Court Ruling Vacates HUD and USDA Mandate of 2021 IECC

A federal district court in Texas has ruled that the Department of Housing and Urban Development (HUD) and Department of Agriculture (USDA) cannot impose the 2021 International Energy Conservation Code (IECC) and the 2019 ASHRAE 90.1 standard on key housing programs.

The National Association of Home Builders (NAHB) joined 15 states in opposing the HUD and USDA energy code requirement.

The decision was announced March 5 by U.S. District Judge Jeremy Kernodle of the United States District Court for the Eastern District of Texas in the case of State of Utah, et. al., v. Secretary, U.S. Department of Housing and Urban Development, et. al.

The agencies’ energy code requirement applied to a number of federal housing programs, including HUD programs such as Section 8, Hope VI, and the Public Housing Capital Fund, as well as the USDA’s Section 502 Rural Housing Direct Loans. 

Most notably, however, it would have applied to FHA single-family and multifamily mortgages. 

NAHB has been working on the legal, regulatory, and legislative fronts to make sure the HUD and USDA 2021 IECC mandate was never implemented.

“FHA mortgages are a big deal, and HUD’s use of such a requirement on these mortgages was a back-door way to federalize a 2021 IECC requirement,” says Tom Ward, NAHB’s vice president of legal strategy.

For example, a new home may meet a state’s IECC requirement, but if a buyer wanted to use an FHA-backed mortgage to buy it, the now-nullified requirement would have disallowed an FHA mortgage for that purchase. 

“This policy would have taken away affordable financing options from the very people the FHA and USDA programs were intended to help,” says Ward.

NAHB has long argued that this energy codes mandate would also have resulted in decreased production and longer permitting and construction times, further exacerbating the nation’s housing affordability challenges. 

Studies indicate the IECC requirement would have added between $9,600 and $21,400 to the price of a new home, depending on the climate zone. And the payback period for these investments can stretch for as much as 90 years, meaning homeowners would never recover the investment. 

HUD and USDA had recognized in their economic impact analysis that this requirement would have a negative impact of 1.5% on housing availability and claimed that other factors would counterbalance those negative effects. But the agencies could not make a compelling argument as to how those opposite effects would work. 

In his ruling, Judge Kernodle called HUD’s arguments “vague, conclusory, and difficult to follow.”

The court also held that under the Cranston-Gonzalez Act, the agencies may only adopt one amendment to the 2006 IECC, which they did in 2015 by adopting the 2009 version of that code.

“This ruling will make it hard for a future administration to impose a comparable IECC  requirement,” he says.

The agencies have the option to appeal, he adds, “but we hope that they do not assign priority to federalizing energy codes given the deregulatory emphasis of the current administration.”

Prior to its legal victory, NAHB had convinced HUD to wait until Dec. 31, 2026, to implement the 2021 IECC and ASHRAE 90.1-2019 as the minimum energy-efficiency standards for certain housing programs. 

While the court “vacated and set aside” the 2024 Final Determination, HUD and USDA may choose to place a notice of the court’s decision in the Federal Register. 

NAHB has also been working to get legislation introduced to prevent HUD and USDA from ever implementing these energy codes.