Dive Brief:

• The U.S. Court of Appeals for the Second Circuit upheld New York’s law that was slated to take effect this year banning gas appliances in new buildings. But because New York Gov. Kathy Hochul, D, has said the state won’t enforce the ban until appeals are complete, the law won’t take effect right away. 
• Tuesday’s ruling opens the door for gas companies and other interests that challenged the ban to appeal the decision to the U.S. Supreme Court; in 2023, the federal appeals court for the Ninth Circuit shut down a similar ban in California. In cases like this where there’s a split between courts, it’s not uncommon for the top court to step in and settle the matter. “The challengers will now need to decide whether to seek hearing en banc before the Second Circuit or seek certiorari,” say attorneys at Barclay Damon. “The split among circuits and the subject matter may increase the odds that the Supreme Court elects to hear the case.” A hearing en banc means all of the judges in a circuit would hear the case. Certiorari is a request for the Supreme Court to hear a case.
• Should it take effect, the law means new buildings in the state, with some exceptions, must have electric appliances, a requirement that critics say will strain utilities that are struggling to cope with demand from data centers, electric vehicles and other electricity uses. Last year, the New York Independent System Operator, which manages the state’s power system, said the grid faces reliability challenges from increased demand. “The grid is at a significant inflection point,” said Zach Smith, NYISO’s senior vice president of system and resource planning. “Depending on future demand growth and generator retirements, the system may need several thousand megawatts of new dispatchable generation within the next ten years.”

Dive Insight:

The decision rests on a parsing of what it means for the state to regulate energy conservation. The gas and other interests that sued to stop the ban argued the state law violated the preemption clause in the Energy Policy and Conservation Act, or ECPA, enacted in 1976 at the height of the energy crisis in the United States. The clause preempts any state or local law that would conflict with ECPA’s energy conservation standards. 

Under ECPA, any state effort to regulate the energy efficiency, energy use or water use of a covered product is subject to federal preemption.

In its ruling, the court said New York’s ban doesn’t address energy conservation standards but rather is directed at the type of energy an appliance uses, in this case fossil fuels. 

The court gave an example of a long-standing New York City ban on the use of kerosene lamps for indoor heating because of the fire risk they pose. Opponents of New York’s ban are trying to argue ECPA would preempt that ban because of its conflict with ECPA’s energy conservation standards, when in reality the city’s law has nothing to do with energy conservation, the court said. It has to do with fire risk.  

Similarly with noise ordinances that prohibit the use of industrial fans. Opponents are trying to read ECPA as preempting those noise ordinances, it said. 

“Our holding does not rely on the absurdity of these outcomes,” the ruling says, but they “buttress our conclusion.”

In the 2023 Ninth Circuit case in California, which ruled on Berkeley’s gas appliance ban — the first such ban to be imposed in the United States — the court reached the opposite conclusion, saying the ban fell under the ECPA preemption clause. 

“Completely prohibiting the installation of natural gas piping within newly constructed buildings” is “preempted by Congress” in ECPA, the court said in the 2023 ruling.  

In Tuesday’s ruling, the Ninth Circuit said it thinks the Second Circuit made a mistake. “We … reluctantly believe it necessary to create ‘a split among the Circuits,’” the court said. 

With the split leaving the door open for further appeal, it could take a year or more for the matter to be settled. The Supreme Court’s term ended this week and the next one begins in October. The top court typically takes five months to hear and rule on a case, according to SCOTUSblog, which would push a ruling on the case if it’s pursued at least into early next year.  

Meanwhile, lawmakers in Congress are taking a separate approach to stop bans like New York’s. The Energy Choice Act, which cleared a House panel last year, would prohibit states and localities from banning gas appliances. A companion bill is in the Senate. 

When talking about the bill last year, its sponsor, U.S. Rep. Nick Langworthy, R-N.Y.,  pointed to the New York ban as an example of the kind of law the bill is intended to stop. 

This “war on natural gas is an illogical, dangerous infringement on your rights,” he said.

The National Propane Gas Association, one of the appellants in the Second Circuit case, didn’t immediately respond to a request for comment.