Notice2026-08531
Rescission of Final Determination: Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA Financed Housing
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 1, 2026
Effective
May 1, 2026
Issuing agencies
Housing and Urban Development DepartmentAgriculture Department
Abstract
This document announces the immediate rescission of the "Final Determination: Adoption of Energy Efficiency for New Construction of HUD- and USDA Financed Housing" (Final Determination), published on April 26, 2024, as well as subsequent notices by HUD and USDA (the Agencies) related to extensions of effective dates for the standards rescinded by this notice.
Full Text
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<title>Federal Register, Volume 91 Issue 84 (Friday, May 1, 2026)</title>
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[Federal Register Volume 91, Number 84 (Friday, May 1, 2026)]
[Notices]
[Pages 23450-23452]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08531]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
DEPARTMENT OF AGRICULTURE
[Docket No. FR-6271-N-08]
Rescission of Final Determination: Adoption of Energy Efficiency
Standards for New Construction of HUD- and USDA Financed Housing
AGENCY: Department of Housing and Urban Development (HUD) and
Department of Agriculture (USDA).
ACTION: Notice of rescission.
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SUMMARY: This document announces the immediate rescission of the
``Final Determination: Adoption of Energy Efficiency for New
Construction of HUD- and USDA Financed Housing'' (Final Determination),
published on April 26, 2024, as well as subsequent notices by HUD and
USDA (the Agencies) related to extensions of effective dates for the
standards rescinded by this notice.
DATES: This rescission is effective May 1, 2026.
FOR FURTHER INFORMATION CONTACT:
HUD: Brian Schlosnagle, Office of Environment and Energy,
Department of Housing and Urban Development, 451 7th Street SW, Room
10180, Washington, DC 20410; telephone number 202-402-4366 (this is not
a toll-free number). HUD welcomes and is prepared to receive calls from
individuals who are deaf or hard of hearing, as well as individuals
with speech or communication disabilities. To learn more about how to
make an accessible telephone call, please visit: <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.
USDA: Robert Bogan, Administrative Management Specialist, Program
Support Services, Rural Housing Service; Department of Agriculture,
1400 Independence Avenue SW, Room 6900-S, Washington, DC 20250;
telephone number 202-557-1000 (this is not a toll-free number).
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SUPPLEMENTARY INFORMATION:
I. Statutory Background
Section 481 of the Energy Independence and Security Act of 2007
(``EISA,'' Pub. L. 110-140) amended section 109 of the Cranston-
Gonzalez National Affordable Housing Act of 1990 (Cranston-Gonzalez)
(42 U.S.C. 12709), which establishes procedures for setting minimum
energy standards for certain categories of newly constructed housing
financed by HUD and USDA.\1\
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\1\ The programs covered by EISA are as follows: Public Housing
Capital Fund; Capital Fund Financing Program; HOPE VI; Choice
Neighborhoods Implementation Grants; Project-Based Voucher Program;
Section 202 Supportive Housing for the Elderly; Section 811
Supportive Housing for Persons with Disabilities; Rental Assistance
Demonstration; FHA Single Family Mortgage Insurance Programs; FHA
Multifamily Mortgage Insurance Programs; USDA Section 502 Guaranteed
Housing Loans; USDA Section 502 Rural Direct Housing Loans; and USDA
Section 523 Mutual Self Help Technical Assistance Grants, homeowner
participants. Note: For HUD, EISA also applies to new construction
projects in the HOME Investment Partnerships Program (HOME) and the
Housing Trust Fund program through their program statutes or
regulations.
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EISA references two standards: the International Energy
Conservation Code (IECC) and American National Standards Institute/
American Society of Heating, Refrigerating, and Air-Conditioning
Engineers/Illuminating Electrical Society Standard 90.1 (ASHRAE 90.1).
The IECC standard applies to single family homes and multifamily low-
rise buildings (up to 3 stories), while the ASHRAE 90.1 standard
applies to multifamily residential buildings with 4 or more stories.
The IECC and ASHRAE 90.1 are industry-based consensus codes that
are typically updated on three-year cycles. Following each update, HUD
and USDA are required to adopt the new versions of the IECC and ASHRAE
90.1 within one year. If the one-year deadline is not met, the agencies
may adopt updated versions only if they make a determination ``that the
revised codes do not negatively affect the availability or
affordability'' of the covered housing and the Secretary of Energy has
determined ``that the revised code or standard would improve energy
efficiency.''
