American Gas Association v. United States Department of Energy

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 21, 2024 Decided November 4, 2025
No. 22-1030
AMERICAN GAS ASSOCIATION, ET AL.,
PETITIONERS
v.
UNITED STATES DEPARTMENT OF ENERGY AND CHRIS
WRIGHT, SECRETARY, U.S. DEPARTMENT OF ENERGY,
RESPONDENTS
CITY OF NEW YORK, ET AL.,
INTERVENORS
Consolidated with 23-1285, 23-1337
On Petitions for Review of Final Rules
of the U.S. Department of Energy
Mithun Mansinghani argued the cause for petitioners.
With him on the joint briefs were Michael B. Schon, Renée M.
Lani, Randolph L. Elliott, Samantha L. Fugagli, Drew F.
Waldbeser, Adeline Kenerly Lambert, Michael L. Murray, and
Matthew J. Agen.

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Andrew R. Varcoe, Stephanie A. Maloney, Jeremy C.
Marwell, and Nathan Campbell were on the brief for amicus
curiae the Chamber of Commerce of the United States of
America in support of petitioners.
Jonathan Skrmetti, Attorney General, Office of the
Attorney General for the State of Tennessee, J. Matthew Rice,
Solicitor General, Whitney Hermandorfer, Director of
Strategic Litigation, Matthew D. Cloutier, Assistant Solicitor
General; Steve Marshall, Attorney General, Office of the
Attorney General for the State of Alabama, Ashley Moody,
Attorney General, Office of the Attorney General for the State
of Florida; Theodore E. Rokita, Attorney General, Office of the
Attorney General for the State of Indiana; Kris W. Kobach,
Attorney General, Office of the Attorney General for the State
of Kansas; Liz Murrill, Attorney General, Office of the
Attorney General for the State of Louisiana; Andrew Bailey,
Attorney General, Office of the Attorney General for the State
of Missouri; Gentner Drummond, Attorney General, Office of
the Attorney General for the State of Oklahoma; Tim Griffin,
Attorney General, Office of the Attorney General for the State
of Arkansas; Chris Carr, Attorney General, Office of the
Attorney General for the State of Georgia; Brenna Bird,
Attorney General, Office of the Attorney General for the State
of Iowa; Russell Coleman, Attorney General, Office of the
Attorney General for the Commonwealth of Kentucky; Lynn
Fitch, Attorney General, Office of the Attorney General for the
State of Mississippi; Michael T. Hilgers, Attorney General,
Office of the Attorney General for the State of Nebraska; Alan
Wilson, Attorney General, Office of the Attorney General for
the State of South Carolina; Ken Paxton, Attorney General,
Office of the Attorney General for the State of Texas; Patrick
Morrisey, Attorney General, Office of the Attorney General for
the State of West Virginia; and Jason Miyares, Attorney

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General, Office of the Attorney General for the
Commonwealth of Virginia, were on the brief for amici curiae
States of Tennessee, et al. in support of petitioners.
J. Mark Little and Megan H. Berge were on the brief for
amici curiae National Multifamily Housing Council, et al. in
support of petitioners.
Steven H. Hazel, Attorney, U.S. Department of Justice,
argued the cause for respondents. With him on the brief were
Brian M. Boynton, Principal Deputy Assistant Attorney
General, Michael S. Raab, Attorney, and Samuel Walsh,
General Counsel, U.S. Department of Energy. Sarah Carroll
and John Starcher, Attorneys, U.S. Department of Justice,
entered appearances.
Letitia James, Attorney General, Office of the Attorney
General for the State of New York, Jeffrey W. Lang, Deputy
Solicitor General, Brian Lusignan, Assistant Solicitor General,
Morgan Anna Costello, Laura Mirman-Heslin, Timothy
Hoffman, and Christopher Gore, Assistant Attorneys General,
and; Kevin Breiner and Timothy D. Ballo, Earthjustice; Emily
Davis, Natural Resources Defense Council; Andrea Joy
Campbell, Attorney General, Office of the Attorney General
for the Commonwealth of Massachusetts, Turner Smith,
Assistant Attorney General; Muriel Goode-Trufant, Acting
Corporation Counsel, Christopher Gene King, Senior Counsel,
New York City Law Department; Brian L. Schwab, Attorney
General, Office of the Attorney General for the District of
Columbia, Caroline S. Van Zile, Deputy Solicitor General;
Aaron Frey, Attorney General, Office of the Attorney General
for the State of Maine, Robert L. Martin, Assistant Attorney
General; Kwame Raoul, Attorney General, Office of the
Attorney General for the State of Illinois, Elizabeth Dubats,
Assistant Attorney General; Anthony G. Brown, Attorney

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General, Office of the Attorney General for the State of
Maryland, John B. Howard, Jr., Special Assistant Attorney
General, Steven Jay Goldstein, Assistant Attorney General;
Keith Ellison, Attorney General, Office of the Attorney
General for the State of Minnesota, Peter Surdo, Special
Assistant Attorney General; Matthew J. Platkin, Attorney
General, Office of the Attorney General for the State of New
Jersey, David Apy, Assistant Attorney General; Aaron D. Ford,
Attorney General, Office of the Attorney General for the State
of Nevada, Heidi Parry Stern, Solicitor General; Raúl Torrez,
Attorney General, Office of the Attorney General for the State
of New Mexico, William Granthan, Assistant Attorney
General, Ellen F. Rosenblum, Attorney General, Office of the
Attorney General for the State of Oregon, Paul Garrahan,
Attorney-in-Charge, Steve Novick, Special Assistant Attorney
General; Robert W. Ferguson, Attorney General, Office of the
Attorney General for the State of Washington, Stephen Scheele,
Assistant Attorney General; and Charity Clark, Attorney
General, Office of the Attorney General for the State of
Vermont, and Hannah Yindra, Assistant Attorney General,
were on the brief for respondent-intervenors.
Jason A. Schwartz was on the brief for amicus curiae the
Institute for Policy Integrity at New York University School of
Law in support of respondents.
Before: PILLARD, WILKINS, and RAO, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKINS.
Dissenting opinion filed by Circuit Judge RAO.
WILKINS, Circuit Judge: After the Department of Energy
(“DOE”) promulgated amended energy efficiency standards
for consumer furnaces (residential non-weatherized gas

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furnaces and mobile home gas furnaces) and certain
commercial water heaters under the Energy Policy and
Conservation Act (“EPCA”), Petitioners—who are a number
of trade associations, manufacturers, and energy providers—
filed petitions for review in this Court challenging DOE’s
actions. Energy Conservation Program: Energy Conservation
Standards for Consumer Furnaces, 88 Fed. Reg. 87502 (Dec.
18, 2023) (“Consumer Furnaces Rule”); Energy Conservation
Program: Energy Conservation Standards for Commercial
Water Heating Equipment, 88 Fed. Reg. 69686 (Oct. 6, 2023)
(“Commercial Water Heaters Rule”); Energy Conservation
Program for Appliance Standards: Energy Conservation
Standards for Residential Furnaces and Commercial Water
Heaters, 86 Fed. Reg. 73947 (Dec. 29, 2021) (“2021
Interpretive Rule”).
In this consolidated case, Petitioners contend that DOE’s
amended energy efficiency standards will expel
non-condensing consumer furnaces and commercial water
heaters—which they allege offer consumers unique
performance characteristics and features—out of the market
because they will be unable to meet the newly amended energy
efficiency standards, unlike their condensing counterparts.
Petitioners also argue that DOE did not provide adequate
economic justification, as is required by EPCA, before
promulgating the amended efficiency standards. Lastly,
Petitioners allege that DOE failed to adhere to procedural
requirements as provided by EPCA when promulgating the
Consumer Furnaces Rule. Because each of Petitioners’
arguments fail, we deny the petitions.

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I. Background
A.
EPCA, amended in 1992, was enacted in order “to provide
for improved energy efficiency1 of . . . major appliances, and
certain other consumer products[,]” among other purposes. 42
U.S.C. § 6201(5). Consumer products such as refrigerators,
freezers, air conditioners, water heaters, furnaces, ovens,
television sets, etc. are “covered products” under EPCA and are
subject to improved energy efficiency standards as authorized
by the Secretary of DOE. Id. §§ 6292(a), 6295(a). As relevant
to this case, DOE was mandated to set energy conservation
standards for consumer furnaces and commercial water heaters
under subsections 6295(f) and 6313(a), respectively.
EPCA also authorizes DOE to make amendments to
energy conservation standards after certain times and
triggering events. Id. §§ 6295(m), 6313(a)(6). For example,
regarding commercial furnaces, subsection 6295(m)(1)
provides that “[n]ot later than 6 years after issuance of any final
rule . . . amending a standard” DOE will either publish a notice
that the standards do not need to be amended, or publish a
notice of proposed rulemaking including the new proposed
standards. A later provision of the statute provides that any
amended energy conservation standard for consumer furnaces
“shall . . . achieve the maximum improvement in energy
efficiency . . . [that] is technologically feasible and
economically justified.” Id. § 6295(o)(2)(A). Likewise, for
commercial water heaters, subsection 6313(a)(6) provides that
1 “The term ‘energy efficiency’ means the ratio of the useful output
of services from a consumer product” or an article of industrial
equipment “to the energy use of such product” or article. 42 U.S.C.
§ 6291(5); 2021 Interpretive Rule, 86 Fed. Reg. at 73955.

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DOE will amend efficiency standards to be at least consistent
with the standards set by the American Society of Heating,
Refrigerating and Air-Conditioning Engineers (“ASHRAE”).
2021 Interpretive Rule, 86 Fed. at 73948. If DOE chooses to
apply a more stringent efficiency standard for commercial
water heaters, the standard needs to result in “significant
additional conservation of energy,” and be “technologically
feasible and economically justified” by clear and convincing
evidence. Id. § 6313(a)(6)(A)(ii)(II).
Congress set out several factors for DOE to consider when
determining whether an amended energy standard is
economically justified. The statutes ask DOE to consider:
(I) the economic impact of the standard
on the manufacturers and on the
consumers of the products subject to
the standard;
(II) the savings in operating costs
throughout the estimated average life
of the product in the type (or class)
compared to any increase in the price
of, or in the initial charges for, or
maintenance expenses of, the
products that are likely to result from
the imposition of the standard;
(III) the total projected quantity of energy
savings likely to result directly from
the imposition of the standard;
(IV) any lessening of the utility or the
performance of the products likely to

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result from the imposition of the
standard;
(V) the impact of any lessening of
competition, as determined in writing
by the Attorney General, that is likely
to result from the imposition of the
standard;
(VI) the need for national energy
conservation; and
(VII) other factors the Secretary considers
relevant.
Id. § 6313(a)(6)(B)(ii); see also id. § 6295(o)(2)(B)(i) (same)2
Importantly, and as relevant to this case, DOE may not
prescribe an amended standard if any “interested persons”
establish “by a preponderance of the evidence that [an
efficiency] standard is likely to result in the unavailability in
the United States in any product type (or class) of performance
characteristics (including reliability, features, sizes, capacities,
and volumes) that are substantially the same as those generally
available in the United States.” Id. § 6313(a)(6)(B)(iii)(II)(aa);
see also id. § 6295(o)(4) (“[DOE] may not prescribe an
amended . . . standard . . . if [DOE] finds . . . that interested
persons have established by a preponderance of the evidence
that the standard is likely to result in the unavailability in the
[U.S.] in any covered product type (or class) of performance
characteristics (including reliability), features, sizes,
2 Although the language of these subsections varies slightly, the
parties agree that they are not materially different for the issues
raised in this case. Pet’rs’ Br. 9; Resp’ts’ Br. 4 n.1.

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capacities, and volumes that are substantially the same as those
generally available in the [U.S.] at the time of [DOE’s]
finding.”).3
B.
Before discussing the procedural history of this case, a
brief overview of the mechanics of condensing versus
non-condensing consumer furnaces and commercial water
heaters is necessary. In a non-condensing consumer furnace or
commercial water heater, a heat exchanger burns gas which is
used to heat the air (for furnaces) or water (for water heaters).
The rest of the heated gas, which is not used for the appliance,
is transferred out of a building via an unpowered heat
exchanger, like a vertical chimney. The vents for non-
condensing appliances are “designed to avoid excessive
condensate production in the vent.” Consumer Furnaces Rule,
88 Fed. Reg. at 87563 n.111. In a condensing consumer
furnace or commercial water heater, on the other hand, a
second powered heat exchanger is used to capture the excess
heat not used to heat air or water. This second heat exchanger
turns the excess heat into condensed water vapor, then transfers
the cooler air out through a fanned horizontal vent and the
liquid condensate out through a drain. This added heat
exchanger makes the condensing appliance more efficient
overall as compared to its non-condensing counterpart.
Additionally, the vents that are used in a condensing appliance
are “corrosion-resistant,” like plastic, id. at 87562–63 & n.111,
and therefore non-condensing appliances and condensing
appliances are unable to share the same vents. Id. at 87536; see
3 Again, although the phrasing of the subsections are not identical,
the parties concede that the two sections are materially similar for the
issues raised in this case. Pet’rs’ Br. 9–10, 45; Resp’ts’ Br. 4 n.1.

