Petition for Writ of Certiorari — American Gas Association, et al., Petitioners v. Department of Energy, et al.
Supreme Court briefJan 20, 2026
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No.
In the Supreme Court of the United States
________________
AMERICAN GAS ASSOCIATION, ET AL.,
Petitioners,
v.
U.S. DEPARTMENT OF ENERGY, ET AL.,
Respondents.
________________
On Petition for Writ of Certiorari to the
United States Court of Appeals
for the D.C. Circuit
________________
PETITION FOR WRIT OF CERTIORARI
________________
MITHUN MANSINGHANI
LEHOTSKY KELLER COHN LLP
629 W. Main St.
Oklahoma City, OK 73102
SCOTT A. KELLER
Counsel of Record
MICHAEL B. SCHON
LEHOTSKY KELLER COHN LLP
200 Massachusetts Ave. NW
Suite 700
Washington, DC 20001
(512) 693-8350
scott@lkcfirm.com
DREW F. WALDBESER
ADELINE KENERLY LAMBERT
LEHOTSKY KELLER COHN LLP
3280 Peachtree Road NE
Atlanta, GA 30305
Counsel for Petitioners
Additional counsel listed on inside cover
RENEE M. LANI
AMERICAN PUBLIC GAS
ASSOCIATION
201 Mass. Ave., NE
Suite C-4
Washington, DC 20002
Counsel for Petitioner
American Public Gas
Association
MICHAEL L. MURRAY
MATTHEW J. AGEN
AMERICAN GAS ASSOCIATION
400 N. Capitol Street, NW
Washington, DC 20001
Counsel for Petitioner
American Gas Association
BENJAMIN A.F. NUSSDORF
NATIONAL PROPANE GAS
ASSOCIATION
1150 Connecticut Ave., NW
Suite 1200
Washington, DC 20036
Counsel for Petitioner
National Propane Gas
Association
Counsel for Petitioners
QUESTIONS PRESENTED
The Energy Policy and Conservation Act (EPCA)
prohibits the Department of Energy from adopting
efficiency standards that ban consumer access to
appliances with distinct performance characteristics.
In this case, the Department adopted standards
abolishing gas-fired furnaces and water heaters that
work with existing venting systems in millions of
homes and buildings across the country. These
standards will force consumers to either renovate
their homes or switch to electric appliances.
The Department overhauled these standards by
interpreting the statutory term “performance
characteristic” to exclude features that allow an
appliance to function in a home without renovation,
dismissing that characteristic as a mere matter of
“cost.” App.26a. Over Judge Rao’s dissent, the D.C.
Circuit deferred to the Department’s statutory
interpretation, asserting the statutory term required
“case-specific” interpretation. App.16a.
The questions presented are:
1. Whether courts may defer to an agency’s legal
interpretation of a statute because an agency
applied the statute to undisputed facts, despite this
Court’s holding in Loper Bright Enterprises v.
Raimondo that courts must construe statutes
without
deference
to
agency
statutory
interpretations. 603 U.S. 369, 395 (2024).
2. Whether an appliance’s ability to operate in
existing homes and buildings without renovation is
a “performance characteristic” that EPCA
prohibits the Department from eliminating. 42
U.S.C. §§ 6295(o)(4); 6313(a)(6)(B)(iii)(II)(aa).
(i)
ii
PARTIES TO THE PROCEEDING
Petitioners are the American Gas Association
(“AGA”), the American Public Gas Association
(“APGA”), the National Propane Gas Association
(“NPGA”), and NCTP, Inc., doing business as Thermo
Products. AGA, APGA, and NPGA were petitioners
below.1 NCTP, Inc. has purchased substantially all the
assets of Thermo Products, LLC, a petitioner below,
and manufactures and sells gas-powered furnaces and
other appliances under the brand name Thermo
Products. Thermo Products, LLC, has changed its
name to TP10, LLC. TP10, LLC has sold certain of its
remaining assets and liabilities to TP97, LLC.
Respondents, which were also respondents below,
are the U.S. Department of Energy, the Office of
Energy Efficiency and Renewable Energy, U.S.
Department of Energy, and Chris Wright, Secretary,
U.S. Department of Energy.
Intervenor-Respondents are the City of New York,
Commonwealth
of
Massachusetts,
Consumer
Federation of America, District of Columbia, State of
Illinois, State of Maine, State of Maryland, State of
Minnesota, State of Nevada, State of New Jersey,
State of New Mexico, State of New York, State of
Oregon, State of Vermont, State of Washington,
Massachusetts Union of Public Housing Tenants,
Natural Resources Defense Council, and Sierra Club.
1 Spire Inc., Spire Alabama Inc., and Spire Missouri Inc. were
also petitioners below.
iii
CORPORATE DISCLOSURE STATEMENT
The American Gas Association has no parent
corporation, and no publicly held company has 10% or
greater ownership in AGA.
The American Public Gas Association has no
parent corporation, and no publicly held company has
10% or greater ownership in APGA.
The National Propane Gas Association has no
parent corporation, and no publicly held company has
10% or greater ownership in NPGA.
NCTP, Inc. has no parent corporation and no
publicly held company has 10% or greater ownership
interest in NCTP, Inc.
RELATED PROCEEDINGS
This case involves consolidated challenges to
three Department of Energy rules. In AGA v. DOE,
No. 22-1030 (D.C. Cir. 2023), Petitioners challenged
an interpretive rule effecting a wholesale change in
the Department’s interpretation of “performance
characteristics.” Energy Conservation Program for
Appliance Standards: Energy Conservation Standards
for Residential Furnaces and Commercial Water
Heaters, Notification of Final Interpretive Rule, 86
Fed. Reg. 73,947 (Dec. 29, 2021). In AGA v. DOE, No.
23-1285 (D.C. Cir. 2023), Petitioners challenged a rule
setting efficiency standards for commercial water
heaters that relied on the interpretive rule. Energy
Conservation
Program:
Energy
Conservation
Standards for Commercial Water Heating Equipment,
88 Fed. Reg. 69,686 (Oct. 6, 2023). In AGA v. DOE, No.
23-1337 (D.C. Cir. 2023), Petitioners challenged
efficiency standards for consumer furnaces that also
iv
relied on the interpretive rule. Energy Conservation
Program: Energy Conservation Standards for
Consumer Furnaces, 88 Fed. Reg. 87,502 (Dec. 18,
2023). The three challenges were consolidated on
December 21, 2023. See Document No. 2032925, AGA
v. DOE, No. 22-1030 (D.C. Cir.). The D.C. Circuit
entered judgment in these cases on November 4, 2025.
v
TABLE OF CONTENTS
Parties to the Proceeding ........................................... ii
Corporate Disclosure Statement ............................... iii
Related Proceedings .................................................. iii
Table of Authorities .................................................. vii
Introduction ................................................................ 1
Opinions Below ........................................................... 4
Jurisdiction ................................................................. 4
Constitutional and Statutory Provisions Involved ... 4
Statement ................................................................... 5
A. Statutory Background .................................. 5
B. Factual Background ..................................... 6
C. The Department’s Rulemakings .................. 8
D. Decision Below............................................ 10
Reasons to Grant the Petition.................................. 16
I.
This Court should grant review to decide
whether, under Loper Bright, courts should
defer to agency statutory interpretations
when issued in the context of “case-specific”
rulemakings. ...................................................... 16
II. This case presents another issue of
exceptional national importance because the
D.C. Circuit’s decision forces millions of
Americans to renovate their homes or stop
using gas appliances.......................................... 21
III. The D.C. Circuit majority erred on the merits
in deferring to the agency’s interpretation of
the Energy Policy and Conservation Act. ......... 25
vi
IV. This case is an ideal vehicle to ensure courts
do not reinstate Chevron deference to agency
statutory interpretations. ................................. 32
Conclusion................................................................. 34
Appendix A — Opinion of the United States Court
of Appeals for the District of Columbia Circuit,
Filed November 4, 2025............................................ 1a
Appendix B — Relevant Statutory Provisions ...... 70a
vii
TABLE OF AUTHORITIES
Page(s)
Cases
Ala. Ass’n of Realtors v. Dep’t of Health
& Hum. Servs.,
594 U.S. 758 (2021) .............................................. 18
Becerra v. Empire Health Found., for
Valley Hosp. Med. Center,
597 U.S. 424 (2022) .............................................. 18
Corner Post, Inc. v. Bd. of Governors of
Fed. Reserve Sys.,
794 F. Supp. 3d 610 (D.N.D. 2025) ...................... 20
Dubin v. United States,
599 U.S. 110 (2023) .............................................. 26
Garland v. Cargill,
602 U.S. 406 (2024) .............................................. 18
Loper Bright Enters. v. Raimondo,
603 U.S. 369 (2024) .............. i, 1, 2, 3, 4, 16, 17, 18,
................................................ 19, 20, 21, 25, 30, 33
Lopez v. Garland,
116 F.4th 1032 (9th Cir. 2024) ............................ 21
Moctezuma-Reyes v. Garland,
124 F.4th 416 (6th Cir. 2024) .............................. 19
viii
Nat’l Fed’n of Indep. Bus. v. Dep’t of
Lab.,
595 U.S. 109 (2022) .............................................. 18
Rangel-Fuentes v. Bondi,
155 F.4th 1138 (10th Cir. 2025) .......................... 19
Robinson v. Shell Oil Co.,
519 U.S. 337 (1997) .............................................. 17
Texas v. EPA,
156 F.4th 523 (5th Cir. 2025) .............................. 20
United States v. Rutherford,
120 F.4th 360 (3d Cir. 2024) ................................ 20
Weyerhaeuser Co. v. U.S. Fish &
Wildlife Serv.,
586 U.S. 9 (2018) ............................................ 17, 18
Statutes and Constitutional Provisions
28 U.S.C. § 1254(1) ...................................................... 4
42 U.S.C. § 6295(d) .................................................... 27
42 U.S.C. § 6295(e) .................................................... 23
42 U.S.C. § 6295(f) ................................................. 5, 27
42 U.S.C. § 6295(o) ................... i, 2, 5, 9, 22, 24, 26, 31
42 U.S.C. § 6295(q) .......................................... 5, 27, 30
42 U.S.C. § 6313(a) ............. i, 2, 5, 9, 23, 25, 26, 30, 31
ix
42 U.S.C. § 6313(c) .................................................... 27
U.S. CONST. art. III ...................................................... 4
Rules and Regulations
10 C.F.R. § 430.32(e) ................................................. 29
10 C.F.R. § 430.32(y) ................................................. 29
73 Fed. Reg. 58,772 (Oct. 7, 2008) ............................ 28
76 Fed. Reg. 22,454 (Apr. 21, 2011) .......................... 28
78 Fed. Reg. 55,890 (Sept. 11, 2013) ......................... 27
78 Fed. Reg. 64,068 (Oct. 25, 2013) .................... 12, 29
79 Fed. Reg. 38,130 (July 3, 2014) ............................ 29
81 Fed. Reg. 34,440 (May 31, 2016) ............................ 8
81 Fed. Reg. 65,720 (Sept. 23, 2016) ........................... 8
83 Fed. Reg. 54,883 (Nov. 1, 2018).............................. 8
84 Fed. Reg. 37,794 (Aug. 2, 2019) ........................... 28
86 Fed. Reg. 4,776 (Jan. 15, 2021) .............. 7, 8, 28, 31
90 Fed. Reg. 20,899 (May 16, 2025) .......................... 24
88 Fed. Reg. 69,686 (Oct. 6, 2023) ....... iii, 7, 10, 27, 29
88 Fed. Reg. 87,502 (Dec. 18, 2023) ................. iv, 7, 10
x
86 Fed. Reg. 73,947 (Dec. 29, 2021) .............. iii, 6, 7, 9,
.................................................................. 10, 28, 31
Other Authorities
Evaluating the Reliability and Security
of the United States Electric Grid,
Department of Energy (July 2025),
https://perma.cc/UP7L-D7N8................................. 2
INTRODUCTION
Chevron deference has returned in the D.C.
Circuit. In the decision below, that court refused to
“second-guess”
the
Department
of
Energy’s
interpretation of a statutory provision that should
have limited the Department’s authority. The D.C.
Circuit chose to defer to the agency’s “expertise” on
statutory meaning by asserting the statute had to be
applied to a specific set of facts. App. 14a-27a. In doing
so, the D.C. Circuit essentially resurrected Chevron
deference, directly undermining this Court’s decision
in Loper Bright Enterprises v. Raimondo, 603 U.S. 369
(2024).
The D.C. Circuit’s decision reflects not only legal
error but also practical folly. Under its novel statutory
interpretation, the Department of Energy adopted
energy efficiency standards that will force millions of
Americans with gas appliances to either renovate
their homes or switch to electric appliances. These
regulations eliminate non-condensing gas furnaces
and commercial water heaters, which work with the
chimneys and natural-draft venting already in
millions of American homes and businesses. The new
standards mandate condensing appliances instead,
which require different venting incompatible with
existing chimneys. Installing them will often require
homeowners to make significant alterations to their
residences. These include punching new holes through
exterior walls for plastic vents, running new piping
through living areas, rewiring electrical systems, and
abandoning functional chimneys. In many rowhouses,
townhomes, and older apartments, such installation is
(1)
2
impracticable. The only alternative is abandoning gas
appliances and switching to electric ones. This all
comes at a time when the electric grid is “increasingly
unreliable.” Evaluating the Reliability and Security of
the United States Electric Grid at vi, Department of
Energy (July 2025), https://perma.cc/UP7L-D7N8.
The Energy Policy and Conservation Act (EPCA)
prohibits the Department from imposing this mandate
on consumers. EPCA bars the Department from
adopting efficiency standards that “result in the
unavailability” of products with unique “performance
characteristics” currently available to consumers. 42
U.S.C. §§ 6295(o)(4); 6313(a)(6)(B)(iii)(II)(aa). Noncondensing appliances qualify for protection by
offering consumers an important installation
compatibility feature: they perform with the
ventilation systems already in millions of Americans’
homes. Yet the Department interpreted “performance
characteristics”
to
exclude
this
installation
compatibility, dismissing it as merely a matter of
“cost.” App.26a. The D.C. Circuit, over Judge Rao’s
dissent, then deferred to the Department’s “expertise”
on how to interpret the statutory term “performance
characteristic” because the interpretive question arose
in the context of a “case-specific” application. App.16a.
This case presents an urgent question
fundamental to administrative law: Whether courts
must exercise independent judgment, under Loper
Bright, when interpreting statutes that must be
applied to a set of undisputed facts or instead defer to
agencies’ interpretive judgment. Review is necessary
because the D.C. Circuit’s approach revives the very
3
Chevron deference that Loper Bright sought to
eliminate.
The stakes are high: The D.C. Circuit plays an
influential role in our nation’s administrative law
jurisprudence. Its interpretation of Loper Bright will
shape how administrative law cases are resolved for
the entire country. If left uncorrected, the decision
below establishes a loophole swallowing Loper
Bright’s rule. An agency could regain Chevron
deference by simply asserting its new broadlyapplicable and prospective interpretation applies
statutory language in some “case-specific” fashion.
That result is particularly absurd in this case, where
the relevant facts are undisputed—and thus cannot
possibly require any deference to non-judicial, expert
judgments. The outsized role of the D.C. Circuit in
administrative law thus heightens the need for this
Court’s review.
This case presents an ideal vehicle to resolve this
fundamental question of administrative law. The D.C.
Circuit acknowledged that the statutory text Congress
enacted to cabin this agency power (“performance
characteristics”) has a “plain” and “broad” meaning.
App.15a. All parties also agree on the relevant facts:
non-condensing appliances function in millions of
existing buildings that condensing appliances cannot
serve without sometimes substantial renovation. The
dispute is purely legal: whether an appliance’s ability
to operate in existing homes without significant
changes is a “performance characteristic” EPCA
protects. Resolving that question requires no technical
expertise, only independent judicial judgment.
4
This Court therefore should grant review for two
reasons of exceptional national importance:
(1) stopping lower courts from circumventing Loper
Bright and deferring to
agency
statutory
interpretations, and (2) preventing the practical harm
of forcing millions of Americans to either renovate
their homes or abandon gas heating.
OPINIONS BELOW
The D.C. Circuit’s opinion is reported at 157 F.4th
476 and reproduced at App.1a-69a.
JURISDICTION
The D.C. Circuit issued its opinion on November
4, 2025. Petitioners timely petitioned for certiorari on
January 20, 2026. This Court has jurisdiction under
28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
“The judicial Power of the United States, shall be
vested in one supreme Court, and in such inferior
Courts as the Congress may from time to time ordain
and establish.” U.S. CONST. art. III, § 1. “The judicial
Power shall extend to all Cases, in Law and Equity,
arising under this Constitution, the Laws of the
United States, and Treaties made, or which shall be
made, under their Authority . . . .” Id. § 2; see Loper
Bright Enters. v. Raimondo, 603 U.S. 369, 384-85
(2024).
Relevant statutory provisions are reproduced at
App.70a to 83a.
5
STATEMENT
A. Statutory Background
EPCA balances energy efficiency with consumer
choice. Congress set initial standards for many
consumer and commercial appliances. See 42 U.S.C.
§ 6295(f); id. § 6313(a). The Department of Energy
may amend those standards, but Congress imposed
critical limits.
The Department may not adopt standards “likely
to result in the unavailability” of products with
distinct
“performance
characteristics
(including reliability, features, sizes, capacities, and
volumes).” Id. § 6313(a)(6)(B)(iii)(II)(aa) (emphasis
added); see id. § 6295(o)(4). Congress also directed the
Department to create separate product “classes,” with
different standards, when products have unique
“performance-related features” justifying different
treatment. Id. § 6295(q)(1).
The Department must also find that amended
standards
are
“technologically
feasible
and
economically
justified.”
Id.
§§ 6295(o)(2)(A),
6313(a)(6)(A)(ii)(II).
Congress
directed
the
Department to consider several factors—including the
“economic impact of the standard” on manufacturers
and consumers, estimated efficiency savings the
standard will produce compared to any price
increases, installation charges or maintenance
expenses, the amount of any likely energy savings,
and any “lessening of the utility or the performance of
the covered products.” Id. § 6295(o)(2)(b)(i)(I)-(VII);
id. § 6313(a)(6)(B)(ii) (same).
