Western New York contractors and developers working on new construction got a significant reprieve in mid-November 2025 when New York State agreed to pause enforcement of the All-Electric Buildings Act (AEBA) — a law that would have banned fossil fuel heating and cooking systems in most newly permitted buildings beginning January 1, 2026. The pause will remain in effect until the U.S. Court of Appeals for the Second Circuit rules on a pending appeal, according to a stipulation filed November 12, 2025 in U.S. District Court in Albany, per Harris Beach Murtha and Earthjustice.

What the Law Would Have Required

Passed as part of the 2023 New York State Budget, the All-Electric Buildings Act implements a core piece of the state's Climate Leadership and Community Protection Act (CLCPA). Under the AEBA's original structure:

• January 1, 2026: Most new buildings seven stories or fewer — and commercial/industrial buildings under 100,000 square feet — must use all-electric systems for space heating, water heating, and cooking. Gas, propane, heating oil, and similar fossil fuel hookups are prohibited.
• January 1, 2029: All remaining new construction, regardless of height or size, must comply.

Exemptions were written into the law for restaurants, hospitals, factories, agricultural buildings, laboratories, and crematoriums. Existing buildings and their equipment are not affected. Backup generators may still use fossil fuels. A waiver exists for buildings where electric service cannot be reasonably provided by the grid within a specified timeframe, per Phillips Lytle.

The Legal Challenge

A coalition of construction trade groups, builder associations, and labor unions filed suit in the U.S. District Court for the Northern District of New York, arguing the AEBA is preempted by the federal Energy Policy and Conservation Act — which, plaintiffs contend, reserves appliance standards authority to the federal government. In July 2025, U.S. District Judge Glenn Suddaby ruled against the coalition, upholding New York's authority to enact the law, per Phillips Lytle.

The coalition appealed to the Second Circuit. In November 2025, parties on both sides of the case agreed to a stipulation pausing the law's effective date until approximately 120 days after the Second Circuit issues its ruling, per CCF Law. It is not yet known when the Second Circuit will hear arguments or decide the matter.

What Western New York Builders Said

Philip Nanula, president of the Buffalo Niagara Builders Association — whose organization is part of the plaintiff coalition — welcomed the pause. Bottom line, there's just not enough capacity on the current grid to facilitate more demand that this would create, Nanula told WKBW. He argued the policy would increase both construction costs and operating costs for building owners, and that existing development projects are not designed for all-electric systems.

State Democratic Assemblyman Bill Conrad, who represents a Buffalo-area district, noted bipartisan concern: If we are going to take these great leaps, we have to adjust our landing pad. I'm not against this. What I'm saying is we have to make it market-ready and affordable.

Governor Hochul's office, despite agreeing to the pause, reiterated support for the law: The Governor remains committed to the all-electric-buildings law and believes this action will help the State defend it, as well as reduce regulatory uncertainty for developers during this period of litigation.

Practical Impact on New Construction Permitting

For contractors, developers, and code officers across Western New York, the pause means business as usual for permit applications during the pendency of the appeal. Building permits may continue to be issued for new construction without regard to AEBA compliance, and applicants are not required to design out fossil fuel systems during this period, per CCF Law and PHCC.

However, the situation creates planning uncertainty for projects with long design and permitting timelines. A project designed today for gas systems could face compliance requirements if construction is permitted after the law's eventual effective date — which may arrive with only 120 days' notice once the Second Circuit rules. Developers and their architects should incorporate all-electric design flexibility into any project that will not break ground before a potential Second Circuit ruling.

Grid Readiness and Cost Concerns

The core dispute is not just legal — it reflects substantive disagreement about grid readiness, particularly in Western New York, where the capacity of existing distribution infrastructure to support widespread all-electric building loads has been questioned by local utilities and builders. Analysis by Switchbox, a nonprofit data team, examined the grid reliability implications of the AEBA, noting that broad electrification of new residential and commercial construction could add material demand on distribution systems that have not been sized for all-electric loads at scale.

The practical cost implications are also real. AEBA compliance requires heat pump systems in place of gas furnaces, heat pump water heaters in place of gas water heaters, and induction cooking in place of gas ranges. For commercial and multi-family projects, these substitutions affect equipment sizing, electrical service requirements, and building system costs. Developers underwriting construction costs should model both AEBA-compliant and gas-system scenarios for projects with long timelines to permit.

Implications for Contractors and Owners

Mechanical, electrical, and plumbing (MEP) contractors working in new construction have the most direct exposure to this regulatory uncertainty. Companies that have invested in heat pump installation expertise and all-electric system design should maintain that capability regardless of the legal outcome — the direction of travel in New York State building policy is clear even if the schedule is uncertain. General contractors pricing jobs through 2027 and beyond should factor in the possibility that the AEBA takes effect with relatively short notice following a Second Circuit ruling.

What to Watch Next

The Second Circuit's docket and any oral argument scheduling will be the primary signal. The 120-day implementation window built into the stipulation means contractors and developers would have approximately four months to adapt permitting strategies after a ruling that upholds the law. PHCC and the Buffalo Niagara Builders Association are monitoring the case actively. Any state legislative action to amend or delay the AEBA separately from the court case would also affect the timeline.

Bottom Line

The All-Electric Buildings Act is paused, not dead. Western New York builders have a reprieve from the January 2026 effective date, but the Second Circuit appeal could conclude at any point — and with it, the 120-day clock starts. Contractors and developers who design and permit new buildings assuming gas systems will remain permanently permissible in New York are taking a meaningful regulatory risk. The most defensible position is to track the litigation closely and maintain the option for all-electric design on any project that will take more than a year to permit.

Sources:
Harris Beach Murtha – NY Delays All-Electric Buildings Act (Nov. 2025)
CCF Law – NY Agrees to Pause on AEBA (Dec. 2025)
PHCC – Court Stipulation Explained (Dec. 2025)
WKBW – Buffalo Niagara Builders Association Reaction (Nov. 2025)
Phillips Lytle – AEBA Legal Analysis (Aug. 2025)
Earthjustice – AEBA Stipulation Statement (Nov. 2025)