San Gabriel Valley – Natural Gas Controversy
More than a dozen San Gabriel Valley cities are pushing back on an effort that could ban the use of natural gas in residential and commercial buildings.
The California Public Utilities Commission and the California Energy Commission have been holding workshops throughout the state to discuss and gather public feedback over the implementation of Senate Bill 1477, which strives to reach near-zero emission homes. The move calls for an electric-only model.
Which is why 17 cities—including La Verne and Pomona—in the San Gabriel Valley have passed resolutions supporting policies that would allow consumers to retain control of their energy options.
If the energy regulations are changed, the average cost for a homeowner, after retrofitting a home for electrical, is about $7,300. And the average annual cost for service would go up $388, said Bill Manis, CEO of the San Gabriel Valley Economic Partnership, which co-hosted the press conference.
Duarte City Councilwoman Liz Reilly said hers is one of the first cities in the San Gabriel Valley to pass a resolution opposing SB 1477.
As vice chairwoman of the Energy, Environment and Natural Resources committee for the San Gabriel Valley Council of Governments, Reilly said that she knows the state and local jurisdictions must act to address climate change.
The Southern California Gas Co. said natural gas is what makes its energy service an affordable option to consumers. The gas company has committed to replacing its natural gas supply with 20% renewable gas by 2030, said Sharon Tomkins, vice president of Strategy and Engagement for the gas company, and a Pomona resident.
John Switalski, executive director of Californians for Balanced Energy Solutions, said banning natural and renewable gas would affect 90% of homeowners, renters, thousands of small businesses, and harm manufacturers.
Switalski said Californians for Balanced Energy Solutions is preparing to send a letter to Gov. Gavin Newsom, urging him to support and promote policies that keep clean energy affordable for everyone, maintain reliable service, and allow consumers to retain control over the type of energy used in their homes and businesses.
Statewide Voter Tax Initiative
On July 5, a San Francisco trial court held that local taxes imposed by voter initiative are not taxes imposed by a “local government,” and therefore are not subject to the two-thirds supermajority voter approval requirement provided for in the California Constitution. This decision is the opening salvo in what likely will be a protracted battle that could potentially open the floodgates for new and increased local taxes.
The Trial Court Decision
The trial court drew heavily from the opinion in Upland (California Supreme Court’s decision in California Cannabis Coalition v. City of Upland), highlighting the “nearly identical language” of the constitutional provision at issue in that case. The trial court concluded the shared term “local government” must be interpreted in the same way in both provisions, such that, following Upland, the term “local government” in Article XIII C, Section 2(d) does not encompass the electorate. The trial court also applied the Upland court’s conclusion that Proposition 218, the initiative which added Article XIII C, Section 2(d) to the constitution, did not contain any “‘clear statement or equivalent evidence’ that it was intended to constrain the people’s power of initiative.” The trial court held that the general requirement in Article XIII C, Section 2(d) that special taxes be approved by a two-thirds vote does not apply to taxes proposed by voter initiative. In doing so, the trial court fulfilled the doomsday scenario presented by the dissent in Upland, namely that “‘from here on out, special taxes can be enacted by a simple majority of the electorate’ rather than the two-thirds vote otherwise required for approval of a special tax.”
Additionally, the trial court held the two-thirds vote requirement in does not apply to taxes by voter initiative either, noting the “closely similar language to that of Article XIII C, section 2(d)” and the lack of “any ‘clear statement’ of the voters’ intent to constrain the people’s initiative power” in the enacting initiative (Proposition 13).7
Eversheds Sutherland Observations
This decision is certain to be appealed. If the trial court’s decision is affirmed, it will significantly reduce the approval threshold for new or increased local taxes across the state. Indeed, a number of other local special taxes passed by a simple majority over the past year paint a picture of the potentially altered landscape, including a separate gross receipts tax and parcel tax in San Francisco, a transient occupancy tax in Del Norte County, a sales tax increase in Fresno, and a parcel tax increase in Oakland.
Additionally, there is a concern that local government officials might use the voter initiative process as an end-around to avoid the two-thirds supermajority approval requirement by placing initiatives on the ballot in an individual capacity. In a companion case also decided on July 5, 2019, the same trial court held that the relevant provisions of the City Charter and the California Elections Code “draw a clear distinction between measures proposed by the voters by initiative petition and measures proposed by a legislative body,” such that even active involvement by a local official in the “development and promotion of the ballot initiative” does not “transform it from a voter initiative into a legislative initiative.”8
While the trial court focused on the parallel language of the two constitutional provisions and the Upland court’s analysis of the term “local government,” the language in Upland suggests the California Supreme Court drew a distinction between the “procedural timing requirement” that local general taxes be submitted at a general election and the “procedural two-thirds vote requirement” that local special taxes be approved by a two-thirds vote. This case likely will provide the California Supreme Court an opportunity to clarify its decision in Upland.