SoCalGas Helped Bankroll Law Firm That Challenged Berkeley Natural Gas Ban

SoCalGas, the nation’s largest natural gas utility, initially billed a ratepayer account more than $1 million to support the law firm that successfully challenged Berkeley’s first-in-the-nation law banning gas hookups in new buildings.

In a California Public Utilities Commission filing released last week, the utility admitted it had paid the Redwood City-based law firm Reichman Jorgensen $1.14 million (PDF) in 2021 to address several legal issues, the most specific of which involved investigating the legality of “existing and proposed federal, state and local laws, and other government actions potentially affecting natural gas service,” and determining “whether they might be preempted by federal law.”

SoCalGas claimed in the filing that “these costs do not include legal challenges to local gas bans for new construction,” like the Berkeley case.

But the firm’s attorneys, working on behalf of the California Restaurant Association, a trade group that sued Berkeley over the gas ban, went on to argue that the city’s law was preempted by — or in conflict with — federal law.

A three-judge panel of the 9th U.S. Circuit Court of Appeals agreed and struck down Berkeley’s law, overruling a lower court’s 2021 decision to uphold it.

In response, Berkeley City Council member Kate Harrison, who co-sponsored the 2020 law barring the use of natural gas pipes in most new residential and commercial construction, announced this week she planned to ask the city attorney to request a rehearing of the case before an 11-judge panel of the 9th Circuit.

“I expect we will collectively mount a robust legal defense,” she said at a press conference on Thursday. “We know what this is really about: the dangerous idea that business profits trump local and state governments’ right to protect our community’s health and safety and a habitable climate.”

Harrison insisted the city’s ordinance remains in effect despite the recent ruling — as the court has yet to issue an injunction or stay.

Matt Vespa, an attorney with Earthjustice who filed the CPUC motion requiring SoCalGas to disclose the purpose of the payment, said the revelation showed yet another brazen effort by the utility to influence local climate policy.

“I think it’s fairly clear to us, [SoCalGas] is underwriting the cost of this litigation and helping support it,” he said. “It’s paying the same law firm to do the same research that otherwise would have been spent by the Restaurant Association.”

What’s more, he said, the company was forced to admit it had billed that payment to a ratepayer account, in violation of state and federal rules barring utilities from using customer funds for political and lobbying purposes.

“Improperly, they were trying to get away with making customers pay for that — for a lawsuit in Berkeley, by the way, and they’re in Southern California,” Vespa said. “They saw that Berkeley’s approach could impact them eventually with jurisdictions down there.”

It remains unclear how the 9th Circuit’s ruling against Berkeley will affect the mounting number of new gas restrictions in other cities, but it could prove detrimental if upheld on appeal.

“While the decision is creating significant uncertainty for cities today, it doesn’t immediately impact the majority of local governments who have passed measures to cut pollution from buildings,” said Emeryville Mayor John Bauters, whose city enacted a gas ban largely modeled on Berkeley’s.

The payment SoCalGas made to Reichman Jorgensen from a ratepayer account comprises roughly a third of the nearly $3.5 million the utility has paid the firm since it took up the case, according to company financial records from 2020 (PDF) and 2021 (PDF) that Vespa, working with the California Environmental Justice Alliance, obtained through CPUC data requests.

Reichman Jorgensen did not respond to multiple requests for comment.

In the filing, SoCalGas said it “unintentionally” attributed the payment to a ratepayer account and had since corrected the oversight.

Dan Guthrie, a SoCalGas spokesperson, denied that the payment to the firm had anything to do with the Berkeley lawsuit.

“The Reichman Jorgensen costs referenced in your question are not being funded by ratepayers and are unrelated to the CRA’s legal challenge to the Berkeley ordinance,” Guthrie said in an email. He did not respond when asked to elaborate further.

Such tactics are part and parcel of the utility’s longstanding playbook of aggressively fighting state and local electrification efforts, Vespa and other environmental advocates argue.

“It’s a pattern of using customer money to obstruct climate action,” he said. “If you get caught, it’s, ‘Oops, I made a mistake,’ which is what they did here.”

Mike Campbell, program manager with the Public Advocates Office, which represents California ratepayers, says the utility is notorious for inappropriately using ratepayer funds to pay for its various lobbying campaigns.

“We have found it multiple times,” he said. “It’s more [times] than fits in a handful.”

And when required by the commission to detail its spending activities, “the utility really stonewalls responses and in some instances provides answers that are flat-out incorrect,” he said.

California’s push for electrification, Campbell argues, poses an “existential threat” to a utility that distributes natural gas to some 21 million customers. And unlike PG&E, which supported Berkeley’s ordinance, SoCalGas does not sell electricity.

Campbell’s office has accused SoCalGas of a litany of transgressions, including lying to regulators, undermining energy efficiency standards and funding seemingly independent advocacy groups to push its agenda.

Vespa and other advocates say CRA fits squarely in that latter category.

Since CRA filed suit against Berkeley in 2019, SoCalGas has given the group’s nonprofit foundation at least $725,000, steadily increasing its contributions, from $24,000 in 2019 (PDF) to more than $555,000 in 2021 (PDF), according to the utility’s annual financial filings.

CRA spokesperson Sharokina Shams denied any connection between SoCalGas and her group’s litigation against Berkeley.

“Reichman Jorgensen LLP are representing CRA in this matter because they are experts in this area of litigation,” she said in a statement. “We have not and do not coordinate with SoCal Gas on our litigation.”

In its lawsuit, CRA argued that Berkeley’s gas ban posed a major threat to the region’s restaurants.

“Indeed, restaurants specializing in international foods so prized in the Bay Area will be unable to prepare many of their specialties without natural gas,” the suit stated.

And although the ban only impacts restaurants in new buildings, the association warned it could spark efforts to limit the use of natural gas in older ones as well.

Berkeley’s law, which the City Council unanimously approved in 2019, has been hailed by health advocates and environmentalists, who argue that scaling back the use of the planet-warming fossil fuels in buildings — a significant but largely overlooked source of emissions — is essential to fighting climate change and reducing exposure to harmful pollutants inside homes.

Since the law took effect in 2020, more than 70 other cities in California, including several dozen in the Bay Area, have adopted building codes to reduce the use of natural gas, according to the Sierra Club.

“They’re all just slightly different. The main point is that this started a movement,” said Harrison. “The culture has changed and people see the benefits of this.”

KQED’s Erin Baldassari contributed to this story.

This story has been updated to clarify that payments made from SoCalGas in 2019 and 2021 to the CRA were made to the group’s nonprofit foundation.