Hearth, Patio & Barbecue Ass'n v. United States Department of Energy

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 11, 2012 Decided February 8, 2013
No. 10-1113
HEARTH, PATIO & BARBECUE ASSOCIATION, ET AL.,
PETITIONERS
v.
UNITED STATES DEPARTMENT OF ENERGY,
RESPONDENT
NATURAL RESOURCES DEFENSE COUNCIL,
INTERVENOR
Consolidated with 10-1181, 12-1010, 12-1014
On Petitions for Review of Final Actions
of the Department of Energy
Barton D. Day argued the cause for petitioners. With
him on the briefs were John A. Hodges, Eric Andreas,
Thomas R. McCarthy, William D. Blakely, and Lauren
Desantis-Then.
H. Thomas Byron III, Attorney, United States
Department of Justice, argued the cause for respondent. With
him on the brief were Gregory H. Woods, General Counsel,
Department of Energy, Daniel Cohen, Assistant General
2
Counsel, Eric Stas, Bettina Mumme, Attorneys, Stuart F.
Delery, Acting Assistant Attorney General, Michael S. Rabb,
Attorney, United States Department of Justice.
Timothy D. Ballo was on the brief for intervenor Natural
Resources Defense Council in support of respondent. With
him were Benjamin Longstreth and Katherine Kennedy.
Before: HENDERSON and BROWN, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge BROWN.
Dissenting opinion by Senior Circuit Judge RANDOLPH.
BROWN, Circuit Judge: Petitioners Hearth, Patio &
Barbecue Association (“HPBA”) and National Propane Gas
Association (“NPGA”) seek review of two recently
promulgated rules that petitioners believe expanded the
Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. §§
6201 et seq., to include decorative fireplaces.1 Among other
challenges, HPBA alleges the Department of Energy’s
(“DOE”) interpretation of decorative fireplaces as “Direct
heating equipment” (“DHE”), a specifically enumerated class
of covered products under the Act, contravenes EPCA’s
statutory scheme and, in turn, clear congressional intent. We
agree. Finding no deference owed under Chevron U.S.A. Inc.
v. NRDC, Inc., 467 U.S. 837 (1984), we hold DOE’s feet to a
1
As used in this opinion, “decorative fireplace” includes “gas
logs,” a similarly situated device which the Department of Energy
also defined as “Direct heating equipment.” See Energy
Conservation Program, 76 Fed. Reg. 71,836, 71,837 (Nov. 18,
2011).
3
not-so-decorative fire by vacating the rule in part and
remanding.
I. STATUTORY SCHEME
The EPCA authorizes DOE to promulgate “energy
conservation standards,” 42 U.S.C. § 6291(6), for “covered
products” provided that the standards are “technologically
feasible,” “economically justified,” and result in “significant
conservation of energy.” 42 U.S.C. § 6295(o). The EPCA
initially recognized a total of fourteen classes of “covered
products,” including “Home heating equipment, not including
furnaces.” 42 U.S.C. § 6292(a)(7) (1987). In 1987, the
National Appliance Energy Conservation Act (“NAECA”)
amended the EPCA by, inter alia, expanding the number of
“covered products” from fourteen to twenty and replacing the
term “Home heating equipment, not including furnaces,” with
“Direct heating equipment.” 42 U.S.C. § 6292(a)(9).
Congress did not define either statutory phrase.
There are two types of covered products under this
statutory scheme: nineteen specifically enumerated classes, 42
U.S.C. § 6292(a)(1)-(19), including DHE, and a catch-all
class that includes “[a]ny other type of consumer product
which [DOE] classifies as a covered product under subsection
(b).” 42 U.S.C. § 6292(a)(20). To classify a consumer product
as a covered product under the catch-all provision, DOE must
show that (1) the classification was “necessary or appropriate”
to carry out the chapter’s purpose, and (2) the “average annual
per-household energy use by products of such type is likely to
exceed 100 kilowatt-hours (or its Btu equivalent) per year.”
42 U.S.C. § 6292(b). But even if DOE satisfies this threshold
jurisdictional test, it is not free to regulate newly classified
covered products as it would one of the specifically
enumerated covered products. To the contrary, DOE must
4
make several showings before imposing energy standards for
these products, including the aggregate household energy use
by product type and the technological feasibility of substantial
energy efficiency improvement. See 42 U.S.C. § 6295(l)(1).
The EPCA also bars the application of “[a]ny new or
amended standard . . . to products manufactured within five
years after the publication of a final rule establishing such
standard.” 42 U.S.C. § 6292(l)(2).
II. RULEMAKING & PROCEDURAL HISTORY
For present purposes, it is enough to cut through the
confused nomenclature and recognize the existence of two
principal categories of heaters prior to the enactment of the
NAECA in 1987: those which were purely functional, i.e.,
room heaters, and those which were purely decorative, i.e.,
faux fireplaces. Decorative fireplaces mimic the aesthetic of a
conventional fireplace with a log fire, but are specifically
designed to minimize the amount of heat generated.2
Sometime after 1987, however, manufacturers began to
introduce fireplace heaters — heaters designed for both
utilitarian heating and general aesthetics. Fireplace heaters
resemble traditional fireplaces but are “heater rated” insofar
as they are tested and marketed on the basis of their “annual
2
Petitioners submitted nine affidavits explaining, among other
things, how decorative fireplaces differ from functional heaters.
