minimum set by the Department of Energy (DOE), industry officials state the city must obtain a waiver of federal preemption from DOE before enforcing the energy codes.

“At the same time, the energy codes create a nearly unenforceable regulation that tips the playing field against complying contractors and distributors,” stated the Heating, Airconditioning & Refrigeration Distributors International (HARDI) in a release issued Feb. 18.

HARDI hosted a meeting of more than 80 Albuquerque distributors and contractors on Feb. 13 to discuss the new codes. At the same time, the Air Conditioning Contractors of America (ACCA), as well as the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) have stated their concerns, both asking Albuquerque Mayor Martin Chavez and City Council members to repeal or suspend the new codes until a federal waiver has been attained.

“Without exemption from federal preemption of current national HVAC equipment standards, the new Albuquerque codes cannot prevent the undercutting of compliant HVAC businesses by noncompliant entities with less expensive equipment that meets federal standards but not the higher city standards,” wrote Talbot Gee, HARDI vice president, in a letter to Chavez dated January 15.

“The only way HVAC distributors and other businesses could afford to comply with the city’s higher standards is for Albuquerque to file a petition for a waiver of federal preemption with the DOE to make the higher standards enforceable.”

In the same letter, Gee stated, “HARDI does not see a way Albuquerque could file and attain approval for such a waiver prior to the stated effective date of April 1, 2008 and has no choice but to insist that the city of Albuquerque repeal or suspend the new codes until such a waiver has been attained.”

The NEWS could not get a response from Chavez or Albuquerque city council before deadline.

TRYING TO AVOID CHAOS

The outcome of this challenge could have ramifications for the HVACR industry. If Albuquerque goes through with its new energy code, other cities and states could follow. This could cause chaos, according to industry officials.

“While HARDI and our local distributor members would still be unable to support these codes that strip consumers of choice, significantly drive costs up, and impede the free market’s ability to satisfy local demands even if they were enforceable, the fact that they are unenforceable is especially troubling because unenforceable codes only put at risk the best of companies that attempt to comply with them,” said Gee. “Without an enforcement mechanism, the city’s proposed codes open the doors to a black market of less expensive HVAC equipment with fewer guarantees of proper installations and no guarantee of any energy savings.”

As Gee noted, HARDI is supportive of energy-efficiency initiatives and incentives “but mandating expensive equipment while doing nothing to drive demand for the greater investment is completely counterproductive because homes and businesses will have no choice but to choose to repair their old, inefficient legacy systems that consume far more energy than the readily available new equipment that the city is currently trying to make illegal.”

Charles McCrudden, director of government relations for ACCA, also sent a letter to Chavez on Jan. 17. In his letter, McCrudden noted that the members of ACCA are “greatly concerned that this new ordinance will foster confusion for manufacturers, distributors, contractors, and ultimately, consumers.”

Stated McCrudden: “ACCA has always supported a single, federal efficiency standard that applies nationwide because it creates certainty in the marketplace. Any regulation that sets in place artificial borders creates a ripe opportunity for illegal equipment to be installed by unscrupulous contractors. In many cases, these installers are unlicensed and jeopardize the health and safety of the building’s occupants.”

According to McCrudden, the city intends to tweak the code to avoid the preemption question under the National Appliance Energy Conservation Act (NAECA). “However, until there’s something in writing, ACCA will assume that the city plans to enforce its unconstitutional energy code,” said McCrudden.

“This issue has national implications, so we will remain involved until a remedy is found.”

READY TO FIGHT BACK

At the meeting held Feb. 13, HARDI’s attendees mapped out a plan to offer to work with the city of Albuquerque to create better, more effective, and enforceable codes. The three-hour meeting established four general principles, unanimously agreed upon by the local HVACR community, to use when engaging local officials in future code revisions. Per Gee, the principles are:

• Energy supplies will be unable to meet future demand if practical and effective energy-efficiency practices aren’t put into place now.

• Any energy-efficiency initiatives must encourage and support quality installation practices such as the ACCA/ANSI Quality Installation standards.

• While impossible to effectively implement if overly prescriptive and without industry’s technical involvement, whole-system approaches to building efficiency are valuable and necessary methods for establishing new codes.

