Two major decisions in recent weeks are giving building electrification advocates good reason to be optimistic about the future of buildings that don’t burn gas. In the first—Association of Contracting Plumbers v. City of New York (“Plumbers”)—the Second Circuit upheld New York State and New York City’s laws restricting the use of fossil-fuel-burning appliances in new buildings. In the second—Rinnai America Corporation v. South Coast Air Quality Management District (“Rinnai”)—the Ninth Circuit upheld the district’s zero-nitrogen oxides rule.
The two cases raise similar issues and are great news for building electrification’s proponents. They also have major ramifications for cities’ climate action. But neither of these cases will be the last word on municipalities’ authority to electrify buildings. This post gives a rundown of where these cases came from, provides an overview of what they say, and offers some reflections on what comes next.
The Winding Road Out of Berkeley
Two pieces of background are necessary to understand the decisions in Plumbers and Rinnai. First, both involve a fairly small set of terms in the Energy Policy and Conservation Act (“EPCA”). EPCA preempts “State [or local] regulation concerning . . . energy use . . . [of a] covered product.” Critically, EPCA defines “energy use” as “the quantity of energy directly consumed by a consumer product at point of use, determined in accordance with test procedures under . . . this title.”
Second, both of the cases are in close conversation with the Ninth Circuit’s decision in California Restaurant Association v. City of Berkeley (“CRA”). In CRA the court held that Berkeley’s ordinance banning natural gas piping in new buildings was preempted by EPCA. Citing a dictionary, the court concluded that “as a matter of ordinary meaning, ‘point of use’ means the ‘place where something is used.’” As a result, the court held that a local law impeding “the end-user’s ability to use installed covered products at their intended final destinations” is one that concerns energy use and is therefore preempted by EPCA. Moreover, the court added, “by using the term ‘concerning,’ Congress meant to expand preemption beyond direct or facial regulations of covered appliances.”
The Ninth Circuit declined to rehear CRA en banc, but Circuit Judge Friedland authored a now-famous dissent on behalf of herself and seven more judges. She argued that the panel acted against Congress’s intent in passing EPCA by reading technically defined terms in the statute according to their ordinary meaning. She pointed out that the meaning of “energy use” in EPCA is “determined in accordance with test procedures” under the statute. When read in light of that caveat and the broader context of how energy use factors into EPCA’s functional provisions, it becomes unavoidably clear that Congress gave “energy use” a specialized meaning not tied to how a consumer uses a covered appliance.
Association of Contracting Plumbers v. City of New York
In Plumbers, the Second Circuit considered whether EPCA preempts New York State’s All-Electric Buildings Act and New York City’s Local Law 154 of 2021, both of which it analyzes as essentially identical laws “prohibit[ing] fossil-fuel-powered appliances” in new buildings. The Sabin Center filed an amicus brief in Plumbers on behalf of the National League of Cities and the New York Conference of Mayors.
The plaintiffs in this case relied heavily on the Ninth Circuit’s decision in CRA. They contended that New York City’s rule is one “concerning” appliances’ “energy use”—just like Berkeley’s—and thus preempted by EPCA. The court disagreed. Closely tracking Judge Friedland’s dissenting reasoning in CRA, the court in Plumbers reasoned that by tying “energy use” to specific testing procedures described in EPCA, Congress gave that term a specific, technical definition. The court thus determined that reading the term in a looser, colloquial way would be unfaithful to what the legislature enacted.
In the context of EPCA, “energy use” refers to a “standardized, fixed measure assigned to a product before it reaches consumers.” As a result, “once an appliance has been sold, nothing a consumer does with the appliance changes that appliance’s ‘energy use.’” So, regulations like the All-Electric Buildings Act and Local Law 154 that only address what a consumer does with an appliance cannot be ones that set preempted standards for “energy use” as the term is used in EPCA. With that, both laws survive.
That would have been enough to decide the case. But Second Circuit Judge Pérez, writing for the panel, went significantly further. On top of the textualist bedrock grounding the court’s ultimate decision, she elaborately buttressed the court’s conclusion with a range of additional bases. Among other reasons, she wrote that if “energy use” did reach into consumers’ hands, other provisions of the Act would make no sense. Further, even though “concerning” is a broad term, it can’t be so broad that it encompasses a law like New York City’s for which enforcers “could very well remain blind to an appliance’s ‘energy use.’” Further still, Congress had multiple opportunities to amend EPCA’s preemption provision in ways that would change this analysis and did not do so. Finally, and certainly not least among all the reasons Judge Pérez offers, she adds that absurd outcomes that would flow from finding this law preempted.
All this extra analysis is exciting for fans of canons of statutory interpretation and to electrification advocates looking to take a victory lap, but it is much more important than drafting and gloating. The court explicitly rejects the Ninth Circuit’s contrary holding in CRA, as they “reluctantly believe it necessary to create ‘a split among the Circuits’”—teeing this up for Supreme Court review.