6
B. Factual Background
Gas-fired consumer furnaces and commercial
water heaters use either condensing or noncondensing technologies. App.6a. Both varieties
require venting systems to operate safely because the
combustion process results in exhaust gases. Id. But
condensing and non-condensing technologies require
different venting systems.
Non-condensing appliances use unpowered
venting systems like chimneys (also known as
“natural draft” or “atmospheric venting”). Id. These
rely on the natural heat and buoyancy of exhaust
gases to carry them outside. Id. They have been used
for generations and remain the primary exhaust gas
venting system in millions of homes, apartments, and
buildings throughout the country. 86 Fed. Reg. at
73,947, 73,959.
Condensing appliances, on the other hand, cannot
use unpowered venting systems. App.6a-7a. That is
because condensing appliances have a secondary heat
exchanger, which pulls additional heat from postcombustion gases before they are vented. This action
changes the volume, temperature, and other
characteristics of the exhaust gases, including by
creating liquid condensate. App.7a. The cooler
exhaust gases of condensing appliances cannot
naturally rise out of a vertical vent like a chimney.
Instead, condensing appliances require a fan to
generate enough pressure to push or pull the gases
outside, and they generally use a horizontal vent. Id.
And condensing appliances require plumbing to
dispose of the liquid condensate. Id.
7
For millions of existing buildings with vertical
chimneys, transitioning to condensing appliances can
be tremendously difficult. 86 Fed. Reg. at 73,959.
Some buildings lack available exterior walls for
horizontal venting, including many rowhouses,
townhomes, and apartments. “[S]afety and building
codes” may prevent horizontal venting near windows
and walkways or where vents could be blocked by
snow. See id. at 73,961-62; 88 Fed. Reg. 69,686,
69,744.
More generally, the renovation process can be
costly, time-consuming, and disruptive. For example,
replacing a non-condensing furnace with a condensing
furnace often involves “interior wall displacement”
and “vent or equipment relocation.” 88 Fed. Reg.
87,502, 87,565. Because exhaust vents cannot be near
operable windows, horizontal venting sometimes
means sacrificing “interior living space, a balcony, or
a window.” 86 Fed. Reg. 4,776, 4,798 (Jan. 15, 2021).
Businesses might be required to give up closet storage
space, or even retail shelf space. Id. at 4,816.
Renovation can impact business operating hours too.
88 Fed. Reg. at 69,750-51. And during emergency
winter replacements in homes, time without heat can
mean freezing pipes and temporary relocation. Id.; 88
Fed. Reg. at 87,565.
8
C. The Department’s Rulemakings
The Department has flip-flopped on whether noncondensing
appliances
offer
“performance
characteristics” protected by EPCA.
In 2016, the Department proposed efficiency
standards that would have functionally banned noncondensing furnaces and commercial water heaters.
See 81 Fed. Reg. 34,440 (May 31, 2016); 81 Fed. Reg.
65,720 (Sept. 23, 2016). It never finalized that
proposal.
In 2018, regulated parties (including Petitioners)
asked the Department to determine that noncondensing
appliances
offer
“performance
characteristics” protected by EPCA. See 83 Fed. Reg.
54,883 (Nov. 1, 2018). The Department agreed, issuing
a final interpretive rule in January 2021. See 86 Fed.
Reg. 4,776. The Department found that eliminating
non-condensing
appliances
would
undermine
consumer utility. Id. It acknowledged that “a
condensing appliance may necessitate significant and
unwelcome physical modifications to a home or
business (e.g., by adding new venting into
living/commercial space or decreasing closet or other
storage/retail space).” Id. at 4,817. Because of that,
eliminating non-condensing appliances would force
many consumers to switch to electric appliances. Id.
But coerced fuel-switching would contradict the
Department’s longstanding policy of “remain[ing]
neutral regarding competing energy sources in the
marketplace.” Id. at 4,816. The Department’s January
2021 Interpretive Rule thus construed EPCA to
“preclude the adoption of energy conservation
9
standards that would limit the market to [gas-fired]
furnaces [and] water heaters . . . that use condensing
combustion technology, as that would result in the
unavailability of a performance related feature within
the meaning of 42 U.S.C. § 6295(o)(4) and 42 U.S.C.
§ 6313(a)(6)(B)(iii)(II)(aa).” Id.
Less than a year later, the Department reversed
course. It published another interpretive rule, this
time reaching the opposite conclusion. See 86 Fed.
Reg. at 73,950. In that December 2021 Interpretive
Rule, the Department argued that “non-condensing
technology (and the associated venting) does not
provide unique utility to consumers separate from an
appliance’s function of providing heated air or water,”
so it does not qualify as a “performance-related
‘feature’”
under
sections
6295(o)(4)
and
6313(a)(6)(B)(iii)(II)(aa). 86 Fed. Reg. at 73,951. The
Department interpreted EPCA as protecting only “the
benefits and usefulness the feature provides to the
consumer while interacting with the product” after
installation, “not through design parameters
impacting installation complexity, or costs that
anyone, including the consumer, manufacturer,
installer, or utility companies, may bear.” Id. Under
the Department’s new interpretation, non-condensing
appliances offer no “unique utility” despite helping
customers avoid home renovation. Id. at 73,953. The
Department reasoned that consumers interact with
both types identically—“to initiate demand for heated
air or water”—making installation complications mere
“matters of cost.” Id. at 73,951, 73,953.
10
The Department then finalized new efficiency
standards for both commercial water heaters and
consumer furnaces that non-condensing appliances
cannot meet. See 88 Fed. Reg. at 87,503; 88 Fed. Reg.
at 69,687. In both rulemakings, the Department relied
on its December 2021 Interpretive Rule’s conclusion
that it could eliminate non-condensing appliances
despite EPCA’s “unavailability” provisions. See 88
Fed. Reg. at 87,535; 88 Fed. Reg. at 69,710.
D. Decision Below
Petitioners challenged the December 2021
Interpretive Rule, 86 Fed. Reg. 73,947, the
Commercial Water Heater Rule, 88 Fed. Reg. 69,686,
and the Consumer Furnace Rule, 88 Fed. Reg. 87,502,
in the D.C. Circuit. Over Judge Rao’s dissent, the D.C.
Circuit denied the petitions for review and upheld the
Department’s final rules. App.1a-69a.
1. After finding Petitioners had standing, the
majority evaluated the statutory terms “performance
characteristics” and “features.” App.14a-27a. Before
discussing “the plain text of the statute,” the majority
“note[d]” that while the Department’s “interpretation
of EPCA” might not be binding, it “may be especially
informative ‘to the extent it rests on factual premises
within . . . [DOE’s] expertise.’” App.14a (quoting Loper
Bright Enters. v. Raimondo, 603 U.S. 369, 402 (2024)).
The majority likewise suggested that Congress gave
the Department “‘a degree of discretion’ to decide what
constitutes a performance characteristic or feature
under EPCA.” Id. (quoting Loper Bright, 603 U.S. at
394).
11
When it eventually got to the plain text, the
majority acknowledged “the plain meaning of
‘performance characteristics’ is broad.” App.15a. All
parties agreed that under the plain text “performance
characteristic” means “a product attribute that
provides utility to consumers desiring to use the
product.” Id. But the D.C. Circuit declined to decide
whether non-condensing appliances’ ability to
function with existing venting fits that plain meaning.
Instead, the majority agreed with the Department
that “because every appliance offers a unique function
to consumers, the concept of a feature or performance
characteristic is ‘very case-specific.’” App.16a (citing
86 Fed. Reg. at 73,948). “No single definition could
effectively capture the potential for features across the
broad array of consumer products and commercial
equipment subject to EPCA’s regulatory scheme.” Id.
So the D.C. Circuit majority concluded “the plain text
of the statute does not . . . resolve the specific
ambiguity here as it relates to consumer furnaces and
commercial water heaters.” Id.
To resolve that “specific ambiguity,” the majority
looked first to “legislative history.” Id. (quoting United
States v. Braxtonbrown-Smith, 278 F.3d 1348, 1352
(D.C. Cir. 2002)). It noted that Petitioner AGA told
Congress in 1986 that EPCA’s “energy efficiency
standards”
could
eliminate
“conventional,
atmospherically vented furnace[s].” App.17a. Yet the
committee report cited by the D.C. Circuit did not
identify venting as an example of a protected feature.
App.18a.
12
According to the majority, this legislative history
supported the purportedly “obvious” point that
“consumers do not buy small furnaces or commercial
water heaters because of how the appliance vents.”
App.18a. The majority thus assumed without evidence
that consumers do not care about whether they will
have to renovate their homes in order to install a new
gas appliance. In the majority’s view, “venting is a
quality that both condensing and non-condensing
appliances share,” so the court reasoned that
differences in venting must not matter to consumers.
Id. The D.C. Circuit repeated the December 2021
Interpretive Rule’s conclusion that the only “unique
utility a consumer furnace or commercial water heater
provides to the consumer” is to “provide hot air or hot
water.” App.19a.
That conclusion conflicts with prior Department
rulemakings, which the majority tried to distinguish.
For instance, the Department previously separated
the efficiency standards for condensing and noncondensing furnace fans, even though both provide hot
air, because condensing furnaces “achieve higher
thermal efficiency but may have lower fan
performance.” App.23a (quoting 78 Fed. Reg. 64,068,
64,080 (Oct. 25, 2013)). The majority held that
decision was appropriate because the “design” of
condensing and non-condensing furnace fans is
“directly related to the performance requirements of
the particular product.” Id.
The majority similarly acknowledged the
Department created separate product classes for
standard-sized and non-standard-sized packaged
13
terminal air conditioners. App.25a n.8. These
appliances are installed in a hole or “sleeve” cut into a
building’s wall, but older buildings do not have
standard-sized sleeves. Id. The Department “created
two different product classes for standard size versus
their non-standard size counterparts because ‘altering
the existing wall sleeve opening to accommodate the
more efficient, standard size equipment could include
extensive structural changes to the building.’” Id. The
court did not explain how that was distinguishable
from the installation requirements of condensing
versus non-condensing appliances.
The majority acknowledged that “installation of
condensing products/equipment [sometimes] requires
modifications to the installed space . . . and that such
modifications may impact the installation cost and/or
complexity.” App.25a (quoting 86 Fed. Reg. at 73,953).
But “[b]ecause [the Department] found that
consumers are able to replace non-condensing
appliances with condensing appliances in ‘all cases,’”
the D.C. Circuit held “that installation factors are
more appropriately addressed in the economicjustification analysis.” App.25a-26a. It did not matter
that these renovation costs “may financially deter
consumers from” choosing to keep a gas appliance by
installing a condensing one. App.26a.
Having skipped past the statute’s “broad” plain
meaning, the majority found “no reason to secondguess” the Department’s statutory interpretation.
App.27a. It did not acknowledge the Department’s
shifting interpretation of the statute. Instead, the
court deferred to the agency’s current interpretation,
14
asserting it “rests on the agency’s evaluations of
scientific data within its area of expertise.” App.27a
(quoting Actavis Elizabeth LLC v. FDA, 625 F.3d 760,
766 (D.C. Cir. 2010)). The D.C. Circuit then rejected
Petitioners’ arguments that the final rules were not
economically justified and the notice and comment
procedures were defective. App.28a-43a.
2. Judge Rao dissented. App.44a-69a. As she
explained, “[t]he ability to vent through a traditional
chimney is exactly the kind of real-world feature
Congress protected from elimination in the
marketplace.” App.45a. The challenged “efficiency
standards, which make non-condensing appliances
unavailable, are therefore contrary to law.” Id.
Judge Rao recognized that “[t]he question in this
case is . . . a legal one: Is a non-condensing appliance’s
compatibility with existing, standard chimney vents a
protected ‘performance characteristic’ under EPCA?”
App.51a-52a. She agreed with the majority that
EPCA’s plain text establishes that “performance
characteristic[s]” are attributes “that provide[] utility
to the consumer.” App.52a.
But unlike the majority, Judge Rao concluded
that “[n]on-condensing appliances plainly provide
such utility: a venting method that is compatible with
the conventional chimneys found in millions of older
homes and buildings.” App.50a. They “integrate
directly into an existing exhaust system” instead of
“requir[ing] cumbersome and costly retrofits”—such
as “punching new holes through exterior walls for
plastic vents, sacrificing closets or other living space
to run new piping, giving up windows or balconies that
15
are too close to a new vent’s exhaust, and re-lining or
abandoning a perfectly functional chimney.” App.50a51a. Non-condensing appliances thus “have a
protected ‘performance characteristic’ under the plain
meaning of EPCA.” App.51a. And “because it is
undisputed that the efficiency standards make these
appliances unavailable, the standards are contrary to
law.” Id.
Judge Rao rejected the Department’s conflicting
arguments. “Nothing in EPCA suggests” the
“limitation” the Department advanced: “that a
‘performance characteristic’ is limited to features
providing utility during operation, ‘not through design
parameters impacting installation complexity[ ] or
costs.’” App.54a-55a (quoting 86 Fed. Reg. at 73,951).
EPCA instead gives as examples “terms that plainly
encompass an appliance’s . . . compatibility with a
building’s existing infrastructure,” such as “sizes,
capacities, and volumes.” App.55a. Nothing in the text
supports the illogical result “that consumers derive
utility only from operational features . . . and not from
the ability to install a product in their home without
cumbersome (and costly) renovations that change the
use of their interior space.” Id.
The dissent concluded that the Department’s
arguments contradicted “its long-standing practice” as
well. Id. “The agency has frequently invoked its
authority to create separate efficiency standards to
preserve a ‘performance-related feature’ based on
installation-related features.” Id. That makes the
challenged rulemakings “an unexplained and
16
arbitrary departure from the agency’s long-standing
practice.” App.56a.
Judge Rao thus faulted the majority for “largely
duck[ing]” the “legal question” at issue “by declaring
that EPCA is ambiguous as to the meaning of
‘performance characteristic’ and ‘utility.’” App.57a58a. “The majority takes this ambiguity as a license to
defer to the Department,” Judge Rao explained. App.
58a. “But this Loper Bright avoidance is inconsistent
with the Supreme Court’s directive that a court must
‘use every tool at [its] disposal to determine the best
reading of the statute and resolve the ambiguity.’” Id.
(citation omitted). Because “the Department’s
interpretation of EPCA contradicts the statute’s text,
context, and the agency’s regulatory practice,” the
“Department’s standards are contrary to law.”
App.59a.2
REASONS TO GRANT THE PETITION
I.
This Court should grant review to decide
whether, under Loper Bright, courts should
defer to agency statutory interpretations
when issued in the context of “case-specific”
rulemakings.
The D.C. Circuit has revived Chevron deference.
This Court therefore should grant review to vindicate
Loper Bright’s sound principles in the most
consequential lower court for administrative law.
2 Judge Rao also would have vacated the challenged rules on
the grounds that “the Department’s economic justification for the
challenged standards is fundamentally flawed.” App.68a.
17
The D.C. Circuit majority acknowledged that
“performance characteristics” has a “plain” and
“broad” meaning. App.15a. Yet it refused to
independently determine whether the undisputed
facts fit that broad statutory term. Instead, it deferred
to the agency, holding that applying the statute to the
undisputed facts purportedly involved “case-specific”
judgment. App.16a. This runs roughshod over Loper
Bright’s core holding. It permits courts to defer to a
broadly-applicable agency interpretation any time the
agency interprets the statute in the context of realworld facts—something which occurs in every
challenge to an agency rule.
Loper Bright held that courts must “exercise their
independent judgment in deciding whether an agency
has acted within its statutory authority.” 603 U.S. at
412. Agency views may be considered for their
persuasive force, but they receive no special weight
merely because Congress charged the agency with
administering the statute. Id. at 395-96. The D.C.
Circuit violated that command, yielding to the
Department’s “expertise” to resolve a “specific
ambiguity” it found in the statute’s meaning. App.14a,
16a. This nullifies Loper Bright.
Statutory interpretation always turns on
“whether the language at issue has a plain and
unambiguous meaning with regard to the particular
dispute in the case.” Robinson v. Shell Oil Co., 519 U.S.
337, 340 (1997) (emphasis added). For instance,
Weyerhaeuser Co. v. U.S. Fish & Wildlife Service, 586
U.S. 9, 14-21 (2018), determined whether “critical
habitat” included land formerly occupied by
18
endangered dusky gopher frogs. That question of
statutory interpretation required consideration of the
case’s facts, but this Court did not defer to the Fish
and Wildlife Service. See id. at 20-21. Similarly,
Becerra v. Empire Health Foundation, for Valley
Hospital Medical Center, 597 U.S. 424, 434 (2022),
interpreted the meaning of a “technical” provision in
the Medicare statute without deferring to HHS’s
expertise. And in the same term as Loper Bright, this
Court decided whether the term “machinegun”
included bump stocks, without deferring to ATF’s
firearms expertise. Garland v. Cargill, 602 U.S. 406,
415-23 (2024).
This Court’s major-questions cases (which predate Loper Bright) illustrate the same point. National
Federation of Independent Business v. Department of
Labor, 595 U.S. 109, 117-18 (2022) (per curiam), did
not defer to OSHA’s view that a nationwide employer
vaccine mandate fell within that agency’s authority
over “occupational safety,” even though that term can
be fact-dependent. Alabama Association of Realtors v.
Department of Health & Human Services, 594 U.S.
758, 763-65 (2021) (per curiam), similarly rejected the
CDC’s claim that an eviction moratorium fell within
its statutory authority to prevent the spread of
disease, notwithstanding the agency’s argument that
public-health measures are context-specific. This
Court has thus repeatedly exercised independent
judgment over statutory meaning rather than
deferring to an agency’s interpretation when a dispute
involves “case-specific” facts. Indeed, there is little
that is “case-specific” here: the Department’s rules
19
affect entire classes of appliances. Moreover, its
interpretation of whether installation compatibilities
can constitute a “performance characteristic” will
presumably govern future rulemakings and D.C.