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also Commercial Water Heaters Rule, 88 Fed. Reg. at 69710
(same).
On March 12, 2015, DOE published a notice of proposed
rulemaking (“NOPR”) to amend energy conservation standards
for consumer furnaces. In this March 2015 NOPR, “DOE
tentatively concluded that the methods by which a furnace is
vented . . . do not provide any separate performance-related
impacts,” and therefore are not a “unique utility to consumers
beyond the basic function of providing heat, which all furnaces
perform.” 2021 Interpretive Rule, 86 Fed. Reg. at 73949. After
publishing a notice of data availability, DOE supplemented its
NOPR on September 23, 2016 (referred to as a “SNOPR”),
proposing to establish capacity-based product classes, and
“reiterated its tentative conclusion that methods of venting do
not provide any performance-related utility separate from the
basic function of a furnace.” Id. Separately, DOE published a
NOPR to amend energy conservation standards for commercial
water heaters on May 31, 2016, in which DOE also tentatively
concluded that condensing and non-condensing commercial
water heaters “provide the same hot water” for commercial
consumers and therefore do not require separate equipment
classes. Id. In each of these notices, DOE “proposed
amend[ing] energy conservation standards that would
effectively require [consumer furnaces and commercial water
heaters] . . . to use condensing technology to meet the proposed
amended standards,” and would “effectively eliminate[] all
non-condensing [consumer furnaces and commercial water
heaters] . . . currently on the market.” Id.
On October 18, 2018, Petitioners submitted a petition for
rulemaking to DOE. In it they asked DOE to: (1) issue an
interpretive rule stating that the agency’s proposed energy
conservation standards would result in the unavailability of
“performance characteristics” in consumer furnaces and

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commercial water heaters, and (2) withdraw the proposed
energy conservation standards because of that finding. DOE
published the petition and requested public comment.
On July 11, 2019, after considering public comments,
DOE published a notice of a proposed interpretive rule
(“NOPIR”) that non-condensing technology “constitute[s] a
performance-related ‘feature’ . . . that cannot be eliminated
through adoption of an energy conservation standard.” Id. at
73949–50. This was eventually followed by a final interpretive
rule on January 15, 2021, “determining that, in the context of
residential furnaces . . . [and] commercial water
heaters . . . use of non-condensing technology (and associated
venting) constitutes a performance-related ‘feature.’” Id. at
73950. DOE found that the reasons non-condensing
technology offers unique “feature[s]” is because it “(1)
[a]void[s] complex installations in certain locations
constrained by space, existing venting, and available drainage;
(2) avoid[s] the encroachment on usable space that would occur
in certain installations; and (3) do[es] not enhance the level of
fuel switching that might accompany standard setting absent a
separate product/equipment class for non-condensing
appliance[s].” Id. Following this final interpretive rule, DOE
withdrew its March 12, 2015, NOPR.
Then, about seven months later, on August 27, 2021, DOE
published another NOPIR where it “re-examined the
conclusions reached in the January 2021” final interpretive
rule. In this August 2021 NOPIR, DOE proposed to “re-instate
its historical interpretation of” “performance characteristics”
and “features” to conclude that “non-condensing technology”
for consumer furnaces and commercial water heaters is “not a
performance-related ‘feature’ for the purpose of the EPCA.”
Id. at 73948, 73950.

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On the same day, August 27, 2021, DOE requested
comment on the NOPIR with the comment period scheduled to
close on September 27, 2021. However, after receiving a
request from Petitioners, DOE extended the comment period to
October 12, 2021.
When the comment period closed DOE issued a Final
Interpretive Rule on December 29, 2021. Consistent with its
March 2015 NOPR, September 2016 SNOPR, and May 2016
NOPR, DOE concluded that non-condensing technology in
consumer furnaces and commercial water heaters does not
offer performance-related “feature[s]” as compared to
condensing consumer furnaces and commercial water heaters.
Id. at 73951. DOE once again found that there was no unique
utility to consumers offered by non-condensing technology as
both non-condensing and condensing appliance’s function is to
provide heated air or water. DOE concluded “[u]pon further
consideration” that “utility is determined through the benefits
and usefulness the feature provides to the consumer while
interacting with the product.” Id. Therefore, differences in
cost or complexity of installation “do not make any method of
venting a performance-related feature.” Id. Instead, DOE
explained that those considerations were more appropriate
under its economic justification analysis under
subsections 6295(o)(2)(B)(i) and 6313(a)(6)(B)(ii).
On October 6, 2023, DOE published a Final Rule updating
the efficiency standards for commercial water heaters after
determining the revised efficiency standards “represent[ed] the
maximum improvement in energy efficiency that [was]
technologically feasible and economically justified.”
Commercial Water Heaters Rule, 88 Fed. Reg. at 69687. The
amended efficiency standards for commercial water heaters
were estimated to save 5.6 percent energy usage relative to the
case without amended standards. Id. at 69688. Likewise, on

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December 18, 2023, DOE amended energy conservation
standards for consumer furnaces that included residential non-
weatherized gas furnaces and mobile home gas furnaces.
Consumer Furnaces Rule, 88 Fed. Reg. at 87503. DOE
estimated that the amended standards for consumer furnaces
would save 4.77 quadrillion British thermal units (“Btu”),
which represented a 3.2 percent savings if compared to a
scenario without amended efficiency standards. Id. at 87504.
Petitioners ask us to vacate DOE’s 2021 Interpretive Rule,
the Commercial Water Heaters Rule, and the Consumer
Furnaces Rule.
II. Analysis
A. Jurisdiction and Standing
We have jurisdiction to review the petitions under 42
U.S.C. sections 6306(b) and 6316. This Court will “hold
unlawful and set aside agency action, findings, and conclusions
found to be . . . arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law” or “without observance
of procedure required by law.” 5 U.S.C. § 706(2)(A), (D). We
will not “substitute [our] judgment for that of the agency,”
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983), nor will we “supply a
reasoned basis for the agency’s action that the agency itself has
not given.” Id. (citing SEC v. Chenery Corp., 332 U.S. 194,
196 (1947)). If the “agency [has] examine[d] the relevant data
and articulate[d] a satisfactory explanation for its action
including a ‘rational connection between the facts found and
the choice made’” we will uphold the decision. Id. (quoting
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156,
168 (1962)); see also Loper Bright Enters. v. Raimondo, 603
U.S. 369, 395–96 (2024). The agency must “clearly disclose[]”

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“the grounds upon which . . . [it] acted” by substantial evidence.
T-Mobile S., LLC v. City of Roswell, 574 U.S. 293, 301 (2015);
42 U.S.C. § 6306(b)(2) (“No rule under section . . . 6295 of this
title may be affirmed unless supported by substantial
evidence.”).
An association has standing on behalf of its members if at
least one member has standing to sue individually. Sierra Club
v. DOE, 107 F.4th 1012, 1014 (D.C. Cir. 2024) (citing Hunt v.
Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343 (1977)).
An association also must show that “the interests it seeks to
protect are germane to the organization’s purpose” and that
“neither the claim asserted nor the relief requested requires the
participation of individual members in the lawsuit.” Hunt, 432
U.S. at 343.
Petitioners American Gas Association (“AGA”),
American Public Gas Association (“APGA”), and National
Propane Gas Association (“NPGA”) are trade associations.
AGA advocates for natural gas companies and customers;
APGA advocates for publicly owned or operated natural gas
systems; and, NPGA represents various entities in the propane
industry. AGA, APGA, and NPGA have adequately supported
their claim of associational standing in their declarations by
alleging that their members expect to incur economic loss if the
Consumer Furnaces and Commercial Water Heaters Final
Rules are not vacated. They allege that without vacatur their
members will be injured when consumers switch from natural
gas to electric appliances. Pet’rs’ Decl. Addendum at 3–
4 ¶¶ 7–9, 6–7 ¶¶ 6–7, 18–19 ¶¶ 6–8, 31–33 ¶¶ 7–9, 36 ¶¶ 6–8;
see Am. Pub. Gas Ass’n. v. DOE, 72 F.4th 1324, 1336 (D.C.
Cir. 2023) (holding that petitioners “demonstrated standing
through declarations attesting to their expectations of economic
losses caused by the [f]inal [r]ule that may be remedied by
vacatur of the rule”).

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Petitioner Thermo Products, LLC (“Thermo”) is a
manufacturer of gas and oil furnaces and claims its standing to
challenge the 2021 Interpretive Rule and the Consumer
Furnaces Rule is “self-evident.” We agree. A petitioner suffers
an injury in fact by an agency when the agency promulgates a
regulation that prohibits a petitioner from producing or selling
a product that they would have otherwise been able to produce
or sell. See Energy Future Coal. v. EPA, 793 F.3d 141, 144
(D.C. Cir. 2015) (holding that petitioners faced an injury in fact
when they “claim that they face a regulatory
impediment . . . that prevents their product from being used as
a test fuel”). Thermo alleges that DOE’s 2021 Interpretive
Rule and Consumer Furnaces Rule will impose standards that
its noncondensing residential furnaces will not be able to meet
or be redesigned to meet. Pet’rs’ Decl. Addendum at 14–
15 ¶¶ 5–7. Thermo claims that as a result it will not be able to
sell non-condensing furnaces, which will cause it to “face
interrupted and possibly lost revenue streams,” “abandon”
product designs “in which it has invested large amounts of
capital,” and reverse changes in its operations. Id. ¶ 7. We also
find that Thermo has demonstrated causation and redressability
by alleging that the loss of sales it may face will be directly
caused by the efficiency standards imposed in the Consumer
Furnaces Rule, and vacating the rule will redress the alleged
injury. See Energy Future Coal., 793 F.3d at 144.4
4 Because we conclude that AGA, APGA, NPGA, and Thermo have
standing, we need not address Spire Inc., Spire Alabama Inc., and
Spire Missouri Inc.’s standing. See Ams. for Safe Access v. Drug
Enf't Admin., 706 F.3d 438, 443 (D.C. Cir. 2013) (holding that if one
petitioner “has individual standing, we need not address the issue for
the other [p]etitioners”).

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B. Performance Characteristics and Features
Turning to the merits of the petition: We next determine
whether DOE was correct to conclude that non-condensing
appliances offer performance characteristics or features that are
substantially the same as those offered by condensing
appliances. 42 U.S.C. §§ 6295(o)(4),
6313(a)(6)(B)(iii)(II)(aa). We note that DOE’s interpretation
of EPCA does not bind us, but “it may be especially
informative ‘to the extent it rests on factual premises within . . .
[DOE’s] expertise.’” Loper Bright Enters., 603 U.S. at 402
(quoting Bureau of Alcohol, Tobacco and Firearms v. FLRA,
464 U.S. 89, 98, n.8 (1983)). “Such expertise has always been
one of the factors which may give an Executive Branch
interpretation particular ‘power to persuade, if lacking power
to control.’” Id. (quoting Skidmore v. Swift & Co., 323 U.S.
134, 140 (1944)).
Congress gave DOE “a degree of discretion” to decide
what constitutes a performance characteristic or feature under
EPCA. Id. at 2263. “The burden of producing evidence and
proving that a[n efficiency] standard level will result in the
unavailability of certain characteristics, etc., rests on interested
persons asserting the claim of unavailability.” H.R. REP. NO.
100-11, at 23 (1987); 42 U.S.C. §§ 6295(o)(4),
6313(a)(6)(B)(iii)(II)(aa). Petitioners must make this showing
before DOE by a preponderance of the evidence.
We begin with the plain text of the statute. See United
States v. Braxtonbrown-Smith, 278 F.3d 1348, 1352 (D.C. Cir.
2002) (“In construing a statute, the court begins with the plain
language of the statute.”). All parties, including the dissent,
see Dissenting Op. 8–9, agree that the plain meaning of

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“performance characteristics” is broad. The term
“performance” is simply defined as “the execution of an
action,” Performance, MERRIAM-WEBSTER INC. (Ninth New
Collegiate 1985), and “characteristic” is defined as “a
distinguishing trait, quality, or property.” Characteristic,
MERRIAM-WEBSTER INC. (Ninth New Collegiate 1985).
Additionally, “feature” means “the structure, form, or
appearance” and “a prominent part or characteristic.” Feature,
MERRIAM-WEBSTER INC. (Ninth New Collegiate 1985).
The parties agree that the plain text of “performance
characteristic” means a product attribute that provides utility to
consumers desiring to use the product.5 Pet’rs’ Br. 46; Resp’ts’
Br. 26 (performance characteristics “provide a consumer
unique utility during the operation of the appliance”) (quoting
2021 Interpretive Rule, 86 Fed. Reg. at 73955); Oral Arg. Tr.
at 5:11–20 (When asked for his definition of “performance
characteristic” at oral argument, Petitioners’ counsel stated that
it is “a product attribute that provides utility to consumers
desiring to use the product.”). In other words, a performance
characteristic “has to be . . . about using the product,” and
“doesn’t include things unrelated to the performance of the
product,” Oral Arg. Tr. at 5:23-25. Instead, a performance
characteristic is related to “the product[’s] . . . useful output.”
2021 Interpretive Rule, 86 Fed. Reg. at 73955.
Moreover, because every appliance offers a unique
function to consumers, the concept of a feature or performance
characteristic is “very case-specific.” 2021 Interpretive Rule,
86 Fed. Reg. at 73948. “No single definition could effectively
5 It seems that the dissent would also agree with this definition. See
Dissenting Op. 12 (“Under the best meaning of EPCA, a
‘performance characteristic’ is a distinctive product attribute that
provides utility to the consumer.”).

