American Gas Association v. U.S. Department of Energy

In a 2-1 decision, the D.C. Circuit Court of Appeals denied manufacturers’, trade groups’, and energy providers’ petitions for review challenging the Biden administration’s amendments to energy efficiency standards for consumer furnaces and commercial water heaters. The court was not persuaded by the petitioners’ contention that because the standards would drive less efficient noncondensing consumer furnaces and commercial water heaters out of the market in favor of condensing furnaces and water heaters, the standards would impermissibly make “unavailable” a product that offers unique performance characteristics and features. The court also rejected arguments that the U.S. Department of Energy’s economic justification for the standards was inadequate and that the agency failed to adhere to the Energy Policy and Conservation Act’s procedural requirements. The dissenting judge would have ruled that the standards were contrary to law because they would result in the “unavailability” of “traditional, ‘non-condensing’ gas furnaces and water heaters,” which have a “performance characteristic” that consumers value (i.e., the ability to vent exhaust up a standard chimney). She also would have found that the agency relied on a flawed model to determine that the standards were economically justified.

In February 2022, a petition for review was filed in the D.C. Circuit Court of Appeals challenging a U.S. Department of Energy final interpretive rule regarding what constitutes a “feature” for purposes of establishing energy conservation standards under the Energy Policy and Conservation Act. The final rule reinstated, for residential furnaces, commercial water heaters, and similar products, a long-standing interpretation under which heat exchanger technology used to supply heated air or hot water is not a performance-related “feature” that provides a distinct consumer utility. The petitioners were trade associations representing energy companies that deliver natural gas and publicly owned natural gas distribution systems, natural gas utilities, and a manufacturer of heating and cooling equipment. Twelve states, the District of Columbia, and New York City moved to intervene in support of the respondents, as did Natural Resources Defense Council, Sierra Club, and Consumer Federation of America. On April 8, the D.C. Circuit granted the petitioners’ unopposed motion to hold the case in abeyance pending issuance of final efficiency regulations issued in reliance on the interpretive rule.