Senate Energy and Natural Resources Committee Chairman Mike Lee (R-UT) introduced the Energy Efficiency Reform Act of 2026 (S. 5338) on August 6, a broad rewrite of the Department of Energy's Appliance Standards Program under the Energy Policy and Conservation Act (EPCA). Congress last gave EPCA a major update in 2007. Nearly two decades later, this bill takes direct aim at the rulemakings that have been used to squeeze fuel choice out of the American home, and it takes up issues our industry has been pressing for years.

Fuel Bans Would Be Preempted

As drafted, the bill would preempt state restrictions on fuel use as applied to covered products, and it would reach "all state and local governments, including municipalities," barring laws that prohibit installation of a product based on "its fuel source; or the emission of any air pollutant." It further provides that where a federal standard is revoked, the previously issued federal standard remains in effect and states may not step in with their own regulation.

Venting Categories Would Get Separate Standards

Most older homes in the Northeast vent a conventional boiler or furnace up a masonry chimney by natural draft. In DOE's system, that is Category I. A condensing appliance cannot use that chimney. It needs sidewall plastic venting and a condensate drain. And if a water heater shares the chimney, converting the furnace orphans the water heater, which then has to be re-vented or replaced as well.

The bill would require DOE to set separate standards for each of the four venting categories, reflecting the distinct technology, venting, installation, and performance characteristics of each. DOE could no longer use one number to push chimney-vented equipment out of the market.

Fuel Type Would Be Protected by Name

The bill adds a protection for what it calls "consumer-valued performance characteristics." A new standard could not take away reliability, how long the unit lasts, the range of sizes and capacities offered, how the unit is installed and vented, the technology, the materials, or the fuel it burns.

Product Classes Would Be Set by Energy Type

The bill would also require DOE to issue a rule establishing one or more product classes for covered products that consume a different kind of energy than other covered products.

Energy Would Be Counted Honestly

The bill redefines "significant energy savings," the threshold DOE must clear to justify a standard. It would now mean a reduction of at least 10 percent in full fuel cycle energy use over 30 years. Full fuel cycle means every unit of energy burned to get that energy to the customer: extraction, processing, transportation, generation, transmission, and distribution. Today DOE largely measures energy at the house, which makes an electric appliance look efficient by ignoring the fuel burned at a distant power plant and the losses along the wires.

A Slower, More Rigorous Process

It repeals the requirement that DOE review product standards every six years, known as the look back period, while preserving the ability of outside parties to petition, though no petition could be filed until at least six years after the standard was published and DOE could grant one only on clear and convincing evidence. The bill would also bar any amended standard from setting a compliance date earlier than 10 years after the compliance date of the standard before it, which means a manufacturer would not face two standards rulemakings on the same product inside roughly a 15-year window. DOE would also have to finalize the test procedure, the actual method for measuring how much energy a product uses, at least 180 days before proposing a standard based on it. And rather than jumping straight to the toughest option on the table, DOE would have to walk up from the current standard one step at a time and show the costs and savings at each level.

What to Watch

The bill now sits in Chairman Lee's committee, which makes a markup this fall a real possibility. There is a great deal in this draft that our industry has asked for over many years, and the preemption language in particular is a major step forward. It is also a first draft. Members reviewing the text have identified provisions where there is still room for improvement, and NEFI will be working with committee staff to address them as the bill advances.