Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: When the City Council of Berkeley, California, voted on a
Speaker 2: law banning gas hookups for new buildings in twenty nineteen,
Speaker 2: it passed unanimously.
Speaker 3: That's er Dabla, Yes, Martlett, Yes, Robinson, there's so many cameras.
Speaker 1: Yes, motion carriage.
Speaker 2: The idea behind the landmark legislation wasn't to rip out
Speaker 2: existing gas pipes just to ensure new Berkeley buildings couldn't
Speaker 2: rely on gas for power. The city saw the law,
Speaker 2: the first of its kind in the US, as a
Speaker 2: way to limit future fossil fuel consumption.
Speaker 1: It was really groundbreaking.
Speaker 2: Ben Elgin is a Bloomberg Green investigative reporter who covers
Speaker 2: climate and business.
Speaker 1: The idea is that the combustion of gas inside of
Speaker 1: homes and buildings, restaurants, et cetera, is a huge contributor
Speaker 1: to climate change in California. It's about ten percent of
Speaker 1: the state's emissions, and California is such a big emitter.
Speaker 1: That's basically the equivalent of the entire climate footprint of
Speaker 1: Hong Kong.
Speaker 2: But the ban wasn't going to go into effect without
Speaker 2: a fight. Besides, gas companies who opposed it for obvious reasons.
Speaker 2: One industry group in particular came out swinging the California
Speaker 2: Restaurant Association.
Speaker 1: They argued that, hey, look, our members are trained on
Speaker 1: using gas. Chefs use gas all the time. They want
Speaker 1: to see the flame in terms of being able to
Speaker 1: gauge how they're cooking.
Speaker 2: The California Restaurant Association also argued that replacing gas with
Speaker 2: induction ranges would cost them. Induction ranges are two to
Speaker 2: three times more expensive than a comparable gas stove. The
Speaker 2: group filed a lawsuit that kicked off a fierce four
Speaker 2: plus year legal battle, a legal battle that would also
Speaker 2: get very costly, and as Ben followed the money behind
Speaker 2: the litigation, he found clues that the Restaurant Association wasn't
Speaker 2: acting entirely independently, evidence that suggested they had a backer
Speaker 2: who had even more at stake in this fight.
Speaker 1: There's long been suspicions. This has been bandied about in
Speaker 1: the press since the Berkeley filing. The lawsuit was filed
Speaker 1: in twenty nineteen, people have wondered, you know, is the
Speaker 1: gas industry involved with this lawsuit? And Jock Kandy at
Speaker 1: the California Restaurant Association has dismissed these questions, but they
Speaker 1: have refused to say then, and they refuse to tell
Speaker 1: us during our own reporting on this who paid for
Speaker 1: the litigation?
Speaker 2: Today on the show, the restaurant led fight against California
Speaker 2: Gas bands and what Ben's reporting tells us about who
Speaker 2: is really funding it, Plus what this legal battle means
Speaker 2: for the one hundred plus other localities all over the
Speaker 2: US who have tried to follow Berkeley's lead. This is
Speaker 2: the big take from Bloomberg News. I'm Sarah there. In California,
Speaker 2: gas is king. The state's homes and businesses are more
Speaker 2: reliant on gas power than any other state in the country.
Speaker 2: California is also the state with some of the most
Speaker 2: ambitious climate goals. It's trying to cut emissions by forty
Speaker 2: percent by the year twenty thirty, and to do that,
Speaker 2: state regulators agree California will need to shrink its gas
Speaker 2: system and halt the expansion of gas pipes into new buildings.
Speaker 2: Ben Elgin, Bloomberg Green's investigative reporter, says that given these
Speaker 2: higher aspirations, Berkeley's twenty nineteen law was seen as a
Speaker 2: baby step in the right direction.
