Building electrification and the Berkeley decision

Originally Published on December 14, 2023; Updated on January 11, 2024, and January 22, 2024.

WATCH: Carra Sahler of the Green Energy Institute explains the impacts of the Berkeley decision as well paths forward.

With 60 to 80% of climate pollution coming from residential, commercial, and industrial buildings in many cities in North America, adopting building electrification policies is one of the most important actions local jurisdictions can take to combat the climate crisis, protect local health and safety, and push back against the fossil fuel industry.

Gas companies are acutely aware of the power wielded by local governments, and have waged all out campaigns to stop policies that electrify buildings from passing or being enforced. The industry has employed dirty tricks ranging from spamming residents with unsolicited emails and robo texts, to impersonating concerned residents on the Nextdoor app, and even to threatening to bus in hundreds of out-of-towners with “no social distancing in place” to disrupt city business during COVID.

They’ve even gone so far as to lobby state governments to pass preemption laws blocking local governments from electrifying their buildings and secretly bankroll (with ratepayer dollars) a lawsuit against the policy in Berkeley, California – the city that started the building electrification movement.

Last year, a three-judge panel of the Ninth Circuit Court of Appeals issued an opinion finding that Berkeley’s building electrification policy interferes with a federal law on appliance efficiency, the Energy Policy and Efficiency Act, or EPCA. The City of Berkeley petitioned for a larger panel of the Ninth Circuit to review the decision (an “en banc” review), with support from President Biden’s administration and others. In the meantime, Berkeley continued to enforce its building electrification policy. Nonetheless, the decision had a chilling effect. Some jurisdictions dropped or paused plans to draft and pass building electrification policies, while still others stopped enforcing laws they already had on the books.

On January 2, 2024, the Ninth Circuit denied the petition for a rehearing, but amended its decision to clarify some language; the amendments do not change the April 2023 finding that Berkeley’s building electrification ordinance is preempted by EPCA. Several justices dissented, saying the decision from the three-judge panel was deeply flawed and the case should have been reheard.

That’s the bad news.

What’s the good news? The ways local governments and advocates can get creative in service to their building electrification goals.

Leaders in the building electrification movement have been developing language to shore up existing policies and create new policies that can co-exist with EPCA, and are even advancing building electrification for local governments at the local level in states that prohibit local action on building electrification.

In short, there are important actions that any local government can take.

Click the flowchart to enlarge and see what the best path forward is for your community

We interviewed Carra Sahler, Director and Staff Attorney at the Green Energy Institute at Lewis and Clark Law School, who works with many local government leaders and advocates in Oregon who are affected by the Ninth Circuit decision, about some of the remaining opportunities.

For those of us who aren’t as familiar with the Berkeley building electrification decision, will you please provide a brief explanation?

The California Restaurant Association challenged the City of Berkeley’s 2019 Natural Gas Infrastructure Ordinance, a health and safety-based prohibition on natural gas piping in new buildings from the gas meter. The California Restaurant Association asserted that the federal Energy Policy and Conservation Act (EPCA) preempted the city’s ordinance. EPCA sets national efficiency standards for residential and commercial appliances, like water heaters and HVAC equipment, precluding states from setting their own efficiency standards where a federal standard exists.

A three-judge panel of the Ninth Circuit Court of Appeals sided with the California Restaurant Association. The panel concluded that EPCA applies to state and local approaches to natural gas if they concern the “energy use” of appliances. Because Berkeley’s ordinance effectively required a quantity of “zero” natural gas at the point of use, the court found the ordinance regulated the “energy use” of covered appliances, and thus ran afoul of EPCA’s preemption provision.

On January 2, 2024, the Ninth Circuit denied Berkeley’s petition for an en banc review of the panel’s opinion, but the panel issued an amended opinion clarifying and narrowing some of its originally broad statements. Specifically, among other changes, the Court added the following lines: “Our holding here is limited. We conclude only that EPCA applies to building codes and that Berkeley’s Ordinance falls with the Act’s preemptive scope.”

