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Cra v. City of Berkeley
Citation: Not availableDocket: 21-16278
Court: Court of Appeals for the Ninth Circuit; April 17, 2023; Federal Appellate Court
Original Court Document: View Document
The Ninth Circuit reversed the district court's dismissal of the California Restaurant Association's complaint, which claimed that the Energy Policy and Conservation Act (EPCA) preempts a Berkeley ordinance banning natural gas piping in new buildings. The court found that the Association had Article III associational standing, as it demonstrated that at least one member faced a concrete and imminent injury due to the ordinance, which hindered potential restaurant openings or relocations in Berkeley. The panel concluded that the EPCA expressly preempts state and local regulations concerning the energy use of natural gas appliances, including those in kitchens. Berkeley's ordinance, although indirectly, effectively banned these appliances by prohibiting gas piping, thus falling within the scope of the EPCA’s preemption provision. The decision reversed and remanded for further proceedings. Judge O’Scannlain concurred, agreeing with the preemption ruling but noting concerns about the presumption against preemption in express-preemption cases. Judge Baker also concurred, expressing reservations regarding the Association's standing and emphasizing that the Berkeley ordinance encroaches upon the area preempted by the EPCA. Judge Baker clarified that an organization does not need to specify an injured member to establish associational standing at the pleading stage, but must do so by the summary judgment or trial phase. On the issue of preemption, he noted that the Berkeley ordinance directly conflicts with congressional intent to prevent state and local alterations of building codes aimed at regulating natural gas consumption when gas services are available for the products used. Judge Baker fully concurred with the panel opinion. Counsel representing the parties included Brian C. Baran and others for the Plaintiff-Appellant, and Anthony L. Francois along with other attorneys for the Defendant-Appellee. Additionally, multiple amici curiae participated, representing various organizations and governmental entities, including the United States Department of Justice, the American Gas Association, and several state attorneys general, among others. The City of Berkeley enacted Ordinance No. 7,672-N.S., which prohibits natural gas piping in newly constructed buildings, effectively rendering natural gas appliances unusable. This regulation was challenged by the California Restaurant Association on the grounds of preemption by the Energy Policy and Conservation Act (EPCA), which explicitly prohibits state and local regulations regarding the energy use of certain natural gas appliances. The district court dismissed the challenge, interpreting EPCA narrowly to apply only to direct regulations of appliances, asserting that Berkeley's ordinance did not directly regulate any specific appliance but instead had an indirect impact. However, the Circuit Court found that EPCA's preemption extends to building codes that affect natural gas use in covered appliances. The court emphasized that the ordinance's impact directly undermines the functionality of natural gas appliances by prohibiting the necessary infrastructure, thus falling within the preemptive scope of EPCA. The court reversed the district court's dismissal, concluding that Berkeley's ordinance is preempted by federal law. The ordinance aims to eliminate natural gas infrastructure to reduce greenhouse gas emissions, allowing for exceptions based on public interest or physical feasibility but does not mandate specific appliances. The California Restaurant Association's appeal was reviewed de novo following the dismissal of state-law claims by the district court. Before addressing the case's merits, the court first assesses the Association's Article III standing. To establish associational standing, the organization must demonstrate that (1) at least one member has suffered a concrete and particularized injury that is actual or imminent, (2) the injury is traceable to the challenged action, and (3) it is likely that a favorable decision will redress the injury. Berkeley argues that the Association lacks standing due to insufficient evidence of imminent harm from the Ordinance. The court counters by stating that when standing is challenged based on pleadings, all material allegations must be accepted as true, and the complaint must be construed favorably towards the Association. The Association claims that its members, who are restaurateurs and chefs in Berkeley, depend on natural gas for cooking and face barriers to opening or relocating restaurants because of the Ordinance prohibiting natural gas. The City contends that the allegations do not specify when a restaurant would be opened or relocated, thus failing to prove actual or imminent injury. However, the court emphasizes that a credible threat of probabilistic harm suffices to meet the injury requirement, referring to precedents where increased threats from government actions established standing. The Association has