Local or state regulations seeking to decarbonize new buildings by banning natural gas appliances or infrastructure are preempted under federal law according to the Ninth Circuit Court of Appeals. Cities from San Francisco to New York have adopted natural gas curtailment or ban measures as a means of cutting greenhouse gas emissions from new buildings, a critical sector of focus in climate action regimes. Given the strong emphasis on decarbonizing buildings in California’s newly adopted Scoping Plan and other regulatory regimes, the ruling promises to have significant ramifications throughout California and nationally.
Much of the burden of realizing California’s self-imposed mandate of carbon neutrality by 2045 will fall to cities and counties. An early emerging local strategy is to curtail or outright ban natural gas in new homes and businesses. The city of Berkeley was one of the first to adopt such a measure in 2019. Apparently aware of difficulties directly regulating appliances themselves, the Berkeley ordinance instead banned natural gas piping infrastructure in new buildings. But in California Restaurant Association v. City of Berkeley (April 17, 2023), the Ninth Circuit ruled that both direct regulation of covered appliances as well as indirect regulation of energy infrastructure violates federal preemption.
The federal statute at issue is the Energy Policy and Conservation Act (EPCA). As the court noted, “EPCA’s preemption clause establishes that, once a federal energy conservation standard becomes effective for a covered product, ‘no State regulation concerning the energy efficiency, energy use, or water use of such covered product shall be effective with respect to such project,’ unless the regulation meets one of several categories not relevant here. 42 U.S.C. § 6297(c).”
Berkeley’s 2019 ordinance, Prohibition of Natural Gas Infrastructure in New Buildings (Ordinance), sought to “eliminate obsolete natural gas infrastructure and associated greenhouse gas emissions in new buildings where all-electric infrastructure can be most practicably integrated, thereby reducing the environmental and health hazards produced by the consumption and transportation of natural gas.” Further, the Ordinance provided that it “shall in no way be construed . . . as requiring the use or installation of any specific appliance or system as a condition of approval.”
Berkeley, supported by the federal government as amicus curiae, argued that there is no EPCA preemption if the regulation at issue does not seek to establish conservation standards specific to EPCA-covered appliances. The trial court agreed, stating that “EPCA must be ‘interpreted in a limited manner,’ so that the Act doesn’t ‘sweep into areas that are historically the province of state and local regulation.’” Based on this limiting interpretive context, the trial court held, “Because the Ordinance does not ‘facially regulate or mandate any particular type of product or appliance’ and because its impact is ‘at best indirect[ ]’ on consumer products, . . . EPCA does not preempt the Ordinance.”
The Ninth Circuit disagreed:
By completely prohibiting the installation of natural gas piping within newly constructed buildings, the City of Berkeley has waded into a domain preempted by Congress. The [EPCA] expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens. Instead of directly banning those appliances in new buildings, Berkeley took a more circuitous route to the same result. It enacted a building code that prohibits natural gas piping into those buildings, rendering the gas appliances useless.
Further, the court held: ““[B]y enacting EPCA, Congress ensured that States and localities could not prevent consumers from using covered products in their homes, kitchens, and businesses. So EPCA preemption extends to regulations that address the products themselves and the on-site infrastructure for their use of natural gas.” Leaving no room for ambiguity, the court added, “States and localities can’t skirt the text of broad preemption provisions by doing indirectly what Congress says they can’t do directly.”
In a seeming last-ditch effort, Berkeley argued that a finding of preemption was effectively a de facto mandate that the city ensure provision of natural gas anywhere and everywhere. Not so, said the court. It noted that the EPCA’s preemption applies only to the provision and use of energy from the point of metering to the point of internal end use. Thus, “Our holding doesn’t touch on whether the City has any obligation to maintain or expand the availability of a utility’s delivery of gas to meters.” Such an approach, however, pits cities and counties directly against utilities as opposed to developers and consumers, raising completely separate legal and jurisdictional conflicts.
The inability to curtail natural gas use has ramifications for local agency determinations under the California Environmental Quality Act (“CEQA”) as well. Finding consistency of a project with applicable greenhouse gas reduction plans is a quantitative means for assessing the significance of the project’s climate impacts. However, the primary state plan for such purposes is the 2022 Scoping Plan. Therein, the California Air Resources Board provides local agencies three “Priority Areas” for reducing emissions: vehicle miles traveled reductions, transportation electrification, and decarbonization of new buildings. The Ninth Circuit has just eliminated the primary tool for accomplishing building decarbonization called for under the Scoping Plan.
California Restaurant Association v. City of Berkeley may be accessed at: https://cdn.ca9.uscourts.gov/datastore/opinions/2023/04/17/21-16278.pdf
For further information on this case or for any questions related to climate regulation and compliance, please contact David Smith.