Congressional Action May Call the Future of Tankless Water Heater Regulations into Question

On December 26, 2024, the United States Department of Energy (DOE) released their long-awaited final rule that was designed to govern energy efficiency for residential tankless water heaters throughout the country. In the final rule, DOE established an all-condensing standard for these products, requiring those in the high draw pattern to meet a minimum UEF of 0.93, and those in the medium draw pattern to meet a minimum UEF of 0.91. This rule would have applied to all of these products sold into the U.S. market beginning December 26, 2029.

However, recent congressional action is now looking to undo what DOE had done in this final rule. Utilizing their authority in the Congressional Review Act, the United States Congress voted on April 10, 2025, to approve a resolution that nullifies this rule. President Trump still needs to sign the resolution to make the action official, but that seems likely.

If the resolution is in fact signed by the president, the energy efficiency standards that are currently in place for these products will remain the same as they are today. Perhaps more interestingly though, the Congressional Review Act would prohibit DOE, at any time in the future, from enacting a rule that is the same or substantially similar to the rule being nullified by Congress. The term “substantially similar” is now what has many scholars scratching their heads. It is not specifically defined in the Congressional Review Act, and since Congress has rarely exercised their authority under the Act, there is little if any legal precedent that helps develop an understanding of what this means for DOE moving forward.

Further complicating this matter are provisions in the Energy Policy and Conservation Act (EPCA), which provides DOE with its authority to regulate energy efficiency from certain products, in this case residential tankless water heaters. EPCA provides that DOE must examine the current energy efficiency standards for covered products every six years and decide as to whether more stringent standards can lead to additional energy savings for that product type. This would beg the following questions, if DOE were to determine later that increasing efficiency standards for these products would lead to additional energy savings, would just that action from the Department be considered “substantially similar” to the final rule Congress just voted to overturn, and therefore violate the provisions of the Congressional Review Act? If DOE refuses to act because of the provisions of the Congressional Review Act, are they then in violation of their requirements under EPCA?

The answers to these important questions are likely to be answered by the courts at some point in the future. But in the meantime, the treatment of these products by DOE will remain an open curiosity for all stakeholders.

If you have any questions about this matter, or any others related to government and regulatory affairs in our industry, BWC’s Government and Regulatory Affairs team would like to speak with you. Also, if you know of any legislative or regulatory activity in your community or state that would impact our industry, please do not hesitate to contact us at BWCGovReg@bradfordwhite.com.