Some models, for example, are designed to “vent most of the heat
they generate outdoors” and not, like functional heaters, into the
home. See Belding Aff. at 3, Hearth, Patio & Barbeque Ass’n, No.
12-1010 (D.D.C. Feb 8, 2012). Because they were “not intended to
be heat efficient,” it is “unlikely that these products could be
redesigned to meet the heating efficiency standards . . . and it
makes no sense to try: the basic design of these products is
inherently unsuitable for an efficient heating appliance.” Id.5
fuel utilization efficiency” (“AFUE”) ratings. Fireplace
heaters, like decorative fireplaces, are classified as “vented
gas hearth” appliances, which are also known as “vented
hearth products” (“VHP”).
The challenges in this case stem from two closely related
rulemakings in which DOE defined both types of VHP —
decorative fireplaces and fireplace heaters — as “Vented
hearth heaters” (“VHH”). Because VHH are a subset of
DHE, DOE’s rulemaking had the effect of subjecting both
types of fireplaces to EPCA’s energy efficiency standards.
DOE claims its interpretation of VHH to encompass
decorative products is reasonable and thus entitled to
deference. Petitioners respond that DOE’s dual rulemaking
was a classic “bait-and-switch” designed to implement an
interpretation that is unambiguously foreclosed by the
statutory authority. To make sense of these arguments, we
must turn to the rulemaking history. Here’s what happened.
In late 2006, DOE announced that it was considering a
rulemaking to determine whether VHP could be regulated as
vented heaters, a type of DHE.3 Petitioners and other
interested parties assumed DOE’s references to VHP included
only fireplace heaters, not decorative fireplaces. The
assumption was well-founded since DOE had consistently
limited its discussion to those VHP with a utilitarian heating
purpose. The Department’s December 2009 proposed rule
bore this supposition out. It proposed a fourth subcategory of
vented heaters called “Vented hearth heater” that would be
subject to the industry’s fireplace heater standard, ANSI
3
See Rulemaking Framework for Residential Water Heaters,
Direct Heating Equipment, and Pool Heaters, U.S. Department of
Energy at 10-11 (Sept. 27, 2006), available at
http://www1.eere.energy.gov/buildings/appliance_standards/residen
tial/pdfs/heating_equipment_framework_092706.pdf.
6
Z21.88. See Energy Conservation Program, 74 Fed. Reg.
65,852, 65,868 (Dec. 11, 2009). The proposed definition read:
Vented hearth heater means a vented, freestanding,
recessed, zero clearance fireplace heater, a gas
fireplace insert or a gas-stove, which simulates a
solid fuel fireplace and is designed to furnish warm
air, without ducts to the space in which it is installed.
Id. (emphasis added).
Any consensus between manufacturers and DOE as to the
scope of the rulemaking would, however, prove short lived.
DOE abruptly reversed position in its Final Rule, sweeping
both decorative fireplaces and decorative heaters into the
definition of VHH. See Energy Conservation Program, 75
Fed. Reg. 20,112, 20,128–30 (Apr. 16, 2010). To do this,
DOE excised the term “fireplace heater” from the proposed
definition of VHH and interpreted the phrase “designed to
furnish warm air” to include decorative fireplaces. Id. at
20,234. DOE reasoned that “all hearth products create heat
and nearly all . . . provide some amount of [] heat, however
small that may be, to the surrounding living space.” Id. at
20,129.
Because decorative products are designed to stay cool
and look pretty — not efficiently convert energy to heat —
their manufacturers would most certainly struggle to comply
with the EPCA since the Act’s AFUE-based energy efficiency
standards had been designed with traditional DHE products in
mind. Likely recognizing as much, DOE included a safe
harbor: any device with a “maximum input capacity” of less
than 9,000 Btu/h would be deemed decorative and thus
exempted from having to comply with DHE efficiency
standards. See id. at 20,234.
7
After petitioner HPBA challenged the 2010 Final Rule in
two cases later consolidated before this Court, see Case Nos.
10-1113 and 10-1181, DOE issued a notice of proposed
rulemaking. Energy Conservation Program, 76 Fed. Reg.
43,941 (July 22, 2011). The Final Rule issued approximately
four months later. Energy Conservation Program, 76 Fed.
Reg. 71,836 (Nov. 18, 2011) (“2011 Final Rule”). DOE’s
2011 rulemaking did two things of relevance. First, it
doubled down on its expansion of VHH’s definition by
clarifying its belief “that all vented hearth products . . . are
designed to furnish heat, regardless of whether they have a
mechanical means for furnishing the air (such as a blower) or
grills.” 2011 Final Rule at 71,839. Second, DOE modified the
VHH safe harbor exemption by dropping the onerous 9,000
Btu/h maximum input capacity requirement in favor of a set
of four specific criterion. Id. at 71,837.