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capture the potential for features across the broad array of
consumer products and commercial equipment subject to
EPCA’s regulatory scheme.” Id. Therefore, because the plain
text of the statute does not get us home, we will look beyond it
to resolve the specific ambiguity here as it relates to consumer
furnaces and commercial water heaters. See Braxtonbrown-
Smith, 278 F.3d at 1352 (“Where the language is subject to
more than one interpretation and the meaning of Congress is
not apparent from the language itself, the court may be forced
to look to the general purpose of Congress in enacting the
statute and to its legislative history for helpful clues.”)
The parties’ dispute centers around the specific ambiguity
of what product attributes of small furnaces and water heaters
Congress concluded had utility to consumers such that they
warrant protection against energy conservation standards that
could eliminate them from the market. Specifically, the parties
dispute whether venting mechanisms, installation factors, or
space-related attributes encompass features that Congress
meant to treat as providing utility to consumers.
Beginning with venting mechanisms: Petitioners contend
that non-condensing appliances, which use unpowered venting
like vertical chimneys, offer performance characteristics to
consumers that condensing appliances do not. According to
Petitioners, condensing appliances are incompatible with
venting systems like chimneys because condensing appliances
require a fan to generate enough pressure to push or pull gases
outside. Pet’rs’ Br. 12. Petitioners further contend that
condensing appliances require plumbing drains to dispose of
condensate and cannot share vents with non-condensing
appliances. Pet’rs’ Br. 13. Petitioners argue that consumers
derive utility from a product by, for example, not “hav[ing] to
renovate their homes,” “to accommodate the use of

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[condensing] products for which they were not architecturally
designed.” Oral Arg. Tr. 6:4; J.A. 324.
Congress was well aware of Petitioners’ perspective
regarding venting mechanics for small gas furnaces when it
amended EPCA in 1987. AGA submitted a statement before
the Subcommittee on Energy Conservation and Power in 1986
expressing concern that energy efficiency standards in EPCA
“would ban the conventional, atmospherically vented furnace”
because it would not be able to meet the prescribed efficiency
percentage. A Bill to Amend the Energy Policy and
Conservation Act with Respect to Energy Conservation
Standards for Appliances: Hearing on H.R. 5465 Before the
H. Subcomm. on Energy Conservation & Power, 99th Cong.
149 (1986). After hearing Petitioners’ perspective, the
Committee on Energy and Commerce issued the amended
EPCA bill the following year. In it, the Committee provided
that “[e]xamples of ‘performance characteristics’ of particular
products [were]: safety; cooling; refrigeration and heating;
dehumidification; ability to clean or dry without adverse
effects; serviceability; and incidence and cost o[f] repair.”
H.R. REP. NO. 100-11, at 23 (1987). Additionally, “[e]xamples
of ‘features’ [were]: automatic defrost, through the door ice,
size of room air conditioners, and noise levels.” Id. Therefore,
despite AGA’s comments, the Committee did not state that
venting mechanics were examples of performance
characteristics or features for consumer furnaces. However, it
did specifically provide that heat was a performance
characteristic. The dissent does not discuss this part of the
legislative history.
We think the Committee on Energy and Commerce’s
examples make good sense. At a certain level, it is obvious that
consumers do not buy small furnaces or commercial water
heaters because of how the appliance vents. In fact, venting is

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a quality that both condensing and non-condensing appliances
share. It “is one of the basic components found in every gas-
fired furnace.” Consumer Furnaces Rule, 88 Fed. Reg. at
87535; see also Commercial Water Heaters Rule, 88 Fed. Reg.
at 69709 (“[V]enting, like a gas burner or heat exchanger, is
one of the basic components found in every gas-fired water
heater (condensing or noncondensing.”). The dissent seems to
overlook this aspect by arguing, without support, that “some
consumers here will be effectively deprived of gas-powered
appliances entirely.” Dissenting Op 12 n.1. This is simply not
true since gas-fired condensing options will still be available to
consumers.
Instead, the unique utility a consumer furnace or
commercial water heater provides to the consumer is that they
either provide hot air or hot water, respectively. If Congress
intended particular methods of venting such as unpowered
venting to be a performance characteristic, it had an
opportunity to clearly state as much—but it did not. See
Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161,
169 (2014) (“Had Congress intended . . . [Petitioners’ view of
the statute], it easily could have drafted language to that
effect.”).
This understanding is also consistent with DOE’s
historical view of whether an appliance provides a unique
utility to consumers. 6 Take vented and ventless residential
6 For example, in the context of dishwashers, “DOE’s longstanding
view [has been] that performance [means] ‘utility accessible to the
layperson and based on user operation.” See Louisiana v. DOE, 90
F.4th 461, 474 (5th Cir. 2024) (discussing DOE’s 2020 Final Rule
establishing a new product class for residential dishwashers, Energy
Conservation Program: Establishment of a New Product Class for
Residential Dishwashers, 85 Fed. Reg. 68723, 68727 (2020))
(internal quotation marks omitted). A practical example is cycle

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clothes dryers as an example. In 2011, DOE separated ventless
and vented residential clothes dryers into two separate classes
because DOE recognized that having a ventless clothes dryer
was a unique utility for consumers who live in areas where a
vented dryer would not be possible to use (like apartments in
certain high-rise buildings). See Energy Conservation
Program: Energy Conservation Standards for Residential
Clothes Dryers and Room Air Conditioners, 76 Fed. Reg.
22454, 22485 (Apr. 21, 2011). DOE found that “a substantial
subset of consumers . . . would be deprived of the benefits of
. . . having [a] clothes-drying appliance in their residence
entirely unless DOE established a ventless clothes dryers
product class.” 2021 Interpretive Rule, 86 Fed. Reg. at 73957.
Venting was treated as a performance characteristic in the
clothes dryer context because the alternative venting option
(non-vented) impacted whether a consumer could use or install
the particular appliance at all in a large class of applications.7
times in clothes washers and dryers. Cycle times have been
understood as “a valuable consumer utility and performance-related
feature” in the context of clothes washers and clothes dryers because
consumers value the utility of having an option for a shorter cycle
time. Energy Conservation Program: Establishment of New Product
Classes for Residential Clothes Washers and Consumer Clothes
Dryers, 85 Fed. Reg. 81359, 81361 (2020).
7 Instead of acknowledging the reason that ventless and vented
clothes dryers were treated as a separate product class, the dissent
cites the same rule and contends that “the Department has
consistently set distinct efficiency standards for products based on
compatibility with venting systems.” Dissenting Op. 11. However,
this contention overlooks the “case-specific” reason that ventless and
vented clothes dryers were separated into two different product
classes—ventless clothes dryers are the only available option for
those who live in certain high-rise buildings. See 2021 Interpretive
Rule, 86 Fed. Reg. at 73948; see also id. at 73957 (“[I]f a ventless
clothes dryer were not available, no clothes dryer would be available

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Not so with condensing consumer water heaters or
furnaces. When DOE had to determine whether consumer
water heaters that utilize heat pump technology versus electric
resistance technology should be placed in separate classes,
DOE concluded that they did not. See Energy Conservation
Program: Energy Conservation Standards for Residential
Water Heaters, Direct Heating Equipment, and Pool Heaters,
75 Fed. Reg. 20112, 20135 (April 16, 2010). DOE concluded
that even though an additional water drain had to be installed if
a consumer decides to use a heat pump, that small installation
requirement did not change the utility of providing heated
water to consumers, and moreover that “heat pump water
heaters could replace traditional electric resistance storage
water heaters in most residences, although the installation
requirements may be quite costly.” Id. So is the case here.
DOE found that “[i]n all cases” “consumers facing the prospect
of replacing a non-condensing residential furnace or
commercial water heater with a condensing . . . [appliance] do
have options available to either modify existing venting or
install a new venting system to accommodate a
condensing . . . [appliance], or to install a feasible alternative.”
2021 Interpretive Rule, 86 Fed. Reg. at 73957.
Next, Petitioners contend that “space-related attributes”
are performance characteristics that are “intertwined” with the
function of a consumer furnace and a commercial water heater.
Pet’rs’ Br. 48–50.
Recall that Petitioners’ burden is a heavy one—they must
“establish[] by a preponderance of the evidence that a[n
for certain locations”). That is, however, not the case for condensing
and non-condensing consumer furnaces and commercial water
heaters as we explain.

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efficiency] standard is likely to result in the unavailability in
the United States in any product type (or class) of performance
characteristics (including . . . sizes, capacities, and volumes)
that are substantially the same as those generally available in
the United States.” 42 U.S.C. § 6313(a)(6)(B)(iii)(II)(aa); see
also id. § 6295(o)(4) (same). Substantial evidence in the record
before us shows that “interested persons” failed to carry that
burden.
In regards to commercial water heaters, DOE explained in
the 2021 Interpretive Rule that condensing technology does not
“require[] an increase in the overall size of a water heater” and
that “a condensing appliance would not result in a loss of useful
space for most consumers.” 2021 Interpretive Rule, 86 Fed.
Reg. at 73955; see also id. at 73957 n.13 (“DOE surveyed the
dimensions of representative commercial water heaters . . . and
found the height and diameter dimensions comparable.”).
Moreover, after conducting a review of both condensing and
non-condensing appliances having similar input ratings and
storage volumes from multiple manufactures, DOE found that
the “overall dimensions for condensing models were not
significantly larger than for non-condensing models.” Id. at
73955. Specifically, DOE found that “non-condensing
residential furnaces and commercial water heaters are not
significantly different in overall footprint, size, or heating
capacity from their condensing counterparts.” Id. at 73957.
Petitioners argue that DOE’s analysis of the space-related
characteristics of consumer furnaces and commercial water
heaters is inconsistent with how it has analyzed other products
like residential condensing and non-condensing furnace fans,
washing machines, and central air conditioners. Petitioners
argue that the reason Congress separated efficiency standards
for residential furnace fans used in mobile homes into its own
product class, for example, was due to the size constraints that

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manufactured homes face. Pet’rs’ Br. 47–55; see Energy
Conservation Program for Consumer Products: Energy
Conservation Standards for Residential Furnace Fans, 78 Fed.
Reg. 64068, 64077 (Oct. 25, 2013). Although Petitioners may
be correct that size constraints were one of the factors DOE
considered when promulgating efficiency standards for furnace
fans used in mobile homes versus those not used in mobile
homes, they oversimplify DOE’s analysis. DOE separated
furnace fans based on characteristics such as whether the
furnace fan was weatherized (meaning that it could be used
outdoors), the type of energy source the furnace fan used, and
whether the furnace fan was condensing or non-condensing.
See Energy Conservation Program for Consumer Products, 78
Fed. Reg. at 64077. DOE explained that it separated these
categories based on “internal structure and application-specific
design differences that impact furnace fan energy
consumption.” Id. Specifically for condensing furnaces, DOE
explained that the separate fan class structure “allow[ed] for
differentiation of products with designs that achieve higher
thermal efficiency but may have lower fan performance.” Id.
at 64080. Therefore, unlike space-related attributes of
consumer furnaces and commercial water heaters, the design
of mobile home furnace fans is directly related to performance
requirements of the particular product.
Petitioners also point to front-loading and top-loading
washing machines to support their contention that size and
installation limits are “performance characteristics.” Pet’rs’
Br. 48; Energy Conservation Standards for Residential Clothes
Washers, 84 Fed. Reg. 37794 (Aug. 2, 2019). However, unlike
condensing and non-condensing consumer furnaces and
commercial water heaters, washing machine capacity has a
direct impact on efficiency levels and “the location of access”
to a washing machine “provides distinct consumer utility.”
Energy Conservation Standards for Residential Clothes