Circuit decisions.
The decision below also highlights confusion over
Loper Bright’s discussion of statutory “discretion.”
Loper Bright recognized that Congress sometimes
confers discretion through express textual signals—
such as directing agencies to act when “appropriate”
or “reasonable.” 603 U.S. at 395. But general
administrative responsibility does not allow agencies
to redefine statutory limits. Id. at 401-03.
Other Circuits have properly recognized this
distinction, refusing to defer absent language
expressly empowering agencies to exercise judgment
over statutory scope. The Sixth Circuit refused to
defer to an agency absent “broad language” that
“expressly empower[s] the agency to exercise
judgment”—“terms such as ‘appropriate’ and
‘reasonable.’” Moctezuma-Reyes v. Garland, 124 F.4th
416, 420-21 (6th Cir. 2024). The Tenth Circuit likewise
emphasized that interpretive discretion must be
clearly conferred by Congress. See Rangel-Fuentes v.
Bondi, 155 F.4th 1138, 1143 (10th Cir. 2025).
The D.C. Circuit, in contrast, now grants
deference whenever an agency interprets a statute in
the process of deciding a “case-specific” issue. App.16a.
It did not rely on any specific language that explicitly
vests discretion in the Department to interpret the
meaning of the provision limiting the Department’s
20
standard-making authority. This conflict
implementing Loper Bright requires resolution.
in
The decision below further demonstrates
conflicting views among the Circuits about this
Court’s suggestion that “an agency’s interpretation of
a statute” may be informative “to the extent it rests on
factual premises within [the agency’s] expertise.”
Loper Bright, 603 U.S. at 402 (citation omitted). Some
courts have properly limited this reliance on agency
views to “scientifically complex area[s],” like “air
pollution patterns.” See, e.g., Texas v. EPA, 156 F.4th
523, 550 (5th Cir. 2025) (finding EPA’s interpretation
of the Clean Air Act persuasive because it relied on
“scientific knowledge about air pollution patterns and
the practicalities of [Clean Air Act] enforcement”);
United States v. Rutherford, 120 F.4th 360, 379 (3d
Cir. 2024), cert. granted on other grounds, 145 S. Ct.
2776 (2025) (“In Loper Bright Enterprises v.
Raimondo, the Supreme Court overturned the longstanding rule that courts must defer to agency
interpretations of statutes within an agency’s
expertise.”); Corner Post, Inc. v. Bd. of Governors of
Fed. Reserve Sys., 794 F. Supp. 3d 610, 623 (D.N.D.
2025) (explaining “the court is by no means bound to
give deference” to “[a]n agency’s claim of having
expertise in the statute’s subject area or holding the
same statutory interpretation for a period of time”).
Here, all factual issues are undisputed, so the only
question is statutory meaning, which is “the proper
and peculiar province of the courts.” Loper Bright, 603
U.S. at 385 (citation omitted). Yet the D.C. Circuit
abdicated its responsibility under Loper Bright by
21
deferring to the Department’s “expertise.” App.14a.
The Ninth Circuit, too, has deferred to an
administrative entity’s views on purely legal
questions. See Lopez v. Garland, 116 F.4th 1032, 103941 (9th Cir. 2024).
The inconsistency across lower court review of
agency actions after Loper Bright alone warrants
review. Making matters worse, the Loper Bright
loophole created by the decision below comes from the
D.C. Circuit, where fidelity to Loper Bright is most
important. The D.C. Circuit handles a substantial
amount of the challenges to federal regulations. Its
reinvigoration of agency deference will ripple
nationwide. If the D.C. Circuit can defer to agency
statutory interpretations by invoking “case-specific”
factors, Loper Bright accomplished little. Certiorari is
warranted to determine whether the D.C. Circuit’s
latest formulation of agency deference should govern
the lion’s share of challenges to federal regulations.
II. This case presents another issue of
exceptional national importance because
the D.C. Circuit’s decision forces millions of
Americans to renovate their homes or stop
using gas appliances.
The practical consequences compound the urgent
need for review. The Department’s rules will require
millions of Americans to undergo costly renovations to
keep their gas appliances. Because many consumers
will not or cannot bear these costs, the challenged
rules will force millions to switch to electric
appliances. Congress did not permit that momentous
22
result in EPCA. This Court’s review is necessary to
rectify this consequential agency overreach.
Congress enacted EPCA against the backdrop of
an existing national housing and commercial building
stock, much of which was designed to accommodate
specific types of equipment. It expressly prohibits
efficiency standards “likely to result in the
unavailability” of covered products with distinct
performance characteristics. 42 U.S.C. § 6295(o)(4).
Consumers derive utility not only from what an
appliance does in isolation, but also from its
compatibility with the consumer’s actual use case
(including whether it can perform within spaces they
already occupy without substantial alteration).
The Department did not dispute—and the D.C.
Circuit below did not question—that condensing
furnaces and water heaters often cannot be installed
in buildings designed for natural-draft venting
without substantial physical modification. The record
reflects that switching to condensing gas appliances
frequently requires new venting pathways, loss of
interior space, structural alterations, or abandonment
of existing systems. See App.26a-27a; App. 44a-45a
(Rao, J., dissenting). Yet the court held that these
consequences are legally irrelevant because they
relate to “installation” rather than operation. See
App.26a-27a. Treating real-world usability as a
characteristic irrelevant to consumer utility severely
undermines
Congress’s
substantive
statutory
constraint on agency power.
The efficiency standards at issue here alone
significantly impact millions of Americans who rely on
23
natural gas and propane appliances and would face
substantial constraints to comply. But EPCA also
governs a broad range of other consumer and
commercial equipment intertwined with existing
buildings. For example, the Department’s reasoning
would apply equally to commercial gas furnaces and
boilers, see id. § 6313(a)(4)(A); consumer water and
pool heaters, see id. § 6295(e)(1)-(2); and consumer
direct heating equipment, including room heaters,
wall furnaces, and floor furnaces, id. § 6295(e)(3). If
the decision below stands, the Department can
eliminate any product so long as a theoretical
substitute exists after substantial alteration. This
especially impacts older buildings that cannot be
easily modified—including homes and apartments,
public housing, schools, and businesses nationwide.
For these and other products, the interpretation
below creates a model for evading EPCA’s statutory
constraints. The Department may redefine protected
“performance characteristics” in a way that is divorced
from the text and eliminates consumer protections for
real-world features. It can dismiss incompatibility
with existing structures as an economic inconvenience
rather than a loss of utility. And then it can eliminate
longstanding product categories by regulation.
Nothing in EPCA authorizes that result, and the
Department will continue regulating across appliance
categories where the same logic may recur. See 42
U.S.C. § 6313(a)(6)(C)(i) (requiring the Department to
reevaluate appliance standards for covered products
every 6 years).
24
Congress’s decision to prohibit standards
rendering performance characteristics unavailable
serves an important structural function, too. It
prevents agencies from eliminating products based on
contestable or marginal economic modeling. That
concern is not abstract. As the dissent below
acknowledged, modest changes to the Department’s
modeling assumptions materially affect whether the
challenged standards produce net benefits at all.
App.64a (Rao, J., dissenting). Even under the
Department’s preferred assumptions, the projected
benefits to consumers would take years to materialize.
By treating “unavailability” as subsumed within
economic justification, the interpretation approved
below eliminated EPCA’s backstop in precisely the
circumstances where it is most important—when the
case for eliminating consumer choice depends on
fragile economic analysis rather than clear necessity.
That concern is heightened by uncertainty
surrounding the Department’s ability to relax
standards. EPCA contains a provision that prohibits
the Department from “prescrib[ing] any amended
standard which increases the maximum allowable
energy use . . . of a covered product.” See 42 U.S.C.
§ 6295(o)(1). This ratchet may prevent the
Department from correcting standards that are legally
or technically flawed. The Department has recently
taken the position that it does not prevent the
Department from rescinding amended standards and
reverting to the original standards issued by
Congress. See 90 Fed. Reg. 20,899, 20,900-901 (May
16, 2025) (proposed rule explaining that Section
25
6295(o) only prevents setting standards less stringent
than those initially set by Congress). But that view is
untested. If the ratchet does apply to standards
previously promulgated by the Department, then
those standards establish a new floor, even if a later
administration determines they were legally or
factually flawed.
In other words, if the court of appeals’ approach to
Loper Bright improperly constricts statutory
protections for consumer choice, the resulting
interpretation may become permanently entrenched.
This Court’s review is necessary to prevent that result,
which will have significant practical impact on
millions of consumers.
III. The D.C. Circuit majority erred on the
merits in deferring to the agency’s
interpretation of the Energy Policy and
Conservation Act.
EPCA’s plain text confirms non-condensing
appliances
have
protected
performance
characteristics. The D.C. Circuit majority below
erroneously reached the opposite result by improperly
deferring to the agency’s statutory interpretation.
A. The Department cannot make “unavailab[le]”
any
products
with
distinct
“performance
characteristics.” 42 U.S.C. § 6313(a)(6)(B)(iii)(II)(aa).
All
parties
agree
the
term
“performance
characteristics” is “broad” and means “a product
attribute that provides utility to consumers desiring
to use the product.” App.15a.
26
Non-condensing technology should easily satisfy
the statutory term “performance characteristics.”
Non-condensing appliances function with existing
unpowered vertical venting, providing utility to
consumers wanting gas appliances by allowing them
to replace their appliances without substantial
renovation. Condensing appliances lack this
characteristic. They cannot perform in the millions of
buildings designed to use non-condensing appliances
without costly renovation.
Context confirms the plain statutory text. The
statute contains non-exhaustive lists of examples of
“performance
characteristics”:
they
“includ[e]
reliability, features, sizes, capacities, and volumes.”
42 U.S.C.
§ 6313(a)(6)(B)(iii)(II)(aa);
see
id.
§ 6295(o)(4) (“any covered product type (or class) of
performance characteristics (including reliability),
features, sizes, capacities, and volumes”). These
examples confirm EPCA prohibits the Department
from eliminating physical and functional appliance
attributes, not just operational outputs. See Dubin v.
United States, 599 U.S. 110, 124 (2023) (“Under the
familiar interpretive canon noscitur a sociis, ‘a word is
known by the company it keeps.’” (citation omitted)).
They contain broad concepts, such as “features.” They
include “size[]” as distinct from “capacit[y]” and
“volume[],” which means the statute is concerned not
only with how much a product can hold but also where
and how the appliance fits. And they reference
“reliability,” which protects not just how the appliance
performs after installation but also whether it works
in the consumer’s building at all.
27
EPCA’s structure further confirms that Congress
protected all product characteristics providing
consumers utility, including installation-related
benefits.
Section
6295(q)(1)(B)
requires
the
Department to establish different efficiency standards
when a “performance-related feature” justifies the
establishment of a “higher or lower standard.” In
making this determination, the Department “shall
consider” all “utility to the consumer” provided by the
product, not simply its end-use by the consumer. Id.
Consistent with that direction, Congress itself
created initial product classes based on installation,
size, venting, condensing technology, and other
design-related considerations. For example, Congress
separated “through-the-wall central air conditioners,”
from other air conditioners because they are “designed
to be installed totally or partially within a fixed-size
opening in an exterior wall.” 42 U.S.C.
§ 6295(d)(4)(A)(ii). It distinguishes mobile home gasfired furnaces from other furnaces because of the
different
physical
installation
and
venting
requirements for mobile homes. Id. § 6295(f)(1)-(2);
see 88 Fed. Reg. at 69,837 (“[S]uitability for use with
condensing technology in a furnace fan is a
performance-related feature under EPCA.”). And it
divided detached remote condensing from selfcontained condensing refrigerators, freezers, and
automatic ice makers due to their distinct physical
and design characteristics. Id. §§ 6313(c), 6313(d)(1);
78 Fed. Reg. 55,890, 55,905 (Sept. 11, 2013). Congress
would not have created these overlapping safeguards
28
to preserve consumer choice if EPCA protected only an
appliance’s post-installation functions.
B. The Department has repeatedly recognized
that “space constraints and similar limitations”
warrant separate product classes or standards.
January 2021 Interpretive Rule, 86 Fed. Reg. at 4,782.
This practice confirms that installation-related
features
constitute
protected
“performance
characteristics” under EPCA.
For example, the Department created separate
classes for standard size packaged terminal air
conditioners and non-standard size packaged terminal
air conditioners because older buildings often lack
standard-sized wall openings. See 73 Fed. Reg. 58,772
(Oct. 7, 2008). It explained that, absent the separate
standards, “customers could be forced to invest in
costly building modifications to convert non-standard
sleeve openings to standard size dimensions.” Id. at
58,782. The same is true of the non-condensing
furnaces and water heaters at issue in this case.
Similarly, the Department has protected front-loading
clothes washers even though they are less efficient
than top-loading ones. 84 Fed. Reg. 37,794, 37,797
(Aug. 2, 2019). That was, in part, because they can fit
in small spaces and cabinets. Id.
The Department has recognized that venting and
condensing technologies are relevant to setting
efficiency standards, too. The Department understood
that ventless clothes dryers provide “unique utility” to
people, like many apartment dwellers, who do not
have a dryer vent or have limited space for appliances.
76 Fed. Reg. 22,454, 22,485 (Apr. 21, 2011); see 86 Fed.
29
Reg. at 73,949 (conceding that ventless dryers warrant
separate standards because they can be used in
existing buildings that cannot easily accommodate
vents). In 2023, the Department adopted different
efficiency standards for the fans needed to distribute
hot air from non-condensing gas furnaces and
condensing gas furnaces, because even though noncondensing furnace fans are more efficient, they do not
function with condensing furnaces. See 88 Fed. Reg. at
69,836-37; see 79 Fed. Reg. 38,130, 38,142 (July 3,
2014) (same).
The Department has created a separate category
for manufactured home furnace fans because they
“meet certain design requirements that allow them to
be installed in manufactured homes” like fitting in “a
more compact cabinet size.” 78 Fed. Reg. at 64,077.
And it has separated appliances into “weatherized”
(i.e., appliances with components designed to remain
outside the building) versus “non-weatherized” classes
(i.e., those kept indoors). E.g., 10 C.F.R. § 430.32(e)
(separating weatherized and non-weatherized
furnaces); 10 C.F.R. § 430.32(y) (separating
weatherized and non-weatherized furnace fans).
The Department has thus repeatedly recognized
that “performance characteristics” include designrelated features allowing consumers to install
appliances in existing spaces that will not easily
accommodate other forms of the appliance at issue.
The Department did not dismiss dryer vent
installation issues for consumers living in apartments
as mere installation issues or expect those wanting
dryers to simply change their residence (e.g., by
30
renovating buildings or moving apartments to one
with dryer vents). Once installed, consumers do not
interact with a dryer vent or furnace fan. The
Department has nonetheless recognized significant
installation and design parameters are a performance
characteristic that should not be eliminated under
EPCA. Yet although only non-condensing furnaces
will function within consumers’ buildings as they
exist, the agency arbitrarily did not preserve their
availability in the challenged rules.
C. The majority’s decision below has no basis in
the statute. See App.25a-26a, 27a. The D.C. Circuit
refused to “second-guess” the Department’s
interpretation that “performance characteristics” does
not include installation-related attributes. App.27a.
This ruling is solely the result of deference to an
agency’s creative statutory interpretation, which
Loper Bright rejected.
The statute’s listing of “initial charges” as a
consideration for the Department’s economic analysis
does not preclude installation and design parameters
from being a protected “performance characteristic.”
See App.26a. After all, another mandatory
consideration in this economic analysis is “any
lessening of the utility or the performance of the
products.” 42 U.S.C. § 6313(a)(6)(B)(ii). Utility must
be part of the “performance characteristic” analysis.
See id. § 6295(q)(1)(B) (mandating separate efficiency
standards for product classes with unique
performance characteristics taking into account “such
factors as the utility to the consumer of such a
feature”).
31
Non-condensing appliances provide exactly the
type of utility to consumers protected by EPCA. The
Department itself concluded, in January 2021, that
non-condensing appliances provide an important
performance characteristic. See 86 Fed. Reg. 4,776.
Just like a larger-sized appliance will not fit in certain
homes easily, condensing appliances will not fit into
some homes designed with vertical venting systems
without significant renovations to accommodate
horizontal venting. Id. at 4,786-87. The Department
expressly admitted that such replacements would
sometimes be “impracticable,” so consumers would
instead “choose to replace the existing appliance with
one utilizing a different fuel type.” 86 Fed. Reg. at
73,962.
Plus, EPCA does not permit the Department to
eliminate performance characteristics any time
consumers could bear the national average cost of
alternatives. Congress directed the Department to
consider both whether “a standard is economically
justified” and independently whether “the standard is
likely to result in the unavailability in the United
States” of any product class with distinct performance
characteristics.
42 U.S.C.
§§ 6313(a)(6)(B)(ii),
6313(a)(6)(B)(iii)(II)(aa), 6295(o)(4). Almost any kind
of consumer impact could be framed as “cost issues,”
not “performance-related impacts.” 86 Fed. Reg. at
73,959-60. If the Department must show only that an
efficiency standard is, in the aggregate, cost-justified,
then EPCA’s unavailability provisions offer illusory
protection.
32
As Judge Rao’s dissent explained, non-condensing
appliances “plainly provide” utility to consumers.
App.56a. They possess a “venting method that is
compatible with the conventional chimneys found in
millions of older homes and buildings,” without
“requir[ing] cumbersome and costly retrofits.”
App.50a. They integrate directly into existing exhaust
systems rather than requiring consumers to modify
their homes to accommodate different venting
technology. Id. And unlike their condensing
alternative, they do not require consumers to “punch[]
new holes through exterior walls for plastic vents,
sacrific[e] closets or other living space to run new
piping, giv[e] up windows or balconies that are too
close to a new vent’s exhaust,” or “re-lin[e] or
abandon[] a perfectly functional chimney.” Id. at 50a51a.
The Department’s standards thus conflict with
EPCA’s plain text. These appliances have
“performance characteristics” protected by EPCA, and
it is undisputed that the challenged standards render
these appliances unavailable. The majority below
erred in concluding otherwise.