Who is directly impacted by the Berkeley decision?

To evaluate the impact of the Ninth Circuit’s decision, a few facts matter. First, where is the municipality located? Second, what kind of policy has been enacted?

In terms of location, California Restaurant Association v. City of Berkeley applies in any state or local government located in the Ninth Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, and the U.S. territory of Guam and the Commonwealth of the Northern Mariana Islands). Except for Berkeley, California. See my answer below for an explanation of that oddity in the law.

The next question is what kind of building decarbonization policy is affected? That’s harder. Certainly, if your municipality has adopted a “Berkeley-style” gas ban – one which prohibits fossil fuel piping in a building from the point of delivery at the gas meter – your municipality is directly impacted.

Technically, the Berkeley decision should not affect any ordinance other than a ban on natural gas piping in buildings. However, despite the narrow type of law at issue, the broad language of the original Ninth Circuit’s decision caused consternation among some municipalities with various forms of building decarbonization policies, such as building code-based electrification ordinances. Some municipalities have paused implementation of previously adopted laws, declined to finalize proposed ordinances, or promised not to enforce existing requirements.

San Francisco is one jurisdiction which has concluded that its all-electric building code “differs from Berkeley’s and remains in effect[.]” Whether cities such as San Francisco proceed with previously adopted policies depends on individual government risk assessments and resources.

The amended opinion should ease some concerns. For example, the amended opinion now explains:

Yet, the breadth of EPCA’s preemption provision ‘does not mean the sky is the limit.’. . . Though EPCA’s preemption provision is broad, it is not unlimited. For instance, our holding here has nothing to say about a State or local government regulation of a utility’s distribution of natural gas to premises where covered products might be used. We only decide that EPCA’s preemptive scope applies to building codes that regulate the gas usage of covered appliances on premises where gas is otherwise available.

I provide additional information below on the building decarbonization pathways that remain following the amended decision.

Can I keep enforcing my policy even if my community’s policy is directly impacted?

The answer is no, if it is drafted like Berkeley’s and you’re in the Ninth Circuit.

All municipalities in the Ninth Circuit are subject to the decision. Berkeley may continue to enforce its policy because the Ninth Circuit’s decision is not yet final with respect to the parties in the case. It is not yet final because Berkeley may appeal the decision to the U.S. Supreme Court. If the time for appeal passes, and the district court issues a final mandate, Berkeley will then be required to comply with the opinion.

Interestingly, however, other municipalities in the Ninth Circuit are subject to the decision now, even before the decision is final.

Should I amend my existing policy even if I’m not directly impacted?

My answer to this question is necessarily nuanced. As you can see from my previous answers, different communities already responded to the first, three-judge panel decision in disparate ways. Municipalities located in the Ninth Circuit should consider whether their policy is compatible with EPCA given the amended decision in the Berkeley case, and explore developing amendments and alternative policy paths (see below) if needed.

Pursuing and finalizing an amendment now may be logical depending on the policy. Washington State’s building code is an example of a circumstance where amending the law made sense. As a state required to comply with the law of the Ninth Circuit and already defending against litigation brought by fossil fuel interests, Washington’s Building Code Council identified a solution to meet the state’s legislative mandate while also complying with EPCA. Washington’s approach requires builders to meet the same energy performance of buildings heated with electric heat pumps, but the choice of which measures to implement remains up to the developer.

In jurisdictions outside of the Ninth Circuit, where we are now seeing EPCA-based arguments being leveled, considering amendments and alternative policy pathways is also probably wise. Having said that, Judge Michelle Friedland, joined by seven other Ninth Circuit judges, offered a thorough and cogent statutory interpretation in her dissent, which may be useful to courts in other jurisdictions. She pointed out that the history of the law, including its amendments, “does not create a consumer right to use any covered appliance.” Rather, the statutory terms at issue–such as “energy use”–have technical meanings that the panel improperly interpreted colloquially. She urged other courts to avoid repeating the Ninth Circuit’s mistakes.