Both petitioners challenged the 2011 Final Rule. See
Case Nos. 12-1010 and 12-1014.4
III. ANALYSIS
A.
The question is a familiar one: is Chevron deference
owed? We conclude it is not.
For all the confusion in application, the Chevron two-step
is old hat: “Pursuant to Chevron Step One, if the intent of
Congress is clear, the reviewing court must give effect to that
unambiguously expressed intent. If Congress has not directly
4
HPBA’s challenges to the 2010 Final Rule have been held in
abeyance since January, 2012. See Case No. 10-1113, Doc. No.
1355446 (D.C. Cir. Jan. 30, 2012) (per curiam). All four cases
have been consolidated and are now before the Court.
8
addressed the precise question at issue, the reviewing court
proceeds to Chevron Step Two.” Petit v. U.S. Dep’t of Educ.,
675 F.3d 769, 778 (D.C. Cir. 2012) (internal quotation marks
omitted).
“Under Chevron Step One, we always first examine the
statute de novo, employing traditional tools of statutory
construction.” Nat’l Ass’n of Clean Air Agencies v. EPA, 489
F.3d 1221, 1228 (D.C. Cir. 2007). The Court is thus free to
consider “the text, structure, purpose, and history of an
agency’s authorizing statute to determine whether a statutory
provision admits of congressional intent on the precise
question at issue.” Petit, 675 F.3d at 781. Here, the question
is simply this: can DOE interpret “Direct heating equipment”
to encompass purely decorative fireplaces? Because we find
clear congressional intent to the contrary, we answer in the
negative and decline to reach Chevron Step Two.
We begin as always with the relevant statutory text:
“Direct heating equipment.” See Nat’l Petrochem. & Refiners
Ass’n v. EPA, 630 F.3d 145, 152 (D.C. Cir. 2010). Though
ambiguity may yet lurk, plainly these are not vacuous words.
When “direct,” a term ordinarily understood as that which is
“[s]traight,” “undeviating in course,” and “not circuitous or
crooked,” is read together with “heating,” that which “heats or
makes hot, in various senses,” a functional purpose emerges.5
The first word distinguishes devices whose output must be
routed in some way and the second supplies the output: heat,
or warmth. To read both terms as modifying “equipment,”
the “manner in which a person or thing is equipped,”
strengthens the phrase’s instrumental and utilitarian gloss
since the construction strongly suggests that the device in
5
Definitions taken from The Oxford English Dictionary unless
otherwise noted.
9
question is one designed to deliver heat to its immediate
surroundings. In the same vein, consider the following
sentence: “Mary Ann called the contractor to fix the heating
and air conditioning.” It is generally understood that as a
noun, “heating” refers to a system designed to furnish heat
into a living space.6 It is for this reason that we understand
the phrase “heating duct” to refer to a part of a building’s
heating system, not a duct that produces its own ambient heat.
In the end, however, we cannot say that this language
establishes unambiguous intent at Chevron Step One. It is a
close question, to be sure, but Congress’s refusal to define
“Direct heating equipment” or qualify the term in a clear
manner to apply only to functional products leaves a residuum
of definitional uncertainty sufficient to establish ambiguity.
Cf. Friends of the Earth v. EPA, 446 F.3d 140, 142–44 (D.C.
Cir 2006) (finding Congress’s purposeful use of “daily” to
modify “total maximum loads” unambiguously foreclosed a
measure of time other than daily).
But our inquiry does not end with the plain language.
“[T]he sort of ambiguity giving rise to Chevron deference is a
creature not of definitional possibilities, but of statutory
context.” ABA v. FTC, 430 F.3d 457, 469 (D.C. Cir. 2005);
see also Cnty. of L.A. v. Shalala, 192 F.3d 1005, 1014 (D.C.
Cir. 1999) (“[T]o prevent statutory interpretation from
degenerating into an exercise in solipsism, we must not be
guided by a single sentence or member of a sentence, but look
to the provisions of the whole law. Under Chevron step one
we consider not only the language of the particular statutory
6
See Heating, CAMBRIDGE ACADEMIC CONTENT
DICTIONARY, available at
http://dictionary.cambridge.org/dictionary/american-english/heating
(“the process of making something warm, esp. a building, or the
equipment used for this”).
10
provision under scrutiny, but also the structure and context of
the statutory scheme of which it is a part.”); Petit, 675 F.3d at781–82 (same). As we explained in ABA, “the existence of
ambiguity is not enough per se to warrant deference to the
agency’s interpretation. The ambiguity must be such as to
make it appear that Congress either explicitly or implicitly
delegated authority to cure that ambiguity. Mere ambiguity in
a statute is not evidence of congressional delegation of
authority.” ABA, 430 F.3d at 469; see also Sea-Land Serv.,
Inc. v. Dep’t of Transp., 137 F.3d 640, 645 (D.C. Cir. 1998)
(Chevron “deference comes into play . . . only as a
consequence of statutory ambiguity, and then only if the
reviewing court finds an implicit delegation of authority to the
agency”). Accordingly, we turn our attention to the statute as
a whole and ask whether it evinces a congressional desire to
defer to DOE’s interpretation of DHE to encompass purely
decorative fireplaces. We conclude it does not.
