In California Restaurant Association v. City of Berkeley, 89 F. 4th 1094 (9th Cir. 2024), the Ninth Circuit was tasked with determining whether the City of Berkeley’s attempt to prohibit the use of natural gas pipelines in new buildings through a local ordinance conflicted with the federal Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. § 6297(c).  That statute expressly preempts state and local governments from enacting regulations restricting energy use of many natural gas appliances, including those used in household and restaurant kitchens.  After evaluating the parties’ arguments, the court concluded that the ordinance is preempted by the EPCA based on the text, structure, and context of that statute. 

In 2019, the California Restaurant Association (the “Association”), a group comprised of restaurateurs and chefs, brought suit against the City, arguing that the EPCA preempted the ordinance.  The City of Berkley moved to dismiss the complaint for failure to state a claim, which the district court granted.  Specifically, the district court held that because the EPCA does “not facially regulate or mandate any particular type of product or appliance” and because its impact is “at best indirect[ ]” on consumer products, the ordinance was not preempted by the EPCA.  The district court declined to exercise supplemental jurisdiction and dismissed the state-law claims.

The Association appealed the district court’s order to the Ninth Circuit.   In analyzing the preemption issue, the court evaluated the parties’ arguments as to what a “regulation concerning the . . . energy use” of a covered product means within the context of the statute.  Among other arguments, the City offered that the EPCA preemption provision prohibits only “regulations that impose standards on the design and manufacture of appliances, not regulations that impact the distribution and availability of energy sources like natural gas.”  In amicus briefing, the federal government suggested a different interpretation—that the EPCA preempts “energy conservation standards”—which operate directly on the covered products themselves.  Finally, the Association argued for a broader interpretation of EPCA preemption, which would preclude regulations like the ordinance that have the effect of banning covered products from using available energy sources like natural gas.

After evaluating the parties’ textual and non-textual arguments in support of their interpretations of the statute, the Ninth Circuit concluded that the ordinance is preempted by the EPCA.  The court stressed that its holding in this regard is narrow, in that it only restricts the City from prohibiting new building owners from using natural gas pipelines to connect to a gas meter by way of a local ordinance, and does not address the City’s obligation “to maintain or expand the availability of a utility's delivery of gas to meters.”

Although the City of Berkeley was the first to attempt to ban natural gas usage in new buildings, it is not alone in its desire to reduce this form of energy usage.  Several other state and local governments across the country have taken steps to prevent further development of natural gas infrastructure, citing environmental and public health concerns.  In light of the Ninth Circuit’s decision in California Restaurant Association, other preemption suits challenging these ordinances are likely to follow, including citations to the EPCA, Natural Gas Act, and other federal statutes.

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