Emissions or energy use? The 9th Circuit's fine line in Rinnai

Less than two years after it struck down the City of Berkeley's ban on natural gas piping in new buildings as preempted by the federal Energy Policy and Conservation Act (EPCA), the 9th Circuit held this month that the EPCA does not preempt a rule enacted by the South Coast Air Quality Management District (District) to phase out gas appliances that emit nitrogen oxide gases (NOx). The difference, in the view of the majority, is that regulation of energy consumption and regulation of the emissions that consumption produces are distinct --not two sides of the same coin.

The EPCA contains a preemption clause which provides that once a federal energy conservation standard takes effect for a 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...." 42 U.S.C. § 6297(c).

In its decision in California Restaurant Association v. City of Berkeley (CRA), the 9th Circuit read "energy use" in the preemption clause broadly. 89 F.4th 1094 (9th Cir. 2024). It held that the EPCA preempts regulations "that relate to 'the quantity of [natural gas] directly consumed by' certain consumer appliances at the place where those products are used," and that "preemption 'is not limited to facial regulations.'" Id. at 1101, 1103. Berkeley could not accomplish indirectly, by cutting off the fuel, what it could not do directly. The court called its holding "limited." Id. at 1106. But its logic seemed to block any non-federal attempt to limit the quantity of gas a covered appliance can consume --until Rinnai America Corporation v. South Coast Air Quality Management District.

The Rinnai dispute centers on the District's Rule 1146.2, which phases in a prohibition on the manufacture, sale or installation of gas-fired water heaters, boilers and process heaters emitting more than zero NOx. Rinnai Am. Corp. v. S. Coast Air Quality Mgmt. Dist., No. 25-5129, 2026 WL 1912093, at *2 (9th Cir. July 2, 2026). The District reduced the cap to zero in a necessary step towards meeting its pollution reduction obligations under the Clean Air Act (CAA). Id. at *8. The majority noted that CRA had declined to address whether the EPCA preempts regulations enacted pursuant to a different federal statute. Id. at *6. A zero-NOx standard, the court reasoned, regulates an output of the appliance rather than energy use. Id. at *11. The dissent countered that the emperor has no clothes: a zero-emissions standard is, in practice, a ban on burning gas and CRA says the EPCA preempts such a ban. Id. at *15.

The dissent's point is worth confronting. You cannot run a gas appliance without emitting NOx, and you cannot run one without a gas line. A fuel-line ban and a zero-emissions standard arrive at the same destination: no gas appliance. Frame the rule around emissions, and you may halt the use of the fuel by covered appliances. Frame it around energy use, as Berkeley did, and your ban runs afoul of the EPCA. It is the same coin; which face lands up depends on how the ordinance is drafted and who is doing the drafting.

Though narrow, the distinction is defensible. The EPCA governs how much energy a product consumes, not what happens to the fuel after combustion. NOx is a combustion output, not "energy use." Moreover, controlling air pollution sources within their borders is a core state function, and the CAA depends on states and air districts regulating emissions within their jurisdictions to attain federal standards. If the EPCA is read to bar a zero-NOx rule, you squeeze districts from both sides--commanded by one statute to cut emissions, forbidden by another from using the best tool to do so. And it would be strange to let a district drive NOx standards down to just above zero but not to zero itself.

States and local governments chilled by CRA may read Rinnai as an invitation to pursue electrification by regulating emissions rather than fuel--but Rinnai does not truly invite that. The court emphasized that "unlike the District, cities like Berkeley are not charged with the authority or obligation under the CAA to attain federal air quality standards by regulating emissions." Rinnai Am. Corp., WL 1912093, at *12. Without that mandate, a city adopting a zero-NOx standard for its own climate goals is exposed to the argument that it is doing Berkeley's forbidden work under an emissions label.

Still, Rinnai will have far-reaching consequences as air districts push to implement similar bans on NOx emissions under CAA authority, affecting not just gas appliance manufacturers but everyone downstream--the contractors and developers who install the appliances and the food-service, hospitality and healthcare businesses that depend on them. The Bay Area Air District's zero-NOx standard for water heaters (Rule 9-6) was set to take effect in January 2027, but draft updates published this month would push the date back a year and add a series of affordability --and feasibility-based exemptions. Every exception to a zero-NOx mandate preserves a slice of the gas appliance market, and these ongoing revisions (which are open for public comment) serve as a reminder that even a rule that survives preemption can still be reshaped through engagement by affected industries. Whether any given rule survives in the wake of CRA and Rinnai will turn on how it is framed and what authority stands behind it--questions best contested at the comment stage and built into the record before a court ever sees them.

Whatever avenue they take, the goal of state and local governments is cleaner air. Electrification is simply the only mature alternative to gas combustion on the market today. Should low- or zero-NOx gas technology or alternative fuels eventually close that gap, the emissions framing that carried Rinnai could deliver the same air-quality gains without banishing gas at all. For now, though, the outcome turns on framing--whether a rule reads as a limit on emissions or a limit on energy use--the same coin the 9th Circuit insists has two very different faces.