Congress prescribed the specific means by which the
Department must regulate new consumer products not
specifically enumerated in the EPCA. Pursuant to 42 U.S.C.
§ 6292 (b), DOE must make two initial factual determinations
before classifying the new consumer product as a “covered
product” under 42 U.S.C. § 6292(a)(20). Only then will DOE
have jurisdiction to regulate it. Thereafter, DOE must
prescribe energy standards in accordance with the
supplemental requirements of 42 U.S.C. § 6295(l), including a
five-year moratorium on any new or amended standards. 42
U.S.C. § 6295(l)(2).
When Congress speaks with such inimitable clarity, this
Court must listen. The carefully drafted scheme we now
confront reflects a considered balancing of competing
concerns. On one hand, Congress recognized the importance
of flexibility to a functioning administrative scheme. In
11
support of that cause, it authorized DOE to not only amend
the substance of the regulations, see 42 U.S.C.
§ 6295(e)(4)(A), but to expand its regulatory scope as well,
see 42 U.S.C. § 6292(a)(20). On the other, Congress
understood that if left unchecked, DOE would expand its
power in a manner contrary to what the legislature intended in
enacting the EPCA. To combat this, Congress inserted
threshold jurisdictional requirements, see 42 U.S.C. §
6292(b), and discrete substantive limits, see 42 U.S.C. §
6295(l), that would curtail the way in which DOE could
regulate consumer goods not previously classified as
“covered.” In essence, Congress designed this statutory
scheme to protect a defined class: manufacturers of products
not specifically enumerated in the EPCA.
Decorative fireplaces clearly fall within this protected
class. Until DOE codified its labored interpretation of “Direct
heating equipment,” decorative fireplaces had never been
regulated under the EPCA. This was not an oversight.
Congress was well aware of decorative fireplaces but thought
it unnecessary to subject manufacturers to the costs and
burdens of government regulations. Congress has done
nothing in the roughly four decades since enacting the EPCA
to suggest any deviation from that view. Indeed, Congress
had multiple opportunities to amend the legislation and bring
decorative fireplaces within the regulatory fold but
consistently declined to do so. This was a conscious choice.
As the NAECA amendment made clear, Congress revisits
the EPCA with purpose, taking to the statutory scheme a
scalpel, not a cudgel. Among other carefully crafted changes,
Congress in 1987 enumerated entire new classes of covered
products, including “Pool heaters,” 42 U.S.C. § 6292(a)(11),
and clarified others. Had Congress wished to regulate
decorative fireplaces, it would have. Much in the same way,
12
had Congress agreed with DOE that specifically enumerated
covered product classes were flexible concepts that could be
stretched broadly, presumably it would have regulated “Pool
heaters” as a subset of “Water heaters,” 42 U.S.C. §
6292(a)(4), rather than naming it a distinct covered product
class. 42 U.S.C. § 6292(a)(11).
Furthermore, to the extent Congress replaced “not
including furnaces,” a clumsily worded statutory phrase, with
“Direct,” it maintained its juxtaposition between furnaces
(devices that provide indirect heat through ductwork) and
DHE (devices that provide direct heat to their immediate
surroundings). This clarification reinforces Congress’s
understanding that “Direct” has a functional meaning.
Relatedly, Congress made a conscious choice to define — and
continue to define — the energy efficiency of DHE and
furnaces in terms of “annual fuel utilization efficiency.” 42
U.S.C. § 6291(22)(A). DOE explains on its website that
AFUE is “a measure of how efficient the appliance is in
converting the energy in its fuel to heat over the course of a
typical year.” Furnaces and Boilers, Department of Energy,
available at http://energy.gov/energysaver/articles/furnaces-
and-boilers (emphasis added). But as petitioners point out,
the “ ‘efficiency’ of a product can be determined only by
reference to the purpose it serves,” Pet. Br. at 34, and that
purpose is obvious even by DOE’s own admission: heating
living spaces.7 Decorative fireplaces, of course, were not
designed to heat rooms — never mind heat them efficiently.
Surely Congress did not intend such incongruity. See API v.
EPA, 198 F.3d 275, 278 (D.C. Cir. 2000) (“if Congress makes
7
See 10 C.F.R. Part 430, Subpart B, Appendix O (test to
calculate AFUE for DHE includes variables such as “average
indoor temperature,” “average number of heating degree days,”
“average length of the heating season,” etc.).
13
an explicit provision for apples, oranges and bananas, it is
most unlikely to have meant grapefruit”).
