What happened
The Ninth Circuit on Thursday upheld South Coast Air Quality Management District’s amended Rule 1146.2, rejecting a challenge by gas-appliance manufacturers and industry groups that said the local zero-NOx appliance rule is preempted by federal energy-efficiency law.
The published, divided panel affirmed summary judgment for the air district, holding that the Energy Policy and Conservation Act does not displace a rule adopted to help the South Coast Air Basin comply with federal ozone standards under the Clean Air Act. The rule phases in prohibitions on manufacturing, selling or installing gas-fired water heaters, boilers and process heaters that emit more than zero nitrogen oxides.
The decision is significant for state and local air regulators because the panel treated the rule as an emissions-control measure tied to Clean Air Act compliance, not as a forbidden state appliance energy standard. The opinion says the South Coast basin has the country’s worst ground-level ozone and is in extreme nonattainment for all federal ozone standards.
Judge Lucy H. Koh’s opinion said EPCA was aimed at avoiding a patchwork of appliance energy-efficiency standards, and that nothing in the statute’s text, structure or history showed Congress meant to interfere with established Clean Air Act emissions controls. The panel also distinguished California Restaurant Association v. City of Berkeley, saying that decision was narrow and did not resolve whether EPCA preempts state regulations enacted under another federal statute.
The panel gave a second reason for rejecting the challenge: Rule 1146.2 also covers process heaters, which the opinion says are not EPCA covered products and are not subject to federal Department of Energy standards, defeating the plaintiffs’ facial challenge.
Judge Kenneth K. Lee dissented, saying the Berkeley decision controlled and that the air district’s NOx rule similarly regulates the energy use of covered products. He also rejected the majority’s facial-challenge analysis, warning that states should not be able to avoid preemption review by adding noncovered items to a broader rule.
The immediate result is that South Coast AQMD’s summary judgment win remains intact, but the dissent and the panel’s treatment of Berkeley make the case a likely candidate for further appellate attention if the challengers pursue rehearing or Supreme Court review.