On April 24, 2026, the U.S. Department of Energy (DOE) issued an Enforcement Policy Statement (EPS) relative to recently established commercial water heater efficiency standards that were originally slated to apply to products manufactured after October 6, 2026. Those standards impact only gas-fired commercial water heaters and require storage products to meet or exceed a Thermal Efficiency (TE) of 95%, along with a more stringent standby loss. Commercial tankless products, including volume water heaters, are required to meet or exceed an even higher TE of 96%. The rule would also increase efficiency metrics for residential-duty commercial water heaters. All these products would have required the use of condensing technology to comply.

The DOE-issued EPS does not change the substance of these requirements; however, it does modify the compliance date as the Department makes clear that they will not enforce this rule for a period of one year. The Department cited ongoing litigation relative to this rule, which is detailed below, as a significant driver for taking this action.

This practically provides product manufacturers with a one-year extension, until October 6, 2027, before being compelled to make only commercial products that meet the TE minimums described above. It is also worth noting that DOE makes clear they can rescind this EPS at any time.

In addition to the EPS, DOE also published a petition for rulemaking soon after on April 27, 2026. This action was taken by the Department in response to correspondence they received from gas industry stakeholders who asked DOE to extend the enforcement date to at least January 1, 2030. The Department will now be accepting comments from various stakeholders until May 27, 2026, to help them ascertain if a further delay of the rule’s compliance date is appropriate.

Finally, litigation on this matter is also persisting before the United States Supreme Court. Gas industry stakeholders had previously tried to prevent the DOE rule on commercial water heaters from going into effect at all by taking legal action in American Gas Association v. DOE. In this case, these stakeholders argued before the United States Court of Appeals for the D.C. Circuit that since the Department is proposing to eliminate non-condensing products from the U.S. market, they are eliminating products with characteristics unique to non-condensing products as an option for American consumers. This, the gas industry stakeholders claimed, was in violation of the Energy Policy Conservation Act (EPCA), which is the federal statute that provides DOE its authority to regulate energy efficiency of appliances and equipment.

On November 4, 2025, the Court ruled against the gas industry stakeholders in a 2-1 ruling, finding that DOE’s rule is, in fact, not a violation of EPCA. Gas industry stakeholders reacted by appealing the case to the United States Supreme Court, who is continuing to consider if the case warrants action on their part.

With all this said, there are a lot of factors that may potentially influence the ultimate compliance date of the commercial water heater efficiency standards that DOE has already finalized, that are described above. As this situation is incredibly fluid, BWC Government and Regulatory Affairs staff will be carefully watching all developments and will certainly keep you informed of the latest information you need to help you plan for your business and your customers. If you have any questions about this situation, or any others pertaining to government and regulatory affairs in our industry, please do not hesitate to contact us directly at BWCGovReg@bradfordwhite.com.