adequately demonstrated standing as its members would be prevented from opening restaurants using natural gas due to the Ordinance's ban, constituting a credible threat of harm. Next, the court examines the preemption scope of the Energy Policy and Conservation Act (EPCA). Berkeley asserts that EPCA preemption applies only to regulations concerning appliance design and manufacture, while the federal government argues it applies strictly to energy conservation standards affecting the products directly. The Association contends that EPCA preemption also covers regulations that effectively prohibit the use of certain energy sources. The court will focus on the plain meaning of the EPCA's preemption clause to discern Congress' intent regarding preemption. EPCA's preemption clause prohibits state regulations related to the energy efficiency, energy use, or water use of covered products once a federal standard is effective. The definitions within EPCA clarify that 'energy use' pertains to the direct energy consumption of consumer products, which include appliances like refrigerators and ovens. The term 'point of use' refers to where these products are utilized, indicating that regulations impacting the installation of necessary infrastructure for these appliances affect their energy consumption. Berkeley's Ordinance banning natural gas piping is deemed preempted because it restricts the installation of infrastructure necessary for the use of natural gas appliances, thus impacting energy consumption directly. Berkeley argues that since the ordinance does not specify a positive quantity of energy, it does not regulate 'energy use.' However, 'zero' is considered a quantity, and a total prohibition on natural gas piping effectively eliminates energy use from these appliances. Additionally, Berkeley's assertion that EPCA's definition of 'energy efficiency' excludes such a prohibition is dismissed, as the text does not imply that a zero denominator creates an exemption from preemption. Overall, the analysis concludes that EPCA's preemption encompasses regulations that effectively eliminate the use of an energy source, affirming that such a prohibition falls under the definition of regulating energy use. The district court acknowledged EPCA's extensive preemptive authority but restricted it to regulations that directly govern the energy use or efficiency of covered appliances. This interpretation misreads the statute's language, which defines 'energy use' based on consumption at the point of use, emphasizing that Congress aimed to prevent states from hindering consumer access to these products in their homes and businesses. EPCA's preemption encompasses not only direct regulations of the products but also the infrastructure supporting their energy use. Congress broadened EPCA’s reach to include regulations that 'concern' covered products, suggesting that such regulations can relate to these products without necessarily being direct mandates. The Supreme Court has interpreted 'concerning' broadly, indicating that laws impacting the subject matter without direct regulation still fall under preemption. This principle applies to regulations affecting the delivery of natural gas to appliances, which are inherently related to their energy use. EPCA’s preemption explicitly covers building codes, as evidenced by a specific subsection addressing building code requirements, which further indicates that preemption extends beyond direct product regulations. Consequently, state and local regulations, including building codes that regulate energy use, cannot evade EPCA’s preemptive scope. EPCA allows the federal government to waive preemption of state regulations if a state demonstrates that the regulation addresses "unusual and compelling State or local energy interests." However, preemption cannot be waived if the state regulation significantly burdens the national manufacturing, marketing, distribution, sale, or servicing of covered products. The federal government must evaluate the entire lifecycle of an appliance when reviewing waiver petitions, which implies that EPCA’s preemption extends beyond just the design or manufacture of products to include servicing aspects, such as installation and usage regulations like building codes. The government contends that EPCA only preempts regulations that directly affect covered products, citing language that suggests state regulations on energy use are not "effective" concerning those products. However, this interpretation misreads the text, which limits preemption to the regulation's impact, not its direct application. Historically, the government has acknowledged that EPCA would preempt regulations concerning energy infrastructure, including building codes, indicating that a regulation affecting both covered and non-covered products would only be preempted in its application to covered products. The government also argues that EPCA preemption is limited to regulations equivalent to "energy conservation standards," citing the title of the relevant section. This argument is flawed for several reasons that have not been fully explored in the excerpt provided. Overall, while there are different interpretations of EPCA’s scope, it