What type of action should I take if my community doesn’t have a building electrification policy in place yet?

It depends on where you live. Some experts describe our system as a layer cake. The cake is made up of federal law (the top layer), state law (the middle layer), and local government law (the bottom layer). As a practical matter, in evaluating which electrification pathways are available, our system of multiple governments is more analogous to a marble cake with numerous areas overlapping and hard to define borders. Nevertheless, the layer cake analogy is useful to help tick off the possible barriers to action.

At a minimum, communities should keep in mind EPCA and the Ninth Circuit’s interpretation of its preemption provision. Additionally, local governments must evaluate existing state laws and their own authority to act. A few questions to ask: What is the local government’s authority to act on climate? Does the local government have authority over the building codes, or does the state? How about the gas distribution system? Who controls air pollution and are there sectors that remain unregulated? Could land use laws be useful? Is the community hamstrung by a contract with the natural gas utility (a franchise agreement) or other licensing or right-of-way ordinance?

In the aftermath of Berkeley, consensus has formed around three main viable approaches to reducing or eliminating natural gas use.

First, EPCA allows state and local building codes to address energy use and energy efficiency of appliances covered by the statute. The statute sets out seven criteria the building code must meet. Washington’s Building Code Council used this approach in adopting its most recent building codes, as I described above. For local governments with building code authority, an EPCA-compliant building code remains a feasible approach.

Second, the federal Clean Air Act offers latitude to states and local governments to enact emission standards. Again, depending on a local government’s authority to regulate air pollution, a building or appliance emissions standard might be an option. New York City’s electrification approach prohibits newly constructed buildings from combusting any substance that emits “25 kilograms or more of carbon dioxide per million British thermal units of energy.” The South Coast Air Quality District, the Bay Area Air Quality District, and the California Air Resources Board have each proposed or adopted restrictions on nitrogen oxide (NOx) air emissions from appliances.

Finally, local governments usually have authority over their sidewalks and streets, known as the rights-of-way, and over the fees they can collect from utilities for the privilege of using the public rights-of-way to provide services. The Berkeley decision expressly left room for local governments to restrict the expansion of fossil fuel infrastructure necessary for the gas distribution system. Specifically, as I noted above, the amended opinion expressly explained that EPCA’s preemptive scope precludes building codes affecting gas use in appliances when gas is available. It later reiterated, “Our holding doesn’t touch on whether the City has any obligation to maintain or expand the availability of a utility’s delivery of gas to meters.” Judge M. Miller Baker’s concurring opinion also notes that local governments “are likely free to impose carbon taxes designed to discourage” natural gas consumption.

Voluntary measures to incentivize action, and restricting fossil fuel use in government-owned buildings, also remain valid pathways post-Berkeley.

The local government’s appetite for action will depend on state and local law and its risk tolerance.

What if I live in a preemption state?

This is also necessarily a nuanced answer. It depends on what the law says is preempted and it depends on what legal authority remains with the local government. Local leaders have been very creative in finding ways to help their communities electrify. I will note that reach codes preferring electric appliances, electric-ready requirements, leveraging financial and other incentives to promote voluntary electrification, community education, and other methods of disincentivizing fossil fuel use all likely remain on the table. Electrifying municipally-owned buildings is also a possibility.

Most important, access and share all the information available on federal and (if they exist) state incentives to fuel switch. And don’t give up. A growing number of people are joining the building electrification movement because of the health, safety, and climate benefits and the available financial incentives to electrify.

To get access to additional SAFE Cities resources and stay up-to-date on the latest happenings in the Berkeley case and on the building electrification movement, please consider joining our growing networks of advocates and policy makers.

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The Road Ahead: Building Electrification and the Berkeley Decision

WATCH: Carra Sahler of the Green Energy Institute explains the impacts of the Berkeley decision as well paths forward, with bonus perspective from Cheryl Davila, a former Berkeley city councilmember who cosponsored the city’s building-electrification policy.