DOE has no effective retort to the thrust of these
arguments. The 2010 and 2011 Final Rules contain not a
single reference to 42 U.S.C. §§ 6292(a)(20), 6292(b), or
6295(l). Equally telling, petitioners’ charge that “DOE
unlawfully circumvented the statutory mechanism for
identifying new ‘covered products’ by using its VHH
definition to add decorative products to a statutory category of
‘covered products’ that does not include them,” Pet. Br. at 24,
goes unanswered in the government’s brief. DOE has simply
failed to offer a single justification or explanation as to why
these statutory mandates would not apply here.8
8
DOE’s implicit argument that the limiting provisions are not
implicated because decorative fireplaces are properly classified as
“Direct heating equipment” must fail as both circular and self-
serving. It requires that the Court put the cart before the proverbial
horse and assume DOE properly interpreted the statute. Such
deference is wholly inappropriate where it provides a backdoor for
a government regulator to circumvent the limits on its authority.
We leave for another day — and other facts — the question of how
to treat an agency’s proffered, non-circular justification for why its
rulemaking did not implicate these statutory requirements. But we
note without deciding that DOE may not be without interpretive
authority under the EPCA. DOE might, for example, expand
specifically enumerated covered product classes to include
reasonably analogous products only recently introduced to the
market. In this view, DOE could define DHE to encompass
fireplace heaters without first classifying fireplace heaters as a new
covered product. A relatively recent invention, fireplace heaters
effectively post-date the NAECA, are functional in design, and
their manufacturers have long subjected them to AFUE standards
and testing. They simply do not pose the same questions and
concerns as does the regulation of decorative products. Even
14
DOE’s contrived effort to regulate decorative fireplaces
as “Direct heating equipment” thus circumvented the plain
language of the EPCA. DOE was free to grow its regulatory
authority through the statutorily provided for means, but
chose instead to push the outermost limits of interpretive
credulity. Whether a conscious decision or not, this plainly
contravenes congressional intent as manifested in a
methodically drafted — and amended — statutory scheme.
Consequently, we hold that Congress has “spoke[n] to the
precise question at issue,” Am. Petroleum Inst., 198 F.3d at
278, and DOE’s interpretation to the contrary must fail at
Chevron Step One. Government regulators simply cannot
choose to ignore statutory limits on their authority and expect
deference to come of their intransigence. See, e.g., Whitman
v. Am. Trucking Ass’ns, 531 U.S. 457, 484 (2001) (gaps in
Subpart 2 “cannot be thought to render Subpart 2’s carefully
designed restrictions on EPA discretion utterly nugatory once
a new standard has been promulgated”); NRDC v. EPA, 489
F.3d 1364, 1372 (D.C. Cir. 2007) (“That EPA may have
broad subcategorization authority, however, does not
authorize EPA to sidestep what Congress has plainly
prohibited.”).
Although decided outside the Chevron context, our
decision in Colorado Indian Tribes v. National Indian
Gaming Commissions, 466 F.3d 134 (D.C. Cir. 2006), is
informative. The Indian Gaming Regulatory Act established
three distinct classes of gaming. The Act charged the
National Indian Gaming Commission (“Commission”) with
oversight of class II gaming, id. at 137, but “contemplate[d]
joint tribal-state regulation” of class III gaming, id. at 138.
petitioners concede as much in supporting the application of the
rulemaking to fireplace heaters.
15
The Commission eschewed the statute’s straightforward
scheme and promulgated rules establishing mandatory
operating procedures for class III gaming. In support of its
regulatory bravado, the Commission argued oversight was
necessary to assure the integrity of outside audits required of
tribes engaged in class II and III gaming, id. at 139, and, more
broadly, that their authority to implement the Act as a whole
required as much, id.We rejected these arguments (and others) out of hand.
Recognizing that “[a]ll questions of government are
ultimately questions of ends and means,” id., we concluded
that government agencies are “bound[] not only by the
ultimate purposes Congress has selected, but by the means it
has deemed appropriate, and prescribed, for the pursuit of
those purposes.” Id. at 139–40 (citing MCI Telecomms. Corp.
v. AT&T, 512 U.S. 218, 231 n. 4 (1994)). Congress may well
have desired to “ensure the integrity of Indian gaming, but it
is equally clear that Congress wanted to do this in a particular
way.” Id. at 140. And so it is here as well. With comparable
clarity, Congress employed specific statutory mechanisms to
circumscribe DOE’s authority to define and regulate new
consumer products under the EPCA. DOE cannot now escape
these limits through its “linguistic jujitsu.” Sherley v.
Sebelius, 644 F.3d 388, 399 (D.C. Cir. 2011) (Henderson, J.,
dissenting).
In sum, the language, context, and history of the EPCA
make clear that DOE’s “interpretation goes beyond the limits
of what is ambiguous and contradicts what in our view is
quite clear.” Whitman, 531 U.S. at 481. Congress has
established — and DOE simply chose to ignore — the means
by which DOE could extend its regulatory authority. For
these very same reasons, we would also reject DOE’s
interpretation at Chevron Step Two.
16
Because DOE’s interpretation is not entitled to deference,
we need not consider petitioners’ related claims.
B.
