A federal appeals court sided with the Department of Energy in defense of new energy-efficiency rules that are part of President Obama's climate agenda.

The court decision means the agency can move forward with appliance standards that the industry argues will drive up costs for manufacturers and consumers in favor of environmental goals.

"Upon review of those challenges, we conclude that [the Energy Department] acted in a manner worthy of our deference," the 7th Circuit Court of Appeals said late Monday, ruling on an industry lawsuit challenging the regulations for commercial refrigerators and the agency's test procedures for determining the stringency of the rules.

"The New Standards Rule is premised on an analytical model that is supported by substantial evidence and is neither arbitrary nor capricious," the court said.

The agency "conducted a cost-benefit analysis that is within its statutory authority and is supported by substantial evidence," the court said in its ruling. "Its methodology and conclusions were not arbitrary or capricious."

The 2014 lawsuit by the Air-Conditioning, Heating, and Refrigeration Institute and member company Zero Zone challenged the agency's efficiency standard and test procedures on the grounds that they were flawed and without basis. It also took exception with how the agency calculated the benefits of the rules, using a measure to assess the cost of reducing carbon dioxide emissions. Many scientists blame the emissions for raising the Earth's temperature, resulting in sea-level rise and more droughts and floods.

However, the court didn't agree with most of the industry's arguments. The Energy Department "gave appropriate consideration to the rule's effect on small businesses and the role of other agency regulations," the decision said. The agency "similarly acted within its authority, and within reason, when it promulgated the 2014 Test Procedure Rule. For these reasons, we deny the petitions in their entirety."

"We are disappointed in the court's ruling, as well as the court taking nearly a year after oral argument to issue a decision," said Stephen Yurek, president and CEO of the Air-Conditioning, Heating, and Refrigeration Institute. "Our members must now comply with the efficiency standard by March 27, 2017."

One of the biggest flaws in the rule was the Energy Department's issuing of the test procedures for the regulations after they were finalized and not before, the industry says. The practice was put in place under Obama's watch and is now common practice in issuing all of its efficiency regulations.

Not having the test procedures beforehand makes it harder for the industry to understand the basis for the rule's energy cuts and where manufacturers need to focus to produce appliances that can comply.

"Issuing a test procedure after efficiency standards is a backwards way of handling rules, and makes it difficult for manufacturers to understand the impact of the new standards and to design equipment to comply with those standards, all while continuing to meet the needs of consumers," Yurek said.

The agency has been working on an expedited rulemaking schedule to meet the goals of Obama's climate agenda before he leaves in January.

Yurek said the court's decision should motivate Congress to update the over 40-year-old law that gives the Energy Department its energy-efficiency authority and reform the law to give stakeholders an "equal voice, greater certainty and better transparency in the regulatory process."

"We will continue our efforts to work with [the agency] to ensure that our members are able to comply with these rules while continuing to plan for the future of their business, including providing jobs and quality products to millions of people around the country."