Speaker 1: The reason why I say baby step is they were
Speaker 1: merely focused on stopping the expansion of gas. Right now,
Speaker 1: the gas industry in the US, they add about one
Speaker 1: new customer to the grid every minute, and of course
Speaker 1: this is making the climate problem that we'll have to
Speaker 1: dig out of even bigger. And so what Berkeley was
Speaker 1: trying to do is say, OK, let's just stop digging
Speaker 1: the hole deeper.
Speaker 2: But to the California Restaurant Association, also known as the CRA,
Speaker 2: Berkeley's law seemed to pose a threat to their members.
Speaker 2: As an industry group, their stated mission is clear making
Speaker 2: it easier for restaurants to do business, and that often
Speaker 2: means protecting their profits.
Speaker 1: They've been around for more than a century. Typically they'll
Speaker 1: weigh in on issues like minimum wage hikes or bands
Speaker 1: on polystyrene takeout containers, these types of things.
Speaker 2: So in November twenty nineteen, the California Restaurant Association set
Speaker 2: their sights on this gas ban in new buildings. Along
Speaker 2: with challenging the band with a lawsuit, the CRA also
Speaker 2: started posting videos like this on their YouTube channel.
Speaker 4: Cooks and chefs in Berkeley will have to use electric
Speaker 4: stoves instead of natural gas powered flame. Try doing three
Speaker 4: or four hundred covers a night on an electric stove.
Speaker 4: Let us know how that goes.
Speaker 2: The CRA had several concerns with gas, like the fact
Speaker 2: that chefs are more familiar with cooking with a flame,
Speaker 2: and that transitioning to induction or electric powered appliances can
Speaker 2: be expensive.
Speaker 1: I hauled around to these various board members to get
Speaker 1: their input on all of this, and they felt that, hey, look,
Speaker 1: we are some of the most civic minded businesses out there.
Speaker 1: We pay more than anybody to the local little leagues.
Speaker 1: We really truly care about the environment, but we have
Speaker 1: to have gas. And when I would ask about well,
Speaker 1: look this Berkeley rule, it was only going to limit
Speaker 1: it in new buildings. Well, I heard from one or
Speaker 1: two and said, well, maybe I want to expand into
Speaker 1: a new building and I don't want to have my
Speaker 1: options limited.
Speaker 2: Ben also talk to restauranteurs who are not members of
Speaker 2: the CIRA about their opinions on gas, like Sammy Monsieur,
Speaker 2: a chef and the co owner of Joyce, a Southern
Speaker 2: style seafood restaurant in Los Angeles.
Speaker 5: I've been in the restaurant industry geeesh for twenty seven
Speaker 5: years now.
Speaker 4: Wow.
Speaker 5: Yeah, lucky for me. I started washing dishes when I
Speaker 5: was thirteen at my parents' restaurant. Love the kitchen environment,
Speaker 5: stuck with it.
Speaker 2: Sammy is quick to say the CIRA does not represent
Speaker 2: his interests, but he agrees that, especially for smaller restaurants,
Speaker 2: cost is a huge barrier to giving up gas in
Speaker 2: the kitchen.
Speaker 5: You know, I'm a member of organizations that are focused
Speaker 5: on food sustainability, food justice, food activism. But this is
Speaker 5: an industry of margins, low profit percentage. So what you
Speaker 5: need to do is think about your output. Right, an
Speaker 5: electric fryer that can keep up like a gas one,
Speaker 5: it's going to cost a lot more induction from what
Speaker 5: I've seen. If you want a good one, a credible one,
Speaker 5: it's going to cost wise as much, so instead of
Speaker 5: five grand, at tend grand. But then also you got
Speaker 5: to buy the pots and pans that work with induction,
Speaker 5: and those are expensive.
Speaker 2: So there's that economic aspect. But the California Restaurant Association
Speaker 2: also came up with a legal one that Berkeley couldn't
Speaker 2: pass a ban like this because regulating appliances like stoves
Speaker 2: is the federal government's turf.
Speaker 1: They've basically said, the federal government regulates appliances, and so
Speaker 1: what this Berkeley law basically does is in a way
Speaker 1: regulates it from a back door, if you will.
