Mulhern Gas Co. v. Mosley

The Second Circuit Court of Appeals held that the Energy Policy and Conservation Act (EPCA) did not preempt New York State and New York City laws that effectively prohibit use of fossil fuel-powered appliances in new buildings. The Second Circuit concluded that EPCA “does not directly regulate the availability of fossil-fuel-powered appliances, and its express preemption provision does not extend to laws far beyond its defined regulatory reach.” EPCA’s preemption provision provides that for a “covered product” for which an energy conservation standard has been established under EPCA, “no State regulation concerning the … energy use … of such covered product shall be effective with respect to such product.” The Second Circuit first concluded that the statutory definition of “energy use” and statutory context “make abundantly clear that the term refers to a metric determined before an appliance ever reaches consumers, not the energy that appliance uses in the hands of consumers”; the court therefore rejected the argument that the State and City laws were preempted because they effectively set fossil fuel-powered appliances’ “energy use” to zero. Second, the court held that the State and City laws were not regulations “concerning” the energy use of covered products. The court found that the challenged laws were not impermissibly connected to EPCA’s objectives “to establish a standardized set of performance standards for covered appliances to promote energy conservation. The court also found that the laws’ prohibition on use of certain covered appliances was not the kind of effect that created an impermissible connection. In addition, the Second Circuit concluded that the State and City laws did not reference or rely on an appliance’s “energy use.” The Second Circuit also rejected arguments asserted by the laws’ challengers based on the EPCA preemption provision’s title, EPCA’s definition of “energy conservation standard,” EPCA’s preemption exemption for certain building code regulations, and the history of the preemption provision. The Second Circuit also concluded that its interpretation avoided absurd results such as precluding a “whole slate of seemingly standard regulations” such as zoning laws that bar use of certain appliances in residential neighborhoods. The Second Circuit acknowledged that the Ninth Circuit had adopted a different interpretation of the EPCA preemption provision in California Restaurant Association v. City of Berkeley but stated that “the reasons for divergence” from the Ninth Circuit’s interpretation were “too compelling” and it was thus necessary to create a circuit split.