IV. This case is an ideal vehicle to ensure courts
do not reinstate Chevron deference to
agency statutory interpretations.
This case presents an ideal vehicle to prevent
lower courts from resurrecting Chevron deference to
agency statutory interpretations. The facts are
undisputed. The question is purely legal. Both the
D.C. Circuit majority and dissent acknowledged that
the statute’s plain text cabining agency power is
33
“broad.” App.15a. And the stakes, both jurisprudential
and practical, are high.
All parties agree on the relevant facts. The
challenged standards eliminate non-condensing
furnaces and water heaters. Non-condensing
appliances function in millions of buildings that
condensing appliances cannot serve without often
substantial modification. And for many consumers,
the burdens of retrofit render gas heating practically
unavailable.
This
forces
electrification
and
undermines consumer choice.
The only dispute is legal: Whether an appliance’s
compatibility with existing infrastructure qualifies as
a “performance characteristic” EPCA protects.
Resolving that requires no technical expertise. It
requires courts to exercise independent judgment.
This is precisely what Loper Bright demands and what
the D.C. Circuit majority refused to do.
This case especially warrants review because the
D.C. Circuit handles a significant amount of federal
regulatory challenges. Its evasion of Loper Bright will
shape not only the bevy of agency cases before it, but
also how courts nationwide approach agency statutory
interpretations. This case is thus the ideal vehicle to
ensure lower courts do not resurrect Chevron
deference to agency statutory interpretations, and to
prevent the Department of Energy from requiring
millions of Americans to renovate or stop using gas
appliances.
34
CONCLUSION
The Court should grant the petition.
Respectfully submitted,
MICHAEL L. MURRAY
MATTHEW J. AGEN
AMERICAN GAS ASSOCIATION
400 N. Capitol Street, NW
Washington, DC 20001
Counsel for Petitioner
American Gas Association
SCOTT A. KELLER
Counsel of Record
MICHAEL B. SCHON
LEHOTSKY KELLER COHN LLP
200 Massachusetts Ave. NW
Suite 700
Washington, DC 20001
(512) 693-8350
scott@lkcfirm.com
RENEE M. LANI
AMERICAN PUBLIC GAS
ASSOCIATION
201 Mass. Ave., NE
Suite C-4
Washington, DC 20002
MITHUN MANSINGHANI
LEHOTSKY KELLER COHN LLP
629 W. Main St.
Oklahoma City, OK 73102
Counsel for Petitioner
American Public Gas
Association
DREW F. WALDBESER
ADELINE KENERLY LAMBERT
LEHOTSKY KELLER COHN LLP
3280 Peachtree Road NE
Atlanta, GA 30305
Counsel for Petitioners
35
BENJAMIN A.F. NUSSDORF
NATIONAL PROPANE GAS
ASSOCIATION
1150 Connecticut Ave., NW
Suite 1200
Washington, DC 20036
Counsel for Petitioner
National Propane Gas
Association
JANUARY 2026
APPENDIX
i
TABLE OF APPENDICES
Page
APPENDIX A — OPINION OF THE UNITED
STATES COURT OF APPEALS FOR THE
DISTRICT OF COLU M BI A CIRCUIT,
FILED NOVEMBER 4, 2025 . . . . . . . . . . . . . . . . . . 1a
APPENDIX B — RELEVANT STATUTORY
PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70a
1a
Appendix
A
APPENDIX A — OPINION
OF THE
UNITED STATES
COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA CIRCUIT, FILED NOVEMBER 4, 2025
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 22-1030
AMERICAN GAS ASSOCIATION, et al.,
Petitioners,
v.
UNITED STATES DEPARTMENT OF ENERGY
AND CHRIS WRIGHT, SECRETARY, U.S.
DEPARTMENT OF ENERGY,
Respondents,
CITY OF NEW YORK, et al.,
Intervenors.
Consolidated with 23-1285, 23-1337
On Petitions for Review of Final Rules
of the U.S. Department of Energy
Argued November 21, 2024
Decided November 4, 2025
Before: Pillard, Wilkins, and Rao, Circuit Judges.
Opinion for the Court filed by Circuit Judge Wilkins.
Dissenting opinion filed by Circuit Judge Rao.
2a
Appendix A
Wilkins , Circuit Judge: After the Department of
Energy (“DOE”) promulgated amended energy efficiency
standards for consumer furnaces (residential nonweatherized gas furnaces and mobile home gas furnaces)
and certain commercial water heaters under the Energy
Policy and Conservation Act (“EPCA”), Petitioners—
who are a number of trade associations, manufacturers,
and energy providers—filed petitions for review in this
Court challenging DOE’s actions. Energy Conservation
Program: Energy Conservation Standards for Consumer
Furnaces, 88 Fed. Reg. 87502 (Dec. 18, 2023) (“Consumer
Furnaces Rule”); Energy Conservation Program: Energy
Conservation Standards for Commercial Water Heating
Equipment, 88 Fed. Reg. 69686 (Oct. 6, 2023) (“Commercial
Water Heaters Rule”); Energy Conservation Program for
Appliance Standards: Energy Conservation Standards for
Residential Furnaces and Commercial Water Heaters, 86
Fed. Reg. 73947 (Dec. 29, 2021) (“2021 Interpretive Rule”).
In this consolidated case, Petitioners contend that
DOE’s amended energy efficiency standards will expel
non-condensing consumer furnaces and commercial
water heaters—which they allege offer consumers
unique performance characteristics and features—out
of the market because they will be unable to meet the
newly amended energy efficiency standards, unlike their
condensing counterparts. Petitioners also argue that
DOE did not provide adequate economic justification, as
is required by EPCA, before promulgating the amended
efficiency standards. Lastly, Petitioners allege that DOE
failed to adhere to procedural requirements as provided
by EPCA when promulgating the Consumer Furnaces
3a
Appendix A
Rule. Because each of Petitioners’ arguments fail, we
deny the petitions.
I. Background
A.
EPCA, amended in 1992, was enacted in order “to
provide for improved energy efficiency1 of . . . major
appliances, and certain other consumer products[,]”
among other purposes. 42 U.S.C. § 6201(5). Consumer
products such as refrigerators, freezers, air conditioners,
water heaters, furnaces, ovens, television sets, etc. are
“covered products” under EPCA and are subject to
improved energy efficiency standards as authorized by the
Secretary of DOE. Id. §§ 6292(a), 6295(a). As relevant to
this case, DOE was mandated to set energy conservation
standards for consumer furnaces and commercial water
heaters under subsections 6295(f) and 6313(a), respectively.
EPCA also authorizes DOE to make amendments
to energy conservation standards after certain times
and triggering events. Id. §§ 6295(m), 6313(a)(6). For
example, regarding commercial furnaces, subsection
6295(m)(1) provides that “[n]ot later than 6 years after
issuance of any final rule . . . amending a standard”
DOE will either publish a notice that the standards do
not need to be amended, or publish a notice of proposed
1. ”The term ‘energy efficiency’ means the ratio of the useful
output of services from a consumer product” or an article of industrial
equipment “to the energy use of such product” or article. 42 U.S.C.
§ 6291(5); 2021 Interpretive Rule, 86 Fed. Reg. at 73955.
4a
Appendix A
rulemaking including the new proposed standards. A later
provision of the statute provides that any amended energy
conservation standard for consumer furnaces “shall . . .
achieve the maximum improvement in energy efficiency
. . . [that] is technologically feasible and economically
justified.” Id. § 6295(o)(2)(A). Likewise, for commercial
water heaters, subsection 6313(a)(6) provides that DOE
will amend efficiency standards to be at least consistent
with the standards set by the American Society of
Heating, Refrigerating and Air-Conditioning Engineers
(“ASHRAE”). 2021 Interpretive Rule, 86 Fed. Reg. at
73948. If DOE chooses to apply a more stringent efficiency
standard for commercial water heaters, the standard
needs to result in “significant additional conservation of
energy,” and be “technologically feasible and economically
justified” by clear and convincing evidence. Id. § 6313(a)
(6)(A)(ii)(II).
Congress set out several factors for DOE to consider
when determining whether an amended energy standard is
economically justified. The statutes ask DOE to consider:
(I)
the economic impact of the standard on
the manufacturers and on the consumers
of the products subject to the standard;
(II)
the savings in operating costs throughout
the estimated average life of the product
in the type (or class) compared to any
increase in the price of, or in the initial
charges for, or maintenance expenses
of, the products that are likely to result
from the imposition of the standard;
5a
Appendix A
(III) the total projected quantity of energy
savings likely to result directly from the
imposition of the standard;
(IV)
any lessening of the utility or the
performance of the products likely
to result from the imposition of the
standard;
(V)
the impact of any lessening of competition,
as determined in writing by the Attorney
General, that is likely to result from the
imposition of the standard;
(VI)
the need for national energy conservation;
and
(VII) other factors the Secretary considers
relevant.
Id. § 6313(a)(6)(B)(ii); see also id. § 6295(o)(2)(B)(i) (same)2
Importantly, and as relevant to this case, DOE may
not prescribe an amended standard if any “interested
persons” establish “by a preponderance of the evidence
that [an efficiency] standard is likely to result in the
unavailability in the United States in any product type
(or class) of performance characteristics (including
reliability, features, sizes, capacities, and volumes) that
2. Although the language of these subsections varies slightly,
the parties agree that they are not materially different for the issues
raised in this case. Pet’rs’ Br. 9; Resp’ts’ Br. 4 n.1.
6a
Appendix A
are substantially the same as those generally available in
the United States.” Id. § 6313(a)(6)(B)(iii)(II)(aa); see also
id. § 6295(o)(4) (“[DOE] may not prescribe an amended
. . . standard . . . if [DOE] finds . . . that interested persons
have established by a preponderance of the evidence that
the standard is likely to result in the unavailability in the
[U.S.] in any covered product type (or class) of performance
characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same
as those generally available in the [U.S.] at the time of
[DOE’s] finding.”). 3
B.
Before discussing the procedural history of this case,
a brief overview of the mechanics of condensing versus
non-condensing consumer furnaces and commercial water
heaters is necessary. In a non-condensing consumer
furnace or commercial water heater, a heat exchanger
burns gas which is used to heat the air (for furnaces) or
water (for water heaters). The rest of the heated gas,
which is not used for the appliance, is transferred out of a
building via an unpowered heat exchanger, like a vertical
chimney. The vents for non-condensing appliances are
“designed to avoid excessive condensate production in the
vent.” Consumer Furnaces Rule, 88 Fed. Reg. at 87563
n.111. In a condensing consumer furnace or commercial
water heater, on the other hand, a second powered heat
3. Again, although the phrasing of the subsections are not
identical, the parties concede that the two sections are materially
similar for the issues raised in this case. Pet’rs’ Br. 9-10, 45; Resp’ts’
Br. 4 n.1.
7a
Appendix A
exchanger is used to capture the excess heat not used to
heat air or water. This second heat exchanger turns the
excess heat into condensed water vapor, then transfers the
cooler air out through a fanned horizontal vent and the
liquid condensate out through a drain. This added heat
exchanger makes the condensing appliance more efficient
overall as compared to its non-condensing counterpart.
Additionally, the vents that are used in a condensing
appliance are “corrosion-resistant,” like plastic, id.
at 87562-63 & n.111, and therefore non-condensing
appliances and condensing appliances are unable to share
the same vents. Id. at 87536; see also Commercial Water
Heaters Rule, 88 Fed. Reg. at 69710 (same).
On March 12, 2015, DOE published a notice of proposed
rulemaking (“NOPR”) to amend energy conservation
standards for consumer furnaces. In this March 2015
NOPR, “DOE tentatively concluded that the methods by
which a furnace is vented . . . do not provide any separate
performance-related impacts,” and therefore are not a
“unique utility to consumers beyond the basic function
of providing heat, which all furnaces perform.” 2021
Interpretive Rule, 86 Fed. Reg. at 73949. After publishing
a notice of data availability, DOE supplemented its NOPR
on September 23, 2016 (referred to as a “SNOPR”),
proposing to establish capacity-based product classes, and
“reiterated its tentative conclusion that methods of venting
do not provide any performance-related utility separate
from the basic function of a furnace.” Id. Separately,
DOE published a NOPR to amend energy conservation
standards for commercial water heaters on May 31, 2016,
in which DOE also tentatively concluded that condensing
8a
Appendix A
and non-condensing commercial water heaters “provide
the same hot water” for commercial consumers and
therefore do not require separate equipment classes. Id. In
each of these notices, DOE “proposed amend[ing] energy
conservation standards that would effectively require
[consumer furnaces and commercial water heaters] . . . to
use condensing technology to meet the proposed amended
standards,” and would “effectively eliminate[] all noncondensing [consumer furnaces and commercial water
heaters] . . . currently on the market.” Id.
On October 18, 2018, Petitioners submitted a petition
for rulemaking to DOE. In it they asked DOE to: (1)
issue an interpretive rule stating that the agency’s
proposed energy conservation standards would result
in the unavailability of “performance characteristics” in
consumer furnaces and commercial water heaters, and
(2) withdraw the proposed energy conservation standards
because of that finding. DOE published the petition and
requested public comment.
On July 11, 2019, after considering public comments,
DOE published a notice of a proposed interpretive rule
(“NOPIR”) that non-condensing technology “constitute[s] a
performance-related ‘feature’ . . . that cannot be eliminated
through adoption of an energy conservation standard.”
Id. at 73949-50. This was eventually followed by a final
interpretive rule on January 15, 2021, “determining that,
in the context of residential furnaces . . . [and] commercial
water heaters . . . use of non-condensing technology (and
associated venting) constitutes a performance-related
‘feature.’” Id. at 73950. DOE found that the reasons
9a
Appendix A
non-condensing technology offers unique “feature[s]” is
because it “(1) [a]void[s] complex installations in certain
locations constrained by space, existing venting, and
available drainage; (2) avoid[s] the encroachment on usable
space that would occur in certain installations; and (3)
do[es] not enhance the level of fuel switching that might
accompany standard setting absent a separate product/
equipment class for non-condensing appliance[s].” Id.
Following this final interpretive rule, DOE withdrew its
March 12, 2015, NOPR.
Then, about seven months later, on August 27, 2021,
DOE published another NOPIR where it “re-examined the
conclusions reached in the January 2021” final interpretive
rule. In this August 2021 NOPIR, DOE proposed to “reinstate its historical interpretation of” “performance
characteristics” and “features” to conclude that “noncondensing technology” for consumer furnaces and
commercial water heaters is “not a performance-related
‘feature’ for the purpose of the EPCA.” Id. at 73948, 73950.
On the same day, August 27, 2021, DOE requested
comment on the NOPIR with the comment period
scheduled to close on September 27, 2021. However, after
receiving a request from Petitioners, DOE extended the
comment period to October 12, 2021.
When the comment period closed DOE issued a Final
Interpretive Rule on December 29, 2021. Consistent with
its March 2015 NOPR, September 2016 SNOPR, and
May 2016 NOPR, DOE concluded that non-condensing
technology in consumer furnaces and commercial water
10a
Appendix A
heaters does not offer performance-related “feature[s]”
as compared to condensing consumer furnaces and
commercial water heaters. Id. at 73951. DOE once again
found that there was no unique utility to consumers offered
by non-condensing technology as both non-condensing and
condensing appliance’s function is to provide heated air or
water. DOE concluded “[u]pon further consideration” that
“utility is determined through the benefits and usefulness
the feature provides to the consumer while interacting
with the product.” Id. Therefore, differences in cost or
complexity of installation “do not make any method of
venting a performance-related feature.” Id. Instead, DOE
explained that those considerations were more appropriate
under its economic justification analysis under subsections
6295(o)(2)(B)(i) and 6313(a)(6)(B)(ii).
On October 6, 2023, DOE published a Final Rule
updating the efficiency standards for commercial
water heaters after determining the revised efficiency
standards “represent[ed] the maximum improvement in
energy efficiency that [was] technologically feasible and
economically justified.” Commercial Water Heaters Rule,
88 Fed. Reg. at 69687. The amended efficiency standards
for commercial water heaters were estimated to save
5.6 percent energy usage relative to the case without
amended standards. Id. at 69688. Likewise, on December
18, 2023, DOE amended energy conservation standards
for consumer furnaces that included residential nonweatherized gas furnaces and mobile home gas furnaces.
Consumer Furnaces Rule, 88 Fed. Reg. at 87503. DOE
estimated that the amended standards for consumer
furnaces would save 4.77 quadrillion British thermal
11a
Appendix A
units (“Btu”), which represented a 3.2 percent savings
if compared to a scenario without amended efficiency
standards. Id. at 87504.
Petitioners ask us to vacate DOE’s 2021 Interpretive
Rule, the Commercial Water Heaters Rule, and the
Consumer Furnaces Rule.
II. Analysis
A. Jurisdiction and Standing
We have jurisdiction to review the petitions under
42 U.S.C. sections 6306(b) and 6316. This Court will
“hold unlawful and set aside agency action, findings, and
conclusions found to be . . . arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law”
or “without observance of procedure required by law.”
5 U.S.C. § 706(2)(A), (D). We will not “substitute [our]
judgment for that of the agency,” Motor Vehicle Mfrs.
Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983), nor
will we “supply a reasoned basis for the agency’s action
that the agency itself has not given.” Id. (citing SEC v.
Chenery Corp., 332 U.S. 194, 196, 67 S. Ct. 1575, 91 L. Ed.
1995 (1947)). If the “agency [has] examine[d] the relevant
data and articulate[d] a satisfactory explanation for its
action including a ‘rational connection between the facts
found and the choice made’” we will uphold the decision.
Id. (quoting Burlington Truck Lines, Inc. v. United
States, 371 U.S. 156, 168, 83 S. Ct. 239, 9 L. Ed. 2d 207
(1962)); see also Loper Bright Enters. v. Raimondo, 603
12a
Appendix A
U.S. 369, 395-96, 144 S. Ct. 2244, 219 L. Ed. 2d 832 (2024).
