By Amy Turner

Earlier this year, I published on this blog about the wave of municipal natural gas bans enacted by municipalities in California and Massachusetts. At that time, two legal frameworks for these policies — which generally prohibit or restrict natural gas infrastructure in new buildings — had emerged. First, Berkeley, California used its municipal police powers to ban natural gas connections in new buildings, an approach later followed by Brookline, Massachusetts. Second, several other municipalities in California amended their local building energy codes to require all-electric construction (all-electric construction codes are a legal tool that accomplish the goals of a natural gas ban; if a new building is wired for and has only electric appliances, no natural gas connection is needed). Berkeley later supplemented its ban ordinance with a building energy code amendment. Municipalities in Massachusetts do not have building code authority.

In the months since these so-called bans were enacted, new legal arguments have been developed for why these prohibitions — particularly but not exclusively the policies formulated as outright bans rather than building code requirements — are or should be preempted by state or federal law. This blog post will examine three recent developments in the potential preemption of these bans.

  1. The Massachusetts Attorney General Determines the Brookline, MA prohibition on NG hookups in new and renovated buildings to be preempted by state law.

On July 21, 2020, the Massachusetts attorney general’s office (“AGO”) issued its determination that Brookline’s 2020 by-law prohibiting natural gas hookups for new and renovated buildings is preempted by three “uniform statewide regulatory schemes”: (1) the state building code; (2)the state fuel gas codeand related law; and (3) the state public utilities law. (As a municipality using the town form of government, Brookline is required to have all local laws reviewed and approved by the attorney general.) Brookline’s by-law drew its authority from the town’s municipal home rule and police powers.

First, the AGO held that the Massachusetts Building Code preempts Brookline’s local law because the law “would frustrate the statutory purpose of having a centralized, state-wide process” for issuing building permits. (p. 7). Notably, the decision does not hold Brookline’s regulation of behind-the-meter natural gas infrastructure inconsistent with the Building Code (the decision notes that “the Building Code does not directly regulate fossil fuel infrastructure”). Rather, it holds that “the by-law’s enforcement and waiver/appeal mechanism — withholding of a permit and waivers/appeals therefrom — is directly and comprehensively regulated by the [Building] Code,” and therefore in conflict with it. (p. 8). The AGO does not weigh in on whether a requirement with respect to natural gas piping to new buildings would be preempted by the Building Code if it did not implicate the Code’s building permit mechanism.

Second, the decision holds the Brookline by-law preempted by the Massachusetts State Gas Code, which reserves for a state board the authority to “alter, amend, and repeal rules and regulations relative to gas fitting in buildings throughout the commonwealth.” (p. 9, quoting M.G.L. c. 142 § 13). The AGO takes issue with both the new local permitting requirements and the substance of the local by-law, noting that “[b]y restricting the installation of ‘On-Site Fossil Fuel Infrastructure’… the Brookline by-law is in reality restricting the installation of ‘gas fitting’ — work governed by the Gas Code.” (p. 10). The by-law is therefore held to be preempted pursuant to both rationales. Interestingly, Brookline relied in part on authority delegated to it under state municipal law to “regulat[e] the inspection, materials, construction, installation, alteration or use of pipes, fittings and fixtures through which gas is supplied within buildings.” The AGO’s decision does not say what, if anything, this grant of authority conveys if it can be preempted by the Gas Code.

Third, the AGO’s decision determines the Brookline by-law to be preempted by the state’s public utilities laws as codified in M.G.L. c. 164. Noting that Massachusetts’ highest court “has repeatedly recognized ‘the desirability of uniformity of standards applicable to utilities,’” (p. 10) the AGO writes that the Brookline prohibition would “force a decision on property owners,” thus interfering with such uniform utility standards. (p. 12). The decision also notes that the Massachusetts Department of Public Utilities is tasked (p. 11) with overseeing the ”sale and distribution of natural gas,” the implication being that by regulating gas pipes and fittings inside buildings, Brookline is imposing a standard on natural gas utilities that is inconsistent with the state uniform standards.

While the AGO’s legal analysis weighs heavily, and indeed invalidates the Brookline by-law unless Brookline opts to challenge it, it is not the last word. Cities in Massachusetts (as opposed to towns) could pass local laws very similar to the invalidated Brookline by-law without AGO approval; in doing so they would invite challenges in court from aggrieved parties but might successfully argue that the approach is lawful. Moreover, the AGO’s opinion invites further municipal action to phase out natural gas use, both through zoning incentives and by advocating for state level change. While the AGO’s decision is a setback for municipal building decarbonization, we’re sure to see more from cities and towns in Massachusetts.