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Washers, 84 Fed. Reg. at 37797. For example, front-loading
washers may be preferable to those with disabilities because
the angle may be easier to access, whereas top-loading washers
may be preferred by the elderly “because it is easier to reach
the laundry without excessive bending” or those who
appreciate the ability to add more clothes while the cycle has
already begun. 2021 Interpretive Rule, 86 Fed. Reg. at 73953.
In contrast, “a consumer’s interaction with a furnace or water
heater . . . [is] a simple one.” Id. “After the consumer adjusts
the thermostat or faucet, the user receives the requested heated
air or water.” Id.
Likewise, Petitioners’ argument regarding Congress’s
decision to separate “space-constrained central air
conditioners” from other central air conditioners misses the
point. DOE explained that it separated these two product
classes because “space-constrained central air conditioners
provide centralized air conditioning in locations with space
constraints that would preclude the use of other types of central
air conditioners.” Id. at 73957. “Space-constrained central air
conditioners have an indoor or outdoor unit that is limited in
size due to the location in which the unit operates.” Id. This
explanation does not mean that space-related attributes always
will dictate whether a product should be separated into its own
product class, however.8 As DOE explained, when it came to
8 Take, for example, packaged terminal air conditioners (“PTACs”)
and terminal heat pumps (“PTHPs”). In 2008, DOE separated
standard size, 16 inches high by 42 inches wide, PTACs and PTHPs
in a separate efficiency class from non-standardized PTACs and
PTHPs. Energy Conservation Program for Commercial and
Industrial Equipment: Packaged Terminal Air Conditioner and
Packaged Terminal Heat Pump Energy Conservation Standards, 73
Fed. Reg. 58772 (2008). DOE explained that the industry
standardized the wall sleeve dimensions for PTACs and PTHPs built
after the mid-1980s. Id. at 58782. However, in buildings constructed

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analyzing non-condensing consumer furnaces and commercial
water heaters, it found that they were “not significantly
different in overall footprint, size, or heating capacity from
their condensing counterparts.” Id.
Lastly, as to installation factors: DOE recognized that
“installation of condensing products/equipment [sometimes]
requires modifications to the installed space . . . and that such
modifications may impact the installation cost and/or
complexity.” Id. at 73962. Because DOE found that
consumers are able to replace non-condensing appliances with
condensing appliances in “all cases,” we agree that installation
factors are more appropriately addressed in the
economic-justification analysis because installation factors
will not prevent the replacement of non-condensing appliances,
but may financially deter consumers from doing so. See id. at
73957. The language of subsections 6295(o)(4) and
6313(a)(6)(B)(iii)(II) bolster this reasoning because neither
includes a reference of “installation factors” or “installation
costs” as a factor that Congress was concerned about as it
relates to the unavailability provisions in EPCA. However,
before the mid-1980s, like “high-rise buildings found in large cities”
non-standard size equipment that varies in size is typically used. Id.
DOE created two different product classes for standard size PTACs
and PTHPs versus their non-standard size counterparts because
“altering the existing wall sleeve opening to accommodate the more
efficient, standard size equipment could include extensive structural
changes to the building, which could be very costly, and is, therefore
rarely done.” Id.

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subsections 6295(o)(2)(B)(i)9 and 6313(a)(6)(B)(ii)10 more
appropriately capture a consideration of the installation costs
and factors under the “economic impact” and the “initial
charges for” the products on consumers.
In sum, the record fails to support Petitioners’ claim that
condensing consumer furnaces and commercial water heaters
are not “substantially the same” as their non-condensing
counterparts. We have no reason to second-guess DOE’s view,
“especially since it ‘rests on the agency’s evaluations of
scientific data within its area of expertise.’” Actavis Elizabeth
LLC v. FDA, 625 F.3d 760, 766 (D.C. Cir. 2010) (quoting
9 Subsections 6295(o)(2)(B)(i)(I) and (II) provide that:
[i]n determining whether a standard is economically
justified, the Secretary shall . . . determine whether
the benefits of the standard exceed its burdens by, to
the greatest extent practicable, considering—
(I) the economic impact of the
standard on the manufacturers and
on the consumers of the products
subject to such standard; [and]
(II) the savings in operating costs
throughout the estimated average
life of the covered product in the
type (or class) compared to any
increase in the price of, or in the
initial charges for, or maintenance
expenses of, the covered products
which are likely to result from the
imposition of the standard.
10 Subsections 6313(a)(6)(B)(ii)(I) & (II) are materially the same as
subsections 6295(o)(2)(B)(i)(I) and (II).

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Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1320 (D.C. Cir.
1998)). We find that, although not identical, condensing
consumer furnaces and commercial water heaters offer
substantially the same performance characteristics and features
as non-condensing options. 42 U.S.C. §§ 6295(o)(4),
6313(a)(6)(B)(iii)(II)(aa); see H.R. REP. NO. 100-11, at 23
(1987) (explaining that “substantially the same” does not mean
“identical”). We are satisfied that DOE has “fulfilled its duty
to ‘examine the relevant data and articulate a satisfactory
explanation for its’” conclusion that Petitioners failed to show,
by a preponderance of the evidence, that non-condensing
consumer furnaces and commercial water heaters offer
performance characteristics that are unlike those offered by
their condensing counterparts. Ark Initiative v. Tidwell, 816
F.3d 119, 127 (D.C. Cir. 2016) (quoting State Farm, 463 U.S.
at 43).
C. Economic Justification
We next determine whether DOE acted arbitrarily in
concluding that the amended standards for consumer furnaces
and commercial water heaters were economically justified.
DOE must show that its amended efficiency standards in the
Consumer Furnaces Rule are supported by substantial
evidence—a burden common to actions we review under the
Administrative Procedure Act. 42 U.S.C. § 6306(b)(2); see
Biestek v. Berryhill, 587 U.S. 97, 102 (2019) (“The phrase
‘substantial evidence’ is a ‘term of art’ used throughout
administrative law to describe how courts are to review agency
factfinding.” (quoting T-Mobile S., LLC, 574 U.S. at 301)).
However, the energy efficiency standards in the Commercial
Water Heaters Rule must be economically justified “by clear
and convincing evidence.” 42 U.S.C. § 6313(a)(6)(A)(ii)(II).
“[C]lear and convincing evidence requires . . . the
Secretary . . . to have an ‘abiding conviction’ that her findings

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. . . are ‘highly probable’ to be true. APGA v. DOE, 22 F.4th
1018, 1025 (D.C. Cir. 2022) (“APGA I”) (quoting Colorado v.
New Mexico, 467 U.S. 310, 316 (1984)). Our review, even
under the clear and convincing standard, is to determine
whether it was reasonable for the agency to conclude that it met
this standard. Id. at 1025–26 (citing Sea Island Broad. Corp.
of S.C. v. FCC, 627 F.2d 240, 244 (D.C. Cir. 1980)).
1. Random Assignment/Monte Carlo Analysis
Petitioners take issue with the widely used random
assignment test (also known as Monte Carlo analysis) that
DOE utilized as part of the economic analysis for the amended
efficiency standards for both the Consumer Furnace Final Rule
and the Commercial Water Heater Final Rule. Petitioners
argue that DOE relied on an assumption that consumers make
appliance purchases randomly without weighing economic
benefits, and that DOE failed to give a reasoned explanation
for doing so.
The random assignment test or Monte Carlo analysis is
used across industries ranging from physical sciences to high
finance. Lyondell Chem. Co. v. Occidental Chem. Corp., 608
F.3d 284, 293 (5th Cir. 2010). It was first used a little under a
century ago by physicists conducting nuclear weapons
research. Id.; see also AT&T Svs., Inc. v. FCC, 21 F.4th 841,
847 (D.C. Cir. 2021) (noting that Monte Carlo analysis was
“[d]eveloped by scientists working on the Manhattan Project”).
This methodology is “particularly useful when reaching an
exact numerical result is impossible or infeasible and the data
provide[s] a known range—a minimum and a maximum, for
example—but leave[s] the exact answer uncertain.” Lyondell
Chem. Co., 608 F.3d at 293. A random assignment test or
Monte Carlo analysis “runs hundreds of simulations, and
produces a range of possible outcomes.” AT&T Svs., Inc., 21

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F.4th at 847. This type of analysis “can provide a ‘more
complete view of potential outcomes and their associated
likelihoods.’” Id. (quoting FED. JUDICIAL CTR. & NAT’L RSCH.
COUNCIL, REFERENCE MANUAL ON SCI. EVIDENCE 469 (3d ed.
2011)). The Environmental Protection Agency has explained
that Monte Carlo analysis can be a “viable statistical tool[] for
analyzing variability and uncertainty in risk assessments.”
Lyondell Chem. Co., 608 F.3d at 293 (quotation omitted)
(citing EPA, GUIDING PRINCIPLES FOR MONTE CARLO
ANALYSIS, EPA/630/R-97/001, at 1 (1997)).
The random assignment test is not new to either AGA or
DOE. This Court recently considered the issue of whether
DOE arbitrarily conducted its life-cycle cost (“LCC”) analysis
when it randomly assigned commercial packaged boilers to
buildings without weighing the kind of building the boiler was
being assigned to. APGA I, 22 F.4th at 1027. When DOE
conducted its no-new-standards case analysis, it assumed that
“the distribution of efficiencies among shipped boilers [was]
the same as the distribution of efficiencies across the models
listed in the [Air-Conditioning, Heating, and Refrigeration
Institute (“AHRI”)] data base.” Id. APGA and other
petitioners contended that DOE “failed to recognize that a
purchaser of commercial packaged boilers would rationally
consider the costs and benefits of its investment and is likely to
buy the boiler that produces the best economic performance for
its building.” Id.
Instead of explaining its analysis, DOE “rather
dismissively” explained that it did not have the data that would
be necessary to run an alternative analysis to the one it
conducted. Id. Additionally, DOE listed possible market
failures that its LCC analysis addressed, but did not provide
evidence to show that the market failures it listed affected the
market for commercial packaged boilers. Id. We remanded

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the case back to DOE, without vacatur, and ordered DOE to
provide a “more complete response” since the “assignment of
efficiencies to the buildings in the sample was a crucial part of
the analysis supporting the DOE’s conclusion that a more
stringent [energy efficiency] standard was warranted.” Id. We
held that DOE’s response that it “essentially . . . did the best it
could with the data it had” was “not enough to justify [an]
assum[ption that] a purchaser’s decisions w[ould] not align
with its economic interests in purchasing a boiler.” Id.
Therefore, we could not conclude that DOE’s amended
efficiency standards were supported by clear and convincing
evidence under subsection 6313(a)(6)(A)(ii)(II). Id. at 1028.
This Court did not discredit, nor decide, that the random
assignment test should not have been used in DOE’s LCC
analysis in APGA I. Instead, we merely ordered DOE to go
back and provide more reasoned explanations for its analysis
and respond to the petitioners’ concerns. The case before us is
unlike what we considered in APGA I. DOE’s LCC here was
“the sum of the purchase price of a piece of equipment
(including its installation and sales tax) and the operating
expense (including energy, maintenance, and repair
expenditures) discounted over the lifetime of the equipment.”
Commercial Water Heaters Rule, 88 Fed. Reg. at 69704;
Consumer Furnaces Rule, 88 Fed Reg. at 87528 (same). To
calculate the LLC, DOE needed a “variety of inputs, such as
product prices, product energy consumption, energy prices,
maintenance and repair costs, product lifetime, and discount
rates appropriate for consumers.” Commercial Water Heaters
Rule, 88 Fed. Reg. at 69704; Consumer Furnaces Rule, 88 Fed
Reg. at 87528 (same).
DOE used real-world historical data for its inputs which
included the highest quality summary statistics submitted by
interested persons as well as data submitted by individual

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households. Consumer Furnaces Rule, 88 Fed. Reg. at 87555.
The data used correlated inputs to “individual building
characteristics” such as “heating load, building shell indices,
installation costs, and no-new-standards case efficiency
probability.” Id.; see also Commercial Water Heaters Rule, 88
Fed. Reg. at 69731 (explaining that in relation to commercial
water heaters DOE’s analysis captured the average hot water
loads on equipment, but did not necessarily capture extremes).
“DOE develop[ed] probabilities for as many inputs to the LCC
analysis as possible, to reflect the distribution of impacts as
comprehensively as possible.” Consumer Furnaces Rule, 88
Fed. Reg. at 87555; see also Commercial Water Heaters Rule,
88 Fed. Reg. at 69731 (same). It also developed sensitivity
scenarios “to specifically address the potential uncertainty in
some key input parameters.” Consumer Furnaces Rule, 88 Fed.
Reg. at 87555. Contrary to Petitioners’ argument, DOE
included “an increasing penetration of condensing furnaces”
into its analysis based on the trend that consumers are
progressively purchasing condensing furnaces and water
heaters even without new standards. Consumer Furnaces Rule,
88 Fed. Reg. at 87556; Pet’rs’ Br. 75–77. DOE then responded
to comments from interested persons and provided “additional
sensitivity scenarios to demonstrate that its conclusions of
economic justification [were] robust.” Consumer Furnaces
Rule, 88 Fed. Reg. at 87555.11
Petitioners’ argument—that DOE did not provide a
reasoned explanation for assuming that consumers sometimes
11 Despite the inputs DOE used and the analysis it performed, the
dissent believes that we somehow found solace in DOE’s analysis
because it was “longer,” see Dissenting Op. 20, but no where do we
conclude that DOE’s reasoning was sound based on the length—
instead we base our holding on the reasoned explanation DOE
provided and its calculus based on the entirety of the data in the
record before it.

