When Federal Preemption Collides with State Natural Gas Bans in Energy Policy

The interplay between federal statutes and state/local authority is shaping a large part of U.S. energy infrastructure policy regarding natural gas. The key case is California Restaurant Association v. City of Berkeley (2023), where the Ninth Circuit held that Berkeley’s ban on natural gas infrastructure in new buildings was preempted by EPCA, which specifically prohibits state or local regulations ‘concerning the energy use of’ certain ‘covered products’—including natural gas appliances. The court found that banning internal gas piping, even indirectly, prevented the use of those appliances and therefore fell within EPCA’s preemptive scope.

This ruling has catalyzed federal enforcement. In early January 2026, the U.S. Department of Justice filed suits against Morgan Hill and Petaluma in California, challenging their ordinances prohibiting natural gas infrastructure and appliances in new construction. The DOJ’s argument rests on EPCA’s prohibition on state/local regulation that impedes energy use for covered appliances. Notably, both cities assert that their policies are no longer enforced.

Faced with preemption risk and litigation, states are increasingly favoring indirect or system‐level policy tools over blunt bans. These include:

• Utility regulation: eliminating or tapering line extension subsidies—the “100‐foot rule” in New York, and similar reforms in Oregon and Washington—to ensure new hookups bear more actual cost rather than being subsidized by existing customers.
• Building performance standards: energy use or emissions thresholds that are fuel‐neutral, which make gas systems economically unattractive without explicitly forbidding them.
• Public health, safety, land use, zoning, and planning policies: framing restrictions through health findings, indoor air quality, or performance in permitting processes to avoid triggering EPCA preemption.

Strategic implications for stakeholders (utilities, developers, policymakers) include:

• Utilities may face shrinking load growth and greater financial risk as incremental new gas hookups are constrained, undermining traditional recovery of fixed infrastructure costs unless rate designs or depreciation practices adapt. The “death spiral” effect raised in the primary article reflects this risk. [Primary source]
• Developers need to anticipate changes in code and permitting—building performance standards or all‐electric mandates in some jurisdictions—or face sunk costs if gas design options are restricted after permitting. Alternative compliance pathways or fuel‐neutral performance thresholds are safer bets longer term.
• States acting preemptively—before widespread litigation or after precedent in their federal circuit—will minimize legal exposure and costly reversals. The Ninth Circuit is in one region; outside it, the legal risk of bans may be lower but still present.

Open questions remain:

• Will the Supreme Court take up a case to clarify EPCA’s preemption scope nationally, possibly resulting in more uniform standards? So far, Berkeley did not seek certiorari.
• How will courts outside the Ninth Circuit view similar ordinances or bans (building performance‐based vs explicit bans)? Will EPCA preemption be interpreted similarly or more narrowly?
• What are the costs and equity implications of shifting utility subsidies, and will there be compensatory policies for low‐income or renters disproportionately affected?[Primary source]
• How able are electricity grids to absorb increased load demand, and will reliability or infrastructure constraints limit electrification in practice? [Primary source]