Gas Ban on New Yorkers Will Be Fought in Court

Last week MDN brought you the sad news that New York State has fallen and is now under a Communist dictatorship, with the freedom to choose an energy source now gone (see NY State has Fallen – Gas Stoves & Peaker Plants Banned in Budget). Gov. Hochul and the Democrat legislature unilaterally voted to ban new homes and businesses from connecting to natural gas lines–even though such a ban was ruled to be unconstitutional in California just a few weeks ago (see Fed Appeals Court Overturns Berkeley, CA “First in Nation” Gas Ban). Can the California ruling be used to overturn the NY ban?

According to an attorney from the Jackson Walker law firm, “Most certainly New York’s ban will be challenged in the Second Circuit” meaning the U.S. Court of Appeals for the Second Circuit (2nd Circuit). Such a case has not yet been filed, but you can count on the fact it will be.

The 2nd Circuit judges in NY should look to (defer to) the decision of California’s 9th Circuit (same court system) when ruling on the NY law. If the 2nd Circuit ignores the 9th Circuit’s ruling, it sets up a schism, a difference, between the two courts. Virtually any time there is a difference between two Appeals courts, it gets settled by the U.S. Supreme Court.

This will take a few years (these things always do), but here’s what to look for:

• Someone (group, association, etc.) will file a lawsuit challenging the NY law. We suspect the NY law will not go into effect until the lawsuit is settled.
• The lawsuit will be heard by the 2nd Circuit, a federal court.
• If the 2nd Circuit does what it should, it will use the 9th Circuit Berkeley ruling to overturn NY’s illegal law.
• If the 2nd Circuit judges ignore the 9th Circuit’s Berkeley ruling and go on to rule in favor of NY’s ban, the case will get appealed to the U.S. Supreme Court.
• Depending on the makeup of the Supremes two years from now, there’s a really good chance that NY’s ban will be overturned by the Supreme Court.

From Energy Intelligence:

New York this week became the first US state to ban natural gas in new homes, creating what is likely to be a legal test case for the growing anti-gas movement.

The action comes in the wake of last month’s Ninth US Circuit Court of Appeals ruling that tossed out a similar ban by Berkeley, California, and potentially paves the way for the US Supreme Court to ultimately decide whether such bans amount to municipal overreach or acceptable oversight.

“Most certainly New York’s ban will be challenged in the Second Circuit” court that governs Connecticut, New York and Vermont, Taylor Holcomb, a partner specializing in energy, environmental and regulatory law at Jackson Walker, told Energy Intelligence.

“I’d expect the Ninth Circuit’s Berkeley decision would be persuasive there,” Holcomb said. “But if the Second Circuit decides the issue differently, that could tee up a ‘circuit split’ for Supreme Court review.”

He noted that the Ninth Circuit ruling explicitly said the 1970s-era Energy Policy and Conservation Act “ensured that states and localities could not prevent consumers from using covered products in their homes, kitchens, and businesses.” But others, including Amy Turner at Columbia’s Sabin Center for Climate Change Law, see a narrow scope for its application.

Whatever the US court system ultimately decides will have broad ramifications for dozens of similar laws in place across the country — including one in New York City.

‘Myopic Policy’

As part of a broad budget package, the Democratic-controlled New York legislature voted to prohibit gas furnaces, appliances and water heaters in newly constructed residences.

The measure, aimed at encouraging more climate-friendly equipment, such as induction stoves and electric heat pumps, takes effect in 2026 for buildings seven stories and under, and in 2029 for taller structures.

Gov. Kathy Hochul (D) has been a broader proponent of weaning the state off of fossil fuels, and cited the state’s 2019 goals for reducing greenhouse gas emissions by 40% by 2030 and 85% by 2050 from 1990 levels in supporting the ban.

The move was quickly lambasted by the gas industry, as well as Republican politicians who decried it as government overreach.

“This unprecedented decision significantly undermines New Yorkers’ access to affordable, reliable and efficient energy,” the American Public Gas Association said. “Natural gas serves as a vital source of energy for home heating, cooking and hot water — particularly for the low-income and vulnerable consumers who will be most impacted by this myopic policy.”

The utility trade group noted that 60% of New Yorkers currently heat their homes with gas and that requiring future customers to adopt all-electric appliances and furnaces “will shift the majority of that energy demand onto the state’s already overburdened electric grid. Not only will this further exacerbate grid reliability challenges, it will also decrease energy efficiency. … The new policy ignores these realities.”

New York State Sen. Robert Ortt (R) said the “first-in-the-nation, unconstitutional ban on natural gas hookups in new construction will drive up utility bills and increase housing costs.”

‘Low-Hanging Fruit’

But environmental groups hailed the move and said they hope other states follow New York’s lead. “There is no way we can meet our climate goals without getting fossil fuels out of buildings,” Matthew Vespa, a senior attorney with Earthjustice, told Energy Intelligence.

Vespa called the gas industry’s arguments “disingenuous,” saying the cost of expanding the gas grid to meet new demand would drive up energy bills far more than shifting to an electric-only model. “There’s enormous potential to redirect money that would be spent on building new gas pipelines toward electrification,” he said, as long as utilities and regulators plan ahead for the added pull on the power grid.

