Southern California clean-heat rule survives key legal challenge

Southern California’s landmark rule to slash emissions from industrial heating sources just notched a major victory in court. 

The region has some of the worst air quality in the U.S., and the gas-fueled boilers and water heaters that serve its factories and large buildings are a key culprit.

In 2024, air quality regulators passed a first-in-the-nation rule to clean up those dirty sources. Since then, opponents of the measure — including gas-appliance makers and trade groups for pipefitters and building contractors — have tried repeatedly to quash it. But last week, the U.S. Ninth Circuit Court of Appeals upheld the regulation, which is meant to spur a shift toward clean, electrified technologies.

The standard, which took effect in January despite the legal challenge, gradually eliminates emissions of nitrogen oxides (NO_x) from more than 1 million gas appliances across Greater Los Angeles.

“It was a big win for folks who breathe air in Southern California,” Candice Youngblood, a senior attorney for Earthjustice, which intervened to defend the rule in court, said by phone. ​“The court fully understood how important this rule is to saving lives.”

The South Coast Air Quality Management District set limits on NO_x emissions for light-industrial and commercial boilers, steam generators, and process heaters, as well as residential pool heaters and tankless water heaters. The rules currently affect small units installed in new buildings, but they’ll broaden in scope until covering new high-temperature units installed in existing buildings in 2033. Existing gas equipment must be replaced with zero-emission units once it reaches a certain age, or at the end of its useful life, depending on the appliance.

A spokesperson for the South Coast air district stressed that the rule does not ban gas appliances but rather regulates emissions. The agency said it ​“remains committed to developing technology-neutral solutions that protect public health, reduce harmful nitrogen oxide (NO_x) emissions, and move the region closer to meeting federal air quality standards.”

The measure is ultimately expected to reduce pollution by 5.6 tons of NO_x per day — the same as halving smog-forming emissions from cars in the air district, where more than 17 million people live.

Yet the policy is likely to make an impact well beyond the four-county region. Proponents say a major goal of setting the zero-emission standard is to signal to heat pump manufacturers and other clean technology suppliers to start ramping up production — which could benefit industrial electrification efforts elsewhere by driving down appliance costs.

The Ninth Circuit’s ruling comes as California is pushing to decarbonize all corners of its $4.3 trillion economy. Manufacturing facilities are responsible for more than one-fifth of annual greenhouse gas emissions in the state, making them the largest source after transportation.

Last year, Democratic Gov. Gavin Newsom signed a law, Assembly Bill 1280, that expands incentive programs to help manufacturers install industrial heat pumps, thermal storage systems, and other electrified equipment. Utilities and state lawmakers are also developing new electricity rate structures that would lower the cost of operating electric appliances.

Such efforts are meant to address the financial challenges that can come with switching to electric appliances in industrial settings. Cleaner alternatives, such as heat pumps and electric boilers, are typically more expensive up front. Electricity is often far more expensive as a fuel than natural gas, especially for large industrial users — an issue that’s true in California as well in other parts of the country, including the Upper Midwest and Northeast.

If policies can help overcome those hurdles, industrial firms stand to reap significant economic benefits by reducing their exposure to volatile fossil fuel prices, making their operations more efficient, and lowering their energy bills over time. All told, electrifying the entire U.S. industrial sector could generate around $471 billion in total economic growth through 2035, according to a recent analysis by the Renewable Thermal Collaborative and the Industrial Heat Pump Alliance.

California is well positioned to reap some of those benefits, given its existing climate policies and high levels of industrial activity. The state could see over $31 billion from the construction, installation, and manufacturing of electrified technologies, as well as indirect effects from growing supply chains, the report said. That’s even accounting for the expected decline in economic activity and job losses from gas-equipment makers and service providers.

The gas industry, however, sees the Golden State’s electrification push as a threat.

Last year, Southern California Gas, the nation’s largest gas-distribution utility, helped sink the air district’s separate plan to push households away from gas-burning space and water heaters and toward electric heat pumps. Rinnai America, which manufactures gas appliances, has led the legal fight against the zero-emission standards for boilers and water heaters.

In July 2025, a U.S. district court upheld the clean boiler rules, rejecting opponents’ argument that the measure conflicts with the federal Energy Policy and Conservation Act and thus isn’t valid. Rinnai and other plaintiffs have continued to fight the policy, resulting in the Ninth Circuit’s July 2 decision to affirm the district court’s earlier ruling.

The opposition will still have a chance to challenge the policy again, by asking the Ninth Circuit to review its ruling, Youngblood said. In the meantime, Southern California regulators are preparing to propose a new set of rules for larger commercial and industrial systems in the region, which the agency staff aims to present to its board by the end of this year.