In a recent decision, the 9th Circuit overturned a City of Berkeley ordinance that effectively banned natural gas appliances, reversing a prior California federal court decision. In doing so, the Court took an expansive view of the Energy Policy and Conservation Act (“EPCA” or the “Act”) (42 U.S.C. §§ 6291 et seq.), holding that the Act preempted the Berkeley ordinance. The implications of the court’s decision in California Restaurant Association v. City of Berkeley will, however, stretch far beyond the City of Berkeley^[1]. 

The general rule of preemption under the EPCA establishes that once a federal energy conservation standard becomes effective for a covered product^[2], “no State regulation concerning energy efficiency, energy use, or water use of such covered product shall be effective with respect to [that] product,” with limited exception^[3]. Berkeley’s ordinance, in turn, prohibited natural gas infrastructure in newly-constructed buildings, in an effort to “eliminate obsolete natural gas infrastructure and associated greenhouse gas emissions in new buildings where all-electric infrastructure can be most practicably integrated.”^[4] Although the ordinance did “not facially regulate or mandate any particular type of product or appliance,”^[5] the California Restaurant Association argued that it effectively amounted to a ban on natural gas appliances. The 9th Circuit agreed, holding that “Berkeley can’t bypass preemption by banning natural gas piping within buildings rather than banning natural gas products themselves.”^[6]

Interestingly enough, the court reached this conclusion despite the Department of Energy’s (“DOE” or the “Department”) contention that the EPCA only preempts “state and local regulations that impose energy conservation standards or similar performance standards for the efficiency or energy consumption of certain appliances” (i.e., what the Department does at the federal level)^[7]. Although the court did not contest DOE’s application of the preemption provision, it reasoned that the breadth of the preemption provision was actually much broader. Indeed, the court explained that this narrow view overlooks the fact that the term “energy use” is: 

based on consumption that happens “at point of use.” This means that we measure energy use not from where the products roll off the factory floor, but from where consumers use the products. Put simply, by enacting EPCA, Congress ensured that States and localities could not prevent consumers from using covered products in their homes, kitchens, and businesses^[8].

Accordingly, the court determined that EPCA preemption “extends to regulations that address the products themselves and the on-site infrastructure for their use of natural gas.”^[9]

Although the 9th Circuit may have thwarted Berkeley’s initial efforts to reduce or eliminate natural gas use and emissions, as well as those localities that utilized Berkeley’s once groundbreaking ordinance as a model^[10],​​​​​​​ it is unlikely to end natural gas appliance bans. Indeed, one concurring opinion identified other possible avenues to effectuate such bans, indicating that “EPCA preemption is unlikely to reach a host of state and local regulations that incidentally impact ‘the quantity of [natural gas] directly consumed by a [covered] product at point of use.’”^[11]

For example, state and local authority could be used to impose carbon taxes or other restrictions on the distribution of natural gas utility services to prevent or disincentivize the use of natural gas without triggering EPCA preemption. Whether other federal statutes may prevent broad restriction on natural gas supplies will have to wait for Berkeley’s and other jurisdictions’ response to this decision within and outside the 9th Circuit. 

FOOTNOTES

^[1] See Cal. Restaurant Ass’n. v. City of Berkely, No. 21-1678 (9th Cir. Apr. 17, 2023). 
^[2] “Covered product” includes consumer and industrial equipment, including, as the court points out, commercial equipment that may be used in restaurants.
^[3] 42 U.S.C. § 6297(c). 
^[4] Cal. Restaurant Ass’n., No. 21-1678 at p. 8.
^[5] Id. at p. 9 (citing Cal Res. Ass’n v. City of Berkeley, 547 F. Supp. 3d 878, 891 (N.D. Cal. 2021)). 
^[6] Id. at p. 24.
^[7] Brief for United States as Amici Curiae Supporting Appellee, Cal. Restaurant Ass’n v. City of Berkeley, No. 21-1678 (9th Cir. Apr. 17, 2023). 
^[8] Cal. Restaurant Ass’n., No. 21-1678 at p.15. (internal citations omitted). 
^[9] Id. 
^[10] e.g., San Jose and Santa Cruz. 
^[11] Id. at 42.