The foregoing assumes that as a result of DOE’s
rulemaking, decorative fireplaces are now regulated as DHE
under the EPCA. The dissent, however, has adopted DOE’s
untenable fiction that the agency “did not in fact regulate
purely decorative fireplaces.” Dissent Op. at 1 (emphasis in
original). Specifically, the dissent acknowledges that DOE
included decorative fireplaces “in a broad definition” of DHE
before “exempting them from the energy-conservation
standards,” but finds no “principled objection to this
technique” since “[t]he end result is the same as if the rule
first defined [DHE] to exclude decorative fireplaces.” Id. at
4.9 We very strongly disagree.
9
Assuming arguendo the dissent is correct that DOE could
effectuate the same ends without formally regulating decorative
fireplaces, this is not what DOE did. The Department’s 2011 Final
Rule unequivocally stated:
DOE believes that regardless of whether the product is
intended to provide only aesthetic appeal, by design, the
product will generate heat due to the presence of the flame,
and some of that heat will be transferred to the space. Indeed
(as discussed further in section III), many interested parties
have conceded that vented hearth products intended primarily
for decorative use and vented gas log sets are an effective
supplemental or emergency heat source, providing further
justification for their inclusion as a type of covered direct
heating equipment.
2011 Final Rule at. 71,839.
17
Even if we were to assume that there is no effective
difference between defining DHE negatively to exclude
decorative fireplaces or defining the safe harbor positively to
include them, this higher order observation does not change
what is clear on present facts: DOE stands in a position of
control. With the foreknowledge that decorative fireplace
manufacturers would have to comply or face onerous,
potentially unreachable energy standards, DOE could at any
time manipulate the safe harbor criterion to compel different
or broader compliance. This is the essence of regulation. The
petitioners and their four lawsuits — four more than
necessary for “unregulated” parties — certainly agree.
More fundamentally, perhaps, we take issue with the
dissent’s suggestion that the specter of “regulation” somehow
disappears because DOE can, without formally bringing
decorative products into the regulatory fold, indirectly define
that class of products by gerrymandering its definition of
DHE. The means may change, but the ultra vires end remains
the same. Agencies don’t get a free pass simply because
they’ve kept their definitional house in order. If faced with
different facts, we suspect the dissent might agree.
Imagine DOE interpreted DHE to include the universe of
what we would traditionally call hot tubs, but created a safe
harbor in which any device that (1) held water and (2) had
less than four water jets would be excluded as a “hot tub”
from DHE’s unattainable energy standards. Alternatively,
imagine DOE defined DHE to include everything except
devices that (1) hold water and (2) have less than four water
jets. Under either approach, all water-holding tubs with four
or more water jets — of which there are countless on the
market — would be deemed subject to DHE requirements.
Would we say then that hot tubs have escaped regulation? No,
18
certainly not. As a direct result of DOE’s interpretive
machinations, a sizeable number of what had long been
regarded as hot tubs would now be regulated as DHE.10 The
only thing that escapes regulation is what the agency has
declared to be a hot tub, regardless of whether or not it
comports with the historical- or industry-based
understandings of the term. And there’s the hitch. With hot
tubs as with decorative fireplaces, an agency supposedly
without authority over that product class has not only altered
and narrowed the accepted contours of that class, but holds
the manufacturers hostage with the threat of future
modifications.
True, this discrepancy might be more easily spotted in the
hot tub hypothetical than here since decorative fireplaces are
more closely related to traditional DHE, but the danger of
such backdoor regulation is no less real. Consider the fourth
safe harbor criterion, the requirement that products sold after
January 1, 2015 must not include “a standing pilot light or
other continuously-burning ignition source.” 2011 Final Rule
at 71,859. By DOE’s admission, 38 percent of decorative
fireplaces “would need to be redesigned to eliminate” these
features. Id. at 71,849. Where more than a third of the
products on the market would have to be reworked to comply
with the safe harbor, it seems disingenuous to suggest DOE
has not already altered the status quo.
Worse yet, to the extent manufacturers will have to
redesign their products to function without standing pilot
lights, DOE will have effectuated yet another workaround of
10
Presumably, hot tub manufacturers would rush to redesign
their products to comport with the four water jet maximum. Should
DOE later reduce the figure to three — or add new requirements —
the manufacturers would have no choice but to comply.
19
statutory limits. “Energy conservation standards” under the
EPCA take two forms: performance standards that
“prescribe[] a minimum level of energy efficiency or a
maximum quantity of energy use,” and design requirements.
42 U.S.C. § 6291(6). Whereas Congress authorized DOE to
impose performance requirements on all covered products, it
specifically limited its authority to impose design
requirements to just a handful of product classes. Id.§ 6291(6). Emphatically, DHE and the catch-all class,
§ 6292(a)(20), are not among them.
