Second Circuit Upholds NYC's Local Law 154, Splits With Ninth Circuit on Gas Bans

The Situation

Propane marketers who bid new-construction work in New York now face an all-electric rule that a federal appeals court has let stand. On June 30, 2026, the Second Circuit Court of Appeals upheld New York's ban on fossil-fuel appliances in new construction, siding with the state over home builders, plumbers and labor groups that challenged the law under federal energy law. The ruling keeps New York City's Local Law 154 and a related state all-electric directive intact, and it conflicts with a prior Ninth Circuit ruling that struck down a similar gas-hookup ban in Berkeley, California. That split raises the odds the U.S. Supreme Court takes up whether federal law preempts local gas bans.

The Facts

The Second Circuit's June 30, 2026, ruling in Association of Contracting Plumbers of the City of New York v. City of New York and Mulhern Gas Co., Inc. v. Mosley rejected arguments from the National Association of Home Builders (NAHB), the New York State Builders Association and other challengers that the federal Energy Policy and Conservation Act (EPCA) blocks New York's building-electrification rules, according to NAHB. Judge Myrna Pérez, writing for the panel, drew a line between appliance-efficiency standards, which EPCA does regulate, and rules about which fuel type a building may use, which the court said fall outside EPCA's reach, per NAHB. NAHB and the New York State Builders Association were named plaintiffs in the challenge to New York State's gas ban, according to NAHB; the rulings upheld both New York City's Local Law 154 — which limits carbon-emitting fuels in new buildings — and a parallel state directive requiring all-electric new construction.

The ruling splits directly with the Ninth Circuit's 2024 decision in California Restaurant Association v. City of Berkeley, where judges found EPCA preempted a comparable gas-hookup ban in that city, according to the law firm K&L Gates. Two days later, the Ninth Circuit added another twist: it upheld South Coast Air Quality Management District Rule 1146.2, which phases in zero-emission standards for water heaters, boilers and process heaters, in Rinnai America Corporation v. South Coast Air Quality Management District — but on narrower Clean Air Act grounds that leave the Berkeley precedent standing, K&L Gates reported. The result is a legal picture where outright fossil-fuel appliance bans survive in the Second Circuit but remain preempted in the Ninth, while Clean Air Act emissions rules stand on separate footing.

Neither ruling is final: both the Mulhern Gas and Rinnai America decisions are subject to further review, K&L Gates reported, and New York State's own all-electric mandate remains under a litigation-hold stay, so it does not yet take effect, according to NAHB. Whether the U.S. Supreme Court will step in to resolve the circuit split is not yet confirmed.

Business Impact

NAHB warns that builders working across state lines now face inconsistent rules: in states such as New York, California, Connecticut and Vermont, state and local governments may now have stronger legal support for gas appliance bans and electrification requirements, while courts elsewhere could still follow the Ninth Circuit's Berkeley reasoning. For propane marketers serving new-construction customers, that split affects which jobs you can bid and which fuel systems builders will spec on their next project. What this means for your business: 1. A Supreme Court review, if granted, could reset the rules nationwide instead of leaving the question to a state-by-state patchwork. 2. NAHB is backing federal Energy Choice Act legislation that would preempt these bans outright, which is worth tracking through your state propane association. 3. New York's statewide mandate remains stayed during litigation, so it has not taken effect yet.

Key Takeaways

• Both the Mulhern Gas and Rinnai America decisions remain subject to further review, K&L Gates reported, so neither ruling is final yet.
• NAHB is pushing the federal Energy Choice Act as a nationwide fix, but no vote timeline has been confirmed.

Action Steps

1. 1.Pull your state's building code language this week and check whether it references EPCA preemption or carries its own state-specific gas-ban statute.
2. 2.Contact your state propane association before the next legislative session to ask whether the Second Circuit's reasoning could apply if a local government proposes its own gas ban.
3. 3.Flag new-construction accounts in New York, California, Connecticut or Vermont for closer permit tracking, since NAHB says those states now have firmer legal ground for bans.
4. 4.Watch for further review in the Mulhern Gas and Rinnai America cases over the coming months before treating either ruling as final.

Competitive Advantage

Dealers who track this circuit split before a state legislature acts can flag new-construction bids in exposed states before a permit gets rejected for a gas hookup. Knowing which states carry stronger legal cover for bans lets you point sales effort toward markets where propane remains the default fuel choice.