Hearth, Patio & Barbecue Ass'n v. U.S. Dep't of Energy

• Decision Date: 08 February 2013
• Docket Number: 12–1010,12–1014.,10–1181,Nos. 10–1113,s. 10–1113
• Citation: 706 F.3d 499
• Court: U.S. Court of Appeals — District of Columbia Circuit
• Parties: HEARTH, PATIO & BARBECUE ASSOCIATION, et al., Petitioners v. UNITED STATES DEPARTMENT OF ENERGY, Respondent Natural Resources Defense Council, Intervenor.

706 F.3d 499

HEARTH, PATIO & BARBECUE ASSOCIATION, et al., Petitioners

v. UNITED STATES DEPARTMENT OF ENERGY, RespondentNatural Resources Defense Council, Intervenor.

Nos. 10–1113, 10–1181, 12–1010, 12–1014.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 11, 2012.

Decided Feb. 8, 2013.

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 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, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), we hold DOE's feet to a 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 “technologicallyfeasible,” “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 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. See42 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 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 Z21.88. SeeEnergy 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. SeeEnergy 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.

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. SeeCase 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 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...