Congress, Legal Bids Jockey to Undo Biden Heater Efficiency Rule

Republicans and gas groups are flexing their muscles in both the courts and Congress as part of their crusade against a Biden-era rule that increases efficiency requirements for natural gas water heaters.

The standard was finalized in December and requires gas tankless water heaters to consume 13% less energy. Now its days are numbered as the House and Senate consider Congressional Review Act resolutions and over a dozen attorneys general take arms against the rule in Georgia v. U.S. Department of Energy.

Lawmakers have never successfully used the Congressional Review Act to strike down a standard created under the Energy Policy and Conservation Act, said Joanna Mauer, the deputy director of the Appliance Standards Awareness Project. But the courts can act as reliable insurance in case a CRA resolution cannot get enough support from both houses of Congress, energy law professors and former Energy Department attorneys say.

Even though 60% of models already meet the standard and several major water heater manufacturers are in support, the groups behind congressional and legal challenges claim the rule violates consumer freedom by forcing non-condensing gas tankless water heaters off the market.

Emily Hammond, a former deputy general counsel at DOE under the Biden administration and a current law professor at George Washington University, said the Justice Department could decide to not defend the rule and request a temporary stay as it makes “adjustments to its litigation strategy” to bring in “its new preferred interpretation of EPCA.” The Eleventh Circuit lawsuit could also help Trump’s DOE get around EPCA’s anti-backsliding provision if its lawyers decide to argue that the Biden administration’s methods to get the rule out were unlawful, Hammond added.

Congress Versus Court

But creating efficiency standard changes through the courts is a much lengthier and narrow approach in comparison to approving a Congressional Review Act resolution. The court process requires time to get through proceedings and then, if the court sides with petitioners, establish a new DOE standard that would fit the Trump administration’s EPCA interpretation.

In exchange for being a faster route, a CRA resolution is riskier because it’s under a 60-session-day time crunch to get enacted, said Susan Dudley, the director of the George Washington University’s Regulatory Studies Center. That process would require approval from both houses of Congress and a signature from President Trump before the period ends.

If Congress and the executive branch does decide to prioritize eliminating Biden’s gas-fired water heater rule, it could bring the application of future EPCA standards into question, said Sharon Jacobs, an administrative and energy law professor of University of California Berkeley.

“Not only does it repeal the rule, but it prevents it from being enacted in what’s called substantially the same form in the future,” Jacobs said. “No one’s really tested what that means, and it’s unclear what that would mean in the context of an efficiency standard in particular.”

Alexandra Klass, an energy law professor at the University of Michigan and former deputy general counsel under Biden’s DOE, said disputes over energy efficiency standards have become more politicized as Republicans join Trump in targeting certain standards and manufacturers continue to challenge standards that hurt its corporate interests. This trend has become prevalent during recent administration switches, Jacobs said, as the CRA had only been used to overturn an ergonomics program rule in 2001 until Trump came into office in 2016.

National Association of Home Builders Chairman Carl Harris issued a Jan. 22 statement in support of the resolutions Sen. Ted Cruz (R-Texas) and Rep. Gary Palmer (R-Ala.) introduced this month. The NAHB is also a party in the Eleventh Circuit case.

Potential Impact

“This rule’s impact on the water heater market could set a dangerous precedent for further restrictions on natural gas appliances, ultimately making it harder for home owners to maintain affordable living standards,” Harris said.

Mauer said the rule would affect less than 10% of gas water heater sold. More than 100 gas tankless water heater models meet the new standards, and manufacturers will have five years to update any less efficient models, according to the Appliance Standards Awareness Project.

“Undoing these standards would cost consumers and would only benefit one manufacturer that doesn’t want to update a factory and some gas utilities that don’t want water heaters to be more efficient,” Mauer said.

Rinnai America Corp. is the sole water heater manufacturer involved in the Eleventh Circuit case. The Japanese gas appliance company is headquartered in Georgia and says it’s at risk of having to shut down a $70 million plant in the state intended to help expand its gas tankless water heater production.

“The Department of Energy’s unlawful and ill-considered ban on noncondensing tankless technology interrupts an organic free-market shift towards decarbonization, denies consumer choice, and threatens hundreds of quality U.S. manufacturing jobs,” Rinnai President Frank Windsor said in a statement Jan. 17. “Our employees and the American families we serve are extremely gratified by the outpouring of material support from state attorneys general and federal lawmakers.”