Speaker 2: The legal battle went back and forth for years, but
Speaker 2: in twenty twenty three the CRA won, and in early
Speaker 2: twenty twenty four, the city's last ditch request for rehearing
Speaker 2: was rejected, and.
Speaker 1: So in March they basically waved the white flag and said, Okay,
Speaker 1: we're going to back off. We're going to pull the
Speaker 1: plug on the country's first ban on on gas extension
Speaker 1: into new buildings.
Speaker 2: After Berkeley officially pulled its ordinance, the California Restaurant Association
Speaker 2: declared that it was a quote significant triumph for chefs
Speaker 2: and restaurant urs unquote, but it was also a big
Speaker 2: triumph for the gas industry. And that's when things got
Speaker 2: interesting because there was still a big unanswered question looming
Speaker 2: over the drawn out legal case. Who paid for the
Speaker 2: Restaurant Association's legal bills. Ben said there were rumors that
Speaker 2: the gas industry had funded the Berkeley suit, but when
Speaker 2: he asked CRA who paid for it, they wouldn't say,
Speaker 2: so Ben thought, no problem, I know where to look.
Speaker 1: In nonprofit tax filings, they have a section where they
Speaker 1: disclose outside contractors to whom they pay one hundred thousand
Speaker 1: dollars or more in a year.
Speaker 2: Ben knew that a firm called Reichmann Jorgensen Lehmann and
Speaker 2: Feldberg LP spearheaded the Berkeley case and fought on the
Speaker 2: restaurant group's behalf, But when he looked at cira's filings.
Speaker 1: They have never disclosed a penny of payment to Reikman Jorgensen,
Speaker 1: which ran the Berkeley lawsuit.
Speaker 2: But at the same time as the Berkeley court case
Speaker 2: was unfolding, at least one major gas utility was paying
Speaker 2: the firm. According to regulatory filings and reporting by the
Speaker 2: Sacramento b so cow Gas, the nation's largest gas utility,
Speaker 2: paid Reikmann jorgan In more than four million dollars between
Speaker 2: twenty twenty and twenty twenty two. When asked about it
Speaker 2: by state regulators, so Cal Gas denied it was for
Speaker 2: challenging the Berkeley ban.
Speaker 1: They say it was not for the California Restaurant Association
Speaker 1: suit in Berkeley. They say it was for exploring various
Speaker 1: legal matters, including federal preemption of local laws, which is
Speaker 1: of course at the crux of this Berkeley case.
Speaker 2: So Ben started digging and he listened to a recording
Speaker 2: of a private meeting that started to offer some answers.
Speaker 6: All right, thanks everyone, we're going to get started here
Speaker 6: with the fireside chat.
Speaker 2: So after the break, what Ben heard in the recording
Speaker 2: of that private meeting and what it may mean for
Speaker 2: the future of gas regulation around the country.
Speaker 1: So there was a board meeting of the National Propane
Speaker 1: Gas Association and this took place in February in Monterey, California.
Speaker 6: Bangs, everyone, and to get started here with fireside chat.
Speaker 5: So I think I know pretty much everyone in the room.
Speaker 3: For anyone who don't know me, I'm Steve Minsky.
Speaker 6: I'm the president and CEO of the National Propane Gas Association,
Speaker 6: and it is my absolute pleasure today here to welcome
Speaker 6: Sarah Jorgans.
Speaker 2: Sarah Jorgensen is a founding partner at the firm that
Speaker 2: led the opposition against the Berkeley ban on gas hookups
Speaker 2: and new buildings. She was at the National Propane Gas
Speaker 2: Association board meeting to talk about legal strategies for cases like.
Speaker 1: These, and so during it, somebody asked, what is a
Speaker 1: what is a lawsuit? Like this cost. What does a
Speaker 1: legal challenge cost? And Steve Kaminski, who runs the National
Speaker 1: Propane Gas Association, first took that answer. He said, look,
Speaker 1: it's a roughly three hundred to four hundred thousand dollars
Speaker 1: and another couple of hundred thousand dollars for an appeal.
