By Marcelle Dibrell

California’s natural gas consumers continue to challenge the state’s relentless move toward banning gas-powered appliances.

A lawsuit has been filed in California’s Central District Court by a coalition of housing providers, business organizations, and trade associations, including the California Pool and Spa Association (CPSA) against the South Coast Air Quality Management District (SCAQMD) over its “zero-NOx” rule, which mandates the elimination of nitrogen oxide emissions from appliances by requiring electric-powered replacements.

The outcome of this case will determine the future of gas-powered pool and spa heaters — among numerous other consumer products — in a large region of Southern California. SCAQMD is the air pollution agency responsible for regulating stationary sources of air pollution the area of Orange County and portions of Los Angeles County, San Bernadino County, and Riverside County. If the district (defendant) wins the case, Southern California gas-powered pool and spa heaters will be slated for replacement with electric heating

https://ww2.arb.ca.gov/search/site?keys=NOX#gsc.tab=0& gsc.q=NOX& gsc.sort= technology beginning in 2028; if the consumers (plaintiffs) win the case, gas heaters will remain on Southern California backyard pool and spa equipment pads for the near future.

That’s because the “zero-NOx” rule effectively bans certain gas appliances that cannot conform to a new California rule by phasing out gas-powered appliances by type and heat capacity over a time period beginning in January 2026.

The case involves SCAQMD’s rule titled “Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers and Process Heaters.” In June 2024, the district amended the rule to phase in zero-NOx emission limits for appliances within the rule’s scope.

SCAQMD’s scheduled compliance occurs over three phases starting in 2026, with the last phase starting in 2033, depending on the appliance type and whether the building is new or existing: Phase One applies to tankless water heaters with a rated heat input capacity of 200,000 Btu per hour or less along with those with a rated heat input capacity less than or equal to 400,000 Btu per hour except pool heaters and high temperature units. The first zero-NOx limits for appliances in new buildings will take effect January 1, 2026, and for existing buildings will be applied in 2029.

Bans on gas-powered pool heaters are slated for Phase Two, which requires zero NOx phaseouts to begin in 2028 for new buildings and 2031 for existing buildings.

The third phase covers Type 1 and Type 2 High Temperature Units. Zero-NOx limits for those appliances take effect in 2029 for new buildings and 2033 for existing buildings.

According to the lawsuit, titled Rinnai America Corp. v. South Coast Air Quality Management District, the emission bans are illegal.

Plaintiffs say the bans violate the federal Energy Policy and Conservation Act’s ( EPCA) preemption of local regulation of covered products. EPCA generally preempts state or local governments from enacting energy efficiency or energy use standards for covered consumer products like furnaces or water heaters.

EPCA implements a national energy policy that, among other things, regulates the energy use and energy efficiency of appliances. The thrust of EPCA’s appliance provisions is that nationally uniform energy use and energy efficiency standards are the best way to promote conservation goals while ensuring energy security and domestic supply, and that those standards should use consumption objectives that do not favor one type of energy or appliance over another.

In other words, these gas-powered appliances are already regulated by EPCA, and another agency like SCAQMD does not have the authority to implement additional provisions.

Such agencies are aware of this fact, and according to the lawsuit, have attempted to skirt existing regulations by finding loopholes in regulatory authority.

For example, a recent lawsuit (California Restaurant Association v. City of Berkeley, 2024) was decided by the Ninth Circuit Court of Appeals against a California city’s regulation that banned gas piping. Rather than prohibiting the appliance itself — which the EPCA regulations preempt — the city sought to ban the means (the gas lines) for powering the appliance.

Similarly, according to the plaintiffs in the current lawsuit, these new regulations seek to ban the emissions produced by the gaspowered appliances.

According to the complaint, a ban on gas piping or a ban on gas emissions both achieve the same result: A ban on the appliances themselves.