II. Procedural History
A. Development of the Determinations
On May 18, 2023, HUD and USDA published a Preliminary Determination
(88 FR 31773) that the 2021 IECC and ASHRAE 90.1-2019 would not
negatively affect the affordability or availability of EISA-covered
housing. After receiving feedback during the public comment period, the
agencies published the Final Determination on April 26, 2024, (89 FR
33112) with an updated economic analysis and found that adoption of the
standards would not negatively impact the affordability or availability
of EISA-covered housing.
The Final Determination made changes to the Preliminary
Determination based on public comments.\2\ Notwithstanding the
adjustments made in the Final Determination, HUD and USDA published a
request for additional comments on the new standards on July 7, 2025
(90 FR 29882).\3\ The agencies informed the public of their intent to
``review the analysis contained in the Final Determination'' \4\ and
that ``HUD and USDA would like to better understand how the adoption of
the updated codes is working in practice.'' \5\
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\2\ The changes based on public comments are outlined in Section
I. F. of the Final Determination. See 89 FR 33120-33121.
\3\ Both before and after the July 7, 2025, request for
additional comments HUD and USDA published extensions of the
effective dates for complying with the new standards. See 90 FR
11622 (March 10, 2025); 90 FR 14775 (April 4, 2025); and 90 FR 50750
(November 10, 2025).
\4\ 90 FR at 29882.
\5\ Id. at 29885.
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B. Litigation
On January 2, 2025, a coalition of fifteen States and the National
Association of Home Builders filed a lawsuit in federal court against
HUD and USDA alleging, among other things, that the 2024 Final
Determination violates the Administrative Procedure Act, 5 U.S.C. 706,
and should therefore be set aside.\6\ During the pendency of the
litigation the Agencies filed a motion to dismiss and both parties
filed cross-motions for summary judgment. On March 5, 2026, the Court
denied the Agencies' motion to dismiss and granted in part the
Plaintiffs' motion for summary judgment, setting aside and vacating the
2024 Final Determination.
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\6\ State of Utah, et al. v. Secretary, US Department of Housing
and Urban Development, et al. (E.D. Texas).
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III. Discussion
On the first day of the new administration, the President
highlighted the need to control the cost of living for ordinary
Americans. See Delivering Emergency Price Relief for American Families
and Defeating the Cost-of-Living Crisis (Presidential Memorandum)
(January 20, 2025).\7\ Included in the memorandum was a mandate to the
heads of all executive departments and agencies to pursue ``appropriate
actions to lower the cost of housing and expand housing supply.'' \8\
Empirical data as well as anecdotal evidence show that the
implementation of the Final Determination is antithetical to this
purpose.
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\7\ Published at 90 FR 8245 (January 28, 2025).
\8\ Id.
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Myriad factors beyond code-based energy requirements, including
labor costs and material costs, combine to exert upward pressure on the
cost of both single-and multifamily housing construction. For instance,
according to the Bureau of Labor Statistics Producer Price Index for
Single Family Residential Construction, a spike in the cost of building
materials occurred between January 2020 and January 2022. While cost
growth has slowed, it has not fallen with the result that building
material costs have seen a 43% increase between January 2020 and
November 2025.\9\ Additionally, contractors' bid amount for
construction of homes (what builders are charging to build a home
excluding land) has increased 42% between 2019 and 2024.\10\ Supply
chain issues, while ameliorating, persist and also add to the total
cost of home construction. These realities are exacerbated by the
requirements imposed by the Final Determination.
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\9\ Federal Reserve Bank of St. Louis, Producer Price Index by
Commodity: Inputs to Industries: Net Inputs to Single Family
Residential Construction, Goods Less Foods and Energy
(WPUIP23111013), November 2025 (updated January 14, 2026), available
at <a href="https://fred.stlouisfed.org/series/WPUIP23111013">https://fred.stlouisfed.org/series/WPUIP23111013</a>.
\10\ HUD/Census Survey of Construction, Characteristics of New
Housing, available at <a href="https://www.census.gov/construction/chars/index.html">https://www.census.gov/construction/chars/index.html</a>.