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do not act in their best economic interest—is not supported by
the record before us. The dissent seems to take this even farther
by contending that DOE “assumed consumers never consider
costs when choosing between gas-fired appliances.”
Dissenting Op. 15 (emphasis in original). But this is once again
simply not true. See e.g., Consumer Furnaces Rule, 88 Fed. at
87584 (“DOE [did] not mak[e] an assumption that consumers
never consider the economics of their purchasing decision.”).
Although DOE’s burden for the Commercial Water
Heaters Final Rule was a high one—clear and convincing
evidence—there is substantial evidence in the record to show
that they met the mark. In order “[t]o accurately estimate the
share of consumers that would be affected by a potential energy
conservation standard,” DOE analyzed the LCC of commercial
water heaters “under the no-new standards case (i.e., the case
without amended or new energy conservation standards).”
Commercial Water Heaters Rule, 88 Fed. Reg. at 69757.
“DOE developed the no-new-standards distribution of
equipment using data from DOE’s Compliance Certification
database and data submitted by AHRI regarding condensing
versus non-condensing equipment.” Id. DOE then assigned a
commercial water heater to each building it had in its sample
based “on the forecasted efficiency distribution (which is
constrained by the shipment and model data collected by DOE
and submitted by AHRI) and accounts for consumers that
[we]re already purchasing efficient” commercial water heaters.
Id.
Specifically, regarding Petitioners’ concern that DOE used
data which suggests that consumers do not act in their best
economic interest—DOE explained that disregarding that data
“would not be representative of the [commercial water heater]
market. Commercial Water Heaters Rule, 88 Fed. Reg. at
69760. DOE “took into account all of the available data

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concerning the market implementation of condensing natural
gas-fired [commercial water heater] equipment.” Id. at 69757.
From this data, DOE projected commercial water heater
shipments by efficiency level over the analysis period. Id.
“[B]ased on the presence of well-understood market failures
and a corresponding lack of data showing a correlation between
[commercial water heater] efficiency and building hot water
load,” DOE concluded that “a random assignment of
efficiencies best accounts for consumer behavior in the”
commercial water heater market. Id. at 69758. DOE explained
that it “is aware of multiple market failures that prevent []
purely economic decision making[,]” and random assignment
“reflect[s] the full range of consumer behaviors, including
those consumers who make purely economic decisions.” Id.
Therefore, the dissent’s argument that the random assignment
test never accounts for costs is simply not supported by the
record and misunderstands the inputs to the analysis.
Even for large economic purchases, like the purchase of a
commercial water heater, DOE “acknowledge[d] that
economic factors play a role” but that an analysis “based solely
on economic measures . . . most likely would not fully and
accurately reflect actual real-world installations.” Id. DOE
reasoned that consumers make decisions based on factors like
the timing of the purchase, competing demands for the funds,
loss aversion, sensitivity to information salience, and other
forms of bounded rationality. Id. (citing Richard H. Thaler &
Shlomo Bernartzi, Save More Tomorrow: Using Behavioral
Economics to Increase Employee Saving, 112 J. OF POL. ECON.
S164, S164–S187 (2004) (Nobel laureate Richard H. Thaler’s
work on behavioral economics)). These factors are amplified
when the decisions involved are complex and infrequent—like

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35
purchasing water heaters for commercial buildings. Id. at
69758–60.12
We also find that DOE’s explanation regarding why
consumers may not always act in their best economic interest
when purchasing consumer furnaces was also reasonably
explained and supported by substantial evidence in the record.
First, DOE explained that Petitioners’ contention is a
“significant[] mischaracteriz[ation]” of DOE’s analysis.
Consumer Furnaces Rule, 88 Fed. Reg. at 87580. DOE
similarly analyzed the LCC of consumer furnaces under the
“no-new-standards case.” Id.. at 87574–80. DOE “estimate[d]
not only the expected market share of products at varying
efficiencies, but also estimate[d] how such products will be
used.” Id. at 87574. DOE used a base case that “reflect[ed]
three analytical steps: (1) an estimate of the buildings likely to
use furnaces, (2) an estimate of the efficiency of the furnaces
that would be sold absent the rule; and (3) the matching of
particular furnace efficiencies with particular building types.”
Id. Each building in the sample was then assigned a furnace at
a state level and a building specific level. Id. at 87576. DOE
once again concluded that “[r]andom assignment of
efficiencies reflects the full range of consumer behaviors in
th[e] market, including consumers who make economically
beneficial decisions and consumers that, due to market failures,
do not.” Id. at 87574. The random assignment method
“simulate[d] behavior in the furnace market, where market
failures result in purchasing decisions not being perfectly
aligned with economic interests, and it d[id] so more
realistically than relying only on apparent cost-
12 Despite these explanations, the dissent somehow contends that
DOE did not provide evidence that market failures affect the market,
see Dissenting Op. 20, while at the same time providing no evidence
that consumers make economically sound decisions 100% of the
time.

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36
effectiveness[.]” Id. at 87576. In other words, the random
assignment method accounts for the fact that consumers do
sometimes base decisions on cost-effectiveness. DOE
considered available data to determine whether any
modifications needed to be made. Id. at 87574–75. This data
included historical information about shipments of condensing
and non-condensing furnaces in various regions around the
country, and accounted for the fact that consumers are already
purchasing furnaces at higher efficiency levels. Id. at 87575.
Petitioners contend that DOE “assum[ed] rationality is not
the typical behavior” for consumers, Pet’rs’ Br. 74 (emphasis
omitted), but the record shows that DOE once again
acknowledged that economic factors “play a role” when
consumers purchase furnaces, but that an economic analysis
“based solely” on life-cycle costs or payback periods “would
not fully and accurately reflect actual real-world installations.”
Consumer Furnaces Rule, 88 Fed. Reg. at 87576. Instead,
DOE took market failures into account because it could not
“assume that all purchasers of furnaces make economically
rational or irrational decisions one-hundred percent of the
time.” Id. For example, DOE responded that Petitioners’
approach “depends on the assumption . . . that homeowners
[always] know . . . the efficiency of their homes’ insulation and
windows, such that they always make heating investments
accordingly.” Id. at 87580. DOE explained that that
assumption would not be realistic and is “unsupported by the
available evidence.” Id. at 87576. Therefore, the random
assignment “methodology is not an assertion of economic
irrationality, but instead, it is a methodological approximation
of complex consumer behavior.” Id. at 87580.
Petitioners also contend that DOE assumed that “new
homebuilders routinely act against their own economic
interest” and that consumers do not purchase furnaces

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37
depending on the type of climate they are in. Pet’rs’ Br. 78,
82–83. Both contentions are contradicted by the record before
us. DOE’s analysis did “incorporate and reflect regional
market share data.” Consumer Furnaces Rule, 88 Fed. Reg. at
87581. DOE explained that “[f]or States with a large majority
of consumers already purchasing more-efficient
furnaces[,] . . . the analysis assign[ed] a correspondingly large
majority of households with an efficient furnace at or above the
adopted efficiency level in the no-new-standards case.” Id. For
example, states with colder weather have a higher market share
of condensing furnaces because they are more efficient, and
therefore less costly to run. Further, DOE’s analysis also
included “a greater probability that new construction is
assigned higher-efficiency furnaces in the no-new-standards
case, given the typically lower installation costs in new
construction.” Id.
The dissent responds with two contentions: (1) DOE
provided no explanation on why its model reflected that, in
some cases, consumers would choose to install a condensing
furnace in a building where it would have been cheaper to
install a non-condensing furnace; and (2) DOE “provide[d] no
rebuttal to petitioners’ expert” who argued that the random
assignment model “assigned a more expensive option to new
buildings . . . and to existing homeowners” most of the time.
Dissenting Op. 18–19. But, DOE did address the dissent’s
concerns and adjusted its model based on new construction vs.
replacement installations. Consumer Furnaces Rule, 88 Fed.
Reg. at 87582. As noted supra, DOE explained its model
reflected real-world data which included “the State-level
shipments market share data.” Id. at 87584. “For example, in
States with a low current market share of condensing furnaces,
the [model was] constrained to assign mostly non-condensing
furnaces in the no-new-standards case, reflecting the current
market[.]” Id. Therefore, instead of making assumptions

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38
devoid of data, DOE used the entirety of the data at its disposal
to conduct its analysis. Further, to respond to commenters who
argued that DOE’s analysis produced an illogical outcome,
DOE reiterated that the analysis “simply reflect[ed] the reality
of the current market.” Id. And even so, DOE explained that
this outcome was “limited to only a few percent [of cases
predominately] in new construction.” Id. Further, “[e]ven if
DOE were to exclude these . . . outcomes as extreme outlier
results, the LCC analysis would [still] demonstrate economic
justification[.]” Id.
Another reason the present case is unlike the random
assignment analysis conducted by DOE in APGA I is that DOE
considered all the scientific literature relevant to its LCC
analysis, and all data submitted in the course of the rulemaking
for both the Consumer Furnaces Final Rule and the
Commercial Water Heaters Final Rule. Id. at 87580;
Commercial Water Heaters Rule, 88 Fed. Reg at 69758–59.
DOE cited the available literature it was aware of, and
repeatedly requested more data from interested persons.
Consumer Furnaces Rule, 88 Fed. Reg. at 87580–81. Despite
Petitioners’ disagreement, they provided DOE with no
alternative “specific external data, information, or studies that
could be incorporated into [DOE’s] analysis.” Id. at 87581; see
also Consumer Water Heaters Rule, 88 Fed. Reg. at 69699.
Further, regarding installation costs, DOE responded to
comments by interested persons by “enhanc[ing]” its estimates
“a number of times” to address the comments. Consumer
Furnaces Rule, 88 Fed. Reg. at 87555.
Overall, we find that DOE’s economic justification
analysis and conclusions were robust. The economic
justification analysis independently and sufficiently supported
DOE’s conclusion that the amended efficiency standards were
economically justified, and we need not address the impacts of

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39
fuel switching in DOE’s analysis. This is so for two main
reasons: (1) “[t]he amended standards plainly do not compel
fuel switching” since the Final Rules do “not ban gas”
appliances; and (2) DOE concluded that even if the impacts of
fuel switching were not included in its economic justification
analysis, the amended standards would still be economically
justified. Id. at 87590, 87595; Commercial Water Heaters
Rule, 88 Fed. Reg. at 69771–72.
D. Consumer Furnaces Rule Comment Period
Lastly, Petitioners contend that DOE did not provide a
meaningful opportunity for stakeholders to comment on the
Consumer Furnaces Rule, and therefore the Rule is
procedurally flawed.
On July 7, 2022, DOE published a NOPR and request for
comment on the proposed energy conservation standards for
consumer furnaces. Energy Conservation Program: Energy
Conservation Standards for Consumer Furnaces, 87 Fed. Reg.
40590 (July 7, 2022). DOE asked that any “comments, data,
and information regarding th[e] NOPR” be submitted “no later
than September 6, 2022.” Id. at 40590. In its analysis of the
impact that the amended or new efficiency standards would
have, DOE used “Monte Carlo simulations to incorporate
uncertainty and variability into the analysis” by “randomly
sampl[ing] input values from probability distributions” and gas
furnace “user samples.” Id. at 40627. To implement this, DOE
used an add-on tool in Microsoft Excel called Crystal Ball™,
which is a “commercially-available software tool” that can
“facilitate the creation of” randomized models “by generating
probability distributions and summarizing results within
Excel.” Id. n.86. Each time that Excel is opened with the
Crystal Ball™ add-on, it produces a slight variation in the data
generated. So, when DOE published its LCC spreadsheet

