AGA Challenges DOE Furnace Rule in Federal Court

WASHINGTON — The American Gas Association (AGA), in collaboration with other trade associations and a manufacturer, on November 21 presented oral arguments before the U.S. Court of Appeals for the District of Columbia Circuit in AGA v. United States Department of Energy, a challenge to the DOE final consumer furnace rule, which establishes new standards for residential furnaces, and two other related rules.

AGA supports efficiency-focused building and appliance energy codes and standards that are technologically feasible, economically justified, and follow statutory requirements — a standard the furnace rule fails to meet, the association said in a press release.

“DOE acted arbitrarily, capriciously, and contrary to the law by imposing amended efficiency standards for consumer furnaces and other products that would take noncondensing gas-fired appliances off the market,” said AGA’s chief regulatory counsel for energy, Matthew Agen. “DOE did not provide sufficient evidence that these standards are technologically feasible and economically justified, and we all need to recognize the very real impacts these standards could have on hard-working Americans. Finally, DOE failed in its duty to allow stakeholders adequate information and time to comment on critical aspects of the rules. AGA has tried time and time again to work with DOE on these matters but have been left with no choice but to file suit to address these issues.”

The only natural gas furnaces capable of complying with the new rule are condensing furnaces that rely on horizontal venting systems and are often difficult or impossible to substitute in place of conventional, noncondensing models due to the physical limitations of buildings, AGA’s press release said. Consumers who currently rely on noncondensing furnaces would be forced to remodel their homes or businesses to accommodate a condensing appliance, if even possible, or abandon natural gas appliances altogether under DOE’s rules, which would ban the sale of new noncondensing furnaces starting in December of 2028.

The Energy Policy and Conservation Act (EPCA) expressly prohibits efficiency standards that eliminate entire product classes.

“As the only natural gas appliances that will function in millions of homes, noncondensing furnaces clearly provide consumers with a unique performance characteristic,” said Agen. “Eliminating noncondensing furnaces is a clear violation of EPCA. That alone is enough to vacate the final furnace rule.”

The final furnace rule also fails to meet EPCA’s standard of “economically justified.” According to DOE’s own analysis, the average consumer would save only a handful of dollars each year due to the increased efficiency of condensing furnaces, with some customers taking almost a decade to recoup the cost of replacing a noncondensing furnace.

Agen challenged the DOE’s analysis on cost-savings.

“The meager savings claimed by DOE are inflated by their arbitrary assumptions. Their life-cycle-cost model assumes customers just choose appliances at random,” explained Agen. “This court has already chastised DOE for using this kind of random assignment economic analysis for one efficiency standard, and it’s similarly fatal to the challenged rules. To make matters worse, DOE’s own data shows that 34 percent of consumers impacted by DOE’s furnace rule will face higher costs. This includes higher costs for 41 percent of low-income households and 33 percent of senior-only households impacted by the rule.”