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As a threshold matter, the agencies consider it noteworthy that the
econometrics relied upon in the Preliminary Determination are from 2020
and 2021, making them up to six years old. Even given the fact that the
Final Determination included updated measures (see fn.2), the most
recent of those numbers are from 2023.\11\ The updated measures for
construction cost increase uses data going back as far as 2020;
similarly, the energy cost increase adjustment uses data going back as
far as 2022.
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\11\ Construction Cost Increase--data from 2020-2023; Energy
Price Increase--date from 2022; Energy Price Escalator--data from
2023.
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Another factor at play in the complex mix of variables that affect
potential homebuyers is mortgage rates, which have begun to show signs
of improving in late 2025. Nonetheless, they currently stand at an
average of 6.2% for conventional 30-year financing--nearly a full point
above the 5.3% assumption of the Final Determination.
While not tied directly to the issue of code-based energy
standards, another
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factor pushing the price of new home construction upward is the cost of
land. A recent report from leading real estate research and consulting
firm John Burns Research and Consulting (JBREC) indicates that in 4Q
2025 lot price appreciation continues to outpace falling new home
prices (net of incentives).\12\ And while YOY average price
appreciation for undeveloped land in suburban areas nationally
decreased in 4Q25 to very slightly negative, brokers reported +5% YOY
average price appreciation for undeveloped land in closer in
submarkets.\13\ Additionally, hitherto unconsidered uses of land
contribute to whittle away land that might otherwise be used for
residential construction. According to JBREC, 38% of brokers nationally
report a somewhat to significant increase in residential land sales for
data center construction in 2025.\14\
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\12\ John Burns Research and Consulting, 4Q25 Residential Land
Survey, January 22, 2026 (p.24).
\13\ Id. at p.8.
\14\ Id. at p.49.
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This additional factor placing upward pressure on construction
costs is yet another reason not to impose expensive new regulations--in
the form of building code-based energy standards--at a time when
ordinary Americans are struggling to achieve the dream of
homeownership.
Finally, the agencies note that the Final Determination overstated
the availability of the Sec. 45L New Energy Tax Credit as a vehicle
for builders to offset some of the costs of complying with the new
energy standards, stating ``there are now significant new resources
available through the Inflation Reduction Act (IRA) which provide
unprecedented financial support for building energy efficient
housing.'' \15\ However, as the agencies went on to acknowledge, the
Sec. 45L tax credit is not a direct subsidy for building to the 2021
IECC; rather, the credit is available to eligible contractors who
construct or sell new homes that meet specific energy efficiency
standards set by the ENERGY STAR program or the Department of Energy's
Efficient New Homes program. The credit amount varies based on the
energy savings achieved and prevailing wage rates for construction.
Even assuming for the sake of argument that the Sec. 45L credit could
have been used in a manner to lower construction costs--and presumably
by extension to lower costs for potential homebuyers--that utility has
dramatically decreased by the reality that the One Big Beautiful Bill
Act, Public Law 119-21, accelerates the sunset for federal energy tax
incentives--with the Sec. 45L tax credit specifically set to expire
for homes acquired after June 30, 2026.
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\15\ 89 FR 33123.
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Rescission
In light of the foregoing realities, the Final Determination flies
in the face of the Administration's express policy of increasing the
supply of housing and making housing more affordable. The net effect of
these realities is that affordability of housing in the Departments'
respective covered housing programs would be negatively affected by
implementation of the Final Determination (42 U.S.C. 12709(d)(1)). In
addition, as noted above, the Final Determination has been judicially
vacated and thus is no longer in force. As such, effective immediately,
the Department of Housing and Urban Development and the Department of
Agriculture rescind the Final Determination of April 26, 2024, in its
entirety. The Departments also rescind the subsequent notices of March
10, 2025, April 4, 2025, and November 10, 2025, related to extensions
of effective dates for the standards rescinded by this notice. Each of
the Departments' respective covered programs shall comply with the
energy efficiency standards that were in effect immediately prior to
the publication of the Final Determination.
Scott Turner,
Secretary, U.S. Department of Housing and Urban Development.
Brooke L. Rollins,
Secretary, U.S. Department of Agriculture.
[FR Doc. 2026-08531 Filed 4-30-26; 8:45 am]
BILLING CODE 4210-67-P
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</html>Indexed from Federal Register on May 1, 2026.
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