Proposal to forbid local gas bans dropped in Senate

A controversial proposal to forbid local governments from banning or limiting use of natural gas has been dropped after House Majority Leader Terry Kilgore revamped a bill Tuesday in a bid to ensure legislation providing businesses with certainty about gas service makes it through the Senate. 

The last-minute change caught many lawmakers and business, utility and environmental groups off guard. 

“We’ve got a bill that is substantially different than what you were probably looking at an hour ago,” said Sen. Chap Petersen, D-Fairfax City, at a meeting of the Senate Agriculture, Conservation and Natural Resources Committee Tuesday. 

The new version of House Bill 1257 presented Tuesday would prohibit any “public entity that provides natural gas utility service” from discontinuing service “generally or to any commercial or industrial customers” without providing three years of notice, undertaking certain negotiations and in some circumstances offering the system up for auction to the highest bidder. 

Only three localities would be affected by the legislation: the cities of Richmond, Charlottesville and Danville, all of which have municipal gas utilities.  

Kilgore, R-Scott, characterized the revised legislation as “a notice bill” intended to provide security to industrial and commercial customers. 

“If somebody’s going to do away with their natural gas, we need to have some notice so they can make other arrangements,” he told the Mercury. 

Brett Vassey, CEO and president of the Virginia Manufacturers Association, said the new bill “is sending a signal that we are going to have a process whereby if someone is going to take away natural gas there is at least a public notice.” 

Environmental groups — which had vigorously argued against the earlier version of HB 1257 that would have limited local government authority over natural gas service — in committee appeared receptive to Kilgore’s re-do. 

“Seeing the massive change to this bill, a lot of my concerns are resolved,” said Peter Anderson, Virginia policy director for environmental and economic nonprofit Appalachian Voices. 

Bob Shippee of the Sierra Club Virginia chapter called the pared-down legislation “a much improved version of the bill” but said he still believed it was “a solution seeking a problem that doesn’t actually exist.” 

Mixed reactions to earlier preemption proposal  

Kilgore’s initial version of HB 1257 limiting local authority was backed by the state’s investor-owned gas utilities and manufacturers and business interests such as Gerdau Steel that emphasized the need to ensure reliable natural gas service. 

That legislation was in line with national efforts by the gas industry to encourage the passage of state laws preempting local governments from passing bans or restrictions on the fuel’s use. 

But unlike states like California and New York where cities have passed local bans on new gas hookups in an effort to reduce carbon emissions, Virginia has seen few organized efforts at the local level to curtail service. 

The only notable step was by Richmond City Council, which in September passed a nonbinding climate resolution that committed the body “to working with the city’s administration on an equitable plan to phase out reliance of gas” and declared “that the continued operation of the city’s gas utility is an obstacle to the city’s goal of net-zero emissions.” 

That resolution, however, was nonbinding and did not require that City Council take any specific steps to shut down its utility or restrict new hookups. 

Emails among city officials and lobbyists regarding Kilgore’s original bill obtained by the Mercury show more ambivalence about phasing out gas, with officials lodging no objections to the idea of the state preempting local decision-making. 

“My take is we like the bill but want some amendments,” wrote Ron Jordan, a lobbyist for the city, on Jan. 24. 

Amendments drafted and circulated by several city officials sought to make it clear that the prohibition on local restrictions would extend to situations such as Richmond’s where a municipal utility supplied gas. 

These “friendly amendments” would “give municipally-owned utilities the same protections [the bill] would afford investor-owned utilities,” a memo from Assistant City Attorney Ross Phillips read. 

Officials also sought to ensure the bill wouldn’t prohibit the city from transferring its system to a “natural gas service authority” in the future if it so chose. 

“Given RGW’s interests in providing continuous gas service to customers and unique opportunity to reform as an authority, HB 1257 seems like a good opportunity for city representatives to discuss RGW’s future with Delegate Kilgore,” Phillips’ memo stated. 

None of the major amendments proposed by the city ended up in the version of Kilgore’s bill that passed the House this February. 

Asked about whether the city supported that bill, Richmond Deputy Chief Administrative Officer for Operations Robert Steidel, the longtime head of the city’s public utilities, said in an email that “the city of Richmond is taking no position on Delegate Kilgore’s legislation.” 

In response to a question about Danville’s position on the proposal, Public Information Officer Arnold Hendrix said that the city manager and utilities director “are monitoring the legislation to see if there would be any impact to our operations.” The city of Charlottesville didn’t respond to an inquiry. 

Whether local governments currently have the authority to restrict natural gas usage also remains an open question. Virginia localities are governed according to the Dillon Rule, the legal principle that local governments have only those powers explicitly granted to them by the state. If the state hasn’t said they can do something, the assumption is that they can’t. 

Amy Turner, a researcher with the Sabin Center for Climate Change Law at Columbia Law School, said in an email that a “full review” of state law would be necessary to determine whether local governments have the power to restrict gas service. 

However, she noted that to date, all local decisions to prohibit new gas hookups or amend the building code to require all-electric construction have occurred in “home rule” states, where local governments have more flexibility. 

Bill may be headed to conference

Kilgore confirmed Tuesday that he had dropped the language regarding local authority from his proposal because of doubts it could clear the Senate. 

However, because the House of Delegates already passed a version of the legislation including those provisions, lawmakers may have to reconcile the two versions through the conference process, where small teams of lawmakers split between the two chambers and parties hammer out differences behind closed doors. 

“Believe it or not, I didn’t come into town on the turnip truck last night, and so I’m not oblivious to the fact this is going to end up in conference,” Petersen told Kilgore during committee. 

“I don’t know,” Kilgore responded. “I like it pretty good as it is.”