Vespa predicted that some cities and states will begin considering measures to expand their gas bans to existing homes and businesses, which he acknowledged would pose an even bigger political and legal challenge. “Starting with new construction makes a lot of sense. It’s the low-hanging fruit,” he said. “But I don’t think we can stop there.”

Since Berkeley’s ban nearly four years ago, more than 20 states have already passed laws forbidding local governments from prohibiting new gas installations. The issue has taken on new urgency in recent months after a member of the US Consumer Product Safety Commission floated the idea of banning gas stoves — a move the industry called “reckless” and lacking any scientific basis.

Amid intensive media coverage and public backlash, the Biden administration has since indicated that it is not considering any such ban. But New York state’s new law has many convinced that the issue is far from settled.

Dan Markind, a Philadelphia-based attorney who writes about issues in the Marcellus, offered the following insights about NY’s ban (and bans in general) on the Forbes website:

While announcing her Fiscal 2024 budget, New York State Governor Kathy Hochul announced that New York will soon be the first state to ban natural gas hookups in new construction.

The proposal, which has yet to be fully released, likely would not contain any “opt-outs” for local municipalities and would appear to be similar to a ban enacted by New York City in 2021.

Surprisingly, the New York State ban likely will be enacted less than three weeks after the Ninth Circuit Court of Appeals in San Francisco struck down an ordinance enacted by the City of Berkeley that banned the construction of natural gas infrastructure. In California Restaurant Association v. City of Berkeley, (9th Circuit, April 17, 2023), a three-judge panel of the United States Court of Appeals for the Ninth Circuit ruled that such a ban is preempted by the federal Energy Policy and Conservation Act (EPCA).

According to the Court, “EPCA’s preemption clause establishes that, once a federal 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 project’” unless the regulation meets one of certain categories, none of which was applicable in that case.

At issue was an attempt by the City of Berkeley in 2019 to regulate (or, less gently, bar) the use of natural gas appliances in new construction. Realizing the legal difficulties in doing so directly, Berkeley adopted an ordinance that banned natural gas infrastructure in new buildings, apparently reasoning that if a direct prohibition of natural gas hookups or usage may be overreaching, outlawing the infrastructure by which gas can even enter new buildings where it can then be consumed may not be. No matter. The Ninth Circuit ruled that both direct and indirect attempts to regulate energy infrastructure are preempted by federal law.

The federal government filed an amicus curiae (friend of the Court) brief in support of Berkeley, arguing that there is no EPCA preemption at issue as the ordinance does not attempt to develop conservation standards specific to appliances covered by the EPCA. In a very blunt opinion, the Ninth Circuit rejected both Berkeley’s and the federal government’s position. It stated:

“[B]y 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 on-site infrastructure for their use of natural gas.”

The upcoming New York law completely ignores the Ninth Circuit ruling. New York is in the Second Circuit, so the Berkeley ruling does not necessarily control what will happen in that different federal Court when New York’s law is challenged (and rest assured, it will be). However, it is a brazen “in your face” challenge to the judges sitting in the Ninth Circuit. Indeed, the Ninth Circuit was very direct in its ruling. Commenting on the Berkeley ban, which didn’t outlaw natural gas directly but instead only new infrastructure, the Court said:

“States and localities can’t skirt the text of broad preemption provisions by doing indirectly what Congress says they can’t do directly.”

Regardless of what the courts say, the issue likely will take years to reach the Supreme Court. Before then, localities like New York State and New York City, where there will be some sort of ban, will have to deal with the fallout. According to the United States Energy Information Agency, natural gas accounts for approximately 60% of New York State’s energy generating capacity and constituted 46% of the energy that New York State generated in 2021.

Overall, New York has pinned many of its hopes on hydropower from Canada, but it is hard to imagine how high-voltage transmission lines can be constructed from Quebec to New York City without impinging on at least some environmentally sensitive areas that could result in challenges by many of the same environmental groups that are now applauding the natural gas ban.

Indeed, something like this already happened when, in 2021, after the State of Maine had granted approvals to a power line company to convey hydropower from Canada to Massachusetts and work on the transmission lines had already started, Maine voters – following a strong push by an alliance of both environmental and business interests who had objected to the project – approved a statewide referendum to retroactively ban construction of high-voltage transmission lines in Maine’s wild and scenic Upper Kennebec Region and to subject other transmission projects to legislative approval.

The results of that referendum were later overturned in 2022 by the Maine Supreme Court on constitutional grounds.

Nevertheless, what happened in Maine could very easily happen elsewhere, including New York.

Thus the problem, which continues to be ignored by many environmental activists and policy-makers. Is there a real plan for how to power our lives as we continue to migrate away from fossil fuel use and make the switch, inexorably, to electrical power generated by so-called “clean energy” sources? Will people wake up one day and find that they no longer can get heat or air conditioning, and no one can keep their lights on? Indeed, how will we compensate people (if we decide to compensate them at all, which remains a very big “if”) when they are compelled to switch to things like electric heat pumps to heat their homes because fossil fuels have been banned or made effectively impossible to get, although they may still have perfectly workable but older furnaces that they long ago paid for but can no longer use? As our politicians trip over themselves to ban fossil fuel use virtually everywhere, it might be beneficial to start asking ourselves how exactly we will live when fossil fuels are fully gone from our lives.