In April, the Ninth Circuit held that a city’s ban on new natural gas hookups for new construction was preempted by federal law. This may impact proposed or existing bans in Oregon including in Eugene and Bend, and in Washington where the Washington State Building Code is currently being challenged or where there is an existing ban in Seattle. Developers desiring to provide natural gas to pending or existing projects may wish to evaluate any state or local restrictions on natural gas under the Ninth Circuit’s analysis.
The Energy Policy and Conservation Act (the “EPCA”) establishes a federal program for regulation of consumer appliances, and generally preempts state regulations concerning energy use of “covered products” including gas kitchen ranges and ovens. 42 U.S.C. § 6297(c), 6292. In the recent case of California Rest. Ass’n v. City of Berkeley, No. 21-16278, 2023 U.S. App. LEXIS 9068 (Apr. 17, 2023), the Ninth Circuit found that “[t]he [EPCA], 42 U.S.C. § 6297(c), expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens.” Id. at *6–7. In doing so, the Court read the EPCA’s preemption clause broadly, which has implications for many state and local regulations. As such, the Ninth Circuit’s decision suggests that jurisdictions aiming to promote “green” building practices in new developments will have to incentivize such practices rather than relying on an outright ban of gas appliances. However, note there is still time to file an appeal of the decision (though none is currently filed), and further review may be sought.
At issue in California Restaurant Association was a Berkeley building code that, with limited exceptions, prohibited natural gas infrastructure in newly constructed buildings (the “Ordinance”). Id. at *8–9. The 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.’” Id. at *9 (quoting Berkeley Mun. Code § 12.80.020(c)). The Ordinance was challenged by the California Restaurant Association, claiming that the EPCA and state law preempted the Ordinance. The District Court found that “[b]ecause 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, the . . . EPCA does not preempt the Ordinance.” Id. at *9. The Ninth Circuit disagreed, reversing the district court and allowing the suit to continue.
In looking at the text of the EPCA, the Ninth Circuit noted that the general preemption clause establishes that “no State regulation concerning the energy efficiency, energy use, or water use of such covered product shall be effective with respect to such product unless the regulation” meets certain exceptions. 42 U.S.C. § 6297(c). The Ninth Circuit found that the Ordinance fell within the preemption clause because, stated simply, “a regulation on ‘energy use’ fairly encompasses an ordinance that effectively eliminates the ‘use’ of an energy source.” California Rest. Ass’n, 2023 U.S. App. LEXIS 9068, at *16. In reading the express preemption clause, the Court noted that by using the word “concerning” Congress intended to broaden the scope of the preemption clause, i.e. it does not just preempt standards concerning energy use but all matters concerning/relating to that subject. Therefore, “States and localities can’t skirt the text of broad preemption provisions by doing indirectly what Congress says that they can’t do directly.” Id. at *26–27. Here, the City of Berkley could not ban use of natural gas appliances through the banning of natural gas infrastructure.
It is unclear whether other existing or proposed bans would survive a similar challenge. Developers wishing to incorporate natural gas in projects may wish to seek guidance if met with conflict from local governments. Jurisdictions with an incentive- as opposed to prohibition-based program are unlikely to be impacted.
If you have questions or want to assess a similar challenge to state or local regulations of natural gas infrastructure, you may wish to retain counsel.
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
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