is clear that the preemption extends beyond direct regulations to include broader implications on energy use and servicing. The heading of 6297(c) does not override the statute's plain text, which is emphasized in Pa. Dep’t of Corr. v. Yeskey, 524 U.S. 206, 212 (1998). The Government has not demonstrated sufficient ambiguity in the preemption clause to warrant interpretation based on the subsection's title. Congress has defined 'energy use,' 'energy efficiency,' and 'energy conservation standards' as related but distinct concepts, with 'energy use' referring to the quantity of energy consumed by a product at the point of use, 'energy efficiency' as the ratio of useful output to energy use, and 'energy conservation standards' as minimum energy efficiency levels or maximum energy use. The use of both terms together in EPCA indicates their distinct meanings, and interpreting 'energy use' as synonymous with 'energy conservation standards' would create redundancy in the statute. While EPCA preempts state regulations on 'energy use' and 'energy efficiency' when a federal performance standard is enacted, the Government's argument seeks to replace these terms with 'energy conservation standards,' which is contrary to Congress's intent. Berkeley's non-textual arguments, particularly the claim that preemption would imply a repeal of the Natural Gas Act, are rejected. The Natural Gas Act establishes a regulatory framework for the wholesale of natural gas, granting FERC exclusive jurisdiction over certain areas, while specifically exempting local distribution from FERC regulation. The Natural Gas Act's limitation on Federal Energy Regulatory Commission (FERC) authority does not conflict with Congress's decision in the Energy Policy Conservation Act (EPCA) to replace building codes that restrict natural gas appliances. There is no irreconcilable issue between EPCA's preemption and the Natural Gas Act, nor is there an implied repeal concern. The court clarifies that EPCA prohibits Berkeley from banning new building owners from extending fuel gas piping from the gas meter, but it does not impose an obligation on the City to ensure the availability of natural gas delivery to meters. The court rejects Berkeley's and the Government's proposal to interpret EPCA in a manner similar to a previous Supreme Court case, Engine Manufacturers Association v. South Coast Air Quality Management District, which emphasized that states cannot limit federal preemption by indirectly regulating in a way that achieves federally prohibited outcomes. The court cites several Supreme Court cases reinforcing that localities cannot circumvent broad preemption by adjusting their regulatory focus. Ultimately, Berkeley cannot avoid preemption by banning natural gas piping instead of directly prohibiting natural gas appliances. The court concludes that EPCA preempts the Ordinance's effect on covered products, leading to a reversal and remand for further proceedings, including reinstating the Association’s state-law claims. Additionally, Circuit Judge O'Scannlain concurs, emphasizing a binding presumption against preemption in this context. The excerpt addresses the complexities surrounding the application of the presumption against preemption in express-preemption cases, particularly in light of conflicting case law. Initially, the Ninth Circuit's decision in *Air Conditioning Refrigeration Inst. v. Energy Res. Conservation Dev. Comm'n* established a precedent that upheld this presumption in interpreting express-preemption provisions under the Energy Policy and Conservation Act (EPCA), aligning with Supreme Court guidance to interpret such provisions narrowly. However, the Supreme Court's recent decision in *Puerto Rico v. Franklin California Tax-Free Trust* indicated a departure from this approach by stating that an express preemption clause does not invoke a presumption against preemption, without explicitly overruling prior cases that had applied the presumption. The author expresses concern over the implications of the *Franklin* ruling, noting that while the Supreme Court did not formally abrogate earlier precedents, subsequent Ninth Circuit interpretations have broadly interpreted *Franklin* as prohibiting the presumption against preemption in future cases. This shift raises doubts about the continued applicability of the *Air Conditioning* precedent. The author highlights the judicial struggle to reconcile these developments, indicating a split among circuits on the issue and the challenges faced by lower courts in adhering to Supreme Court and circuit precedents amidst evolving interpretations. In Dialysis Newco, Inc. v. Cmty. Health Sys. Grp. Health Plan, the court addresses the complexities surrounding the presumption against preemption, particularly in the context of express-preemption provisions. The author notes a significant lack of clarity in the law, highlighting tensions in Supreme Court precedents and discrepancies among various circuits. The Supreme Court's decision in Cipollone established a clear framework for applying the presumption against preemption to express-preemption provisions, especially in areas of traditional state concern, advocating for a narrow interpretation