In the continued effort by cities to require all-electric infrastructure in new buildings, the City of Berkeley (“Berkeley”) adopted an ordinance that prohibited, with some exceptions, natural gas infrastructure in newly constructed buildings (“Ordinance”). Congress adopted the Energy Policy and Conservation Act (“EPCA”), 42 U.S. 6297(c)), which expressly preempts state and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens. The Ninth Circuit Court of Appeals (“9th Circuit”) concluded that Berkeley is preempted from prohibiting natural gas piping because Berkeley is barred from banning natural gas appliances. As denying gas piping will render any natural gas appliances useless to the homeowner or commercial user, the 9th Circuit held the EPCA preempts the Ordinance.
Scope of EPCA Preemption
EPCA preempts regulations that relate to “the quality of natural gas directly consumed by certain consumer appliances at the place where those products are used.” EPCA concerns the end-user’s ability to use installed covered products at their intended final destinations. A regulation that prohibits consumers from using appliances impacts the “quality of energy directly consumed by the appliances at the point of use. So, in plain language, EPCA preempts the Ordinance because the Ordinance prohibits the installation of necessary natural gas infrastructure on premises where covered natural gas appliances are used.
The court reinforced this interpretation of the EPCA’s scope by emphasizing that a regulation need not be written directly against the products covered under the EPCA; instead, the statute protects against regulations that “concern” such products. Therefore, given the broadness of the term “concerns,” the court explained that local governments have less authority to regulate products under the EPCA as the statute’s terms grant widespread control over those regulations to the federal government.
Berkeley contended that its Ordinance does not regulate “energy use” because it bans natural gas rather than prescribing an affirmative “quality of energy.” While Berkeley agreed that a prohibition on natural gas infrastructure reduces energy consumption to zero, Berkeley argued that “zero” is not a “quantity.” Thus, the Ordinance is not an “energy use” regulation. The 9th Circuit quickly dispensed with this argument, determining it is well accepted in ordinary usage that “zero” is a “quantity.”
Berkeley’s second, equally unpersuasive argument is that EPCA’s definition of energy efficiency precludes a total prohibition on natural gas piping from being an “energy use” regulation. EPCA defines “energy efficiency” as the “ratio of the useful output of services to the energy use of the product. (Section 6291(5).) According to Berkeley, “zero” cannot serve as the “quantity of energy” in “energy use;” otherwise the energy efficiency ratio would have an impermissible “zero” denominator. But in that case, both the denominator (“energy use”) and the numerator (“output”) would be zero, which yields an indeterminate result. The 9th Circuit doubted Congress meant to hide an exemption to the plain text of EPCA’s preemption clause in a mathematical equation. Thus, a regulation that imposes a total ban on natural gas is not exempt from EPCA because it lowers the “quantity of energy” consumed to “zero.”
In sum, Berkeley cannot bypass the preemption by banning natural gas piping within buildings rather than banning natural gas products themselves. With several cities and counties adopting and considering similar ordinances or policies in their Climate Act Plans or through their building codes, it is essential to evaluate if the prohibitions or restrictions are preempted by the EPCA or other legislation adopted by Congress or California. It is also vital to assess prospective policies beyond their direct implications, as the court has decided that EPCA’s preemption extends past facial regulations. Furthermore, this is consistent with the recent California Supreme Court case holding that Monterey County’s Measure Z banning the injection of oil and gas wastewater on all lands within Monterey County is preempted by Public Resources Code section 3106. Thus, while cities and counties have broad zoning powers, the local legislation cannot conflict with federal or state law. (Chevron U.S.A. Inc, v. County of Monterey (2023) S271869.)
Patrick Enright is Senior Counsel and Kara Anderson is a law clerk at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.