Second Circuit Upholds New York Ban on Fossil Fuels in New Construction, Splitting With the Ninth Circuit

In a decision styled Association of Contracting Plumbers v. City of New York, the Second Circuit split with the Ninth Circuit to rule that the federal Energy Policy and Conservation Act (EPCA) does not preempt state and local laws which prohibit fossil fuel-powered appliances in new construction, possibly setting up another showdown before the US Supreme Court over the balance between state and federal regulatory power. 

Recent years have seen many state and local governments adopt building electrification measures aimed at reducing emissions from the build environment.  Amond these are limits or bans on the use of such appliances in homes and buildings. Those efforts hit a roadblock in 2023 when the Ninth Circuit blocked a Berkeley, California, building code that banned the installation of new natural gas hookups, holding that the EPCA, which sets minimum federal efficiency standards for certain appliances, preempted. 

However, courts outside the Ninth Circuit have not followed suit, and federal district courts have recently upheld a Maryland county’s ordinance requiring all-electric appliances in new buildings and a Washington, DC, law requiring new buildings to meet net-zero emissions (effectively prohibiting gas-powered appliances). 

For developers, manufacturers, utilities, investors, and building owners, the decision highlights the increasingly fragmented regulatory landscape governing building electrification. Project planning may require different approaches depending on jurisdiction, and stakeholders should continue to evaluate how state and local requirements interact with federal energy regulations and long-term capital planning.

Second Circuit Decision

The Second Circuit has now become the second federal appellate court to weigh in, hearing challenges by unions and trade associations to a pair of New York State and New York City laws that, in effect, prohibit the installation of fossil-fuel-burning appliances in new construction. Echoing the Ninth Circuit, the challengers argued that EPCA preempted the local bans.

The Second Circuit rejected that argument and affirmed both laws, holding that EPCA sets the energy efficiency of the appliance itself, as determined by manufacturers through test procedures, before it reaches consumers. As a result, local laws governing the use of an appliance by consumers are beyond the scope of EPCA and are not preempted. 

While recognizing the Ninth Circuit’s contrary interpretation, the Second Circuit concluded that EPCA’s preemption provision should be construed more narrowly and does not extend to regulations governing the fuels available for use in buildings. 

Key Takeaways

• Electrification requirements are likely to receive increased attention within the Second Circuit. State and local governments may view the decision as encouraging similar measures, although the ultimate legal landscape remains unsettled.

• Developers may price in the costs of electrification into new buildings. The decision may also influence permitting, development, and infrastructure planning discussions, particularly in regions considering electrification requirements as part of broader climate and energy strategies.

• The distinction between fuel choice and energy use may prove critical. The Second Circuit emphasized that EPCA regulates appliance efficiency standards but not the types of energy available to consumers. Future disputes are likely to focus on where that boundary is drawn.

• Supreme Court review is increasingly plausible. The direct conflict between the Second and Ninth Circuits creates uncertainty for developers, manufacturers, energy providers, and local governments operating across multiple jurisdictions. A future Supreme Court decision could reshape not only building electrification efforts but also broader federal-preemption disputes.

The growing divergence among federal courts underscores a broader trend. Energy transition initiatives increasingly are being shaped not only through legislation and regulation but through preemption litigation. Organizations evaluating building design, energy infrastructure, product deployment, or long-term investment strategies should closely monitor developments in this area as the regulatory framework continues to evolve.

The firm’s Energy & Cleantech and Environmental teams are monitoring administrative changes and case decisions related to federal and state energy policy. Stay tuned for further updates.