The agency must “clearly disclose[]” “the grounds upon
which . . . [it] acted” by substantial evidence. T-Mobile S.,
LLC v. City of Roswell, 574 U.S. 293, 301, 135 S. Ct. 808,
190 L. Ed. 2d 679 (2015); 42 U.S.C. § 6306(b)(2) (“No rule
under section . . . 6295 of this title may be affirmed unless
supported by substantial evidence.”).
An association has standing on behalf of its members
if at least one member has standing to sue individually.
Sierra Club v. DOE, 107 F.4th 1012, 1014, 467 U.S. App.
D.C. 32 (D.C. Cir. 2024) (citing Hunt v. Wash. State
Apple Advert. Comm’n, 432 U.S. 333, 343, 97 S. Ct.
2434, 53 L. Ed. 2d 383 (1977)). An association also must
show that “the interests it seeks to protect are germane
to the organization’s purpose” and that “neither the
claim asserted nor the relief requested requires the
participation of individual members in the lawsuit.” Hunt,
432 U.S. at 343.
Petitioners American Gas Association (“AGA”),
American Public Gas Association (“APGA”), and National
Propane Gas Association (“NPGA”) are trade associations.
AGA advocates for natural gas companies and customers;
APGA advocates for publicly owned or operated natural
gas systems; and, NPGA represents various entities
in the propane industry. AGA, APGA, and NPGA have
adequately supported their claim of associational standing
in their declarations by alleging that their members
expect to incur economic loss if the Consumer Furnaces
and Commercial Water Heaters Final Rules are not
vacated. They allege that without vacatur their members
13a
Appendix A
will be injured when consumers switch from natural gas to
electric appliances. Pet’rs’ Decl. Addendum at 3-4 ¶¶ 7-9,
6-7 ¶¶ 6-7, 18-19 ¶¶ 6-8, 31-33 ¶¶ 7-9, 36 ¶¶ 6-8; see Am.
Pub. Gas Ass’n. v. DOE, 72 F.4th 1324, 1336, 461 U.S.
App. D.C. 463 (D.C. Cir. 2023) (holding that petitioners
“demonstrated standing through declarations attesting
to their expectations of economic losses caused by the
[f]inal [r]ule that may be remedied by vacatur of the rule”).
Petitioner Thermo Products, LLC (“Thermo”) is
a manufacturer of gas and oil furnaces and claims its
standing to challenge the 2021 Interpretive Rule and the
Consumer Furnaces Rule is “self-evident.” We agree. A
petitioner suffers an injury in fact by an agency when the
agency promulgates a regulation that prohibits a petitioner
from producing or selling a product that they would have
otherwise been able to produce or sell. See Energy Future
Coal. v. EPA, 793 F.3d 141, 144, 417 U.S. App. D.C. 141 (D.C.
Cir. 2015) (holding that petitioners faced an injury in fact
when they “claim that they face a regulatory impediment
. . . that prevents their product from being used as a test
fuel”). Thermo alleges that DOE’s 2021 Interpretive Rule
and Consumer Furnaces Rule will impose standards that
its noncondensing residential furnaces will not be able to
meet or be redesigned to meet. Pet’rs’ Decl. Addendum at
14-15 ¶¶ 5-7. Thermo claims that as a result it will not be
able to sell non-condensing furnaces, which will cause it
to “face interrupted and possibly lost revenue streams,”
“abandon” product designs “in which it has invested large
amounts of capital,” and reverse changes in its operations.
Id. ¶ 7. We also find that Thermo has demonstrated
causation and redressability by alleging that the loss of
14a
Appendix A
sales it may face will be directly caused by the efficiency
standards imposed in the Consumer Furnaces Rule, and
vacating the rule will redress the alleged injury. See
Energy Future Coal., 793 F.3d at 144.4
B. Performance Characteristics and Features
Turning to the merits of the petition: We next
determine whether DOE was correct to conclude that noncondensing appliances offer performance characteristics
or features that are substantially the same as those offered
by condensing appliances. 42 U.S.C. §§ 6295(o)(4), 6313(a)
(6)(B)(iii)(II)(aa). We note that DOE’s interpretation
of EPCA does not bind us, but “it may be especially
informative ‘to the extent it rests on factual premises
within . . . [DOE’s] expertise.’” Loper Bright Enters.,
603 U.S. at 402 (quoting Bureau of Alcohol, Tobacco and
Firearms v. FLRA, 464 U.S. 89, 98, n.8, 104 S. Ct. 439,
78 L. Ed. 2d 195 (1983)). “Such expertise has always been
one of the factors which may give an Executive Branch
interpretation particular ‘power to persuade, if lacking
power to control.’” Id. (quoting Skidmore v. Swift & Co.,
323 U.S. 134, 140, 65 S. Ct. 161, 89 L. Ed. 124 (1944)).
Congress gave DOE “a degree of discretion” to decide
what constitutes a performance characteristic or feature
under EPCA. Id. at 2263. “The burden of producing
4. Because we conclude that AGA, APGA, NPGA, and Thermo
have standing, we need not address Spire Inc., Spire Alabama Inc.,
and Spire Missouri Inc.’s standing. See Ams. for Safe Access v. Drug
Enf’t Admin., 706 F.3d 438, 443, 403 U.S. App. D.C. 388 (D.C. Cir.
2013) (holding that if one petitioner “has individual standing, we need
not address the issue for the other [p]etitioners”).
15a
Appendix A
evidence and proving that a[n efficiency] standard level
will result in the unavailability of certain characteristics,
etc., rests on interested persons asserting the claim of
unavailability.” H.R. Rep. No. 100-11, at 23 (1987); 42
U.S.C. §§ 6295(o)(4), 6313(a)(6)(B)(iii)(II)(aa). Petitioners
must make this showing before DOE by a preponderance
of the evidence.
We begin with the plain text of the statute. See United
States v. Braxtonbrown-Smith, 278 F.3d 1348, 1352,
349 U.S. App. D.C. 399 (D.C. Cir. 2002) (“In construing
a statute, the court begins with the plain language
of the statute.”). All parties, including the dissent,
see Dissenting Op. 8-9, agree that the plain meaning
of “performance characteristics” is broad. The term
“performance” is simply defined as “the execution of an
action,” Performance, Merriam-Webster Inc. (Ninth New
Collegiate 1985), and “characteristic” is defined as “a
distinguishing trait, quality, or property.” Characteristic,
M erriam-Webster Inc. (Ninth New Collegiate 1985).
Additionally, “feature” means “the structure, form, or
appearance” and “a prominent part or characteristic.”
Feature, Merriam-Webster Inc. (Ninth New Collegiate
1985).
The parties agree that the plain text of “performance
characteristic” means a product attribute that provides
utility to consumers desiring to use the product. 5 Pet’rs’
Br. 46; Resp’ts’ Br. 26 (performance characteristics
5. It seems that the dissent would also agree with this definition.
See Dissenting Op. 12 (“Under the best meaning of EPCA, a
‘performance characteristic’ is a distinctive product attribute that
provides utility to the consumer.”).
16a
Appendix A
“provide a consumer unique utility during the operation
of the appliance”) (quoting 2021 Interpretive Rule, 86
Fed. Reg. at 73955); Oral Arg. Tr. at 5:11-20 (When asked
for his definition of “performance characteristic” at oral
argument, Petitioners’ counsel stated that it is “a product
attribute that provides utility to consumers desiring
to use the product.”). In other words, a performance
characteristic “has to be . . . about using the product,”
and “doesn’t include things unrelated to the performance
of the product,” Oral Arg. Tr. at 5:23-25. Instead, a
performance characteristic is related to “the product[‘s]
. . . useful output.” 2021 Interpretive Rule, 86 Fed. Reg.
at 73955.
Moreover, because every appliance offers a unique
function to consumers, the concept of a feature or
performance characteristic is “very case-specific.” 2021
Interpretive Rule, 86 Fed. Reg. at 73948. “No single
definition could effectively capture the potential for
features across the broad array of consumer products
and commercial equipment subject to EPCA’s regulatory
scheme.” Id. Therefore, because the plain text of the statute
does not get us home, we will look beyond it to resolve the
specific ambiguity here as it relates to consumer furnaces
and commercial water heaters. See Braxtonbrown-Smith,
278 F.3d at 1352 (“Where the language is subject to more
than one interpretation and the meaning of Congress is not
apparent from the language itself, the court may be forced
to look to the general purpose of Congress in enacting the
statute and to its legislative history for helpful clues.”)
The parties’ dispute centers around the specific
ambiguity of what product attributes of small furnaces
17a
Appendix A
and water heaters Congress concluded had utility to
consumers such that they warrant protection against
energy conservation standards that could eliminate them
from the market. Specifically, the parties dispute whether
venting mechanisms, installation factors, or space-related
attributes encompass features that Congress meant to
treat as providing utility to consumers.
Beginning with venting mechanisms: Petitioners
contend that non-condensing appliances, which use
unpowered venting like ver tical chimneys, offer
performance characteristics to consumers that condensing
appliances do not. According to Petitioners, condensing
appliances are incompatible with venting systems like
chimneys because condensing appliances require a
fan to generate enough pressure to push or pull gases
outside. Pet’rs’ Br. 12. Petitioners further contend that
condensing appliances require plumbing drains to dispose
of condensate and cannot share vents with non-condensing
appliances. Pet’rs’ Br. 13. Petitioners arg ue that
consumers derive utility from a product by, for example,
not “hav[ing] to renovate their homes,” “to accommodate
the use of [condensing] products for which they were not
architecturally designed.” Oral Arg. Tr. 6:4; J.A. 324.
Congress was well aware of Petitioners’ perspective
regarding venting mechanics for small gas furnaces when
it amended EPCA in 1987. AGA submitted a statement
before the Subcommittee on Energy Conservation and
Power in 1986 expressing concern that energy efficiency
standards in EPCA “would ban the conventional,
atmospherically vented furnace” because it would not
be able to meet the prescribed efficiency percentage.
18a
Appendix A
A Bill to Amend the Energy Policy and Conservation
Act with Respect to Energy Conservation Standards
for Appliances: Hearing on H.R. 5465 Before the H.
Subcomm. on Energy Conservation & Power, 99th Cong.
149 (1986). After hearing Petitioners’ perspective, the
Committee on Energy and Commerce issued the amended
EPCA bill the following year. In it, the Committee
provided that “[e]xamples of ‘performance characteristics’
of particular products [were]: safety; cooling; refrigeration
and heating; dehumidification; ability to clean or dry
without adverse effects; serviceability; and incidence
and cost o[f] repair.” H.R. Rep. No. 100-11, at 23 (1987).
Additionally, “[e]xamples of ‘features’ [were]: automatic
defrost, through the door ice, size of room air conditioners,
and noise levels.” Id. Therefore, despite AGA’s comments,
the Committee did not state that venting mechanics were
examples of performance characteristics or features for
consumer furnaces. However, it did specifically provide
that heat was a performance characteristic. The dissent
does not discuss this part of the legislative history.
We think the Committee on Energy and Commerce’s
examples make good sense. At a certain level, it is
obvious that consumers do not buy small furnaces or
commercial water heaters because of how the appliance
vents. In fact, venting is a quality that both condensing
and non-condensing appliances share. It “is one of the
basic components found in every gas-fired furnace.”
Consumer Furnaces Rule, 88 Fed. Reg. at 87535; see also
Commercial Water Heaters Rule, 88 Fed. Reg. at 69709
(“[V]enting, like a gas burner or heat exchanger, is one
of the basic components found in every gas-fired water
19a
Appendix A
heater (condensing or noncondensing.”). The dissent seems
to overlook this aspect by arguing, without support, that
“some consumers here will be effectively deprived of gaspowered appliances entirely.” Dissenting Op 12 n.1. This
is simply not true since gas-fired condensing options will
still be available to consumers.
Instead, the unique utility a consumer furnace or
commercial water heater provides to the consumer is that
they either provide hot air or hot water, respectively. If
Congress intended particular methods of venting such as
unpowered venting to be a performance characteristic, it
had an opportunity to clearly state as much—but it did not.
See Mississippi ex rel. Hood v. AU Optronics Corp., 571
U.S. 161, 169, 134 S. Ct. 736, 187 L. Ed. 2d 654 (2014) (“Had
Congress intended . . . [Petitioners’ view of the statute], it
easily could have drafted language to that effect.”).
This understanding is also consistent with DOE’s
historical view of whether an appliance provides a
unique utility to consumers.6 Take vented and ventless
6. For example, in the context of dishwashers, “DOE’s
longstanding view [has been] that performance [means] ‘utility
accessible to the layperson and based on user operation.” See
Louisiana v. DOE, 90 F.4th 461, 474 (5th Cir. 2024) (discussing DOE’s
2020 Final Rule establishing a new product class for residential
dishwashers, Energy Conservation Program: Establishment of a
New Product Class for Residential Dishwashers, 85 Fed. Reg. 68723,
68727 (2020)) (internal quotation marks omitted). A practical example
is cycle times in clothes washers and dryers. Cycle times have been
understood as “a valuable consumer utility and performance-related
feature” in the context of clothes washers and clothes dryers because
consumers value the utility of having an option for a shorter cycle
20a
Appendix A
residential clothes dryers as an example. In 2011, DOE
separated ventless and vented residential clothes dryers
into two separate classes because DOE recognized that
having a ventless clothes dryer was a unique utility for
consumers who live in areas where a vented dryer would
not be possible to use (like apartments in certain high-rise
buildings). See Energy Conservation Program: Energy
Conservation Standards for Residential Clothes Dryers
and Room Air Conditioners, 76 Fed. Reg. 22454, 22485
(Apr. 21, 2011). DOE found that “a substantial subset of
consumers . . . would be deprived of the benefits of . . .
having [a] clothes-drying appliance in their residence
entirely unless DOE established a ventless clothes
dryers product class.” 2021 Interpretive Rule, 86 Fed.
Reg. at 73957. Venting was treated as a performance
characteristic in the clothes dryer context because the
alternative venting option (non-vented) impacted whether
a consumer could use or install the particular appliance
at all in a large class of applications.7
time. Energy Conservation Program: Establishment of New Product
Classes for Residential Clothes Washers and Consumer Clothes
Dryers, 85 Fed. Reg. 81359, 81361 (2020).
7. Instead of acknowledging the reason that ventless and
vented clothes dryers were treated as a separate product class, the
dissent cites the same rule and contends that “the Department has
consistently set distinct efficiency standards for products based on
compatibility with venting systems.” Dissenting Op. 11. However,
this contention overlooks the “case-specific” reason that ventless
and vented clothes dryers were separated into two different product
classes—ventless clothes dryers are the only available option for
those who live in certain high-rise buildings. See 2021 Interpretive
Rule, 86 Fed. Reg. at 73948; see also id. at 73957 (“[I]f a ventless
clothes dryer were not available, no clothes dryer would be available
21a
Appendix A
Not so with condensing consumer water heaters or
furnaces. When DOE had to determine whether consumer
water heaters that utilize heat pump technology versus
electric resistance technology should be placed in separate
classes, DOE concluded that they did not. See Energy
Conservation Program: Energy Conservation Standards
for Residential Water Heaters, Direct Heating Equipment,
and Pool Heaters, 75 Fed. Reg. 20112, 20135 (April 16,
2010). DOE concluded that even though an additional
water drain had to be installed if a consumer decides
to use a heat pump, that small installation requirement
did not change the utility of providing heated water to
consumers, and moreover that “heat pump water heaters
could replace traditional electric resistance storage water
heaters in most residences, although the installation
requirements may be quite costly.” Id. So is the case
here. DOE found that “[i]n all cases” “consumers facing
the prospect of replacing a non-condensing residential
furnace or commercial water heater with a condensing
. . . [appliance] do have options available to either modify
existing venting or install a new venting system to
accommodate a condensing . . . [appliance], or to install
a feasible alternative.” 2021 Interpretive Rule, 86 Fed.
Reg. at 73957.
Next, Petitioners contend that “space-related
attributes” are performance characteristics that are
“intertwined” with the function of a consumer furnace
and a commercial water heater. Pet’rs’ Br. 48-50.
for certain locations”). That is, however, not the case for condensing
and non-condensing consumer furnaces and commercial water
heaters as we explain.
22a
Appendix A
Recall that Petitioners’ burden is a heavy one—they
must “establish[] by a preponderance of the evidence
that a[n efficiency] standard is likely to result in the
unavailability in the United States in any product type (or
class) of performance characteristics (including . . . sizes,
capacities, and volumes) that are substantially the same as
those generally available in the United States.” 42 U.S.C.
§ 6313(a)(6)(B)(iii)(II)(aa); see also id. § 6295(o)(4) (same).
Substantial evidence in the record before us shows that
“interested persons” failed to carry that burden.
In regards to commercial water heaters, DOE
explained in the 2021 Interpretive Rule that condensing
technology does not “require[] an increase in the
overall size of a water heater” and that “a condensing
appliance would not result in a loss of useful space for
most consumers.” 2021 Interpretive Rule, 86 Fed. Reg.
at 73955; see also id. at 73957 n.13 (“DOE surveyed the
dimensions of representative commercial water heaters
. . . and found the height and diameter dimensions
comparable.”). Moreover, after conducting a review of
both condensing and non-condensing appliances having
similar input ratings and storage volumes from multiple
manufactures, DOE found that the “overall dimensions
for condensing models were not significantly larger than
for non-condensing models.” Id. at 73955. Specifically,
DOE found that “non-condensing residential furnaces and
commercial water heaters are not significantly different
in overall footprint, size, or heating capacity from their
condensing counterparts.” Id. at 73957.
