Constitution of America, We the People.
Since 2019, more than seventy local and state jurisdictions have followed Berkeley, CA in requiring or strongly incentivizing all-electric or natural gas-free new buildings. However, a Ninth Circuit ruling invalidating the Berkeley ordinance threatens to change the balance.
Background
Under Ithaca’s similar ordinance, building owners will “not use fossil fuels for major building energy needs such as space heating and hot water heating, by 2026.” When commercial or residential buildings file building permits to build, expand or remodel, they must earn points based upon many factors, such as hotel room size and the number of EV parking spaces they have. The number of required points increased on Jan. 1, 2023.
In contrast, the federal government’s approach has been to provide incentives, such as tax credits, to encourage conversion from natural gas to electricity without a flat prohibition. The question is whether local governments can force property owners to convert from natural gas when the federal government leaves them free to choose.
During the 1973 Arab Oil Boycott, America’s dependence on imported oil caused widespread economic hardship. In response, the federal government adopted policies and enacted laws to increase domestic production, encourage conservation, and promote natural gas as a substitute for oil. The 1975 Energy Policy and Conservation Act (EPCA) was an important part of this national plan. Congress realized that the EPCA could be inconsistent with some local laws and added strong provisions to preempt any contrary local law.
The Lawsuit Challenging Berkeley
Just like Ithaca, Berkeley has adopted an ordinance prohibiting the connection of natural gas appliances. However, restaurant owners and chefs prefer using natural gas over electricity in commercial kitchens. So, the California Restaurant Association (CRA) sued the city to invalidate the ordinance in November 2019. The CRA claimed that Berkeley’s ordinance was preempted by the EPCA when the EPCA set efficiency standards for gas appliances. In other words, if a particular natural gas appliance met the federal standard set by the EPCA, Berkeley could not set a different standard nor block the use of those appliances city-wide.
The federal district court agreed with the city of Berkeley and upheld the “no gas appliances” ordinance in 2021. The CRA appealed to the Ninth Circuit Court of Appeals, and the case drew many third party briefs from the energy industry, including from the American Gas Association. On April 17, 2023, the Ninth Circuit reversed the trial court and held that the EPCA preempted the Berkeley ordinance.
The Ninth Circuit ruling only governs western states, as mandatory authority. New York is in the Second Circuit, where the decision can be cited as persuasive authority. Other groups will use that decision to file lawsuits to block similar local ordinances, including the Ithaca Green New Deal. Even without this adverse decision, the Ithaca officials most involved in the Ithaca Green New Deal have left or are leaving government, and the idea of a natural gas appliance ban has been unpopular with homeowners and landlords.
Reactions to the Court Decision
The American Gas Association is a national trade association representing all natural gas distribution companies, including NYSEG. “The U.S. Court of Appeals for the Ninth Circuit took a huge step today that will both safeguard energy choice for California consumers and help our nation continue on a path to achieving our energy and environmental goals,” said Karen Harbert, American Gas Association president and CEO. Harbert added:
Natural gas has been one of the primary drivers to achieving environmental progress, and any ban on this foundation fuel will saddle consumers with significant costs for little environmental gain. The natural gas industry has led the way in reducing our nation’s emissions, and we will continue to innovate and advance technologies to help ensure Americans have access to the efficient and reliable energy they need and expect.
However, it is far from settled how the Ninth Circuit’s decision will affect Ithaca homeowners. The Cornell Review asked Thomas Ward, of the National Association of Home Builders (NAHB), about the decision’s impact on Ithaca homeowners. He responded:
In your hypothetical, I assume the person can wait (their heating source is still working) and would prefer a gas furnace. I am not very familiar with the Ithaca ordinance, but I believe it is an energy code and therefore is a building code. The 9th Circuit thought that was important.
In addition, the Ithaca Ordinance seems to say there are certain energy types that cannot be used—the 9th Circuit thought this was a problem in Berkeley. So I would say that the Ithaca ordinance is at least somewhat vulnerable under the 9th Circuit’s decision. But, Ithaca does not fall in the 9th Circuit, and the 2nd Circuit may read EPCA differently. In the end, if someone needs a new furnace, probably not the best plan to wait for the courts to figure this out.
“As to NAHB’s plans, we don’t currently have any plans to challenge any other ordinances,” said Ward.
Although the court ruling against Berkeley does not have a direct impact on Ithaca, Ithaca property owners will take it into account when deciding whether to invest in decarbonizing their buildings. It is up to Congress, not the Ithaca Common Council, to change the existing federal laws.
