US court upholds New York City gas ban, rejects 'flawed' Berkeley opinion

A US district court judge upheld a New York City ordinance prohibiting natural gas use in new construction, marking the latest setback for a coalition of industry and labor groups seeking to overturn gas bans and building electrification mandates across the country.

Six trade associations and a plumbers union failed to make their case that a federal energy efficiency law preempts the local ordinance, Judge Ronnie Abrams opined on March 18 for the US District Court for the Southern District of New York. Abrams' decision allowed New York City to continue enforcing Local Law 154, which set emission limits on fuel combustion in new buildings that disqualified gas use.

The opinion followed the dismissal on procedural grounds of a lawsuit challenging preferences for electric heating equipment in the state of Washington's energy code, as well as the partial dismissal of a suit challenging a law requiring New York state building code officials to adopt an all-electric construction requirement.

Abrams' opinion was the first since 2023 to address the substance of a major question for the building decarbonization movement: whether the US Energy Policy and Conservation Act (EPCA) blocks cities and states from restricting gas use in new construction.

Implications for building decarbonization policy challenges

In April 2023, a three-judge panel for the US Court of Appeals for the 9th Circuit ruled that EPCA preempted a first-in-the-nation ordinance by Berkeley, California, restricting gas piping in new construction. The ruling prompted policymakers to pull back existing or planned building decarbonization policies and inspired EPCA-based legal challenges across the nation.

Abrams dismissed the complaint against Local Law 154 with prejudice. The plaintiffs plan to appeal the decision to the US Court of Appeals for the 2nd Circuit, Sarah Jorgensen of Reichman Jorgensen Lehman & Feldberg LLP told Platts, part of S&P Global Commodity Insights.

Jorgensen, who spearheaded the Berkeley case and challenged the New York state law, said she had expected the New York cases to reach the 2nd Circuit. She noted that a US District Court initially dismissed a California Restaurant Association (CRA) complaint against the Berkeley ban, only for the 9th Circuit to overturn the decision.

Abrams' decision does not set a precedent that other courts must follow, but the landmark decision in CRA v. City of Berkeley only set a precedent within the 9th Circuit, according to Daniel Carpenter-Gold, staff attorney at the Mitchell Hamline School of Law's Public Health Law Center.

"This is a sign that judges outside of the 9th Circuit are willing to disagree with CRA v. Berkeley's strained interpretation of EPCA preemption," Carpenter-Gold told Platts. "It probably will help persuade the other judges that are handling similar cases."

Meaning of 'energy use'

EPCA and subsequent changes to the 1975 law tasked the US Department of Energy with setting uniform energy conservation standards for household appliances and preempted conflicting state policies. In reaching her decision, Abrams considered two key issues: the meaning of "energy use" under EPCA, and whether Local Law 154 "concerns" energy use within that meaning.

The plaintiffs argued that energy use applies to the ability of EPCA-covered products to consume energy. By essentially setting the energy use of gas furnaces, water heaters, stoves and other appliances at zero, Local Law 154 sought to do indirectly what Congress prohibited local governments from doing directly under EPCA.

New York City countered that energy use under EPCA refers to a fixed value determined through product testing, which decides whether that product complies with DOE's energy conservation standard. Lawyers for the city said EPCA preemption only applies to regulations that "directly or indirectly establish energy conservation standards."

Abrams took New York City's view, relying on EPCA's definition of energy use: "the quantity of energy directly consumed by a consumer product at point of use, determined in accordance with test procedures." The court said the 9th Circuit's interpretation of energy use "rested on a flawed reading of the term 'point of use.'"

The 9th Circuit read the term "point of use" to mean that Congress was concerned with a household's ability to use EPCA-covered products "at their intended final destination" — a dedicated gas hookup or electric outlet.

Abrams agreed with a dissenting opinion from Judge Michelle Friedland, who urged other courts against repeating the 9th Circuit's "mistakes," specifically applying colloquial meanings to technical terms. Abrams said that argument was persuasive.

Congressional intent key to decision

After establishing the meaning of energy use, Abrams determined that Local Law 154 does not "concern" energy use under EPCA, citing the US Supreme Court's past interpretations of that term.

Additionally, Local Law 154 does not frustrate EPCA's purpose: to establish uniform federal standards and avoid a patchwork of conflicting state regulations that burdens manufacturers, Abrams said. The ordinance does not address energy efficiency or energy use of manufactured products, but instead regulates the type of fuel that EPCA-covered products can consume in certain settings, she said.

Setting-specific restrictions on fuel use are "integral" to municipal construction and fire codes, and nothing in EPCA suggests that Congress intended to preempt those regulations, Abrams said.

The plaintiffs' reliance on a 2nd Circuit decision that struck down New York City rules favoring hybrid taxis was also "misplaced," the judge said. That decision found that the rules amounted to setting fuel economy standards — powers reserved for the federal government.

"Here, by contrast, prohibiting certain fuel types in certain settings does not impose performance standards by proxy," Abrams said. She again cited Friedland, who noted that the Berkeley ordinance "may have the indirect effect of increasing energy consumption in new buildings" in cases where gas appliances are more efficient than electric alternatives.

Carpenter-Gold said it was "particularly notable" that Abrams drew on Friedland's dissent, which seven other judges joined and three senior judges supported.

"It's early still, but other judges might look at this as the beginnings of a consensus that the Berkeley decision was wrong," he said.