Speaker 2: And then Sarah Jorgensen chimed in.
Speaker 3: And I can say that with a word, we spent
Speaker 3: more than that Apparrely.
Speaker 2: It was a blink and you miss it moment. Jurgensen
Speaker 2: wasn't saying who paid her firm for their work in Berkeley,
Speaker 2: but what she was saying was that they had spent
Speaker 2: more than four hundred thousand dollars, maybe even half a
Speaker 2: million dollars for the fight. And remember, because the California
Speaker 2: Restaurant Association is a nonprofit, it has to disclose any
Speaker 2: payments it's made over one hundred thousand dollars to outside
Speaker 2: contractors like a law firm. And it didn't. Ben described
Speaker 2: what he thought when he realized that.
Speaker 1: It felt very meaningful. At the same time, it didn't
Speaker 1: answer the question clearly of who is paying this legal tab?
Speaker 1: Is it the gas industry, isn't somebody else? And so
Speaker 1: the fact that they're not disclosing it. We know the
Speaker 1: cost was significantly hired. Someone else is paying the legal
Speaker 1: bills here.
Speaker 2: The Public Advocate's Office, an independent watchdog for California's utility regulator,
Speaker 2: said in a filing last year, quote, it strains credibility
Speaker 2: to suggest that the utility did not fund research that
Speaker 2: supported the California Restaurant Association's litigation unquote. Chief executive officer
Speaker 2: of CRA dismissed questions about the gas industry funding the
Speaker 2: legal challenge when he was asked by kqed about this
Speaker 2: back in twenty.
Speaker 1: Nineteen, she said, odds like looking for monsters under the bed,
Speaker 1: but they have refused to say then, and they refused
Speaker 1: to tell us during our own reporting on this who
Speaker 1: paid for the litigation.
Speaker 2: Kandi declined to be interviewed by Bloomberg and would not
Speaker 2: say who funded the suit, but in written responses to questions,
Speaker 2: he said, quote the decision to fight the illegal city
Speaker 2: ordinances was ciras alone, unquote, and that it supports California's
Speaker 2: climate goals. Ben says that even though the recording doesn't
Speaker 2: definitively answer who paid for the litigation, it does point
Speaker 2: to strong ties between the gas industry and the California
Speaker 2: Restaurant Association. You spoke with one expert that says this
Speaker 2: fight puts restaurants directly at odds with the habitable planet.
Speaker 2: Is that overstating the role of restaurants.
Speaker 1: It really isn't. I mean, if restaurants were only advocating
Speaker 1: for their own use of gas, that's one thing. But
Speaker 1: these legal challenges are basically fighting for everybody's ability to
Speaker 1: use gas and new buildings. So it's a really an
Speaker 1: outsized impact. And that's what surprised me going into this.
Speaker 1: I mean, you would think of all of the opposition
Speaker 1: to climate action, all of the setbacks that have occurred,
Speaker 1: you'd think, hey, coal companies or oil companies or whatever. No, really,
Speaker 1: one of the biggest setbacks in recent memory was delivered
Speaker 1: by a restaurant association in California. It's really quite.
Speaker 2: Remarkable, and it's not just Berkeley. More than one hundred
Speaker 2: other cities, counties, and states have followed Berkeley's lead and
Speaker 2: tried to pass similar legislation, including around seventy five localities
Speaker 2: in California. And now many of those gas bands risk
Speaker 2: getting snuffed out in certain parts of the country. That
Speaker 2: risk is even greater because of where this ruling happened
Speaker 2: in a circuit court, the Ninth Circuit, so.
Speaker 1: That means the westernmost nine states of the United States.
Speaker 1: It's sort of the rule of the land. And so
Speaker 1: they're saying anybody with this type of ordinance, California, other
Speaker 1: western states, they have to pull the plug on this.
Speaker 2: And after the ruling, Ben says, a number of those
Speaker 2: places have already backed down.