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40
accompanying the NOPR, it “inadvertently” used a version of
the LCC spreadsheet that showed a slight variation of what was
included in the published NOPR and an accompanying
Technical Support Document (“TSD”), although the results
shown in the spreadsheet were similar to those included in the
NOPR and TSD. Energy Conservation Standards for
Consumer Furnaces, 87 Fed. Reg. 52861, 52862 (Aug. 30,
2022).
After interested parties, including Petitioners, alerted DOE
that the spreadsheet varied from the table results included in
the NOPR and TSD, DOE issued a Notification of Data
Availability (“NODA”) in which DOE published a revised
version of the LCC spreadsheet that was static and supported
the NOPR. DOE also extended the NOPR comment period an
extra thirty-days to October 6, 2022, and announced that it
would hold—at Petitioners’ request—a public meeting
webinar workshop where it would “provide instruction on the
operation of the LCC spreadsheet.” Id. In total, DOE provided
interested parties ninety-days to comment on the Consumer
Furnaces Rule.
Nonetheless, Petitioners contend that the ninety-days was
a “break-neck” comment period. Pet’rs’ Br. 104. We cannot
agree. 42 U.S.C. subsection 6295(p)(2) provides that DOE
shall “afford interested persons an opportunity, during a period
of not less than 60 days, to present oral and written
comments . . . on matters relating to” proposed new or
amended energy conservation standards. Petitioners
acknowledge this sixty-day statutory requirement, but contend
that DOE “promise[d] that stakeholders w[ould] have at least
75 days to comment on proposed rulemaking” as was provided

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41
in DOE regulations at the time.13 Pet’rs’ Br. 102; see 10 C.F.R.
pt. 430, subpt. C, app. A(6)(b)(2) (2022). But as Petitioners
acknowledge in their briefing, the seventy-five-day allotment
provided in the appendix to the regulation did “not intend[] to,
and [did] not, create any right or benefit, substantive or
procedural” that DOE was required to adhere to. 10 C.F.R. pt.
430, subpt. C, app. A(3)(c) (2022). It was only required to
provide at least sixty days for interested parties to comment—
which it did. Moreover, the regulation expressly authorized
DOE to “deviate” from the 75-day period for comments if DOE
found it “necessary or appropriate” and provided “notice of the
deviation and an explanation.” Id. pt. 430, subpt. C, app.
A(3)(a) (2022). DOE explained in the NOPR that it was
“necessary and appropriate” to only provide the statutory
minimum for comments in this NOPR because DOE was
facing “an overdue statutory deadline” and the “analytical
methods used . . . [in the] NOPR [were] similar to those used
in previous rulemaking notices.” Energy Conservation
Standards for Consumer Furnaces, 87 Fed. Reg. at 40607.
Moreover, because the static spreadsheet DOE provided
the public on August 30, 2022, did not amount to “critical
factual material,” it was not necessary to extend the comment
period past the thirty-days it already provided. See Chamber
of Com. v. SEC, 443 F.3d 890, 900 (D.C. Cir. 2006) (“[F]urther
notice and comment are not required when additional fact
gathering merely supplements information in the rulemaking
record by checking or confirming prior assessments without
changing methodology, [or] by confirming or corroborating
data in the rulemaking record.” (citations omitted)). This is
because, as DOE explained, its Monte Carlo analysis utilized
13 10 C.F.R. pt. 430, subpt. C, app. A(6)(b)(2) (2024) was amended,
effective June 24, 2024, and presently provides that “[t]here will be
not less than 60 days for public comment on the NOPR.”

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42
random number generation, where the sequence of random
numbers was expected to change, but “[t]he relative
comparison of the various proposed energy conservation
standard levels in the published LCC spreadsheet remain[ed]
similar to the comparison presented in the NOPR.” Energy
Conservation Standards for Consumer Furnaces, 87 Fed. Reg.
at 52862. Therefore, DOE’s “conclusions of the analysis, the
policy decision, and associated rationale [we]re not impacted
by [the] sampling variability” in the two different LCC
spreadsheets. Id.
III.
Because each of Petitioners’ arguments fail for the reasons
explained, the petitions are denied.
So ordered.

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RAO, Circuit Judge, dissenting: This case concerns
Department of Energy regulations that effectively ban a class
of common and affordable gas-powered appliances. Millions
of homes and commercial buildings are equipped with
traditional, “non-condensing” gas furnaces and water heaters.
These reliable appliances vent their exhaust up a standard
chimney. A more efficient “condensing” technology exists, but
it is incompatible with traditional chimneys. Instead, it requires
a different venting mechanism. In its quest for greater
efficiency, the Department has issued new efficiency standards
that effectively ban the sale of non-condensing appliances. As
a result, any consumer seeking to replace a traditional gas
furnace or commercial water heater will be forced to install a
condensing model, a switch that often requires disruptive and
expensive renovations to a building’s venting and plumbing
systems.
These standards run afoul of the careful balance Congress
struck in the Energy Policy and Conservation Act (“EPCA”)
between improving energy efficiency and preserving consumer
choice. While EPCA empowers the Department to set
efficiency standards, the statute also imposes a critical limit on
that authority. The agency is prohibited from imposing an
efficiency standard that will result in the “unavailability” of a
product with a “performance characteristic” that consumers
value.
No one doubts that the challenged regulations make non-
condensing appliances unavailable. The central question in this
case is whether a non-condensing appliance’s venting
mechanism is a protected “performance characteristic.”
Because these appliances utilize a chimney common to many
older homes and buildings, installing a condensing appliance
will often require complex and costly renovations that may
reduce a building’s useable space. The ability to vent through

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2
a traditional chimney is exactly the kind of real-world feature
Congress protected from elimination in the marketplace. The
Department’s efficiency standards, which make non-
condensing appliances unavailable, are therefore contrary to
law.
Independent of this legal error, the Department failed to
demonstrate that the regulations are “economically justified,”
as mandated by EPCA, by showing their “benefits … exceed
[their] burdens.” 42 U.S.C. § 6295(o)(2)(B)(i); see also id.
§ 6313(a)(6)(B)(ii). The Department utilized an economic
model that we have previously held to be irrational and
inconsistent with EPCA’s requirements. The flawed model
fares no better here. Because the regulations are contrary to law
and predicated on an arbitrary economic analysis, I respectfully
dissent.
I.
A.
Congress enacted EPCA in 1975 to increase energy
production and supply while reducing energy demand. Pub. L.
94-163, 89 Stat. 871, 874 (1975). EPCA authorizes the
Department to promulgate energy efficiency standards for
consumer appliances such as refrigerators, dishwashers, air
conditioners, water heaters, and furnaces, as well as
commercial industrial equipment, like walk-in freezers and
commercial water heaters. 42 U.S.C. §§ 6292(a), 6311(1).
Congress did not, however, write the Department a blank
check to pursue efficiency at all costs. Instead, the statute
repeatedly tempers the agency’s authority by requiring it to
balance efficiency gains with the preservation of consumer
choice and product utility. While EPCA instructs the
Department to set standards that “achieve the maximum

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3
improvement in energy efficiency,” those standards must be
both “technologically feasible and economically justified.” Id.
§ 6295(o)(2)(A) (consumer appliances); see also id.
§ 6313(a)(6)(A)(ii)(II) (commercial equipment). As part of this
analysis, the agency “shall” consider whether an efficiency
standard would “lessen[] … the utility or the performance of
the” covered products. Id. §§ 6295(o)(2)(B)(i)(IV),
6313(a)(6)(B)(ii)(IV).
At issue here, EPCA also contains an “unavailability”
provision that prohibits the Department from prescribing a
standard that “is likely to result in the unavailability in the
United States in any covered product type (or class) of
performance characteristics (including reliability), features,
sizes, capacities, and volumes.” Id. § 6295(o)(4); see also id.
§ 6313(a)(6)(B)(iii)(II)(aa). This limitation balances the
regulatory promotion of greater energy efficiency with the
preservation of products that have features that provide utility
to consumers. See H.R. Rep. No. 100-11, at 22–23 (1987)
(explaining the unavailability provision “ensures that energy
savings are not achieved through the loss of significant
consumer features” and prevents a standard from making a
product with a particular feature “prohibitively expensive”).
For consumer products, the unavailability provision is
paired with the requirement that the Secretary “shall specify”
separate efficiency standards if a type of the covered product
either “consume[s] a different kind of energy” or possesses a
“performance-related feature” that other products in the group
lack. 42 U.S.C. § 6295(q)(1). In determining whether a feature
justifies a separate standard, the Secretary must consider
“utility to the consumer” and any other factors he “deems
appropriate.” Id.

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4
B.
The challenged efficiency standards apply to two classes
of products: gas-fired consumer furnaces and gas-fired
commercial water heaters. These appliances can be further
divided into two classes: non-condensing and condensing.
Both types of appliances produce hot exhaust gases that require
exterior venting; however, they employ different venting
methods.
Non-condensing appliances are the traditional design and
are currently used in millions of homes and commercial
buildings. These units use unpowered venting systems that
keep exhaust gases hot enough to rise naturally through a
vertical chimney. Because some usable heat is lost in the
exhaust, non-condensing appliances typically achieve an
efficiency of around 80 percent. Furthermore, if a building
lacks a suitable vertical chimney, installing a non-condensing
appliance requires constructing one, which adds to initial costs.
Condensing appliances use a different ventilation method
that captures some of the lost heat and can achieve efficiency
levels of over 90 percent. The exhaust from condensing
appliances cannot be vented through a traditional chimney
without significant modification. Instead, condensing
appliances use a powered ventilation method and exhaust
through vents that are generally installed horizontally. While a
new horizontal vent is typically cheaper to install than a new
vertical chimney, it can be difficult to retrofit into some
existing homes and buildings.
The Department’s approach to these appliances has flip-
flopped across administrations. In 2016, the agency proposed
rules that would set minimum efficiency standards for certain
consumer furnaces and commercial water heaters to levels
above 90 percent. See Energy Conservation Program: Energy

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5
Conservation Standards for Residential Furnaces, 81 Fed. Reg.
65720, 65722 (Sept. 23, 2016); Energy Conservation Program:
Energy Conservation Standards for Commercial Water
Heating Equipment, 81 Fed. Reg. 34440, 34443 (May 31,
2016). Because only condensing appliances can meet these
efficiency levels, the proposed rules would have effectively
banned the sale of new non-condensing models.
In January 2021, the Department switched course in an
interpretive rule, which determined that, for consumer furnaces
and commercial water heaters, non-condensing technology
provides a unique “performance characteristic” and
eliminating it from the market would violate EPCA’s
“unavailability” provision. See Energy Conservation Program
for Appliance Standards: Energy Conservation Standards for
Residential Furnaces and Commercial Water Heaters, 86 Fed.
Reg. 4776, 4816 (Jan. 15, 2021). The agency explained that
non-condensing technology allows consumers to: (1) avoid
complex or costly installations where space, venting, or
drainage is constrained; (2) prevent the loss of usable space that
installing a condensing unit might require; and (3) maintain a
meaningful choice of fuel type by preserving an affordable gas-
powered option, as the alternative would cause significant “fuel
switching” from gas to electric appliances. See id. Following
this interpretation, the agency withdrew the 2016 proposed
standards.
Later that year, the Department again reversed course. In
a new interpretive rule, the agency concluded that non-
condensing technology is not a “performance characteristic”
because it “does not provide unique utility to consumers
separate from an appliance’s function of providing heated air
or water.” See Energy Conservation Program for Appliance
Standards: Energy Conservation Standards for Residential
Furnaces and Commercial Water Heaters, 86 Fed. Reg. 73947,

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6
73951 (Dec. 29, 2021) (“December 2021 Interpretive Rule”).
The Department explained that consumer utility arises from
interacting with a product’s primary function, “not through
design parameters impacting installation complexity[] or
costs.” Id. Because consumers do not directly interact with
vents, the agency reasoned that differences in venting methods
or installation costs are not a unique performance characteristic
of non-condensing appliances. Id. at 73953.
Relying on this interpretation, the Department set
minimum efficiency standards for gas-fired consumer furnaces
and commercial water heaters at 95 percent, a level that non-
condensing appliances cannot achieve. See Energy
Conservation Program: Energy Conservation Standards for
Consumer Furnaces, 88 Fed. Reg. 87502, 87503 (Dec. 18,
2023) (“Consumer Furnace Rule”); Energy Conservation
Program: Energy Conservation Standards for Commercial
Water Heating Equipment, 88 Fed. Reg. 69686, 69687 (Oct. 6,
2023) (“Commercial Water Heater Rule”).
A coalition of gas industry associations, manufacturers,
and utilities petitions for review of these regulations. We have
jurisdiction under 42 U.S.C. §§ 6306(b) and 6316, which
provide for judicial review under the Administrative Procedure
Act.
II.
Petitioners first argue the efficiency standards are contrary
to law because they violate EPCA’s unavailability provision.
EPCA prohibits the Department from setting standards that
make unavailable products with distinct “performance
characteristics”—that is, with attributes that provide utility to
the consumer. Non-condensing appliances plainly provide such
utility: a venting method that is compatible with the
conventional chimneys found in millions of older homes and

