PACE: Legal Action Aims to Save Clean Energy Program
Six entities within the last three months filed suit in federal court against the Federal Housing Finance Agency in an attempt to force the agency to call off its opposition to property assessed clean energy (PACE) financing.
The PACE program assists property owners in making efficiency improvements to reduce their energy use and save money. In early July, the Federal Housing Finance Agency (FHFA) essentially froze nearly every residential PACE program by releasing a letter that publicly supported Fannie Mae and Freddie Mac’s claim that “senior lien” provisions in PACE violate their mortgage regulations.
Lawsuits Seek Court Order for FHFA to Step Down Opposition
In response to the FHFA’s letter, the California Attorney General’s Office, Leon County, Sonoma County, Palm Desert, the Sierra Club, and the Natural Resources Defense Council separately filed complaints in federal district court. Each plaintiff desires a court order that would require the FHFA to accept the senior lien provisions in PACE and remove administrative barriers to their implementation.
In order to accomplish the goal of obtaining “declaratory, injunctive, and equitable relief,” the lawsuits aim to prove that the FHFA’s actions violate the federal Administrative Procedures Act, as well as the National Environmental Policy Act.
The Arguments Behind the Lawsuits
Under the Administrative Procedures Act (APA), federal agencies must publish a proposed rule in the Federal Register so that the public can comment on the rule’s potential effects. The APA also requires courts to strike down “arbitrary and capricious” agency actions.
The various complaints allege that the FHFA’s July letter amounted to the issuance of a rule and was subject to the APA notice and comment requirements. Because the FHFA did not solicit public comments, the plaintiffs argue that the rule must be struck down. Additionally, the mischaracterization of PACE programs as “loans” as opposed to “tax assessments” demonstrates that FHFA’s determination was arbitrary and capricious, according to the lawsuits.
Meanwhile, the National Environmental Policy Act requires that a federal agency conduct an environmental analysis prior to taking any action that could substantially impact the environment. The FHFA was aware that its July letter would thwart active PACE programs and that the environmental benefits achieved through energy efficiency are a core component of PACE programs. The complaints allege that the FHFA’s failure to conduct an environmental analysis amounted to a violation of the National Environmental Policy Act, and was an arbitrary and capricious decision in violation of the APA.
Alliance: Cultivating Support for PACE
The Alliance to Save Energy supports PACE programs, and believes that they present a unique opportunity to promote widespread, energy-efficient retrofits. But the FHFA’s stance in opposition to PACE financing has made it impossible for the programs to function.
If successful, these lawsuits—and any more that may be filed—would remove the FHFA’s opposition and allow PACE to once again provide homeowners nationwide with the financing necessary to reduce utility bills while substantially decreasing energy use.
However, the Alliance realizes that the judicial system does not provide the only mechanism of change. As such, the Alliance continues to promote PACE program implementation through the legislative process, and remains actively involved in ongoing negotiations on the Hill.
