The Supreme Court has directed a lower court to rethink a ruling that upheld Biden-era efficiency regulations for commercial water heaters and consumer furnaces.
In a short order Monday, the justices directed a federal appeals court in Washington to reconsider its decision “in light of the position” of the Trump administration. In an April brief to the high court, Solicitor General D. John Sauer said the Department of Energy now holds that the rules at issue in the case “rest on a legal error.”
DOE is currently in the process of reviewing efficiency regulations for furnaces and water heaters to determine if they pose an “undue burden” on “domestic energy resources,” Sauer said.
He had urged the justices to grant the petition led by the American Gas Association, toss out the ruling by the U.S. Court of Appeals for the District of Columbia Circuit and send the lower bench back to work on the industry challenge — a process known as a GVR.
“A GVR would permit the court of appeals to take account of those developments and the Department’s revised position in the first instance, including by potentially holding this case in abeyance pending a new rulemaking,” Sauer wrote.
The decision is a win for the American Gas Association and other industry groups, who argued the stricter DOE rules effectively prevent consumers from purchasing noncondensing appliances compatible with existing chimneys and venting systems in their homes and businesses.
“We welcome the Supreme Court’s decision to protect the American people from this unlawful regulation that would increase costs for families and businesses and ban an entire class of appliances,” said Karen Harbert, president and CEO of the association, in a statement. “We will continue to work to ensure all Americans can make choices about the energy and appliances in their homes.”
The Biden rules would make noncondensing furnaces illegal to manufacture in 2028, requiring homeowners and businesses to make “significant structural modifications” to accommodate condensing appliances, according to the association.
The trade groups claimed the Biden-era regulations violated a provision of the Energy Policy and Conservation Act that bars DOE from eliminating certain performance features. In this case, the new rules could only be achieved by condensing appliances that capture more residual heat and are more energy-efficient.
Industry groups also claimed the D.C. Circuit’s divided ruling last year upholding the DOE rules violated the Supreme Court’s ruling in Loper Bright v. Raimondo. The 2024 decision overturned a legal theory known as Chevron deference that had previously directed courts to generally defer to agencies’ reasonable interpretation of ambiguous laws.
The new standard under Loper Bright requires agencies to “exercise independent judgment” when evaluating agency decisions. But the D.C. Circuit’s ruling upholding the DOE regulations revived the Chevron approach, the gas industry groups said in their petition to the Supreme Court.
States and advocacy groups defending the Biden-era rules have argued the decision to uphold the rules does not conflict with Loper Bright. They said the matter is a “fact-bound” dispute that has not provoked disagreement among the lower courts that the justices must step in to resolve.
An attorney for the DOE rules’ proponents could not be immediately reached for comment on the Supreme Court’s Monday order.
