A divided panel of the U.S. Court of Appeals for the Ninth Circuit ruled last Thursday that federal energy law does not preempt South Coast Air Quality Management District’s Rule 1146.2, affirming a lower court decision and rejecting a challenge from gas appliance manufacturers, homebuilders and other trade groups.
The 2-1 decision, posted by the court, keeps in place a rule that phases in zero-nitrogen oxide emission standards for large water heaters, small boilers and process heaters across the district, which covers Los Angeles, Orange, Riverside and San Bernardino counties. Circuit Judge Lucy Koh, writing for the majority, found that nothing in the text, structure or history of the Energy Policy and Conservation Act suggested Congress intended to interfere with state and local efforts to meet federal air quality standards under the Clean Air Act, according to reporting from the National Association of Home Builders. Circuit Judge Kenneth Lee dissented, arguing the district’s rule was “strikingly similar” to a Berkeley, California, gas hookup ban the same court struck down in 2023.
Rule 1146.2 was first adopted in 1998 and has been tightened repeatedly since, with the air district adopting a zero-NOx version in 2022 and further amendments taking effect in June 2024, according to the Ninth Circuit’s opinion. The South Coast Air Basin remains in “extreme” nonattainment with federal ozone standards, and the district has said it risks losing federal highway funding if it fails to bring the region into compliance.
The People’s Collective for Environmental Justice, Sierra Club and Industrious Labs intervened in the case to defend the rule alongside the district, represented by Earthjustice and the firm Donahue, Goldberg & Herzog.
“Today, we secured a huge victory for clean air in the nation’s smog capital,” said Candice Youngblood, senior attorney at Earthjustice, in a statement from the organization. “The courts have rejected a cynical effort to stop one of the Los Angeles region’s most significant air pollution reduction rules in decades.”
Once fully implemented, the rule is projected to cut roughly 5.6 tons of smog-forming NOx pollution per day, an amount regulators compare to nearly half the daily NOx emissions from every car in the region combined, and will affect more than 1.3 million boilers and water heaters, according to Earthjustice’s release. The district estimates full implementation will avoid more than 2,800 early deaths, 11,800 cases of asthma and 300,000 lost work and school days over time, yielding more than $95 billion in public health benefits.
“Inland Empire communities are getting crushed by air pollution, and this ruling provides a breath of fresh air to make our communities safer,” said Gem Montes, policy analyst and advocate at the People’s Collective for Environmental Justice.
The lawsuit, Rinnai America Corp. v. South Coast Air Quality Management District, was filed in December 2024 by a coalition that included Rinnai America Corporation, Noritz America Corporation, the National Association of Home Builders, the California Manufacturers & Technology Association, the California Restaurant Association, the California Hotel and Lodging Association, the California Apartment Association and the California State Pipe Trades Council. The plaintiffs argued the rule amounted to an effective ban on gas-fired appliances and was preempted by the same federal energy law that doomed Berkeley’s gas piping ordinance in the earlier Ninth Circuit case, California Restaurant Association v. City of Berkeley.
A federal district court sided with the air district in 2025, finding the rule concerned appliance emissions rather than the “energy use” covered by federal preemption, and both that court and the Ninth Circuit denied requests to block the rule while the appeal proceeded, according to case tracking by the Public Health Law Center.
Thursday’s ruling arrives days after the U.S. Court of Appeals for the 2nd Circuit reached the opposite conclusion in a related dispute, upholding gas appliance restrictions in New York City and New York state over challenges from the National Association of Home Builders and other groups, according to NAHB. With the Ninth and 2nd Circuits now split on how far federal energy law reaches into local emissions rules, industry watchers say the issue could be headed for further appellate or U.S. Supreme Court review.
“These boiler rules help the region adopt modern technology that reduces harmful pollution, a critical priority for the people in the LA Basin,” said Dylan Plummer, campaign advisor with the Sierra Club.
Teresa Cheng, California director for Industrious Labs, said the ruling clears the way for upgrades across the region’s industrial and commercial building stock. “This ruling paves the way to continue modernizing our region by upgrading over a million pieces of equipment, which will bring new jobs and investment into the region while tackling the air quality crisis head on,” Cheng said.
Compliance with Rule 1146.2 is staggered by appliance type and building status, with the first deadlines affecting a limited set of units in new buildings that took effect Jan. 1, 2026, and later deadlines for high-temperature units in existing facilities extending to 2033, according to Canary Media’s coverage of the rule. The rule doesn’t require anyone to replace working equipment but limits emissions from new units as they’re installed or replaced.
Attorneys representing the plaintiff coalition, including Reichman, Jorgensen, Lehman & Feldberg, did not immediately have a public statement addressing Thursday’s decision.