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7
buildings. For these consumers, replacing a non-condensing
appliance with a condensing one may require cumbersome and
costly retrofits. These modifications often include punching
new holes through exterior walls for plastic vents, sacrificing
closets or other living space to run new piping, giving up
windows or balconies that are too close to a new vent’s exhaust,
and re-lining or abandoning a perfectly functional chimney.
Because non-condensing appliances can integrate directly
into an existing exhaust system, they have a protected
“performance characteristic” under the plain meaning of
EPCA. And because it is undisputed that the efficiency
standards make these appliances unavailable, the standards are
contrary to law.
A.
Under EPCA, the Department of Energy
may not prescribe an amended or new
standard under this section if … interested
persons have established by a preponderance
of the evidence that the standard is likely to
result in the unavailability in the United
States in any covered product type (or class)
of performance characteristics (including
reliability), features, sizes, capacities, and
volumes that are substantially the same as
those generally available in the United States
at the time of the Secretary’s finding.
42 U.S.C. § 6295(o)(4); see also id.
§ 6313(a)(6)(B)(iii)(II)(aa).
No one questions that the challenged efficiency standards
will make non-condensing appliances unavailable. The

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8
question in this case is therefore a legal one: Is a non-
condensing appliance’s compatibility with existing, standard
chimney vents a protected “performance characteristic” under
EPCA?
The parties agree that a “performance characteristic” is
one that provides utility to the consumer, but they disagree
about what type of utility counts. The Department claims a
“performance characteristic” only includes features a
consumer interacts with during the product’s operation and
excludes “design parameters impacting installation
complexity[] or costs.” December 2021 Interpretive Rule, 86
Fed. Reg. at 73951. Petitioners counter that the term
encompasses other utility conferring features, and that
“noncondensing technology provides obvious utility—
functioning in the purchaser’s existing building and vents.”
To determine whether non-condensing appliances have a
“performance characteristic,” this court must identify the “best
meaning” of the statute and “exercise [its] independent
judgment in deciding whether [the Department] has acted
within its statutory authority.” Loper Bright Enters. v.
Raimondo, 144 S. Ct. 2244, 2266, 2273 (2024). The term
“performance characteristic” is not defined in EPCA, so we
must give it its “ordinary, contemporary, common meaning.”
Sandifer v. U.S. Steel Corp., 571 U.S. 220, 227 (2014) (cleaned
up). The ordinary meaning of a term is informed by the context
of the “overall statutory scheme.” Sturgeon v. Frost, 577 U.S.
424, 438 (2016) (cleaned up).
The text and structure of EPCA demonstrate that
petitioners’ broader understanding of “performance
characteristic”—any product attribute that provides “utility” to
the consumer—is correct. EPCA is a highly detailed statute in
which Congress created a framework for balancing energy

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9
efficiency with consumer utility. The statute repeatedly uses
“utility” and “performance” in tandem, treating them as related
concepts that capture a product’s overall value and usefulness
to the consumer. For example, when determining if a new
efficiency standard is “economically justified,” the agency
must consider the “lessening of the utility or the performance
of the covered products likely to result from the imposition of
the standard.” 42 U.S.C. §§ 6295(o)(2)(B)(i)(IV),
6313(a)(6)(B)(ii)(IV). Likewise, the unavailability provision,
which ensures products with valued characteristics remain on
the market, is paired for consumer appliances with a
requirement that the Secretary “shall specify” a separate
efficiency standard for any product with a “performance-
related feature” that provides “utility to the consumer.” Id.
§ 6295(q)(1).
The plain meaning of these terms is exceptionally broad.
“Utility” simply means “usefulness” or “fitness for some
desirable purpose.” See Utility, Oxford English Dictionary
(2nd ed. 1989). A “performance characteristic,” in turn, is a
“distinctive” or “essential quality,” see Characteristic, Oxford
English Dictionary (2nd ed. 1989), that relates to the
“execution … of any action or work,” see Performance,
Oxford English Dictionary (2nd ed. 1989). By repeating these
terms in several provisions preserving consumer choice,
Congress enacted comprehensive protections for consumer
utility.
EPCA protects the availability of products that provide
utility broadly understood, an interpretation that is confirmed
by the list of terms Congress included with “performance
characteristics”: “reliability, features, sizes, capacities, and
volumes.” 42 U.S.C. § 6313(a)(6)(B)(iii)(II)(aa); see also id.
§ 6295(o)(4). “Under the … interpretive canon noscitur a
sociis, a word is known by the company it keeps.” McDonnell

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10
v. United States, 579 U.S. 550, 569 (2016) (cleaned up). The
fact that “several items in a list share an attribute counsels in
favor of interpreting the other items as possessing that attribute
as well.” Beecham v. United States, 511 U.S. 368, 371 (1994).
Here, the list is expansive and practical. It includes intangible
qualities like “reliability” and “features,” as well as concrete
attributes like “sizes, capacities, and volumes.” These terms
reflect multiple ways in which a product may provide real
world utility and reinforce that the term “performance
characteristic” has an expansive meaning that protects
consumer choice.
The Department’s cramped interpretation of “performance
characteristic” cannot be reconciled with the text and structure
of EPCA. The agency asserts that a “performance
characteristic” is limited to features that provide utility during
operation, “not through design parameters impacting
installation complexity[] or costs.” See December 2021
Interpretive Rule, 86 Fed. Reg. at 73951. Nothing in EPCA
suggests such a limitation. To the contrary, Congress explicitly
protected the availability of “sizes, capacities, and volumes,”
terms that plainly encompass an appliance’s physical
dimensions and compatibility with a building’s existing
infrastructure. And “reliability” similarly refers to a
performance characteristic that goes beyond operation to
consider a product’s long-term effectiveness. There is no
reason to think that consumers derive utility only from
operational features like “through the door ice” and not from
the ability to install a product in their home without
cumbersome (and costly) renovations that change the use of
their interior space. Cf. Majority Op. 19.
EPCA’s broad protection for the availability of consumer
products demonstrates that a “performance characteristic” may

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11
include a product’s physical dimensions, its functional output,
and how it integrates into a home or building.
The Department’s regulations also cannot be squared with
its long-standing practice. The agency has frequently invoked
its authority to create separate efficiency standards to preserve
a “performance-related feature” based on installation-related
features. For example, the Department established a separate
standard for air conditioners that fit into smaller wall openings
to ensure consumers would not “be forced to invest in costly
building modifications.” See Energy Conservation Program for
Commercial and Industrial Equipment: Packaged Terminal Air
Conditioner and Packaged Terminal Heat Pump Energy
Conservation Standards, 73 Fed. Reg. 58772, 58782 (Oct. 7,
2008).
In addition, the Department has consistently set distinct
efficiency standards for products based on compatibility with
venting systems, installation location, and availability of power
sources. See, e.g., Energy Conservation Program: Energy
Conservation Standards for Residential Clothes Dryers and
Room Air Conditioners, 76 Fed. Reg. 22454, 22485 n.28 (Apr.
21, 2011) (specifying separate standards for ventless clothes
dryers because they offer utility to consumers in homes that
cannot accommodate an external vent); 10 C.F.R.
§ 430.32(c), (e) (specifying separate standards for air
conditioners, heat pumps, and furnaces based on installation
constraints). In these prior rules, the agency correctly
recognized that features related to installation provide
significant utility and set separate standards to preserve them.
The Department’s refusal to do so here for non-condensing
furnaces—which likewise provide utility related to

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installation—is an unexplained and arbitrary departure from
the agency’s long-standing practice.1
Under the best meaning of EPCA, a “performance
characteristic” is a distinctive product attribute that provides
utility to the consumer. Non-condensing appliances plainly
provide such utility through their unique venting method,
which allows for direct integration into many existing exhaust
systems without cumbersome and costly retrofits. This
integration capability is a “performance characteristic” of non-
condensing appliances that EPCA protects from regulatory
elimination.
B.
Relying on the Department’s “scientific data,” the
majority concludes that petitioners have failed to meet their
burden of proving that non-condensing appliances have a
protected “performance characteristic.” Majority Op. 27–28.
But this is not the burden EPCA imposes. The evidentiary
burden applies only to the factual question of whether a
standard will cause a protected product to become unavailable,
not to the legal question of what qualifies as a protected
“performance characteristic.” See 42 U.S.C. §§ 6295(o)(4),
6313(a)(6)(B)(iii)(II)(aa). The facts of unavailability are not in
1 The majority’s attempt to distinguish these previous regulations is
unpersuasive. It claims ventless dryers are different because some
consumers would be deprived of a dryer entirely, yet it ignores that
the Department projects some consumers here will be effectively
deprived of gas-powered appliances entirely. See Majority Op. 19–
22. It claims size-based distinctions are permitted, yet it ignores that
“sizes” naturally includes the dimensional constraints associated
with venting, which make non-condensing appliances the only viable
option for many consumers who prefer to have a gas-powered
appliance. See Majority Op. 22–27.

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dispute here. The Department’s new standards demand
efficiency levels of 95 percent, which will eliminate non-
condensing appliances from the market.2
The central disagreement turns on the legal question of
what counts as a “performance characteristic” under EPCA.
The majority largely ducks this question by declaring that
EPCA is ambiguous as to the meaning of “performance
characteristic” and “utility.” Majority Op. 16–18. The majority
takes this ambiguity as a license to defer to the Department.
But this Loper Bright avoidance is inconsistent with the
Supreme Court’s directive that a court must “use every tool at
[its] disposal to determine the best reading of the statute and
resolve the ambiguity.” 144 S. Ct. at 2266.
The majority also relies on the Department’s conclusion
that non-condensing appliances lack a distinct “performance
characteristic” because “venting is a quality that both
condensing and non-condensing appliances share.” Majority
Op. 19–20; see also Consumer Furnaces Rule, 88 Fed. Reg. at
87535; Commercial Water Heaters Rule, 88 Fed. Reg. at
69709–10. This framing misses the point. The issue is not the
generic existence of venting, but whether the specific type of
venting provides utility to consumers. And on this question, the
Department does not contest that non-condensing and
condensing appliances use different types of venting, such that
2 See Technical Support Document, Consumer Furnace Rule 8D-3–
4 (“Almost all of the non-condensing [gas furnaces] have an annual
fuel utilization efficiency (AFUE) of 80 percent. … Condensing [gas
furnaces] have an AFUE of 90 percent or greater.”); id. 8I-1 n.b
(“The market share of furnaces with AFUE between 80 and 90
percent is well below 1 percent due to the very high installed cost of
81-percent AFUE furnaces, compared with condensing designs.”).

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replacements may require awkward retrofits and costly
renovations.
The Department attempts to minimize the loss of
consumer utility, claiming only “5 percent or fewer of
condensing gas appliance installations were challenging.”
December 2021 Interpretive Rule, 86 Fed. Reg. at 73960. But
this only supports the conclusion that non-condensing
appliances in fact have a performance characteristic that
provides utility to consumers. For such ubiquitous appliances,
5 percent of installations may easily impact millions of
consumers. In any event, nothing in EPCA suggests that the
unavailability provision applies only when a large percentage
of consumers are harmed.
The majority also relies on the Department’s reassurance
that consumers have other options available. Majority Op. 22.
But the Department’s elaboration of these so-called options
reveals the true nature of the rules: consumers can either
undertake undesirable and costly building modifications or
they can switch to an electric appliance. See December 2021
Interpretive Rule, 86 Fed. Reg. at 73957. EPCA’s
unavailability provision protects consumer choice for products
with performance characteristics—it would be rendered a dead
letter if the mere existence of other options (no matter how
different) allowed the Department to set standards that made
products unavailable.
The distinctive venting mechanism of non-condensing
appliances is precisely the kind of “performance characteristic”
that condensing appliances lack and that EPCA protects from
regulatory elimination.

