Ninth Circuit Rules Berkeley Gas Hookup Ban Is Preempted

A local California ordinance prohibiting natural gas hookups in new construction conflicts with federal law according to a federal appellate court.

Yesterday a unanimous panel of the U.S. Court of Appeals for the Ninth Circuit concluded that a Berkeley, California ordinance prohibiting the installation of natural gas piping in newly constructed buildings is preempted by the federal Energy Policy and Conservation Act (EPCA). The opinion by Judge Bumatay in California Restaurant Association v. City of Berkeley was joined by Judges O'Scannlain and Baker, each of whom also wrote a separate concurrence.

Here is how Judge Bumatay summarizes the opinion:

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 Energy Policy and Conservation Act ("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. 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.

The California Restaurant Association, whose members include restaurateurs and chefs, challenged Berkeley's regulation, raising an EPCA preemption claim. The district court dismissed the suit. In doing so, it limited the Act's preemptive scope to ordinances that facially or directly regulate covered appliances. But such limits do not appear in EPCA's text. By its plain text and structure, EPCA's preemption provision encompasses building codes that regulate natural gas use by covered products. And by preventing such appliances from using natural gas, the new Berkeley building code does exactly that.

We thus conclude that EPCA preempts Berkeley's building code's effect against covered products and reverse.

Judge Bumatay's opinion concludes that the the plain text of EPCA preempts the ordinance, and thus does not rely upon any form of implied or conflict preemption.

From his discussion:

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 product," unless the regulation meets one of several categories not relevant here. 42 U.S.C. § 6297(c). For our purposes, we need to determine what constitutes a "regulation concerning the . . . energy use" of a covered product. . . .

by its plain language, EPCA preempts Berkeley's regulation here because it prohibits the installation of necessary natural gas infrastructure on premises where covered natural gas appliances are used.

Berkeley's main contention is that its Ordinance doesn't regulate "energy use" because it bans natural gas rather than prescribes an affirmative "quantity of energy." While Berkeley concedes that a prohibition on natural gas infrastructure reduces the energy consumed by natural gas appliances in new buildings to "zero," it argues that "zero" is not a "quantity" and so the Ordinance is not an "energy use" regulation. But that defies the ordinary meaning of "quantity." In context, "quantity" means "a property or attribute that can be expressed in numerical terms." Oxford English Dictionary Online (2022). And it is well accepted in ordinary usage that "zero" is a "quantity." . . .

a regulation that imposes a total ban on natural gas is not exempt from EPCA just because it lowers the "quantity of energy" consumed to "zero." In other words, a regulation on "energy use" fairly encompasses an ordinance that effectively eliminates the "use" of an energy source. As the Court said long ago, a regulation may "assume the form of [a] prohibition." Champion v. Ames, 188 U.S. 321, 328 (1903). . . .

by 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  onsite infrastructure for their use of natural gas. . . .

States and localities can't skirt the text of broad preemption provisions by doing indirectly what Congress says they can't do directly. EPCA would no doubt preempt an ordinance that directly prohibits the use of covered natural gas appliances in new buildings. So Berkeley can't evade preemption by merely moving up one step in the energy chain and banning natural gas piping within those buildings. Otherwise, the ability to use covered products is "meaningless" if consumers can't access the natural gas available to them within the City of Berkeley.

Judge O'Scannlain concurs, but expresses some misgivings about the precedents that (he believes) compel the result in this case.

I agree that EPCA preempts the Ordinance. But I only reach that conclusion because, under Ninth Circuit precedent, I believe I am bound to hold that the presumption against preemption does not apply to the express-preemption provision before us today. That conclusion is not obvious or easy. In my view, this issue presents a challenging question in a deeply troubled area of law—namely, which of the apparently conflicting lines of cases we should follow in applying the presumption against preemption in expresspreemption cases.

His concurrence concludes with a plea for greater clarity on preemption from the Supreme Court:

We are duty-bound to apply binding precedents of the Supreme Court and the Ninth Circuit. Alas, those precedents "are not always clear, consistent, or coherent." Separation of Church & State Comm. v. City of Eugene of Lane Cnty., State of Or., 93 F.3d 617, 627 (9th Cir. 1996) (O'Scannlain, J., concurring). Here, I believe I am bound  by our post-Franklin precedents to hold that the presumption is inapplicable to the express-preemption provision before us today. And for that reason, I join the panel's opinion. But I remain concerned that this area of law is troubling and confused, with tensions in the Supreme Court's precedents, splits in the circuits, and important  practical questions unanswered. Greater clarity and further guidance from the Court on how to navigate preemption doctrine after Franklin would be most welcome.

Judge Baker, a judge on the Court of International Trade sitting by designation, also concurred with a detailed discussion of why he believes the Berkeley ordinance "invades the core area" preempted by EPCA. His concurrence concludes:

The Berkeley Ordinance—a building code—prohibits the customer-owned piping that receives gas distributed by the utility at the meter, and scrupulously avoids touching on infrastructure owned by the utility, including the meter or the service pipe connecting the meter to the gas distribution main. And although EPCA has little, if anything, to say about a state or local government's regulation of a utility's distribution of natural gas to customers, it has everything to say about "State or local building code[s] for new construction concerning the . . . energy use of . . . covered product[s] . . . ." 42 U.S.C. § 6297(f)(3). "[R]egulation[s] or other requirement[s]" in such codes are preempted unless they "compl[y] with all of" various specified conditions. See id. § 6297(f)(3)(A)–(G). And it's undisputed the Ordinance does not do so.

Thus, far from having only "a tenuous, remote, or peripheral connection," N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 661 (1995), to the subject matter preempted by EPCA, the Berkeley Ordinance cuts to the heart of what Congress sought to prevent—state and local manipulation of building codes for  new construction to regulate the natural gas consumption of covered products when gas service is otherwise available to premises where such products are used. And as the panel explains, because EPCA would unquestionably preempt a building code that prohibited the attachment of covered appliances to the owner's piping that receives gas at the utility's service delivery point, it necessarily also preempts a building code that instead bans that piping to evade preemption. I therefore join the panel opinion in full.