Petitioners argue that DOE’s analysis of the spacerelated characteristics of consumer furnaces and
23a
Appendix A
commercial water heaters is inconsistent with how it has
analyzed other products like residential condensing and
non-condensing furnace fans, washing machines, and
central air conditioners. Petitioners argue that the reason
Congress separated efficiency standards for residential
furnace fans used in mobile homes into its own product
class, for example, was due to the size constraints that
manufactured homes face. Pet’rs’ Br. 47-55; see Energy
Conservation Program for Consumer Products: Energy
Conservation Standards for Residential Furnace Fans,
78 Fed. Reg. 64068, 64077 (Oct. 25, 2013). Although
Petitioners may be correct that size constraints were
one of the factors DOE considered when promulgating
efficiency standards for furnace fans used in mobile homes
versus those not used in mobile homes, they oversimplify
DOE’s analysis. DOE separated furnace fans based on
characteristics such as whether the furnace fan was
weatherized (meaning that it could be used outdoors), the
type of energy source the furnace fan used, and whether
the furnace fan was condensing or non-condensing. See
Energy Conservation Program for Consumer Products, 78
Fed. Reg. at 64077. DOE explained that it separated these
categories based on “internal structure and applicationspecific design differences that impact furnace fan energy
consumption.” Id. Specifically for condensing furnaces,
DOE explained that the separate fan class structure
“allow[ed] for differentiation of products with designs
that achieve higher thermal efficiency but may have lower
fan performance.” Id. at 64080. Therefore, unlike spacerelated attributes of consumer furnaces and commercial
water heaters, the design of mobile home furnace fans
is directly related to performance requirements of the
particular product.
24a
Appendix A
Petitioners also point to front-loading and top-loading
washing machines to support their contention that size
and installation limits are “performance characteristics.”
Pet’rs’ Br. 48; Energy Conservation Standards for
Residential Clothes Washers, 84 Fed. Reg. 37794 (Aug.
2, 2019). However, unlike condensing and non-condensing
consumer furnaces and commercial water heaters,
washing machine capacity has a direct impact on efficiency
levels and “the location of access” to a washing machine
“provides distinct consumer utility.” Energy Conservation
Standards for Residential Clothes Washers, 84 Fed. Reg.
at 37797. For example, front-loading washers may be
preferable to those with disabilities because the angle
may be easier to access, whereas top-loading washers
may be preferred by the elderly “because it is easier to
reach the laundry without excessive bending” or those
who appreciate the ability to add more clothes while the
cycle has already begun. 2021 Interpretive Rule, 86 Fed.
Reg. at 73953. In contrast, “a consumer’s interaction with
a furnace or water heater . . . [is] a simple one.” Id. “After
the consumer adjusts the thermostat or faucet, the user
receives the requested heated air or water.” Id.
Likewise, Petitioners’ argument regarding Congress’s
decision to separate “space-constrained central air
conditioners” from other central air conditioners misses
the point. DOE explained that it separated these two
product classes because “space-constrained central
air conditioners provide centralized air conditioning in
locations with space constraints that would preclude
the use of other types of central air conditioners.” Id. at
73957. “Space-constrained central air conditioners have
25a
Appendix A
an indoor or outdoor unit that is limited in size due to the
location in which the unit operates.” Id. This explanation
does not mean that space-related attributes always will
dictate whether a product should be separated into its
own product class, however. 8 As DOE explained, when it
came to analyzing non-condensing consumer furnaces and
commercial water heaters, it found that they were “not
significantly different in overall footprint, size, or heating
capacity from their condensing counterparts.” Id.
Lastly, as to installation factors: DOE recognized
that “installation of condensing products/equipment
[sometimes] requires modifications to the installed space
. . . and that such modifications may impact the installation
cost and/or complexity.” Id. at 73962. Because DOE
found that consumers are able to replace non-condensing
8. Take, for example, packaged terminal air conditioners
(“PTACs”) and terminal heat pumps (“PTHPs”). In 2008, DOE
separated standard size, 16 inches high by 42 inches wide, PTACs
and PTHPs in a separate efficiency class from non-standardized
PTACs and PTHPs. Energy Conservation Program for Commercial
and Industrial Equipment: Packaged Terminal Air Conditioner and
Packaged Terminal Heat Pump Energy Conservation Standards,
73 Fed. Reg. 58772 (2008). DOE explained that the industry
standardized the wall sleeve dimensions for PTACs and PTHPs built
after the mid-1980s. Id. at 58782. However, in buildings constructed
before the mid-1980s, like “high-rise buildings found in large cities”
non-standard size equipment that varies in size is typically used.
Id. DOE created two different product classes for standard size
PTACs and PTHPs versus their non-standard size counterparts
because “altering the existing wall sleeve opening to accommodate
the more efficient, standard size equipment could include extensive
structural changes to the building, which could be very costly, and
is, therefore rarely done.” Id.
26a
Appendix A
appliances with condensing appliances in “all cases,” we
agree that installation factors are more appropriately
addressed in the economic-justification analysis because
installation factors will not prevent the replacement of
non-condensing appliances, but may financially deter
consumers from doing so. See id. at 73957. The language
of subsections 6295(o)(4) and 6313(a)(6)(B)(iii)(II) bolster
this reasoning because neither includes a reference of
“installation factors” or “installation costs” as a factor
that Congress was concerned about as it relates to the
unavailability provisions in EPCA. However, subsections
6295(o)(2)(B)(i)9 and 6313(a)(6)(B)(ii)10 more appropriately
capture a consideration of the installation costs and factors
under the “economic impact” and the “initial charges for”
the products on consumers.
9. Subsections 6295(o)(2)(B)(i)(I) and (II) provide that:
[i]n determining whether a standard is economically
justified, the Secretary shall . . . determine whether the
benefits of the standard exceed its burdens by, to the
greatest extent practicable, considering—
(I) the economic impact of the standard on the
manufacturers and on the consumers of the products
subject to such standard; [and]
(II) the savings in operating costs throughout the
estimated average life of the covered product in the
type (or class) compared to any increase in the price of,
or in the initial charges for, or maintenance expenses
of, the covered products which are likely to result from
the imposition of the standard.
10. Subsections 6313(a)(6)(B)(ii)(I) & (II) are materially the
same as subsections 6295(o)(2)(B)(i)(I) and (II).
27a
Appendix A
In sum, the record fails to support Petitioners’ claim
that condensing consumer furnaces and commercial
water heaters are not “substantially the same” as their
non-condensing counterparts. We have no reason to
second-guess DOE’s view, “especially since it ‘rests on
the agency’s evaluations of scientific data within its area
of expertise.’” Actavis Elizabeth LLC v. FDA, 625 F.3d
760, 766, 393 U.S. App. D.C. 188 (D.C. Cir. 2010) (quoting
Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1320, 332 U.S.
App. D.C. 407 (D.C. Cir. 1998)). We find that, although not
identical, condensing consumer furnaces and commercial
water heaters offer substantially the same performance
characteristics and features as non-condensing options.
42 U.S.C. §§ 6295(o)(4), 6313(a)(6)(B)(iii)(II)(aa); see
H.R. REP. NO. 100-11, at 23 (1987) (explaining that
“substantially the same” does not mean “identical”). We
are satisfied that DOE has “fulfilled its duty to ‘examine
the relevant data and articulate a satisfactory explanation
for its’” conclusion that Petitioners failed to show, by
a preponderance of the evidence, that non-condensing
consumer furnaces and commercial water heaters offer
performance characteristics that are unlike those offered
by their condensing counterparts. Ark Initiative v.
Tidwell, 816 F.3d 119, 127, 421 U.S. App. D.C. 414 (D.C.
Cir. 2016) (quoting State Farm, 463 U.S. at 43).
C. Economic Justification
We next determine whether DOE acted arbitrarily
in concluding that the amended standards for consumer
furnaces and commercial water heaters were economically
justified. DOE must show that its amended efficiency
28a
Appendix A
standards in the Consumer Furnaces Rule are supported
by substantial evidence—a burden common to actions
we review under the Administrative Procedure Act. 42
U.S.C. § 6306(b)(2); see Biestek v. Berryhill, 587 U.S. 97,
102, 139 S. Ct. 1148, 203 L. Ed. 2d 504 (2019) (“The phrase
‘substantial evidence’ is a ‘term of art’ used throughout
administrative law to describe how courts are to review
agency factfinding.” (quoting T-Mobile S., LLC, 574 U.S.
at 301)). However, the energy efficiency standards in the
Commercial Water Heaters Rule must be economically
justified “by clear and convincing evidence.” 42 U.S.C.
§ 6313(a)(6)(A)(ii)(II). “[C]lear and convincing evidence
requires . . . the Secretary . . . to have an ‘abiding
conviction’ that her findings . . . are ‘highly probable’ to
be true. APGA v. DOE, 22 F.4th 1018, 1025, 455 U.S. App.
D.C. 268 (D.C. Cir. 2022) (“APGA I”) (quoting Colorado
v. New Mexico, 467 U.S. 310, 316, 104 S. Ct. 2433, 81 L.
Ed. 2d 247 (1984)). Our review, even under the clear and
convincing standard, is to determine whether it was
reasonable for the agency to conclude that it met this
standard. Id. at 1025-26 (citing Sea Island Broad. Corp.
of S.C. v. FCC, 627 F.2d 240, 244, 200 U.S. App. D.C. 187
(D.C. Cir. 1980)).
1. Random Assignment/Monte Carlo Analysis
Petitioners take issue with the widely used random
assignment test (also known as Monte Carlo analysis)
that DOE utilized as part of the economic analysis for
the amended efficiency standards for both the Consumer
Furnace Final Rule and the Commercial Water Heater
Final Rule. Petitioners argue that DOE relied on an
29a
Appendix A
assumption that consumers make appliance purchases
randomly without weighing economic benefits, and that
DOE failed to give a reasoned explanation for doing so.
The random assignment test or Monte Carlo analysis
is used across industries ranging from physical sciences
to high finance. Lyondell Chem. Co. v. Occidental Chem.
Corp., 608 F.3d 284, 293 (5th Cir. 2010). It was first used
a little under a century ago by physicists conducting
nuclear weapons research. Id.; see also AT&T Svs., Inc. v.
FCC, 21 F.4th 841, 847, 455 U.S. App. D.C. 181 (D.C. Cir.
2021) (noting that Monte Carlo analysis was “[d]eveloped
by scientists working on the Manhattan Project”). This
methodology is “particularly useful when reaching an
exact numerical result is impossible or infeasible and
the data provide[s] a known range—a minimum and a
maximum, for example—but leave[s] the exact answer
uncertain.” Lyondell Chem. Co., 608 F.3d at 293. A random
assignment test or Monte Carlo analysis “runs hundreds
of simulations, and produces a range of possible outcomes.”
AT&T Svs., Inc., 21 F.4th at 847. This type of analysis “can
provide a ‘more complete view of potential outcomes and
their associated likelihoods.’” Id. (quoting Fed. Judicial
Ctr . & Nat ’l Rsch. Council , Reference M anual on
Sci. Evidence 469 (3d ed. 2011)). The Environmental
Protection Agency has explained that Monte Carlo
analysis can be a “viable statistical tool[] for analyzing
variability and uncertainty in risk assessments.” Lyondell
Chem. Co., 608 F.3d at 293 (quotation omitted) (citing
EPA, Guiding Principles for Monte Carlo A nalysis,
EPA/630/R-97/001, at 1 (1997)).
30a
Appendix A
The random assignment test is not new to either
AGA or DOE. This Court recently considered the issue
of whether DOE arbitrarily conducted its life-cycle cost
(“LCC”) analysis when it randomly assigned commercial
packaged boilers to buildings without weighing the kind
of building the boiler was being assigned to. APGA
I, 22 F.4th at 1027. When DOE conducted its no-newstandards case analysis, it assumed that “the distribution
of efficiencies among shipped boilers [was] the same as the
distribution of efficiencies across the models listed in the
[Air-Conditioning, Heating, and Refrigeration Institute
(“AHRI”)] data base.” Id. APGA and other petitioners
contended that DOE “failed to recognize that a purchaser
of commercial packaged boilers would rationally consider
the costs and benefits of its investment and is likely to buy
the boiler that produces the best economic performance
for its building.” Id.
Instead of explaining its analysis, DOE “rather
dismissively” explained that it did not have the data that
would be necessary to run an alternative analysis to the
one it conducted. Id. Additionally, DOE listed possible
market failures that its LCC analysis addressed, but did
not provide evidence to show that the market failures
it listed affected the market for commercial packaged
boilers. Id. We remanded the case back to DOE, without
vacatur, and ordered DOE to provide a “more complete
response” since the “assignment of efficiencies to the
buildings in the sample was a crucial part of the analysis
supporting the DOE’s conclusion that a more stringent
[energy efficiency] standard was warranted.” Id. We held
that DOE’s response that it “essentially . . . did the best
31a
Appendix A
it could with the data it had” was “not enough to justify
[an] assum[ption that] a purchaser’s decisions w[ould]
not align with its economic interests in purchasing a
boiler.” Id. Therefore, we could not conclude that DOE’s
amended efficiency standards were supported by clear
and convincing evidence under subsection 6313(a)(6)(A)
(ii)(II). Id. at 1028.
This Court did not discredit, nor decide, that the
random assignment test should not have been used in
DOE’s LCC analysis in APGA I. Instead, we merely
ordered DOE to go back and provide more reasoned
explanations for its analysis and respond to the petitioners’
concerns. The case before us is unlike what we considered
in APGA I. DOE’s LCC here was “the sum of the purchase
price of a piece of equipment (including its installation and
sales tax) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over
the lifetime of the equipment.” Commercial Water Heaters
Rule, 88 Fed. Reg. at 69704; Consumer Furnaces Rule,
88 Fed Reg. at 87528 (same). To calculate the LLC, DOE
needed a “variety of inputs, such as product prices,
product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates
appropriate for consumers.” Commercial Water Heaters
Rule, 88 Fed. Reg. at 69704; Consumer Furnaces Rule,
88 Fed Reg. at 87528 (same).
DOE used real-world historical data for its inputs
which included the highest quality summary statistics
submitted by interested persons as well as data submitted
by individual households. Consumer Furnaces Rule, 88
32a
Appendix A
Fed. Reg. at 87555. The data used correlated inputs to
“individual building characteristics” such as “heating
load, building shell indices, installation costs, and nonew-standards case efficiency probability.” Id.; see also
Commercial Water Heaters Rule, 88 Fed. Reg. at 69731
(explaining that in relation to commercial water heaters
DOE’s analysis captured the average hot water loads on
equipment, but did not necessarily capture extremes).
“DOE develop[ed] probabilities for as many inputs to
the LCC analysis as possible, to reflect the distribution
of impacts as comprehensively as possible.” Consumer
Furnaces Rule, 88 Fed. Reg. at 87555; see also Commercial
Water Heaters Rule, 88 Fed. Reg. at 69731 (same). It also
developed sensitivity scenarios “to specifically address
the potential uncertainty in some key input parameters.”
Consumer Furnaces Rule, 88 Fed. Reg. at 87555. Contrary
to Petitioners’ argument, DOE included “an increasing
penetration of condensing furnaces” into its analysis based
on the trend that consumers are progressively purchasing
condensing furnaces and water heaters even without new
standards. Consumer Furnaces Rule, 88 Fed. Reg. at
87556; Pet’rs’ Br. 75-77. DOE then responded to comments
from interested persons and provided “additional
sensitivity scenarios to demonstrate that its conclusions of
economic justification [were] robust.” Consumer Furnaces
Rule, 88 Fed. Reg. at 87555.11
11. Despite the inputs DOE used and the analysis it performed,
the dissent believes that we somehow found solace in DOE’s analysis
because it was “longer,” see Dissenting Op. 20, but no where do we
conclude that DOE’s reasoning was sound based on the length—
instead we base our holding on the reasoned explanation DOE
provided and its calculus based on the entirety of the data in the
record before it.
33a
Appendix A
Petitioners’ argument—that DOE did not provide
a reasoned explanation for assuming that consumers
sometimes do not act in their best economic interest—is
not supported by the record before us. The dissent seems
to take this even farther by contending that DOE “assumed
consumers never consider costs when choosing between
gas-fired appliances.” Dissenting Op. 15 (emphasis in
original). But this is once again simply not true. See e.g.,
Consumer Furnaces Rule, 88 Fed. at 87584 (“DOE [did]
not mak[e] an assumption that consumers never consider
the economics of their purchasing decision.”).
Although DOE’s burden for the Commercial Water
Heaters Final Rule was a high one—clear and convincing
evidence—there is substantial evidence in the record to
show that they met the mark. In order “[t]o accurately
estimate the share of consumers that would be affected by
a potential energy conservation standard,” DOE analyzed
the LCC of commercial water heaters “under the no-new
standards case (i.e., the case without amended or new
energy conservation standards).” Commercial Water
Heaters Rule, 88 Fed. Reg. at 69757 . “DOE developed
the no-new-standards distribution of equipment using
data from DOE’s Compliance Certification database and
data submitted by AHRI regarding condensing versus
non-condensing equipment.” Id. DOE then assigned a
commercial water heater to each building it had in its
sample based “on the forecasted efficiency distribution
(which is constrained by the shipment and model data
collected by DOE and submitted by AHRI) and accounts
for consumers that [we]re already purchasing efficient”
commercial water heaters. Id.
34a
Appendix A
Specifically, regarding Petitioners’ concern that DOE
used data which suggests that consumers do not act in their
best economic interest—DOE explained that disregarding
that data “would not be representative of the [commercial
water heater] market. Commercial Water Heaters Rule,
88 Fed. Reg. at 69760. DOE “took into account all of the
available data concerning the market implementation of
condensing natural gas-fired [commercial water heater]
equipment.” Id. at 69757. From this data, DOE projected
commercial water heater shipments by efficiency level
over the analysis period. Id. “[B]ased on the presence
of well-understood market failures and a corresponding
lack of data showing a correlation between [commercial
water heater] efficiency and building hot water load,” DOE
concluded that “a random assignment of efficiencies best
accounts for consumer behavior in the” commercial water
heater market. Id. at 69758. DOE explained that it “is
aware of multiple market failures that prevent [] purely
economic decision making[,]” and random assignment
“reflect[s] the full range of consumer behaviors, including
those consumers who make purely economic decisions.”
Id. Therefore, the dissent’s argument that the random
assignment test never accounts for costs is simply not
supported by the record and misunderstands the inputs
to the analysis.
Even for large economic purchases, like the purchase
of a commercial water heater, DOE “acknowledge[d] that
economic factors play a role” but that an analysis “based
solely on economic measures . . . most likely would not fully
and accurately reflect actual real-world installations.” Id.
