After this was posted, in the November 5th election, Berkeley, California, voters overwhelming defeated, with more than 68% of citizens voting against the citizen initiative Measure GG, The Large Buildings Fossil Fuel Emissions Tax, described below.

After being told by the courts that its attempts to prohibit the installation of natural gas piping within newly constructed buildings were constitutionally preempted by Federal law, now the City of Berkeley is trying to ban natural gas by taxing it out of existence.

Building owners across the country should pay heed as it is apparent that state and local government attempts to ban natural gas, be it by text amendments to building codes, BEPS mandates, or the like, will fail as preempted by Federal law and this transmogrified tactic of taxing fossil fuel out of existence is coming to a jurisdiction where you live or operate a business.

On July 30, the Berkeley City Council voted to put an initiative, “The Large Buildings Fossil Fuel Emissions Tax” ordinance, on the November 5, 2024, ballot.

The citizen initiative provides, “the buildings emissions tax is intended to disincentivize natural gas consumption and greenhouse gas emissions, thereby increasing the number of commercial and large residential property owners switching energy sources from fossil fuel gas to electricity, while also raising funds for municipal services, including funding a program to: reduce greenhouse gas emissions rapidly through decarbonizing buildings; support unionized trades and municipal jobs; and improve public safety, health, and indoor and outdoor air quality.”

If approved by a simple majority of voters, the Large Building Fossil Fuel Emissions Tax would tax buildings 15,000 square feet or larger on their natural gas use beginning in 2025. The tax would apply to approximately 609 buildings in Berkeley.

City Council staff estimate that the tax would generate $26.7 million in its first year. The tax rate would escalate annually by 6% plus the local consumer price index. The estimated first year tax collection is larger than Berkeley’s total annual sales tax revenue and is about a third of Berkeley’s annual property tax receipts.

In a draconian alternative compliance path, if the owners of affected properties perceive the Large Buildings Fossil Fuel Emissions Tax to be overly burdensome, they could choose to remove the property from the market, leaving it vacant, thus avoiding the tax; .. really.

The City Council staff made clear, that the Large Buildings Fossil Fuel Emissions Tax is a carbon tax, based on high estimates of the social cost of carbon (a local advocacy group’s extrapolation, not EPA’s). The goals of this initiative, to disincentivize greenhouse gas emissions and increase funding for building electrification and climate action programs, are aligned with adopted City plans.

Local media has raised the concern of the already fast and dramatic increasing electricity bills in California, but low income housing advocates and small business owners alike appear to not be getting significant traction in the campaign over this ballot initiative as opposed to those who would ban fossil fuel.

LaTanya Bellow, the interim City Manager told the Council, “If successful in its intended purpose, this initiative could reduce or eliminate natural gas use in existing buildings throughout Berkeley, thereby reducing the greenhouse gas emissions associated with buildings. Such reductions would help achieve Berkeley’s goal of becoming a Fossil Fuel Free City and mitigate climate change impacts.”

Or spun another way, despite that the Federal appellate courts have told the City “the Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. § 6297(c), expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens” striking down the City’s prior attempted outright ban on new natural gas installations as constitutionally preempted by federal law, now Berkeley is attempting to tax gas appliances out of existence.

And despite that tax laws are often given greater deference (.. as opposed to generalized laws) by the judicial branch, in this instance, it looks like a duck, swims like a duck, and quacks like a duck, so it is a duck, preempted by Federal law under the Supremacy Clause of the U.S. Constitution.

The initiative and accompanying staff report are a worthy read because attempts to ban natural gas, be it by building codes, BEPS mandates, or the like, will all fail as preempted by Federal law and this new tactic of taxing fossil fuel out of existence is coming to a jurisdiction where you live or operate a business.

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We are offering a fun and fast webinar entitled, “With ‘new’ reproposed Maryland BEPS regulations what does a Building Owner do now?” this Tuesday, August 13 from 9 – 9:30 am EDT. The webinar is complimentary, but you must register here.