Ninth Circuit upholds air quality rule against industry challenge

The United States Court of Appeals for the Ninth Circuit recently upheld a significant air quality regulation that affects millions of residents in Southern California. The court ruled in the case of Rinnai America Corporation v. South Coast Air Quality Management District (docket number 25-5129) that the South Coast Air Quality Management District (SCAQMD) can enforce its amended Rule 1146.2, which aims to phase in zero nitrous oxide emissions standards for certain appliances over the next decade. This decision is crucial as the South Coast Air Basin, which includes parts of Los Angeles, Orange, Riverside, and San Bernardino counties, has the worst air quality in the nation, particularly regarding ground-level ozone, also known as smog.

The ruling, issued on July 2, 2026, comes at a time when the Basin is classified as being in "extreme" nonattainment of federal ozone standards under the Clean Air Act (CAA). The court's decision is significant because it allows the District to move forward with its efforts to improve air quality and public health in a region that has struggled with pollution for decades.

In this case, several plaintiffs, including manufacturers of gas appliances and industry trade groups, challenged the District's rule, claiming it was preempted by the Energy Policy and Conservation Act (EPCA). They argued that the EPCA was designed to create uniform energy efficiency standards and should prevent local regulations that could interfere with those standards. However, the court found that the EPCA does not preempt the District's authority to regulate emissions under the CAA.

Background

The parties involved in this case include Rinnai America Corporation, Noritz America Corporation, and various industry associations, who filed the lawsuit against the SCAQMD. The dispute centers around the District's Rule 1146.2, which was amended to phase in prohibitions on the manufacture, sale, or installation of gas-fired water heaters, boilers, and process heaters that emit more than zero nitrous oxides. The District adopted this rule in response to the urgent need to comply with federal air quality standards.

The SCAQMD has a long history of regulating air pollution in the South Coast Air Basin. Since its establishment in the 1970s, the District has implemented various rules to control emissions, particularly nitrous oxides, which contribute to smog. Despite previous efforts, the Basin has consistently failed to meet federal air quality standards, leading to the adoption of the new rule aimed at achieving significant reductions in emissions.

The case reached the Ninth Circuit after the district court granted summary judgment in favor of the SCAQMD, ruling that the District's rule was not preempted by the EPCA. The plaintiffs appealed this decision, arguing that the rule interfered with federal energy efficiency standards.

The Ruling

The Ninth Circuit affirmed the district court's decision, stating that the EPCA does not preempt the SCAQMD's Rule 1146.2. Judge Lucy H. Koh, writing for the panel, emphasized that the District's efforts to comply with federal air quality standards under the CAA were not in conflict with the EPCA. The court noted, "Nothing in the text, structure, or history of EPCA suggests that Congress intended to interfere with states’ ability to use these well-established methods to achieve compliance with federal air quality standards under the CAA."

The court's opinion highlighted that the plaintiffs failed to demonstrate that the rule was unconstitutional in every application, particularly since the rule regulates emissions from process heaters, which are not covered under the EPCA. The ruling also pointed out that the District's efforts to implement stricter emissions standards align with its obligations under the CAA, which requires states to take necessary measures to reduce emissions in nonattainment areas.

Impact

This ruling has significant implications for air quality regulations in the South Coast Air Basin and beyond. It allows the SCAQMD to enforce its zero-emission standards, which are expected to reduce emissions from appliances by nearly 10 percent once fully implemented. The decision also reinforces the authority of local air quality management districts to regulate emissions in line with federal standards, which is particularly important for regions facing severe air pollution challenges.

The ruling may set a precedent for other local jurisdictions seeking to implement similar emissions regulations. As more states and localities consider adopting zero-emission standards for appliances, this case could serve as a legal benchmark for future challenges against such regulations. The court's decision underscores the importance of local agencies in addressing public health and environmental concerns, particularly in areas with critical air quality issues.

What's Next

While the Ninth Circuit's ruling is a significant victory for the SCAQMD, the plaintiffs may still seek to appeal the decision to the U.S. Supreme Court. However, details regarding any potential appeal were not available in the court filing. The outcome of this case could influence similar legal battles across the country as states and localities strive to improve air quality and meet federal standards.