of such provisions. This approach relies on two key presumptions: first, that Congress does not intend to override state law unless explicitly stated, and second, that the understanding of a preemption statute must primarily reflect congressional intent, informed by the statute's text and overall purpose. Despite early criticism, the Supreme Court continued to uphold this presumption in subsequent rulings. The author emphasizes that inferior courts have consistently applied this presumption, as seen in cases like Air Conditioning, which closely resembles the current case, reiterating the principle that Congress’s intent is paramount in preemption matters. The excerpt analyzes the application of the presumption against preemption in the context of statutory interpretation and its implications for express-preemption provisions. It references the Supreme Court's instruction that a narrow reading of statutory text, alongside legislative history, suggests that preemption provisions should be narrowly construed. Despite this, the author notes that the legal landscape has evolved since the Air Conditioning decision, creating confusion regarding the presumption's applicability, particularly in the Ninth Circuit. The Supreme Court's later ruling in Franklin, which did not invoke the presumption against preemption and focused on the plain wording of the statute, has complicated matters further. The author highlights that Franklin did not overturn previous decisions applying the presumption, leaving unclear whether its application is limited to specific considerations or universally applicable to all express-preemption provisions, especially in areas of traditional state concern. The discussion reflects a need for clarity on how to interpret these evolving precedents concerning preemption. The excerpt examines the evolving judicial approach to preemption in relation to legislative intent and statutory language. It references Bates v. Dow Agrosciences LLC, indicating that courts may prioritize the plain text of statutes over legislative intent, marking a shift from previous interpretations seen in Cipollone v. Liggett Group, Inc. The analysis contrasts cases like Franklin, which emphasizes plain text, with Medtronic, which considers legislative purpose. The author expresses concerns over the implications of Franklin's ruling, suggesting it may undermine established case law regarding express preemption. The Ninth Circuit has interpreted Franklin's statements broadly, opting not to apply a presumption against preemption in cases involving express preemption clauses, as illustrated by several cited decisions. However, the author raises doubts about whether this interpretation aligns with Supreme Court precedent and expresses a desire for a more thorough examination of these issues, cautioning against the potential overreach of Franklin's implications on decades of legal precedent. The legal document examines the implications of the Supreme Court's decision in Franklin concerning the presumption against preemption, particularly in relation to express-preemption provisions. It references the ruling in Travelers, emphasizing that Franklin did not negate established circuit precedents that rely on it. The author expresses concern that the court has not sufficiently addressed the complexities surrounding this issue, particularly the Miller and Agostini doctrines, which are typically necessary to modify existing precedent. The document critiques the lack of thorough discussion in prior cases that have followed Franklin, casting doubt on their interpretations of its scope. Despite recognizing that the Ninth Circuit's interpretation following Franklin suggests that the presumption against preemption may not apply to new express-preemption provisions, the author finds this conclusion unsatisfactory. The discussion highlights broader confusion within the circuits regarding the Supreme Court's inconsistent guidance on presumptions in express preemption cases, referring to the ongoing "preemption wars." Ultimately, the author acknowledges that while the preemption presumption may not apply in the current case, this conclusion is perplexing and reflects the inconsistent application of legal principles across different jurisdictions. The excerpt addresses complexities related to federal preemption and its impact on state law, particularly in the context of the California Restaurant Association v. City of Berkeley case. It references various circuit court decisions, highlighting the uncertainty surrounding the implications of the Franklin decision on existing legal precedents. The discussion includes the necessity for clarity from the Supreme Court regarding the reach of Franklin in relation to abrogating past rulings. The author expresses adherence to binding precedents from both the Supreme Court and the Ninth Circuit, ultimately concluding that the presumption of applying the Franklin decision does not extend to the express-preemption provision at issue. Additionally, Judge Baker raises concerns about the standing of the California Restaurant Association, explaining the criteria for associational standing. He notes that while the second and third criteria (germaneness