DOE reasoned that consumers make decisions based on
35a
Appendix A
factors like the timing of the purchase, competing demands
for the funds, loss aversion, sensitivity to information
salience, and other forms of bounded rationality. Id.
(citing Richard H. Thaler & Shlomo Bernartzi, Save More
Tomorrow: Using Behavioral Economics to Increase
Employee Saving, 112 J. of Pol. Econ. S164, S164-S187
(2004) (Nobel laureate Richard H. Thaler’s work on
behavioral economics)). These factors are amplified when
the decisions involved are complex and infrequent—like
purchasing water heaters for commercial buildings. Id.
at 69758-60.12
We also find that DOE’s explanation regarding why
consumers may not always act in their best economic
interest when purchasing consumer furnaces was also
reasonably explained and supported by substantial evidence
in the record. First, DOE explained that Petitioners’
contention is a “significant[] mischaracteriz[ation]” of
DOE’s analysis. Consumer Furnaces Rule, 88 Fed. Reg.
at 87580. DOE similarly analyzed the LCC of consumer
furnaces under the “no-new-standards case.” Id.. at 8757480. DOE “estimate[d] not only the expected market share
of products at varying efficiencies, but also estimate[d]
how such products will be used.” Id. at 87574. DOE used
a base case that “reflect[ed] three analytical steps: (1) an
estimate of the buildings likely to use furnaces, (2) an
estimate of the efficiency of the furnaces that would be
12. Despite these explanations, the dissent somehow contends
that DOE did not provide evidence that market failures affect the
market, see Dissenting Op. 20, while at the same time providing no
evidence that consumers make economically sound decisions 100%
of the time.
36a
Appendix A
sold absent the rule; and (3) the matching of particular
furnace efficiencies with particular building types.” Id.
Each building in the sample was then assigned a furnace
at a state level and a building specific level. Id. at 87576.
DOE once again concluded that “[r]andom assignment of
efficiencies reflects the full range of consumer behaviors in
th[e] market, including consumers who make economically
beneficial decisions and consumers that, due to market
failures, do not.” Id. at 87574. The random assignment
method “simulate[d] behavior in the furnace market,
where market failures result in purchasing decisions
not being perfectly aligned with economic interests,
and it d[id] so more realistically than relying only on
apparent cost-effectiveness[.]” Id. at 87576. In other
words, the random assignment method accounts for the
fact that consumers do sometimes base decisions on costeffectiveness. DOE considered available data to determine
whether any modifications needed to be made. Id. at
87574-75. This data included historical information about
shipments of condensing and non-condensing furnaces in
various regions around the country, and accounted for the
fact that consumers are already purchasing furnaces at
higher efficiency levels. Id. at 87575.
Petitioners contend that DOE “assum[ed] rationality
is not the typical behavior” for consumers, Pet’rs’ Br.
74 (emphasis omitted), but the record shows that DOE
once again acknowledged that economic factors “play a
role” when consumers purchase furnaces, but that an
economic analysis “based solely” on life-cycle costs or
payback periods “would not fully and accurately reflect
actual real-world installations.” Consumer Furnaces
37a
Appendix A
Rule, 88 Fed. Reg. at 87576. Instead, DOE took market
failures into account because it could not “assume that
all purchasers of furnaces make economically rational or
irrational decisions one-hundred percent of the time.” Id.
For example, DOE responded that Petitioners’ approach
“depends on the assumption . . . that homeowners [always]
know . . . the efficiency of their homes’ insulation and
windows, such that they always make heating investments
accordingly.” Id. at 87580. DOE explained that that
assumption would not be realistic and is “unsupported
by the available evidence.” Id. at 87576. Therefore, the
random assignment “methodology is not an assertion of
economic irrationality, but instead, it is a methodological
approximation of complex consumer behavior.” Id. at
87580.
Petitioners also contend that DOE assumed that “new
homebuilders routinely act against their own economic
interest” and that consumers do not purchase furnaces
depending on the type of climate they are in. Pet’rs’ Br.
78, 82-83. Both contentions are contradicted by the record
before us. DOE’s analysis did “incorporate and reflect
regional market share data.” Consumer Furnaces Rule,
88 Fed. Reg. at 87581. DOE explained that “[f]or States
with a large majority of consumers already purchasing
more-efficient furnaces[,] . . . the analysis assign[ed] a
correspondingly large majority of households with an
efficient furnace at or above the adopted efficiency level in
the no-new-standards case.” Id. For example, states with
colder weather have a higher market share of condensing
furnaces because they are more efficient, and therefore
less costly to run. Further, DOE’s analysis also included
38a
Appendix A
“a greater probability that new construction is assigned
higher-efficiency furnaces in the no-new-standards
case, given the typically lower installation costs in new
construction.” Id.
The dissent responds with two contentions: (1) DOE
provided no explanation on why its model reflected
that, in some cases, consumers would choose to install
a condensing furnace in a building where it would have
been cheaper to install a non-condensing furnace; and (2)
DOE “provide[d] no rebuttal to petitioners’ expert” who
argued that the random assignment model “assigned a
more expensive option to new buildings . . . and to existing
homeowners” most of the time. Dissenting Op. 18-19. But,
DOE did address the dissent’s concerns and adjusted
its model based on new construction vs. replacement
installations. Consumer Furnaces Rule, 88 Fed. Reg.
at 87582. As noted supra, DOE explained its model
reflected real-world data which included “the State-level
shipments market share data.” Id. at 87584. “For example,
in States with a low current market share of condensing
furnaces, the [model was] constrained to assign mostly
non-condensing furnaces in the no-new-standards case,
reflecting the current market[.]” Id. Therefore, instead
of making assumptions devoid of data, DOE used the
entirety of the data at its disposal to conduct its analysis.
Further, to respond to commenters who argued that
DOE’s analysis produced an illogical outcome, DOE
reiterated that the analysis “simply reflect[ed] the reality
of the current market.” Id. And even so, DOE explained
that this outcome was “limited to only a few percent [of
cases predominately] in new construction.” Id. Further,
39a
Appendix A
“[e]ven if DOE were to exclude these . . . outcomes as
extreme outlier results, the LCC analysis would [still]
demonstrate economic justification[.]” Id.
Another reason the present case is unlike the random
assignment analysis conducted by DOE in APGA I is that
DOE considered all the scientific literature relevant to its
LCC analysis, and all data submitted in the course of the
rulemaking for both the Consumer Furnaces Final Rule
and the Commercial Water Heaters Final Rule. Id. at
87580; Commercial Water Heaters Rule, 88 Fed. Reg at
69758-59. DOE cited the available literature it was aware
of, and repeatedly requested more data from interested
persons. Consumer Furnaces Rule, 88 Fed. Reg. at 8758081. Despite Petitioners’ disagreement, they provided DOE
with no alternative “specific external data, information, or
studies that could be incorporated into [DOE’s] analysis.”
Id. at 87581; see also Consumer Water Heaters Rule, 88
Fed. Reg. at 69699. Further, regarding installation costs,
DOE responded to comments by interested persons by
“enhanc[ing]” its estimates “a number of times” to address
the comments. Consumer Furnaces Rule, 88 Fed. Reg.
at 87555.
Overall, we find that DOE’s economic justification
analysis and conclusions were robust. The economic
justification analysis independently and sufficiently
supported DOE’s conclusion that the amended efficiency
standards were economically justified, and we need not
address the impacts of fuel switching in DOE’s analysis.
This is so for two main reasons: (1) “[t]he amended
standards plainly do not compel fuel switching” since the
40a
Appendix A
Final Rules do “not ban gas” appliances; and (2) DOE
concluded that even if the impacts of fuel switching were
not included in its economic justification analysis, the
amended standards would still be economically justified.
Id. at 87590, 87595; Commercial Water Heaters Rule, 88
Fed. Reg. at 69771-72.
D. Consumer Furnaces Rule Comment Period
Lastly, Petitioners contend that DOE did not provide
a meaningful opportunity for stakeholders to comment on
the Consumer Furnaces Rule, and therefore the Rule is
procedurally flawed.
On July 7, 2022, DOE published a NOPR and request
for comment on the proposed energy conservation
standards for consumer furnaces. Energy Conservation
Program: Energy Conservation Standards for Consumer
Furnaces, 87 Fed. Reg. 40590 (July 7, 2022). DOE asked
that any “comments, data, and information regarding
th[e] NOPR” be submitted “no later than September 6,
2022.” Id. at 40590. In its analysis of the impact that the
amended or new efficiency standards would have, DOE
used “Monte Carlo simulations to incorporate uncertainty
and variability into the analysis” by “randomly sampl[ing]
input values from probability distributions” and gas
furnace “user samples.” Id. at 40627. To implement this,
DOE used an add-on tool in Microsoft Excel called Crystal
Ball TM, which is a “commercially-available software tool”
that can “facilitate the creation of” randomized models
“by generating probability distributions and summarizing
results within Excel.” Id. n.86. Each time that Excel is
41a
Appendix A
opened with the Crystal Ball TM add-on, it produces a
slight variation in the data generated. So, when DOE
published its LCC spreadsheet accompanying the NOPR,
it “inadvertently” used a version of the LCC spreadsheet
that showed a slight variation of what was included in the
published NOPR and an accompanying Technical Support
Document (“TSD”), although the results shown in the
spreadsheet were similar to those included in the NOPR
and TSD. Energy Conservation Standards for Consumer
Furnaces, 87 Fed. Reg. 52861, 52862 (Aug. 30, 2022).
After interested parties, including Petitioners, alerted
DOE that the spreadsheet varied from the table results
included in the NOPR and TSD, DOE issued a Notification
of Data Availability (“NODA”) in which DOE published a
revised version of the LCC spreadsheet that was static
and supported the NOPR. DOE also extended the NOPR
comment period an extra thirty-days to October 6,
2022, and announced that it would hold—at Petitioners’
request—a public meeting webinar workshop where it
would “provide instruction on the operation of the LCC
spreadsheet.” Id. In total, DOE provided interested parties
ninety-days to comment on the Consumer Furnaces Rule.
Nonetheless, Petitioners contend that the ninety-days
was a “break-neck” comment period. Pet’rs’ Br. 104. We
cannot agree. 42 U.S.C. subsection 6295(p)(2) provides
that DOE shall “afford interested persons an opportunity,
during a period of not less than 60 days, to present oral and
written comments . . . on matters relating to” proposed new
or amended energy conservation standards. Petitioners
acknowledge this sixty-day statutory requirement, but
42a
Appendix A
contend that DOE “promise[d] that stakeholders w[ould]
have at least 75 days to comment on proposed rulemaking”
as was provided in DOE regulations at the time.13 Pet’rs’
Br. 102; see 10 C.F.R. pt. 430, subpt. C, app. A(6)(b)(2)
(2022). But as Petitioners acknowledge in their briefing,
the seventy-five-day allotment provided in the appendix
to the regulation did “not intend[] to, and [did] not, create
any right or benefit, substantive or procedural” that DOE
was required to adhere to. 10 C.F.R. pt. 430, subpt. C,
app. A(3)(c) (2022). It was only required to provide at least
sixty days for interested parties to comment—which it
did. Moreover, the regulation expressly authorized DOE
to “deviate” from the 75-day period for comments if DOE
found it “necessary or appropriate” and provided “notice
of the deviation and an explanation.” Id. pt. 430, subpt.
C, app. A(3)(a) (2022). DOE explained in the NOPR that
it was “necessary and appropriate” to only provide the
statutory minimum for comments in this NOPR because
DOE was facing “an overdue statutory deadline” and the
“analytical methods used . . . [in the] NOPR [were] similar
to those used in previous rulemaking notices.” Energy
Conservation Standards for Consumer Furnaces, 87 Fed.
Reg. at 40607.
Moreover, because the static spreadsheet DOE
provided the public on August 30, 2022, did not amount to
“critical factual material,” it was not necessary to extend the
comment period past the thirty-days it already provided.
See Chamber of Com. v. SEC, 443 F.3d 890, 900, 370 U.S.
13. 10 C.F.R. pt. 430, subpt. C, app. A(6)(b)(2) (2024) was
amended, effective June 24, 2024, and presently provides that “[t]here
will be not less than 60 days for public comment on the NOPR.”
43a
Appendix A
App. D.C. 249 (D.C. Cir. 2006) (“[F]urther notice and
comment are not required when additional fact gathering
merely supplements information in the rulemaking
record by checking or confirming prior assessments
without changing methodology, [or] by confirming or
corroborating data in the rulemaking record.” (citations
omitted)). This is because, as DOE explained, its Monte
Carlo analysis utilized random number generation, where
the sequence of random numbers was expected to change,
but “[t]he relative comparison of the various proposed
energy conservation standard levels in the published
LCC spreadsheet remain[ed] similar to the comparison
presented in the NOPR.” Energy Conservation Standards
for Consumer Furnaces, 87 Fed. Reg. at 52862. Therefore,
DOE’s “conclusions of the analysis, the policy decision, and
associated rationale [we]re not impacted by [the] sampling
variability” in the two different LCC spreadsheets. Id.
III.
Because each of Petitioners’ arguments fail for the
reasons explained, the petitions are denied.
So ordered.
44a
Appendix A
Rao, Circuit Judge, dissenting: This case concerns
Department of Energy regulations that effectively
ban a class of common and affordable gas-powered
appliances. Millions of homes and commercial buildings
are equipped with traditional, “non-condensing” gas
furnaces and water heaters. These reliable appliances
vent their exhaust up a standard chimney. A more efficient
“condensing” technology exists, but it is incompatible
with traditional chimneys. Instead, it requires a different
venting mechanism. In its quest for greater efficiency,
the Department has issued new efficiency standards that
effectively ban the sale of non-condensing appliances. As
a result, any consumer seeking to replace a traditional
gas furnace or commercial water heater will be forced to
install a condensing model, a switch that often requires
disruptive and expensive renovations to a building’s
venting and plumbing systems.
These standards run afoul of the careful balance
Congress struck in the Energy Policy and Conservation
Act (“EPCA”) between improving energy efficiency and
preserving consumer choice. While EPCA empowers the
Department to set efficiency standards, the statute also
imposes a critical limit on that authority. The agency is
prohibited from imposing an efficiency standard that
will result in the “unavailability” of a product with a
“performance characteristic” that consumers value.
No one doubts that the challenged regulations make
non-condensing appliances unavailable. The central
question in this case is whether a non-condensing
appliance’s venting mechanism is a protected “performance
characteristic.” Because these appliances utilize a chimney
45a
Appendix A
common to many older homes and buildings, installing a
condensing appliance will often require complex and
costly renovations that may reduce a building’s useable
space. The ability to vent through a traditional chimney is
exactly the kind of real-world feature Congress protected
from elimination in the marketplace. The Department’s
efficiency standards, which make non-condensing
appliances unavailable, are therefore contrary to law.
Independent of this legal error, the Department failed
to demonstrate that the regulations are “economically
justified,” as mandated by EPCA, by showing their
“benefits ... exceed [their] burdens.” 42 U.S.C. § 6295(o)
(2)(B)(i); see also id. § 6313(a)(6)(B)(ii). The Department
utilized an economic model that we have previously held to
be irrational and inconsistent with EPCA’s requirements.
The flawed model fares no better here. Because the
regulations are contrary to law and predicated on an
arbitrary economic analysis, I respectfully dissent.
I.
A.
Congress enacted EPCA in 1975 to increase energy
production and supply while reducing energy demand. Pub.
L. 94-163, 89 Stat. 871, 874 (1975). EPCA authorizes the
Department to promulgate energy efficiency standards for
consumer appliances such as refrigerators, dishwashers,
air conditioners, water heaters, and furnaces, as well as
commercial industrial equipment, like walk-in freezers
and commercial water heaters. 42 U.S.C. §§ 6292(a),
6311(1).
46a
Appendix A
Congress did not, however, write the Department
a blank check to pursue efficiency at all costs. Instead,
the statute repeatedly tempers the agency’s authority
by requiring it to balance efficiency gains with the
preservation of consumer choice and product utility. While
EPCA instructs the Department to set standards that
“achieve the maximum improvement in energy efficiency,”
those standards must be both “technologically feasible
and economically justified.” Id. § 6295(o)(2)(A) (consumer
appliances); see also id. § 6313(a)(6)(A)(ii)(II) (commercial
equipment). As part of this analysis, the agency “shall”
consider whether an efficiency standard would “lessen[]
... the utility or the performance of the” covered products.
Id. §§ 6295(o)(2)(B)(i)(IV), 6313(a)(6)(B)(ii)(IV).
At issue here, EPCA also contains an “unavailability”
provision that prohibits the Department from prescribing
a standard that “is likely to result in the unavailability in
the United States in any covered product type (or class)
of performance characteristics (including reliability),
features, sizes, capacities, and volumes.” Id. § 6295(o)(4); see
also id. § 6313(a)(6)(B)(iii)(II)(aa). This limitation balances
the regulatory promotion of greater energy efficiency
with the preservation of products that have features that
provide utility to consumers. See H.R. Rep. No. 100-11,
at 22-23 (1987) (explaining the unavailability provision
“ensures that energy savings are not achieved through
the loss of significant consumer features” and prevents a
standard from making a product with a particular feature
“prohibitively expensive”).
For consumer products, the unavailability provision
is paired with the requirement that the Secretary “shall
47a
Appendix A
specify” separate efficiency standards if a type of the
covered product either “consume[s] a different kind of
energy” or possesses a “performance-related feature”
that other products in the group lack. 42 U.S.C. § 6295
(q)(1). In determining whether a feature justifies a
separate standard, the Secretary must consider “utility
to the consumer” and any other factors he “deems
appropriate.” Id.
B.
The challenged efficiency standards apply to two
classes of products: gas-fired consumer furnaces and
gas-fired commercial water heaters. These appliances can
be further divided into two classes: non-condensing and
condensing. Both types of appliances produce hot exhaust
gases that require exterior venting; however, they employ
different venting methods.
Non-condensing appliances are the traditional design
and are currently used in millions of homes and commercial
buildings. These units use unpowered venting systems
that keep exhaust gases hot enough to rise naturally
through a vertical chimney. Because some usable heat is
lost in the exhaust, non-condensing appliances typically
achieve an efficiency of around 80 percent. Furthermore,
if a building lacks a suitable vertical chimney, installing
a non-condensing appliance requires constructing one,
which adds to initial costs.