  1. The Arizona state legislature passed a law preempting local governments from enacting any form of municipal natural gas ban for new buildings. Other states followed.

Earlier this year, House Bill 2686 went into effect in Arizona, effectively preempting any prohibition on natural gas connections for buildings by local governments. More precisely, HB 2686 prohibits municipalities from denying a building permit “based on the utility provider proposed to serve the project,” and from imposing larger fees or more burdensome requirements on building permit applications based on utility provider. While the law is neutral on its face — the phrase “natural gas” appears nowhere in it — lawmakers’ intentions are clear. No local building requirements, whether in the form of a code requirement or a ban, may disfavor natural gas service for new buildings or new building additions. Oklahoma, Tennessee and Louisiana quickly followed suit with preemption laws.

Several other states are considering preempting local natural gas bans — that is, enacting a so-called “ban on bans.” In Colorado, for example, Initiative 284 is expected to appear on the ballot this November; if passed, the resulting law would prohibit state and local “restrictions on the installation of natural gas utilization in homes and businesses… or otherwise limit a consumer’s ability to use or install natural gas, except as required for safety purposes.”

It’s worth noting who does, and doesn’t, want to preempt local natural gas restrictions. The campaigns for the preemptive Arizona bill and Colorado ballot initiative are backed by natural gas interests. In Arizona, the local natural gas utility, Southwest Gas, and fossil fuel-backed political action committees gave campaign contributions totaling approximately $12,000 to the bill’s two sponsors. In Colorado, the group Protect Colorado, which is spearheading the ballot initiative process, receives millions of dollars in funding from oil and gas companies. Its sophisticated messaging frames the ballot initiative as a “consumer choice measure,” rather than as a measure related to municipal authority, greenhouse gas emissions or other air pollution. These states’ largest local governments, on the other hand, do not appear to want a “ban on bans.” Denver has a task force considering whether to restrict new natural gas connections, and the mayors of Phoenix and Tucson spoke out in opposition to HB 2686, observing that it “needlessly micromanages cities and tells us what we can and cannot do.“ Prior to HB 2686’s introduction, no Arizona municipality had publicly considered restricting new natural gas hookups.

  1. The California Restaurant Association has been so far unsuccessful in arguing that Berkeley’s natural gas ban is preempted.

Questions regarding preemption of the municipal natural gas bans in California are still being resolved. So far, the local building code amendments requiring or favoring all-electric construction do not appear to be preempted by California law, based on the California Energy Commission’s approval of more than a dozen of these local requirements. Moreover, while some of these local all-electric requirements have been challenged in court, they have not been challenged on preemption grounds.

The situation is less clear with respect to the City of Berkeley’s ordinance prohibiting natural gas connections in new buildings. As reported in Municipal Natural Gas Bans: Round 1, Berkeley’s natural gas ban was challenged in court by the California Restaurant Association, which argued that the Berkeley ordinance was preempted by both federal and state law — that is, as an energy appliance standard by the U.S. Energy Policy and Conservation Act, or EPCA, and by the California Building Standards Code.

In the months since January’s blog post, Berkeley submitted both its July 2019 ordinance and its later, supplementary building code amendment requiring all-electric construction to the California Energy Commission. The CEC approved the all-electric building code requirements and, according to court filings, issued a letter to the City opining that the July 2019 ordinance was outside the scope of CEC’s review (City of Berkeley’s Response to Surreply to Motion to Dismiss, April 3, 2020). In July 2020, the case’s judge dismissed the CRA’s claims as unripe and gave the plaintiffs until August 14 to resubmit an amended complaint with additional detail in its arguments in support of preemption. It remains to be seen what arguments the CRA will make in its forthcoming complaint, but it is expected the group will assert that the July 2019 Berkeley ordinance is preempted by EPCA as an impermissible appliance standard.

The legal landscape surrounding municipal natural gas bans continues to develop. While some states push back strongly against municipal efforts to phase out natural gas, others appear to be finding room for this exercise of municipal authority (as in California) or expressing agreement with the municipality’s goals, even when finding their actions preempted (as in Massachusetts). As municipalities experiment with new legal pathways to restrict new connections to natural gas service, and as state legislatures and agencies grapple with the delineations of authority granted to municipalities, we are sure to see an increasingly varied patchwork of how local governments may phase out new natural gas development.

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