“The ‘wheels of justice turn slowly,’ but they indeed turned, even within the District of Columbia’s ‘uni-party.’ As for holding on to this victory, it is far from a slam-dunk for preserving consumer choice and free markets. I expect the struggle to escalate in Biden’s all-of-government war against natural gas and other fossil fuels.”
Beleaguered energy consumers were just handed a far-reaching victory by the United States Court of Appeals for the District of Columbia (DC Circuit). The ruling vacated a Final Rule from the U.S, Department of Energy (DOE) that would have banned the manufacture and sale of non-condensing boilers for use in commercial applications. DOE’s rule was challenged several years ago by natural gas interests–and later joined with a separate but similar case brought by the Air-Conditioning, Heating, and Refrigeration Institute (AHRI).
For those fluent in legalese, the Court’s historical review and logic can be downloaded here. The Court found that DOE failed to meet the standards of “clear and convincing evidence” necessary for DOE to mandate more stringent minimum efficiency standards. Such evidence is required by the Energy Policy and Conservation Act (EPCA).
DOE’s failures were major and numerous. Previously, the Court had afforded DOE ample opportunities to rectify them, but they didn’t. Ultimately (reading in between the lines), it appears that the Court lost its patience with “the Agency” (DOE). One of the far-reaching results of this victory is that it undermines a veritable super-weapon of the administrative state: the Chevron Deference. This aspect will be discussed in more detail further down.
DC Circuit has set a precedent that illustrates how DOE routinely bends the rules to achieve its “administrative state” objectives. Consequently, DOE should exercise more care and transparency going forward with both present and future developments of appliance minimum efficiency standards. However, it is probably more likely that DOE will find ways to get around it; perhaps drastically.
Over the years, I’ve provided updates via MasterResource on the status of these issues. Some of the most relevant to this “victory” are as follows:
The last link shows the extent that the gas industry went to politely provide DOE the opportunity to do the right thing. This started with a February 12, 2017, request for error correction that was ignored by DOE. The reason it was ignored was because it went beyond correcting a mere typo. Rather, it was aimed at correcting a major conceptual error in EERE’s Monte Carlo analyses. That error effectively assumed consumers (even commercial ones) NEVER make rational economic decisions. That error also cascades through subsequent analysis to render the DOE conclusions meaningless.
The end-result of this (amid many other analytical biases discussed in the Court ruling) is fatally skewed economic “determinations” that almost always favor stricter standards, regardless of the true economics.. As a result of this Court Order, such routine biases are now on public display to demonstrate the full intent of regulatory failures that occur within the intentionally opaque bureaucratic processes to ostensibly overcome so-called market failures.
Page 2 of the Court’s July 7, 2023 decision, is a list of the “usual suspects” who attempted to thwart us, mostly other government entities. Why such a show of force? Perhaps because their Chevron Deference was and is vulnerable to the reality of their analytical misdeeds? And if you can’t trust the government to deal fairly with the “small stuff,” why should you trust them to get the “big stuff” right?
The “wheels of justice turn slowly,” but they indeed turned, even within the District of Columbia’s “uni-party” (Democrats and pliable Republicans). As for holding on to this victory, it is far from a slam-dunk for preserving consumer choice and free markets. I expect the struggle to escalate in Biden’s all-of-government war against natural gas and other fossil fuels.
Where do we go from here?
It is too early for consumers and the natural gas industry to declare victory, although the evidentiary record is now ensconced and the DC Circuit is a major court. It is time to build on what is a superior case. Specific recommendations follow:
In closing, I want to acknowledge Tom Tanton for his wise help in fine-tuning this article. I also want to acknowledge the legal expertise of Barton Day, as well as Spire’s Mark Darrell, for their unfaltering perseverance throughout this multi-year struggle.
Mark Krebs, a mechanical engineer and energy policy consultant, has been involved with energy efficiency design and program evaluation for over thirty years. Mark has served as an expert witness in dozens of State energy efficiency proceedings, has been an advisor to DOE and has submitted scores of Federal energy-efficiency filings. His many MasterResource posts on natural gas vs. electricity and “Deep Decarbonization” federal policy can be found here. Mark’s first article was in Public Utilities Fortnightly, titled “It’s a War Out There: A Gas Man Questions Electric Efficiency” (December 1996). Recently retired from Spire Inc., Krebs has formed an energy policy consultancy (Gas Analytic & Advocacy Services) with other veteran energy analysts.