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* * *
In sum, the Department’s interpretation of EPCA
contradicts the statute’s text, context, and the agency’s
regulatory practice. The ability of non-condensing appliances
to integrate into a building’s existing ventilation without
disruptive renovations is a protected “performance
characteristic.” Because the Consumer Furnace Rule and
Commercial Water Heater Rule make appliances with this
characteristic unavailable, the Department’s standards are
contrary to law.
III.
Petitioners separately maintain that the Department has
failed to demonstrate these efficiency standards are
“economically justified.” I agree. The agency relied on an
irrational economic model that assumed consumers never
consider costs when choosing between gas-fired appliances,
but always consider costs when deciding whether to switch
from a gas-fired appliance to an electric one. With no support
for these contradictory assumptions, the Department’s Monte
Carlo model is arbitrary and capricious and cannot justify
imposing these efficiency standards on consumers.
A.
EPCA requires the Department to demonstrate that a new
efficiency standard is “economically justified,” by “substantial
evidence” for consumer appliances and “clear and convincing
evidence” for commercial equipment. 42 U.S.C.
§§ 6306(b)(2), 6313(a)(6)(A)(ii)(II). A standard is
economically justified only if its “benefits ... exceed its
burdens.” Id. § 6295(o)(2)(B)(i); see also id.
§ 6313(a)(6)(B)(ii). As we have previously held on very similar
facts, when the Department’s economic model rests on a false

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or unexplained premise about consumer behavior, the
justification falls short of EPCA’s evidentiary requirements.
Am. Pub. Gas Ass’n v. Dep’t of Energy (“APGA I”), 22 F.4th
1018, 1022, 1027–28 (D.C. Cir. 2022).
To determine whether an efficiency standard results in net
benefits, the Department must consider, among other things,
“the savings in operating costs throughout the estimated
average life of the covered product … compared to any
increase in the price of, or in the initial charges for, or
maintenance expenses of,” the covered product. 42 U.S.C.
§ 6295(o)(2)(B)(i); see also id. § 6313(a)(6)(B)(ii)(II). To
satisfy this statutory mandate, the agency generally conducts a
life-cycle cost analysis that compares two hypothetical
scenarios: one without the new standards and one with the new
standards in effect. APGA I, 22 F.4th at 1023. These
calculations are complicated because consumer costs vary
tremendously across the country depending on local labor
rates, energy prices, and building characteristics. Costs will
also differ based on a consumer’s individual building and
construction type and on a consumer’s priorities and projected
use of the new appliance. As a result, there is not one life-cycle
cost, but many.
To account for this variability, the Department employed
a Monte Carlo model. The model’s name refers to how casinos
predict earnings—while the outcome of a single roll of the dice
is random, the average outcome over thousands of repeated
plays is predictable. In its analysis, the agency simulated ten
thousand buildings with randomly assigned appliances and
then calculated the life-cycle costs in two scenarios. First, in
the scenario without the new standards, the life-cycle costs
were based on the randomly assigned appliance. Second, in the
scenario with the new standards, every consumer assigned a
non-condensing appliance would be required to purchase a

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condensing appliance. To estimate the rules’ net economic
impact, the Department averaged the cost difference between
the two scenarios for each building.
I agree with the majority that a Monte Carlo analysis could
be used to model the economic impacts of an efficiency
standard. The reliability and validity of the resulting
predictions, however, depend on the inputs. Like all models,
the Monte Carlo method “adhere[s] to the inviolable law of
data analysis, ‘garbage in; garbage out.’” Mississippi v. EPA,
744 F.3d 1334, 1352 (D.C. Cir. 2013).
The inputs here were fundamentally flawed. The
Department properly used real-world data for energy prices and
building types, but it excluded the most salient factor
influencing appliance selection: cost. On the grounds that
consumers are sometimes irrational or myopic in choosing
appliances, the model assumed that consumers choose among
available appliances completely at random, with no regard for
costs.3
This assumption defies both reality and basic economics.
As the Department has documented, installation costs for
condensing and non-condensing appliances differ substantially
and predictably depending on construction scenario. For
example, in new construction, a condensing furnace is
3 The Department concedes that “[t]he efficiency assignment is a
methodological simplification that takes into account existing market
trends … and acknowledges a range of consumer behaviors and
market failures.” Consumer Furnaces Rule, 88 Fed. Reg. at 87534.
That is to say, the Department’s model did not consider costs. The
majority glosses over the actual inputs used by the Department and
simply relies on the Department’s self-serving assertion that “DOE
[did] not mak[e] an assumption that consumers never consider the
economics of their purchasing decision.” Majority Op. 33.

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significantly cheaper to install ($1,796 on average) than a non-
condensing one ($2,467). Technical Support Document,
Consumer Furnace Rule 8D-32. But when replacing a non-
condensing furnace, it costs significantly more to install a
condensing furnace ($1,345 versus $801). Id. 8D-31. Given
these stark cost differences, the Department must provide a
“cogent and reasoned” explanation for its assumption that “a
purchaser’s decisions will not align with its economic interests
in purchasing” an appliance. APGA I, 22 F.4th at 1027–28. But
the Department provided no such explanation here, and instead
merely assumed consumers ignored these costs and selected
appliances at random.4
This unsound assumption of a total market failure stacked
the deck in favor of the rules by manufacturing artificial
savings. Because the model ignored consumer costs and
assigned appliances at random, it frequently assigned
consumers an economically irrational appliance. For example,
it sometimes assigned a non-condensing appliance in new
construction even though that would require constructing an
expensive vertical chimney. The model then credited the new
standards with the “savings” realized when it banned non-
condensing appliances and prevented a consumer from
incurring those construction costs—a choice no rational
consumer would have made in the first place.
This economic sleight of hand undermines the
Department’s justification for its rules. The Department
4 Perhaps recognizing that the market failure is not complete, the
Department defends its model on the grounds that it predicted
approximately 45 percent of consumers will choose the most cost-
effective furnace. But this is merely a byproduct of chance and not a
“prediction” in any meaningful sense. A coin flip will be correct half
the time, but it is hardly a predictive model for economic behavior.

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provides no rebuttal to petitioners’ expert, who explains that
the model randomly assigned a more expensive option to new
buildings 80 percent of the time and to existing homeowners
60 percent of the time.5 Meyer Declaration 3–5. If the
Department had assumed that consumers rationally choose the
lowest cost appliance, the Consumer Furnace Rule would
impose a $2.5 million net cost on the public, rather than the
projected net savings of $1.4 million. Id. at 6. That is, the
benefits of the standards would not exceed the costs, and under
EPCA the standards could not be promulgated. See 42 U.S.C.
§§ 6295(o)(2)(B)(i), 6313(a)(6)(B)(ii).
In APGA I, we rejected a similar economic analysis in
which the Department used a Monte Carlo model to project the
costs of an efficiency standard for boilers but “failed to
recognize that a purchaser … would rationally consider the
costs and benefits of its investment and is likely to buy the
[appliance] that produces the best economic performance for
its building.” 22 F.4th at 1027. The assumption of consumer
irrationality “inflated the economic value of a more stringent
standard by attributing to a new regulation economic benefits
that would be realized even without a new regulation.” Id.
Relying on a model that presumes widespread consumer
irrationality without supporting evidence “bespeaks a failure to
consider an important aspect of the problem.” Id. at 1027–28
(cleaned up); see also Chem. Mfrs. Ass’n v. EPA, 28 F.3d 1259,
1265 (D.C. Cir. 1994) (explaining “we must reverse” agency
action “as arbitrary and capricious if there is simply no rational
5 The analysis by petitioners’ expert, Richard Meyer, focuses on the
Consumer Furnace Rule because the Department did not make the
raw data for the Commercial Water Heater Rule available.
Petitioners assert, and the Department does not contest, that the same
flawed modeling assumptions were made in both rules.

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relationship between the model and the known behavior … to
which it is applied”).
The majority suggests APGA I is distinguishable because
here the Department provided a more detailed explanation for
its model and included additional inputs. Majority Op. 30–33.
But a longer explanation of an erroneous premise does not cure
the defect. Nor does adding additional inputs that fail to address
the core shortcoming. The central error in APGA I was not a
lack of explanation, but a failure of proof. 22 F.4th at 1027–28
(explaining the Department bears the burden of “provid[ing]
actual evidence that … market failures affect the market” and
“justify[ing] the assumptions that underly its analysis”).
While consumers may not be perfect estimators of life-
cycle costs, that fact cannot explain a wholesale disregard for
stark differences in initial costs.6 For these regulations, the
Department lacked evidence to justify its assumption of
widespread market failure, and therefore its economic model
does not substantially or clearly support the new efficiency
standards.
B.
The Consumer Furnace Rule’s economic analysis is also
flawed because of its reliance on rational fuel switching—the
prediction that higher costs under the new standard would
cause consumers to shift from gas-fired to electric furnaces.7
6 Contrary to the majority, consumers do not need to “make
economically sound decisions 100% of the time” for cost to be a
relevant consideration. Majority Op. 35 n.12.
7 The Department did not include benefits from forced fuel switching
as part of its analysis in the Commercial Water Heater Rule. 88 Fed.
Reg. at 69771.

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The Department modeled two scenarios: one with no fuel
switching and one in which consumers always switched to
electric when it was economically advantageous. Consumer
Furnace Rule, 88 Fed. Reg. at 87587. While the agency
predicted cost savings in both scenarios, the savings in the
scenario with fuel switching were more than double the
scenario without.
The majority does not address the Department’s fuel
switching analysis because it upholds the agency’s Monte
Carlo analysis. Majority Op. 38–39. But because I reject that
analysis, I explain why the Department’s fuel switching
analysis also fails to justify the rule.
There are two fundamental problems with the
Department’s analysis. First, it is in tension with EPCA, which
requires the agency to weigh the “savings in operating costs”
against any “increase in the price of … the covered products.”
42 U.S.C. § 6295(o)(2)(B)(i). The most natural reading of this
provision is that it requires a comparison of costs and benefits
related to the covered product, not savings generated because
the rule forces consumers to switch to an entirely different type
of appliance. Moreover, EPCA explicitly preserves products
that “consume a different kind of energy” and requires different
standards for them. See id. § 6295(q)(1)(A); cf. id.
§ 6295(f)(1)(B)(iii) (prohibiting standards likely to cause “a
significant shift from gas heating to electric resistance heating
with respect to either residential construction or furnace
replacement”). These provisions strongly suggest that the
Department cannot count as an economic “benefit” the fact that
an efficiency standard makes a regulated product so costly that
consumers are forced to abandon it.
The Department’s justification for this approach does not
withstand scrutiny. The agency argues that the statute’s broad

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instruction to consider “the total projected amount of
energy[] … savings” allows it to count savings from fuel
switching. See Respondents’ Br. 70 (citing 42 U.S.C.
§ 6295(o)(2)(B)(i)(III)). But this general provision must be
read in harmony with the specific instruction to analyze the
costs and savings of the “covered product.” When a standard
for gas furnaces causes a consumer to buy an electric heat
pump, the resulting savings are not savings from efficiency
improvements to the gas furnace (the covered product); they
are savings from a different product in a different product class.
Justifying a standard for one product class based on its
projected demise in the marketplace creates a perverse
incentive that runs contrary to EPCA’s protection of distinct
product classes and consumer choice. See 42 U.S.C.
§ 6295(q)(1).
Second, the Department’s fuel-switching analysis is
starkly inconsistent with its primary economic model. When
analyzing the choice between gas furnaces, the model assumed
consumers are wholly indifferent to cost. Yet when analyzing
the choice between a gas and an electric furnace, the model
suddenly presumed a perfectly rational consumer who
carefully weighs all costs to make an economically optimal
decision. The efficiency standards depend on a schizophrenic
view of the consumer.
A rule built on two diametrically opposed assumptions
about consumer behavior is the antithesis of reasoned
decisionmaking. The Department provides no explanation, let
alone evidence, to support its approach. Because the Consumer
Furnace Rule fails to explain this internal inconsistency, it is
arbitrary and capricious. ANR Storage Co. v. FERC, 904 F.3d
1020, 1028 (D.C. Cir. 2018); see also Engine Mfrs. Ass’n v.
EPA, 20 F.3d 1177, 1182 (D.C. Cir. 1994) (concluding that

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“unexplained inconsistency” in final rule was “not
reasonable”).
In sum, the Department’s economic justification for the
challenged standards is fundamentally flawed. The agency
propped up its cost-benefit analysis by relying on a model that
first assumed consumer irrationality to manufacture benefits
from the new standards and then assumed perfect consumer
rationality to claim additional savings from fuel switching.
This analysis is the epitome of arbitrary and capricious
decisionmaking. The Department’s economic justifications are
not supported by substantial evidence, much less by the clear
and convincing evidence required for commercial products.
* * *
Congress prohibited the Department of Energy from
setting efficiency standards in a way that would eliminate
product features and characteristics that provide substantial
utility to consumers. But the challenged rules do just that by
banning a class of useful gas-fired appliances. Moreover, the
agency’s economic analysis defies reality and runs headlong
into this circuit’s precedents. Because these standards are
contrary to law and predicated on an arbitrary and capricious
economic justification, I would grant the petitions and vacate
the rules.

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