“Instead of banning gas piping as an indirect route to banning gas appliances, the district banned gas appliances from emitting any NOx — a byproduct of the combustion needed to run those appliances — which has the intent and effect of prohibiting their use,” the lawsuit states. “On information and belief, no existing gas appliance can satisfy the district’s rule … By effectively banning gas appliances covered by EPCA, the zero-NOx rule does exactly what the Ninth Circuit held that EPCA preempts.”

Plaintiffs state that adhering to the provisions of the federal Energy Policy and Conservation Act provides a nationwide uniform energy policy that no state policy is authorized to usurp.

“EPCA implements a national energy policy that, among other things, regulates the energy use and energy efficiency of appliances,” the complaint states. “The thrust of EPCA’s appliance provisions is that nationally uniform energy use and energy efficiency standards are the best way to promote conservation goals while ensuring energy security and domestic supply, and that those standards should use consumption objectives that do not favor one type of energy or appliance over another.

“To that end, EPCA’s preemption provision for consumer appliances states: Effective on the effective date of an energy conservation standard established in or prescribed under [42 U.S.C. § 6295] for any covered product, no state regulation concerning the energy efficiency, energy use, or water use of such covered product shall be effective with respect to such product unless the regulation [falls within certain enumerated exceptions not applicable here].”

And while there are exceptions for when a state or other governing body may step in, the plaintiffs argue that the new emissions rules do not qualify for any of EPCA’s exemptions from preemption.

That’s because: “A. The rule has not received — and is not eligible for — a waiver of preemption; B. It is not in a building code for new construction and would not qualify for the building code exception even if it were; C. It bans gas appliances even when those appliances meet federal standards.”

Furthermore, plaintiffs argue, the district’s new regulations cause direct economic harm to all those involved in the production and installation of gas-powered heaters.

“Plaintiffs and their members are already experiencing and will continue to face economic injuries, including lost sales, lost work hours or jobs, the cost to replace appliances and make associated building upgrades and modifications, and the cost of business disruptions or interruptions; their business planning, infrastructure investments, and hiring decisions and job opportunities are and will be affected; and they face compliance burdens associated with the rule,” the complaint states.

But the greatest harm caused be the emissions bans will be incurred by the end users, the lawsuit states.

“The public interest is not served by enforcing invalid regulations,” the lawsuit states. “Banning gasfired instantaneous (tankless) water heaters, boilers, pool and spa heaters, or other appliances is fundamentally inconsistent with the public interest and consumer choice, will exacerbate California’s problem of housing affordability, and will shift energy demand onto already overburdened electric grids … “Plaintiffs face significant costs in having to replace gas appliances with electric appliances in existing buildings, which may also necessitate building modifications, disrupt business operations, or require the temporary relocation of tenants. The increased cost of retrofitting or building for electric appliances will raise the cost of housing and limit supply. Plaintiffs also have members that include plumbers and pipefitters who will see a decrease in the amount of gas plumbing work, affecting their hours, job opportunities, and hiring and training in the industry. In short, the district’s rule will impose enormous financial costs and disruption on businesses and individuals, including plaintiffs.”

Ultimately, the plaintiff’s case rests on preemption: That states cannot enact their own regulations regarding heater installation like those banning gas heaters, even if the states or local governing bodies want to adopt stricter environmental policies than those of the federal government. This is because the EPCA has the regulatory authority on the matter, and recent legal precedent has upheld this.

“The Ninth Circuit decision emphasizes that ‘EPCA would no doubt preempt an ordinance that directly prohibits the use of covered natural gas appliances in new buildings,’ and that ‘States and localities can’t skirt the text of broad preemption provisions by doing indirectly what Congress says they can’t do directly.’” The plaintiffs ask the court to apply this consistent logic: “Just as EPCA prohibited Berkeley from banning gas appliances indirectly by banning gas piping, so too does it prohibit the district from banning those appliances indirectly by prohibiting their NOx emissions.”