Speaker 1: They said, look, okay, we can't defend this. We don't
Speaker 1: want some costly lawsuit we're going to have. We regretfully,
Speaker 1: are going to have to pull the plug on this.
Speaker 2: So it's had a chilling effect already.
Speaker 1: Most definitely a chilling effect.
Speaker 2: Ben says some other cities have held firm to their
Speaker 2: gas bands despite the threat of legal pushback, including big
Speaker 2: ones like San Francisco and Los Angeles. But in not
Speaker 2: recording from that Propane Gas Association meeting where Ben heard
Speaker 2: the cost of the Berkeley suit discussed, Ben learned that
Speaker 2: the industry isn't going to rest until more are rolled back.
Speaker 1: They were saying, Okay, what are our next steps. We've
Speaker 1: won this Berkeley case, how do we wield that legal
Speaker 1: victory to get others to fall in line, and so
Speaker 1: as they were discussing it, Sarah Jorgenson discussed, Okay, we
Speaker 1: need to start with a letter writing campaign to basically
Speaker 1: ask these cities are you going to you need to
Speaker 1: enforce this, to basically get them on the record, and
Speaker 1: she mentioned that if some do not say they're going
Speaker 1: to walk this back, then we may need to file
Speaker 1: a couple of lawsuits.
Speaker 2: Jorgensen was talking to NPGA President Steve Kaminski, who is
Speaker 2: pretty frank about the plan.
Speaker 3: I know you've had some conversations with the restaurant folks,
Speaker 3: and we're trying to bring in state executives and the
Speaker 3: propane industry from those affected states about a strategy of
Speaker 3: basically reaching out, for lack of a better word, strong
Speaker 3: army those municipalities into following the law of their jurisdiction.
Speaker 1: That's really the crux of this. I mean, it's not
Speaker 1: just Berkeley and a few dozen new building permits. They
Speaker 1: are really worried about these one hundred plus other cities
Speaker 1: who basically followed suit.
Speaker 2: When asked about the remarks, Jorgensen replied in writing that
Speaker 2: any efforts to enforce the Court's decision are quote confidential
Speaker 2: client matters, and Kaminsky said in a statement that quote
Speaker 2: NPGA does not strong arm, unquote, but rather is floring
Speaker 2: whether local governments are continuing to enforce gas bands despite
Speaker 2: the outcome of the Berkeley suit, and around the country,
Speaker 2: other restaurant groups, one in Washington, d C. For example,
Speaker 2: are rallying their own members against gas bands. Ben points
Speaker 2: out that of course, not every restaurant owner is against electrification.
Speaker 2: Some restaurants have embraced induction cooking, and some say they
Speaker 2: just need more help to make the transition. Sammy Montsour,
Speaker 2: the chef who we met earlier, says governments could make
Speaker 2: letting go of gas easier for restaurants by offering economic
Speaker 2: incentives and removing some of the barriers to entry.
Speaker 5: What I consider opening up a new restaurant all electric, Absolutely,
Speaker 5: why wouldn't I? I would want to work in some
Speaker 5: sort of a pilot situation to help figure out how
Speaker 5: we can do it together. And so it does need
Speaker 5: to happen, but it needs to happen with more people,
Speaker 5: more stakeholders, more conversation happening, more voices.
Speaker 2: Thanks for listening to the Big Take podcast from Bloomberg News.
Speaker 2: I'm Sarah Holder. This episode was produced by Adriana Tapia.
Speaker 2: It was edited by Caitlin Kenny and Emily Buzo with
Speaker 2: help from Aaron Edwards. It was mixed by Blake Maples.
Speaker 2: It was fact checked by Jessica Beck. Naomi Shavin and
Speaker 2: Kim Gittleson are our senior producers. Our senior editor is
Speaker 2: Elizabeth Ponso. Nicole beamsterbor is our executive producer. Sage Bauman
Speaker 2: is Bloomberg's head of podcasts. Please subscribe and review The
Speaker 2: Big Take wherever you listen to podcasts. It helps new
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Speaker 2: tomorrow