Rinnai America Corporation v. South Coast Air Quality Management District
In Rinnai, the Ninth Circuit considered whether EPCA preempts the South Coast Air Quality Management District’s Rule 1146.2, which prohibits manufacturing, selling, and installing large water heaters, small boilers, and process heaters that emit more than zero nitrogen oxides. The plaintiffs relied, in the court’s telling, “exclusively on our decision in” CRA to argue that the district’s rule is just like Berkeley’s and thus preempted by EPCA. The Ninth Circuit disagreed.
The Rinnai court’s primary basis for upholding Rule 1146.2 was totally distinct from the reasoning in CRA or in Plumbers: the rule was promulgated under—and in fact necessary to comply with—the district’s authority and responsibilities under the Clean Air Act (“CAA”). After closely surveying the history of both acts, the court concluded that nothing there suggests that Congress meant for EPCA to limit the district’s CAA responsibilities or authority. Leaning on the presumption against implied repeals, the court declined to find Rule 1146.2 preempted by EPCA.
There was one more wrinkle the court had to address: even though the history of the two laws gave no reason to think EPCA impliedly repealed authority granted by the CAA, the latter does provide that the actual measures undertaken to comply with its mandates must not be ones that are prohibited by federal or state law. The plaintiffs argued this as another reason an EPCA-preempted rule cannot be a way of complying with CAA responsibilities. Again, the court disagreed. It clarified that, “[CRA] had no occasion to consider whether EPCA would preempt a state’s exercise of its regulatory authority under another federal statute.” The court went on to provide some examples of statutory sources of authority likely not preempted by EPCA, including terminating existing gas utility service, declining to extend that service, and imposing taxes that might reduce consumption of gas.
The text of EPCA was less important here than in Plumbers, but the Rinnai opinion complemented that decision by confirming that CRA should be read narrowly. Further, it invited local governments (albeit in dicta) to explore the options they have under other sources of authority under federal law.
What Might Come Next
One outcome of these cases ought to be—and will be, I think—that municipalities and other sub-state governments are emboldened to take steps to get buildings off gas-burning equipment. Plumbers and Rinnai both reiterated the importance of local action on air pollution by their specific holdings and by articulating more generally how holding otherwise would have upset the balance of authority between the federal, state, and local governments. They built on the momentum that was already forming among District Courts, which have uniformly been upholding building electrification measures under the reasoning offered by Judge Friedland’s dissent in CRA. Any lingering sense that CRA portended the end of local building electrification policy should now be put to rest. It is clearer than ever that CRA is an outlier—even within the Ninth Circuit.
Still, we are more likely than before to see a Supreme Court decision weighing in on these issues. District courts in the Second, Fourth, and D.C. Circuits had already split with the Ninth Circuit on EPCA’s reach, but Plumbers unequivocally confirmed a split at the appellate level that is ripe for Supreme Court review. We will know more when the deadline to seek certiorari has passed, but there is a possibility that Plumbers will be overturned. Still, justices looking to go that way will have their work cut out for them.
The Second Circuit has gone to extraordinary lengths to armor its opinion. Not only does the decision rest squarely on axiomatic principles of statutory interpretation, it also clearly explains where the Ninth Circuit went wrong and painstakingly lays out a half dozen more textualist arguments that would all need to be ignored or refuted to overturn the outcome. Further, on the two most important components of the statutory analysis supporting the court’s all-important conclusion that “energy use” must have a technical meaning, Judge Pérez’s opinion draws exclusively on prior decisions written by Supreme Court justices that might have worried building electrification advocates. For example, for the proposition that a statute’s own, technical definition of a term governs over that term’s ordinary meaning, Judge Pérez relied on opinions authored by Justices Barrett and Thomas. On the canon that words should be interpreted in light of the context in which they are used, Judge Pérez quoted Chief Justice Roberts and Justice Souter. Obviously selecting those citations does not come close to guaranteeing a particular outcome at the Supreme Court. But it is one example of many highlighting the extraordinary care that went into this opinion. That care in drafting and reasoning, on the whole, should encourage cities interested in relying on this opinion to replicate New York City’s approach with Local Law 154 that they are on a strong legal footing to do so.
Finally, regardless of the outcome of any appeals in Plumbers, cities will still have additional options independent of the reach of these cases. As my colleagues have previously pointed out, there are other pathways to getting new construction off gas appliances. Among other things, EPCA contains an exception to its preemptive reach for state and local building codes, provided they meet specific conditions. Rinnai nicely lays out the pathway based on nitrogen oxides that dozens of air quality districts have already used to reach zero-emissions outcomes, and Rinnai further highlights gas-service and tax-related options that might reduce gas consumption without implicating EPCA at all.
In sum: municipalities have a long and productive track record of finding effective, creative solutions that answer the challenges climate change brings while improving the lives of their citizens and visitors. These litigation developments showcase that their approaches work.