of interests and non-requirement of individual member participation) are met, the first criterion—demonstrating that at least one member has suffered an injury-in-fact traceable to the defendant—requires specific allegations. The excerpt emphasizes the need for greater clarity in preemption law and the challenges posed by the current state of judicial interpretations. The requirement for an organizational plaintiff to name affected members to establish standing has not been waived based on statistical probabilities. An organization claiming associational standing must identify specific members harmed by a challenged policy; failure to do so results in dismissal for lack of standing, as seen in AGC, where general allegations were insufficient. In the case of the California Restaurant Association (CRA), the complaint does not specify individual members harmed by the Berkeley Ordinance, despite some members being directly affected, such as those wanting to open or relocate restaurants. The Supreme Court case Summers reiterates that without identifying injured members, an organization's standing claim may fail. However, recent rulings, such as in National Council of La Raza v. Cegavske, indicate that at the pleading stage, an organization might allege a credible threat of harm without naming specific injured members, diverging from the strict requirements established in earlier cases. Standing for an organizational plaintiff at the pleading stage requires only general factual allegations of injury to its members due to a defendant's actions, without the necessity of identifying specific injured members. The court presumes these allegations to be true when considering a motion to dismiss. Even if the challenged ordinance is likely to harm at least one member of the Association, the defendant does not need to know that member's identity to respond to the complaint. The requirements for demonstrating standing change at later stages, where specific facts and evidence must substantiate allegations of injury. While the case references Cegavske, it highlights tension with other precedents, including Summers and AGC, particularly regarding the identification of injured members at the summary judgment stage. Ultimately, while general allegations suffice at the pleading stage, specific identification of injuries becomes essential when presenting evidence in later stages of litigation. The excerpt addresses the interpretation of the term "related to" in legal contexts, particularly concerning the preemption provisions of the Energy Policy and Conservation Act (EPCA) and the Employee Retirement Income Security Act (ERISA). The Supreme Court case Morales v. Trans World Airlines, Inc. defines "related to" broadly, indicating that nearly everything is interconnected, which complicates the application of preemption. However, it clarifies that the expansive nature of EPCA’s preemption does not allow for limitless interpretation. EPCA's preemption clause prohibits state regulations on energy efficiency, energy use, or water use for covered products once a federal energy standard is applied. It does not affect state or local measures that incidentally impact natural gas consumption, such as taxes aimed at reducing usage. The text does not suggest that EPCA addresses the distribution of natural gas; hence, states may impose carbon taxes without conflicting with EPCA. Furthermore, the ordinance in question does not interfere with natural gas distribution but assumes that gas service is available where covered products are used. The Pacific Gas and Electric Company describes the service delivery point as the connection between their facilities and the customer’s piping, emphasizing that EPCA presumes the availability of energy and water services at the premises where covered products are utilized. The excerpt reinforces the notion that EPCA's preemption does not extend to state measures for rationing resources such as electricity and water in response to public needs like droughts or wildfire risks. The excerpt addresses the responsibilities of Pacific Gas and Electric Company (PG&E) and its customers regarding natural gas service delivery and infrastructure maintenance. PG&E is responsible for the gas distribution system up to the meter, while customers are responsible for maintaining their own gas service piping and related components located downstream of the meter. The Berkeley Ordinance, which is a building code, prohibits the installation of customer-owned piping that receives gas from the utility at the meter but does not regulate utility-owned infrastructure such as the meter or the service pipe. The Energy Policy and Conservation Act (EPCA) sets limits on state or local regulations related to the energy use of covered products in new construction, preempting any building codes that do not comply with specified conditions. The Berkeley Ordinance is deemed to violate these conditions, as it directly interferes with the regulation of natural gas consumption for covered products by banning customer-owned piping. The conclusion emphasizes the preemptive nature of EPCA, stating that the Ordinance's attempt to circumvent regulation by banning piping is also preempted.