In response, DOE maintains in its briefing that the mere
mention of an “energy-use characteristic[],” including
standing pilot lights, will not “transform[] the definition into a
design requirement.” Resp’t Br. at 44. But this is not what
DOE argued in the 2011 Final Rule. Rather, DOE responded
to the objection that the EPCA “does not provide DOE with
the authority to impose design requirements,” 2011 Final Rule
at 71,847, by stating that it was “not mandating a design
requirement for primarily decorative hearth products, because
meeting the exclusion criteria is completely optional and at
the manufacturers’ discretion,” id. Having conceded that the
ban was a design requirement — though not a mandatory one
— the agency’s present argument is not an “amplified
articulation” of its rulemaking position, Local 814, Int’l Bhd.
of Teamsters v. NLRB, 546 F.2d 989, 992 (D.C. Cir. 1976),
but an entirely unavailing post hoc rationalization. See Motor
Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 50 (1983).
IV. CONCLUSION
The dissent may well be correct that “the distance
between two points on the vertical axis is the same whether
one measures down or up,” Dissent Op. at 4 (quotation marks
20
omitted), but it is likewise so that “a straight line is any
distance between two places” and a circle but “a round
straight line with a hole in the middle.” Mark Twain, English
as She Is Taught 15 (Mut. Book Co. 1900). Clearly the phrase
“Vented hearth heater” did not encompass decorative
fireplaces as that term is traditionally understood. In light of
DOE’s tightly limned regulatory circle, we vacate the entire
statutory definition of “Vented hearth heater” and remand for
DOE to interpret the challenged provisions consistent with
this opinion. If the Department still wishes to regulate
decorative fireplaces, it must do so through the EPCA’s catch-
all provision, § 6292(a)(20).
So ordered.
RANDOLPH, Senior Circuit Judge, dissenting: The majority
opinion holds that the Department of Energy, acting under the
Energy Policy and Conservation Act, 42 U.S.C. §§ 6201 et seq.,
exceeded its authority when it regulated “purely decorative
fireplaces.” E.g., Maj. Op. 4, 8, 10.1
There is a fundamental problem with the majority’s
decision: the Energy Department did not in fact regulate purely
decorative fireplaces. I do not like using italics for emphasis, but
this deserves highlighting. This case is rather like an Escher
drawing—once the viewer comes to realize that decorative
fireplaces were indeed exempted from the government’s
regulating apparatus, it is difficult to see the case in any other
light.
One must first consider what “regulating” means in this
context. The rule we have before us is a definitional provision
adopted in 2011.2 I have included it in an addendum. It is but a
tiny portion of 10 C.F.R. § 430.2. Part 430 is an imposing and
cumbersome set of detailed regulations establishing energy-
conservation standards for all manner of products under the Act.
See 10 C.F.R. § 430.1. In terms of part 430, “regulating” means
subjecting items—here decorative fireplaces—to energy-
conservation standards. But “purely decorative” fireplaces, as
the majority calls them, or “primarily decorative” fireplaces, as
the Energy Department calls them in its brief and in the
1
A decorative fireplace, according to the majority’s
nomenclature, includes gas fireplaces, gas fireplace inserts, gas stoves,
and gas log sets that are “primarily decorative in nature.” Energy
Conservation Program, 76 Fed. Reg. 71,836, 71,837, 71,839 (Nov. 18,
2011).
2
An earlier petition for judicial review of a 2010 rule,
consolidated with this petition seeking review of the 2011 rule, is
moot. The relevant portion of the 2010 rule has been superseded by
the 2011 rule.
2
preamble to its rule (e.g., Resp’t Br. 3, 27; 76 Fed. Reg. at
71,842, 71,846), are exempt from energy-conservation
standards. Reading the rule set forth in the addendum admits of
no other conclusion.3
The Energy Department rule—unlike the majority
opinion—describes a purely or primarily decorative fireplace
with precision. Such products have four defining characteristics,
each of which the Energy Department discussed in detail in the
2011 rulemaking. 76 Fed. Reg. at 71,846–49.
The first is that the product is “[c]ertified to ANSI Z21.50
. . . but not to ANSI Z21.88.” 10 C.F.R. § 430.2 (vented hearth
heater). Translated, “ANSI” means the American National
Standards Institute, a standard-setting organization established
in 1918 whose members include representatives of industry and
government. Petitioners have no quarrel with this portion of the
3
The Energy Department, in its brief and in oral argument,
stressed again and again that it was not regulating purely or primarily
decorative fireplaces. See, e.g., Resp’t Br. 37 (“The agency designed
the final rule to exclude primarily decorative hearth heaters from the
energy conservation standards applicable to hearth products that are
primarily designed for utilitarian heating functions.”); Oral Arg. Tr.
20:11–15 (“[T]he Government fundamentally agrees with Petitioners
that decorative hearth products should not be subject[] to energy
conservation standards. And indeed, the rule under review does not
subject them to energy conservation standards.”); id. at 42:12–13
(“They [decorative fireplaces] don’t have to meet the standards of . . .
efficiency that are set forth in the 2010 rule.”); id. at 50:14–15 (“[T]he
Agency hasn’t sought to regulate these [decorative] products.”); id. at
56:7–16 (“[N]obody wants to subject [decorative products] to energy
conservation standards. Petitioners don’t want that, the Agency
doesn’t want that, . . . we’re not trying to do that. . . . So, we do try to
carve out from the energy conservation standards those products that
are decorative, principally decorative . . ..”).
