
A diverse group of 15 state attorneys general, alongside the National Association of Home Builders (NAHB), has taken legal action against the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA).
This lawsuit is centered around the energy-efficiency regulations for newly constructed residential properties that were introduced in April 2024.
Overview of the Regulations
These regulations are said to fulfill the 2007 legislative directive that calls for both departments to adopt the latest energy-efficiency standards following assessments by the U.S. Department of Energy (DOE) and HUD.
The rules were officially published in the Federal Register in April and became effective on May 28, 2024.
The new standards draw upon guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the International Energy Conservation Code (IECC).
However, the attorneys general and NAHB argue that these codes infringe on constitutional rights and pose a significant threat to the availability of affordable housing.
The lawsuit, spearheaded by Texas Attorney General Ken Paxton and former Utah Attorney General Sean Reyes, has been lodged in the U.S. District Court for the Eastern District of Texas, where the plaintiffs are requesting a jury trial.
Concerns and Plaintiffs’ Arguments
Joining this cause are attorneys general from several states, including Alabama, Arkansas, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, South Carolina, Tennessee, and West Virginia, all of whom are affiliated with the Republican Party.
The chair of the NAHB has highlighted the potential financial implications of complying with the 2021 IECC, estimating that the cost of a new home could increase by over $22,000, reaching as high as $31,000 for builders.
Both the NAHB and the involved attorneys general believe they are uniquely positioned to address how these regulations could worsen housing affordability for vulnerable homebuyers and renters nationwide.
Furthermore, the chair expressed concern that these new requirements might hinder construction efforts at a time when increasing the housing supply is vital to mitigate rising housing costs.
He pointed out that the regulations conflict with existing energy codes in many areas across the country.
In their lawsuit, the plaintiffs intend to illustrate that HUD and USDA have unconstitutionally asserted that they can only provide insurance for mortgages on new single-family and multifamily properties adhering to these stringent standards.
The complaint highlights alarming data from HUD regarding homelessness rates in 2023 and 2024, attributing this troubling trend to rising housing costs.
The plaintiffs argue that for every $1,000 increase in the median price of a new home, an additional 106,031 American households find themselves unable to buy a home.
Political Context and Transition
It is perplexing to the plaintiffs that HUD and USDA believe they can justify imposing stricter energy-efficiency requirements that they know will financially burden low-income homebuyers, especially when builders have estimated these requirements could greatly increase the overall cost of new homes.
Before departing from office, Reyes commented that this lawsuit emerges as agency leaders from the outgoing Biden administration allegedly burden Americans with unnecessary financial challenges during a period of economic strain.
Reyes had previously announced he would not seek reelection, and his successor, Derek Brown, a fellow Republican, took office shortly thereafter.
His office revealed the lawsuit on January 2, just prior to Reyes’s exit from his position.
HousingWire reached out to Brown’s office to inquire about the transition of responsibilities for the litigation but did not receive a timely response.
As for HUD and USDA, they have yet to formally address the lawsuit’s claims in court.
A summons has been filed for U.S. Attorney General Merrick Garland, acting HUD Secretary Adrianne Todman, and Secretary of Agriculture Tom Vilsack.
With the Biden administration gearing up for a transition on January 20, in conjunction with the inauguration of President-elect Donald Trump, it is expected that current leadership will no longer be in place.
Trump has announced his nominees for key roles, including Pam Bondi for U.S. Attorney General, Scott Turner for HUD Secretary, and Brooke Rollins as the next USDA Secretary.
Source: Housingwire