• Demand-side incentive programs are ultimately the most effective method for driving energy-efficiency investments and upgrades.

According to Gee, HARDI and ACCA intend to work jointly to organize a local task force to work with city officials and energy advocates to provide market and technical expertise towards the development of new, more effective, and federally compliant energy conservation codes. However, in the meantime, the local HVAC professionals are determined to educate city council members and officials why the unenforceable equipment standards in the current “must be repealed.”

“Should these codes or new ones ever come before the city council in the future, they will certainly not be able to say they were unaware of how such unenforceable equipment standards would hurt local businesses and, more importantly, local home and business owners,” said Chris Lopez of Albuquerque Winair, an HVAC wholesale distributor and HARDI member, who attended the Feb. 13 meeting.

Albuquerque contractor Bill Howland of Affordable Service Inc. is ready to fight.

“It is our responsibility as heating and air-conditioning contractors to fulfill the demands and needs of our customers, so the market must let the home or business owner be able to decide what best fits their budget and anticipated use,” said Howland.

“If the city is serious about trying to increase energy efficiency, then it and our local utilities should provide me with tools to help my customers gain access to the high-efficiency HVAC equipment they often want but fear they can’t afford. But eliminating my customers’ choices by arbitrarily raising equipment standards and mandating the most expensive equipment only discourages the purchaser and installation of new heating and cooling equipment that would save considerable energy over their existing system.

“This could cause a severe hardship on HVAC contractors who depend on a/c conversions in the spring and summer months to make up for slow winter sales, potentially putting some out of business.”

Added McCrudden, “If the city gets away with this, nothing could stop other cities from doing the same.”

Sidebar: What the Uproar Is All About

The new commercial and residential building codes signed into law by the mayor of Albuquerque on Sept. 25, 2007, is scheduled to become effective on April 1. It attempts to establish mandated minimum appliance efficiency standards to reduce energy consumption by buildings and homes by at least 30 percent compared to national standards.

While HVACR industry officials applaud the efforts of the city to push energy efficiency, they argue that the current code, as it currently stands, will cause more harm than good. And, they question if the code is actually legal.

According to all officials contacted, the city must get a waiver of federal preemption for provisions in the code. They state that before the code can be enforced, the Department of Energy (DOE) must grant this waiver after a thorough review process “that can take years to complete,” said Charles McCrudden, director of government relations for the Air Conditioning Contractors of America (ACCA).

“It is ACCA’s interpretation that the city may not enforce the code without a waiver of preemption,” said McCrudden. “I’m not even sure the city qualifies for a waiver. The law only allows states to file for a waiver. It is my understanding that the DOE has yet to chime in on this issue, but I know they are aware of it. Industry representatives met with DOE officials two weeks ago,” noting that the parties present included HARDI, ACCA, PHCC, and AHRI.

Should the city choose to enforce the code, officials believe contractors would be placed in a legal no man’s land. Said McCrudden, compliance with the federal statute “would place them in jeopardy with the city’s illegal law.”

“If the city gets away with this, nothing could stop other cities from doing the same,” charged McCrudden.

ACCA has requested a notice from the city of their intent to apply for a waiver and any enforcement policies they expect to implement. As of Feb. 12, McCrudden said no response has been received.

“This case could potentially set a national precedent for regional standards on energy-efficiency standards,” cautioned McCrudden.

“With our industry partners at HARDI, ACCA will insist that the city expeditiously resolve this conflict in the law. Either the council must rescind these provisions in the code, or the city must petition for a federal waiver of preemption and abate any enforcement proceedings while the waiver petition is under review.”

McCrudden wishes Albuquerque officials had gone to local contractors, as this could have been avoided.

“There are better ways to achieve energy savings,” he said.

“All the city needed to do was ask local HVAC businesses - businesses that have a vested interest in promoting high-efficiency systems - what could be done to make high-efficiency systems more accessible and affordable. Instead, the city should now be asking why is it that so many businesses with such a vested interest are opposed to the new codes attempting to mandate that same equipment.”

- Mark Skaer

Publication date: 03/03/2008