The U.S. Supreme Court on Monday revived a legal challenge to Biden-era energy efficiency standards for natural gas furnaces and commercial water heaters. The case will now return to a lower court for further review after the Trump administration reversed the federal government’s position and argued the regulations were legally flawed.
In an unsigned order, the justices vacated a previous ruling by the U.S. Court of Appeals for the District of Columbia Circuit. They sent the case back to the lower court for reconsideration. The Supreme Court did not explain its decision. There were no recorded dissents.
The case, American Gas Association v. Department of Energy, centers on Department of Energy efficiency standards finalized during former President Joe Biden’s administration. The rules required certain residential natural gas furnaces and commercial water heaters to meet a 95 percent efficiency benchmark.
Industry groups argued the standards would effectively eliminate many traditional non-condensing gas appliances from the market. They said those products generally could not meet the new efficiency requirements.
The American Gas Association first sued the Department of Energy in December 2023. The group argued the regulations would make traditional non-condensing natural gas furnaces unavailable to most Americans.
According to the association, non-condensing furnaces account for about 55 percent of the nation’s natural gas furnace market. The group said those furnaces would become illegal to manufacture in 2028 if the rule remains in place.
A divided D.C. Circuit panel upheld the regulations in November 2025. The appeals court concluded that the Department of Energy had acted within its authority under the Energy Policy and Conservation Act.
Industry groups later argued that the ruling improperly relied on agency interpretations. They said the decision conflicted with the Supreme Court’s 2024 ruling in Loper Bright Enterprises v. Raimondo, which limited judicial deference to federal agencies.
The legal landscape changed after President Donald Trump returned to office. In an April filing, U.S. Solicitor General D. John Sauer urged the Supreme Court to vacate the appeals court ruling.
Sauer said the Department of Energy had concluded the regulations were “factually and legally flawed.” He argued the rules would effectively eliminate non-condensing gas furnaces and water heaters from the market.
He also said the agency is considering a new rulemaking process. According to Sauer, the Energy Policy and Conservation Act prohibits the government from imposing standards that effectively remove products with distinct performance characteristics from the market.
The Trump administration agreed with the industry’s position. It argued that the previous court ruling interpreted that provision too narrowly.
Environmental groups and several states, including New York, urged the Supreme Court to leave the lower court ruling intact. They argued the D.C. Circuit properly interpreted federal law and that the case did not conflict with the Loper Bright decision.
Following the Supreme Court’s action, the case will return to the D.C. Circuit for reconsideration. It remains unclear when the appeals court will take up the matter.
Karen Harbert, president and CEO of the American Gas Association, welcomed the ruling.
“We welcome the Supreme Court’s decision to protect the American people from this unlawful regulation that would increase costs for families and businesses and ban an entire class of appliances,” Harbert said.
“We will continue to work to ensure all Americans can make choices about the energy and appliances in their homes.”