3
definition of decorative fireplace. How could they? It contains
their industry’s distinction between purely or primarily
decorative fireplaces and those used for heating. See 76 Fed.
Reg. at 71,846. Apparently the majority opinion finds this factor
unobjectionable as well. It does not even mention it.
The second characteristic of a decorative fireplace is fairly
straightforward. The product is sold without a thermostat, a
device that “cycles the appliance on and off based on the
temperature of the room.” Id.4 It is obvious why this is a
defining feature of a purely decorative fireplace. Here again
petitioners do not object to this part of the definition of a
decorative fireplace. The majority opinion also says nothing
about it.
The third defining characteristic also reflects common
sense—the product must be “[e]xpressly and conspicuously
identified on its rating plate and in all manufacturer’s
advertising and product literature” as a decorative product not to
be used for heating. 10 C.F.R. § 430.2 (vented hearth heater).
Again petitioners have nothing to say about this criterion and
neither does the majority opinion.
The fourth and final defining characteristic is that the
product does not have a standing pilot light (this applies only to
products manufactured after July 1, 2015). Petitioners object to
this criterion on the ground that it constitutes an impermissible
design standard. Their argument is a strong one, and the
majority seems to agree with them. To the extent that this fourth
criterion is problematic, it seems to me that the appropriate
4
The rule further requires that the product’s warranty contain a
provision “expressly voiding all manufacturer warranties in the event
the product is used with a thermostat.” 10 C.F.R. § 430.2 (vented
hearth heater).
4
solution is simply to vacate it. The majority does not explain
why that would not suffice.
To repeat, the Energy Department exempted primarily or
purely decorative fireplaces from energy-conservation standards.
It is true that it did this by including these products in a broad
definition (of direct heating equipment) and then exempting
them from the energy-conservation standards otherwise
applicable to direct heating equipment. I see no principled
objection to this regulatory technique, and the majority opinion
offers none. The end result is the same as if the rule first defined
direct heating equipment to exclude decorative fireplaces. “Even
a beginner in mathematics knows that the distance between two
points on the vertical axis is the same whether one measures
down or up.” Henry J. Friendly, “Some Kind of Hearing,” 123
U. PA. L. REV. 1267, 1295 (1975).
To this the majority responds that the Energy Department
“could at any time manipulate the safe harbor criterion to
compel different or broader compliance.” Maj. Op. 17. That,
according to the majority, is “the essence of regulation.” Id. But
the risk the majority identifies would exist even if the Energy
Department had excluded decorative fireplaces from the
definition of direct heating equipment. Whether decorative
fireplaces are included in the definition of direct heating
equipment and exempted from the otherwise-applicable energy-
conservation standards or altogether excluded from the
definition of direct heating equipment, there must still be a
method—a set of criteria—for distinguishing primarily or purely
decorative fireplaces from those used for heating. And in either
case, those objecting to any future modifications to the criteria
would be free to bring a new challenge.
The majority seems to assume that there is a “traditional
understanding” of the term “decorative fireplace.” See Maj.
5
Op. 20. But, except for objecting to the portion of the definition
addressing standing pilot lights, the majority opinion never tells
us how its version of a purely decorative fireplace differs from
the Energy Department’s definition. The majority identifies no
problem with the first three criteria in that definition. Nor do
petitioners. While petitioners suggest that certification to ANSI
Z21.50 (the first criterion) should serve as the sole criterion for
identifying decorative fireplaces, they object only to the
“standing pilot light” (the fourth) criterion. But rather than
simply vacating that fourth criterion, the majority has thrown the
baby out with the bath water and set aside the entire definition
of “vented hearth heater” (a category of direct heating
equipment) in 10 C.F.R. § 430.2.
ADDENDUM
Section 430.2 is amended by revising the definition for
‘‘Vented hearth heater’’ to read as follows:
§ 430.2 Definitions.
* * * * *
Vented hearth heater means a vented appliance
which simulates a solid fuel fireplace and is designed
to furnish warm air, with or without duct connections,
to the space in which it is installed. The circulation of
heated room air may be by gravity or mechanical
means. A vented hearth heater may be freestanding,
recessed, zero clearance, or a gas fireplace insert or
stove. The following products are not subject to the
energy conservation standards for vented hearth
heaters:
6
(1) Vented gas log sets and
(2) Vented gas hearth products that meet all of the
following four criteria:
(i) Certified to ANSI Z21.50 (incorporated by
reference; see § 430.3), but not to ANSI Z21.88
(incorporated by reference; see § 430.3);
(ii) Sold without a thermostat and with a warranty
provision expressly voiding all manufacturer
warranties in the event the product is used with a
thermostat;
(iii) Expressly and conspicuously identified on its
rating plate and in all manufacturer’s advertising and
product literature as a “Decorative Product: Not for use
as a Heating Appliance”; and
(iv) With respect to products sold after January 1,
2015, not equipped with a standing pilot light or other
continuously-burning ignition source.
Energy Conservation Program, 76 Fed. Reg. 71,836, 71,859
(Nov. 18, 2011).