Twelve AGs Ask Court to Throw Cold Water on Trump Administration Loophole for Inefficient Water Heaters, Furnaces

Washington, D.C. — A coalition of 12 state attorneys general led by New York Attorney General Letitia James today filed a petition for review in the U.S. Court of Appeals for the Second Circuit seeking to close a Trump-era loophole in the Energy Department’s appliance efficiency program that allows inefficient gas-fired residential furnaces and commercial water heaters to remain on the market.

During the final week of the Trump administration, the Energy Department issued a pair of rules finding that an inefficient technology — non-condensing combustion technology — is a performance-related “feature” of residential furnaces and commercial water heaters. That finding allows the department to avoid adopting energy efficiency standards under the Energy Policy and Conservation Act (EPCA) which would have eliminated the inefficient technology. The decision perpetuates the use of inefficient product designs, delaying the transition to widely available, efficient condensing technology that captures additional heat from flue gases and reroutes it back to the appliance.

“This is a textbook example of technological innovation creating a win-win opportunity to significantly cut carbon emissions while reducing consumers’ electric bills — an opportunity that cannot be fully capitalized on if the Energy Department’s misclassification is allowed to stand,” said Bethany Davis Noll, Executive Director of the State Energy & Environmental Impact Center.“State attorneys general, together with consumer and environmental advocates, have a solid case that the department’s logic here does not comport with the Energy Policy and Conservation Act. The court should throw cold water on this rule.”

An estimated 50 percent of homes in the United States use natural gas for heat, accounting for nearly half of the average home’s energy costs. The Energy Department proposed efficiency standards in 2015 for residential furnaces and 2016 for commercial water heaters. But in July 2019, in response to a gas industry petition, the department issued a proposed interpretative rule finding that the inefficient technology was a “feature” and thus could not be phased out through an efficiency standard. State attorneys general filed comments in September 2019 opposing the proposal. In their comments, the attorneys general emphasized that the “features” analysis was not consistent with the EPCA because it set different product classes for condensing and non-condensing furnaces and water heaters.

In September 2020, the Energy Department proposed a supplemental interpretative rule that drew a broader distinction than the 2019 proposal and was based on compatibility with existing venting systems. State attorneys general argued in comments filed in November 2020 that this interpretation of “feature” is also inconsistent with the EPCA.

The attorneys general of California, Illinois, Maine, Massachusetts, Minnesota, Nevada, New Mexico, Oregon, Vermont, Washington and Washington, D.C., along with the City of New York, joined AG James in filing today’s petition.

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About the State Energy & Environmental Impact Center:
The State Energy & Environmental Impact Center at NYU School of Law is a nonpartisan academic center at NYU School of Law. The Center is dedicated to working towards a healthy and safe environment, guided by inclusive and equitable principles. The Center studies and supports the work of state attorneys general (AGs) in defending, enforcing, and promoting strong laws and policies in the areas of climate, environmental justice, environmental protection, and clean energy.