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When Palo Alto changed its building code in 2022 to require that every new building be all-electric, city leaders and local environmentalists lauded it as a critical tool for moving the community away from natural gas use and key to meeting their sustainability goals.
With building emissions accounting for roughly a third of the city’s total greenhouse gas emissions, council members have made it a priority to convert people from natural gas to electricity in water heating, space heating and cooking.
“Because Palo Alto already has a carbon-neutral electric power supply, building electrification reduces greenhouse-gas emissions and also improves the indoor air quality and reduces fire risk,” George Hoyd, the city’s chief building official, said shortly before the council voted to adopt the all-electric requirement.
But after a recent court ruling struck down Berkeley’s ban on gas infrastructure, Palo Alto is now preparing to abandon its own prohibition. In a stinging setback for the city’s environmental agenda, the City Council will consider a proposal from the Department of Planning and Development Services on Feb. 26 to halt enforcement of the all-electric requirement and to consider other changes to the building code that would encourage residents and businesses to adopt electric appliances,
Palo Alto’s potential reversal is prompted by an April 2023 ruling from the Ninth Circuit Court of Appeals in the case California Restaurant Association v. City of Berkeley. After Berkeley became the first California city to ban gas infrastructure in 2019, the restaurant association filed a lawsuit challenging the ban. Then, after the court issued its ruling last year, Berkeley requested a new hearing. In January, the appeals court denied Berkeley’s request.
In denying the request and effectively striking down Berkeley’s law, the appeals court argued that the ban on gas infrastructure runs afoul of the Energy Policy and Conservation Act, a 1975 law that Congress adopted in response to a crippling oil embargo that the Organization of Arab Petroleum Exporting Countries imposed two years earlier, sinking the United States into a recession. The law sought to, among other things, increase energy production and promote energy efficiency.
The appeals court concluded that the law effectively invalidates Berkeley’s ban on gas infrastructure. In doing so, it rejected Berkeley’s argument that EPCA only pertains to regulations that “impose standards on the design and manufacture of appliances,” not regulations that impact the distribution and availability of natural gas.
Berkeley had argued that its gas ordinance is consistent with all state and federal laws. In responding to the suit from the restaurant association, the Berkeley city attorney’s office noted that it includes exemptions that allow new buildings that cannot meet energy-efficiency requirements to adopt a mixed-fuel — gas and electric — infrastructure. It also empowered its Zoning Adjustment Board to consider other exceptions in which installation of natural gas infrastructure may be in the “public interest.”
“This exemption explicitly contemplates that there may be circumstances where substitutes for natural gas technology are inadequate, and the public interest is served by allowing natural gas infrastructure to be installed,” the city argued in its brief.
The argument did not, however, sway the appeals court, which stated in its opinion that the federal act is “concerned with the end-user’s ability to use installed covered products at their intended final destinations, like restaurants.”
“So, by its plain language, EPCA preempts Berkeley’s regulation here because it prohibits the installation of necessary natural gas infrastructure on premises where covered appliances are used,” the court opinion states.
The court’s determination that the federal act applies to state and local building codes goes well beyond Berkeley. According to a new report from the Palo Alto’s Department of Planning and Development Services, more than 70 cities in the United States have adopted regulations requiring or strongly incentivizing all-electric building construction. Because the Ninth District encompasses Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, Guam and the Northern Mariana Islands, dozens of cities may have to reconsider their new laws.
In Palo Alto, this could mean halting enforcement of the all-electric requirement less than two years since it was enacted. The move is particularly significant given that the city is now in the midst of revising its zoning code to accommodate an addition of more than 6,000 new housing units by 2030 to comply with a state mandate.
While the Berkeley and Palo Alto laws aren’t exactly the same — the Berkeley ban is included in the city’s Health and Safety Code while Palo Alto’s part of the building code — the end result is similar: a prohibition on gas plumbing in new buildings. Given this similarity, Palo Alto “faces legal risk if it were to continue enforcement of its blanket prohibition on natural gas plumbing in new buildings,” the new report from the Department of Planning and Community Environment states.
To address this risk, staff is proposing a temporary moratorium on enforcement of the all-electric requirement that would remain in effect until the city adopts a new standard that would comply with the appeals court’s position. The approach that staff is recommending, known as “one-margin,” would impose higher energy-efficiency standards on new buildings. Though it technically does not discriminate between gas and electric appliances, it takes account of energy use of the source, which according to staff “favors the additional efficiency and lower emission of all-electric equipment using clean electricity.”
The “one margin” code is currently in place in San Luis Obispo, San Jose and Santa Cruz, according to the report.
“Given the significantly higher efficiency of electric heat pump equipment compared to gas equipment, it is easier to comply with the One Margin code with an all-electric design,” the report states. “In fact, the standards being established by most One-Margin codes currently being developed are high enough that while an all-electric home can meet them with thoughtful efficiency measures, a mixed-fuel home would require the highest level of efficiency and the addition of on-site solar and storage to meet the standards.”
The city hopes to adopt the new code by this fall, according to the report.