Condensing appliances use a different ventilation
method that captures some of the lost heat and can
achieve efficiency levels of over 90 percent. The exhaust
48a
Appendix A
from condensing appliances cannot be vented through
a traditional chimney without significant modification.
Instead, condensing appliances use a powered ventilation
method and exhaust through vents that are generally
installed horizontally. While a new horizontal vent is
typically cheaper to install than a new vertical chimney,
it can be difficult to retrofit into some existing homes and
buildings.
The Department’s approach to these appliances has
flip-flopped across administrations. In 2016, the agency
proposed rules that would set minimum efficiency
standards for certain consumer furnaces and commercial
water heaters to levels above 90 percent. See Energy
Conservation Program: Energy Conservation Standards
for Residential Furnaces, 81 Fed. Reg. 65720, 65722
(Sept. 23, 2016); Energy Conservation Program: Energy
Conservation Standards for Commercial Water Heating
Equipment, 81 Fed. Reg. 34440, 34443 (May 31, 2016).
Because only condensing appliances can meet these
efficiency levels, the proposed rules would have effectively
banned the sale of new non-condensing models.
In January 2021, the Department switched course
in an interpretive rule, which determined that, for
consumer furnaces and commercial water heaters, noncondensing technology provides a unique “performance
characteristic” and eliminating it from the market would
violate EPCA’s “unavailability” provision. See Energy
Conservation Program for Appliance Standards: Energy
Conservation Standards for Residential Furnaces and
Commercial Water Heaters, 86 Fed. Reg. 4776, 4816
49a
Appendix A
(Jan. 15, 2021). The agency explained that non-condensing
technology allows consumers to: (1) avoid complex or
costly installations where space, venting, or drainage
is constrained; (2) prevent the loss of usable space that
installing a condensing unit might require; and (3)
maintain a meaningful choice of fuel type by preserving
an affordable gas-powered option, as the alternative would
cause significant “fuel switching” from gas to electric
appliances. See id. Following this interpretation, the
agency withdrew the 2016 proposed standards.
Later that year, the Department again reversed
course. In a new interpretive rule, the agency concluded
that non-condensing technology is not a “performance
characteristic” because it “does not provide unique utility
to consumers separate from an appliance’s function of
providing heated air or water.” See Energy Conservation
Program for Appliance Standards: Energy Conservation
Standards for Residential Furnaces and Commercial
Water Heaters, 86 Fed. Reg. 73947, 73951 (Dec. 29, 2021)
(“December 2021 Interpretive Rule”). The Department
explained that consumer utility arises from interacting
with a product’s primary function, “not through design
parameters impacting installation complexity[] or costs.”
Id. Because consumers do not directly interact with
vents, the agency reasoned that differences in venting
methods or installation costs are not a unique performance
characteristic of non-condensing appliances. Id. at 73953.
Relying on this interpretation, the Department set
minimum efficiency standards for gas-fired consumer
furnaces and commercial water heaters at 95 percent, a
50a
Appendix A
level that non-condensing appliances cannot achieve. See
Energy Conservation Program: Energy Conservation
Standards for Consumer Furnaces, 88 Fed. Reg. 87502,
87503 (Dec. 18, 2023) (“Consumer Furnace Rule”); Energy
Conservation Program: Energy Conservation Standards
for Commercial Water Heating Equipment, 88 Fed. Reg.
69686, 69687 (Oct. 6, 2023) (“Commercial Water Heater
Rule”).
A coalition of gas industry associations, manufacturers,
and utilities petitions for review of these regulations. We
have jurisdiction under 42 U.S.C. §§ 6306(b) and 6316,
which provide for judicial review under the Administrative
Procedure Act.
II.
Petitioners first argue the efficiency standards are
contrary to law because they violate EPCA’s unavailability
provision. EPCA prohibits the Department from setting
standards that make unavailable products with distinct
“performance characteristics”—that is, with attributes
that provide utility to the consumer. Non-condensing
appliances plainly provide such utility: a venting method
that is compatible with the conventional chimneys found
in millions of older homes and buildings. For these
consumers, replacing a non-condensing appliance with
a condensing one may require cumbersome and costly
retrofits. These modifications often include punching new
holes through exterior walls for plastic vents, sacrificing
closets or other living space to run new piping, giving up
windows or balconies that are too close to a new vent’s
51a
Appendix A
exhaust, and re-lining or abandoning a perfectly functional
chimney.
Because non-condensing appliances can integrate
directly into an existing exhaust system, they have a
protected “performance characteristic” under the plain
meaning of EPCA. And because it is undisputed that the
efficiency standards make these appliances unavailable,
the standards are contrary to law.
A.
Under EPCA, the Department of Energy
may not prescribe an amended or new standard
under this section if ... interested persons
have established by a preponderance of
the evidence that the standard is likely to
result in the unavailability in the United
States in any covered product type (or class)
of performance characteristics (including
reliability), features, sizes, capacities, and
volumes that are substantially the same as
those generally available in the United States
at the time of the Secretary’s finding.
42 U.S.C. § 6295(o)(4); see also id. § 6313(a)(6)(B)(iii)
(II)(aa).
No one questions that the challenged efficiency
standa rds w i ll make non- condensing appliances
unavailable. The question in this case is therefore a
52a
Appendix A
legal one: Is a non-condensing appliance’s compatibility
with existing, standard chimney vents a protected
“performance characteristic” under EPCA?
The parties agree that a “performance characteristic”
is one that provides utility to the consumer, but
they disagree about what type of utility counts. The
Department claims a “performance characteristic” only
includes features a consumer interacts with during the
product’s operation and excludes “design parameters
impacting installation complexity[] or costs.” December
2021 Interpretive Rule, 86 Fed. Reg. at 73951. Petitioners
counter that the term encompasses other utility conferring
features, and that “noncondensing technology provides
obvious utility—functioning in the purchaser’s existing
building and vents.”
To determine whether non-condensing appliances
have a “performance characteristic,” this court must
identify the “best meaning” of the statute and “exercise
[its] independent judgment in deciding whether [the
Department] has acted within its statutory authority.”
Loper Bright Enters. v. Raimondo, 603 U.S. 369, 144 S.
Ct. 2244, 2266, 2273, 219 L. Ed. 2d 832 (2024). The term
“performance characteristic” is not defined in EPCA,
so we must give it its “ordinary, contemporary, common
meaning.” Sandifer v. U.S. Steel Corp., 571 U.S. 220, 227,
134 S. Ct. 870, 187 L. Ed. 2d 729 (2014) (cleaned up). The
ordinary meaning of a term is informed by the context
of the “overall statutory scheme.” Sturgeon v. Frost, 577
U.S. 424, 438, 136 S. Ct. 1061, 194 L. Ed. 2d 108 (2016)
(cleaned up).
53a
Appendix A
The text and structure of EPCA demonstrate that
petitioners’ broader understanding of “performance
characteristic”—any product attribute that provides
“utility” to the consumer—is correct. EPCA is a highly
detailed statute in which Congress created a framework
for balancing energy efficiency with consumer utility. The
statute repeatedly uses “utility” and “performance” in
tandem, treating them as related concepts that capture
a product’s overall value and usefulness to the consumer.
For example, when determining if a new efficiency
standard is “economically justified,” the agency must
consider the “lessening of the utility or the performance
of the covered products likely to result from the imposition
of the standard.” 42 U.S.C. §§ 6295(o)(2)(B)(i)(IV), 6313(a)
(6)(B)(ii)(IV). Likewise, the unavailability provision, which
ensures products with valued characteristics remain on
the market, is paired for consumer appliances with a
requirement that the Secretary “shall specify” a separate
efficiency standard for any product with a “performancerelated feature” that provides “utility to the consumer.”
Id. § 6295(q)(1).
The plain meaning of these terms is exceptionally
broad. “Utility” simply means “usefulness” or “fitness
for some desirable purpose.” See Utility, Oxford English
Dictionary (2nd ed. 1989). A “performance characteristic,”
in turn, is a “distinctive” or “essential quality,” see
Characteristic, Oxford English Dictionary (2nd ed. 1989),
that relates to the “execution ... of any action or work,” see
Performance, Oxford English Dictionary (2nd ed. 1989).
By repeating these terms in several provisions preserving
54a
Appendix A
consumer choice, Congress enacted comprehensive
protections for consumer utility.
EPCA protects the availability of products that
provide utility broadly understood, an interpretation that
is confirmed by the list of terms Congress included with
“performance characteristics”: “reliability, features, sizes,
capacities, and volumes.” 42 U.S.C. § 6313(a)(6)(B)(iii)
(II)(aa); see also id. § 6295(o)(4). “Under the ... interpretive
canon noscitur a sociis, a word is known by the company
it keeps.” McDonnell v. United States, 579 U.S. 550, 569,
136 S. Ct. 2355, 195 L. Ed. 2d 639 (2016) (cleaned up). The
fact that “several items in a list share an attribute counsels
in favor of interpreting the other items as possessing that
attribute as well.” Beecham v. United States, 511 U.S.
368, 371, 114 S. Ct. 1669, 128 L. Ed. 2d 383 (1994). Here,
the list is expansive and practical. It includes intangible
qualities like “reliability” and “features,” as well as
concrete attributes like “sizes, capacities, and volumes.”
These terms reflect multiple ways in which a product may
provide real world utility and reinforce that the term
“performance characteristic” has an expansive meaning
that protects consumer choice.
The Depar tment’s cramped interpretation of
“performance characteristic” cannot be reconciled with
the text and structure of EPCA. The agency asserts that
a “performance characteristic” is limited to features
that provide utility during operation, “not through
design parameters impacting installation complexity[]
or costs.” See December 2021 Interpretive Rule, 86
Fed. Reg. at 73951. Nothing in EPCA suggests such a
55a
Appendix A
limitation. To the contrary, Congress explicitly protected
the availability of “sizes, capacities, and volumes,”
terms that plainly encompass an appliance’s physical
dimensions and compatibility with a building’s existing
infrastructure. And “reliability” similarly refers to a
performance characteristic that goes beyond operation
to consider a product’s long-term effectiveness. There is
no reason to think that consumers derive utility only from
operational features like “through the door ice” and not
from the ability to install a product in their home without
cumbersome (and costly) renovations that change the use
of their interior space. Cf. Majority Op. 19.
EPCA’s broad protection for the availability of
consumer products demonstrates that a “performance
character istic” may include a product’s physical
dimensions, its functional output, and how it integrates
into a home or building.
The Department’s regulations also cannot be squared
with its long-standing practice. The agency has frequently
invoked its authority to create separate efficiency
standards to preserve a “performance-related feature”
based on installation-related features. For example,
the Department established a separate standard for air
conditioners that fit into smaller wall openings to ensure
consumers would not “be forced to invest in costly building
modifications.” See Energy Conservation Program
for Commercial and Industrial Equipment: Packaged
Terminal Air Conditioner and Packaged Terminal Heat
Pump Energy Conservation Standards, 73 Fed. Reg.
58772, 58782 (Oct. 7, 2008).
56a
Appendix A
In addition, the Department has consistently
set distinct efficiency standards for products based
on compatibility with venting systems, installation
location, and availability of power sources. See, e.g.,
Energy Conservation Program: Energy Conservation
Standards for Residential Clothes Dryers and Room
Air Conditioners, 76 Fed. Reg. 22454, 22485 n.28 (Apr.
21, 2011) (specifying separate standards for ventless
clothes dryers because they offer utility to consumers
in homes that cannot accommodate an external vent);
10 C.F.R. § 430.32(c), (e) (specifying separate standards
for air conditioners, heat pumps, and furnaces based on
installation constraints). In these prior rules, the agency
correctly recognized that features related to installation
provide significant utility and set separate standards to
preserve them. The Department’s refusal to do so here for
non-condensing furnaces—which likewise provide utility
related to installation—is an unexplained and arbitrary
departure from the agency’s long-standing practice.1
Under the best meaning of EPCA, a “performance
characteristic” is a distinctive product attribute that
provides utility to the consumer. Non-condensing
appliances plainly provide such utility through their
1. The majority’s attempt to distinguish these previous
regulations is unpersuasive. It claims ventless dryers are different
because some consumers would be deprived of a dryer entirely, yet it
ignores that the Department projects some consumers here will be
effectively deprived of gas-powered appliances entirely. See Majority
Op. 19-22. It claims size-based distinctions are permitted, yet it
ignores that “sizes” naturally includes the dimensional constraints
associated with venting, which make non-condensing appliances the
only viable option for many consumers who prefer to have a gaspowered appliance. See Majority Op. 22-27.
57a
Appendix A
unique venting method, which allows for direct integration
into many existing exhaust systems without cumbersome
and costly retrofits. This integration capability is a
“performance characteristic” of non-condensing appliances
that EPCA protects from regulatory elimination.
B.
Relying on the Department’s “scientific data,” the
majority concludes that petitioners have failed to meet
their burden of proving that non-condensing appliances
have a protected “performance characteristic.” Majority
Op. 27-28. But this is not the burden EPCA imposes. The
evidentiary burden applies only to the factual question
of whether a standard will cause a protected product
to become unavailable, not to the legal question of what
qualifies as a protected “performance characteristic.” See
42 U.S.C. §§ 6295(o)(4), 6313(a)(6)(B)(iii)(II)(aa). The facts
of unavailability are not in dispute here. The Department’s
new standards demand efficiency levels of 95 percent,
which will eliminate non-condensing appliances from the
market. 2
The central disagreement turns on the legal question
of what counts as a “performance characteristic” under
EPCA. The majority largely ducks this question by
2. See Technical Support Document, Consumer Furnace Rule
8D-3-4 (“Almost all of the non-condensing [gas furnaces] have an
annual fuel utilization efficiency (AFUE) of 80 percent. ... Condensing
[gas furnaces] have an AFUE of 90 percent or greater.”); id. 8I-1
n.b (“The market share of furnaces with AFUE between 80 and 90
percent is well below 1 percent due to the very high installed cost of
81-percent AFUE furnaces, compared with condensing designs.”).
58a
Appendix A
declaring that EPCA is ambiguous as to the meaning of
“performance characteristic” and “utility.” Majority Op.
16-18. The majority takes this ambiguity as a license to
defer to the Department. But this Loper Bright avoidance
is inconsistent with the Supreme Court’s directive that a
court must “use every tool at [its] disposal to determine
the best reading of the statute and resolve the ambiguity.”
144 S. Ct. at 2266.
The majority also relies on the Department’s
conclusion that non-condensing appliances lack a distinct
“performance characteristic” because “venting is a quality
that both condensing and non-condensing appliances
share.” Majority Op. 19-20; see also Consumer Furnaces
Rule, 88 Fed. Reg. at 87535; Commercial Water Heaters
Rule, 88 Fed. Reg. at 69709-10. This framing misses the
point. The issue is not the generic existence of venting,
but whether the specific type of venting provides utility to
consumers. And on this question, the Department does not
contest that non-condensing and condensing appliances
use different types of venting, such that replacements
may require awkward retrofits and costly renovations.
The Department attempts to minimize the loss of
consumer utility, claiming only “5 percent or fewer of
condensing gas appliance installations were challenging.”
December 2021 Interpretive Rule, 86 Fed. Reg. at 73960.
But this only supports the conclusion that non-condensing
appliances in fact have a performance characteristic
that provides utility to consumers. For such ubiquitous
appliances, 5 percent of installations may easily impact
millions of consumers. In any event, nothing in EPCA
59a
Appendix A
suggests that the unavailability provision applies only
when a large percentage of consumers are harmed.
The majority also relies on the Department’s
reassurance that consumers have other options available.
Majority Op. 22. But the Department’s elaboration of
these so-called options reveals the true nature of the
rules: consumers can either undertake undesirable and
costly building modifications or they can switch to an
electric appliance. See December 2021 Interpretive Rule,
86 Fed. Reg. at 73957. EPCA’s unavailability provision
protects consumer choice for products with performance
characteristics—it would be rendered a dead letter if the
mere existence of other options (no matter how different)
allowed the Department to set standards that made
products unavailable.
The distinctive venting mechanism of non-condensing
appliances is precisely the kind of “performance
characteristic” that condensing appliances lack and that
EPCA protects from regulatory elimination.
***
In sum, the Department’s interpretation of EPCA
contradicts the statute’s text, context, and the agency’s
regulatory practice. The ability of non-condensing
appliances to integrate into a building’s existing
ventilation without disruptive renovations is a protected
“performance characteristic.” Because the Consumer
Furnace Rule and Commercial Water Heater Rule make
appliances with this characteristic unavailable, the
Department’s standards are contrary to law.
60a
Appendix A
III.
Petitioners separately maintain that the Department
has failed to demonstrate these efficiency standards are
“economically justified.” I agree. The agency relied on
an irrational economic model that assumed consumers
never consider costs when choosing between gas-fired
appliances, but always consider costs when deciding
whether to switch from a gas-fired appliance to an electric
one. With no support for these contradictory assumptions,
the Department’s Monte Carlo model is arbitrary and
capricious and cannot justify imposing these efficiency
standards on consumers.
A.
EPCA requires the Department to demonstrate that
a new efficiency standard is “economically justified,” by
“substantial evidence” for consumer appliances and “clear
and convincing evidence” for commercial equipment. 42
U.S.C. §§ 6306(b)(2), 6313(a)(6)(A)(ii)(II). A standard
is economically justified only if its “benefits ... exceed
its burdens.” Id. § 6295(o)(2)(B)(i); see also id. § 6313(a)
(6)(B)(ii). As we have previously held on very similar
facts, when the Department’s economic model rests on a
false or unexplained premise about consumer behavior,
the justification falls short of EPCA’s evidentiary
requirements. Am. Pub. Gas Ass’n v. Dep’t of Energy
(“APGA I”), 22 F.4th 1018, 1022-28, 455 U.S. App. D.C.
268 (D.C. Cir. 2022).
To determine whether an efficiency standard results
in net benefits, t
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