NAIOP Colorado has joined with the Colorado Apartment Association and the Colorado Hotel and Lodging Association to challenge the legality and economic feasibility of the Building Energy Performance Standards (BEPS) adopted by the state of Colorado and the City of Denver. The outcome of this litigation could influence how Maryland proceeds with its own BEPS regulations.

Both the state of Colorado and the City of Denver have adopted BEPS regulations similar to those proposed by the Maryland Department of the Environment (MDE) that set limits on the direct greenhouse gas emissions of buildings and total energy use per square foot, known as site Energy Use Intensity (EUI). In a complaint filed in federal court on April 22, the associations allege that both the Colorado and City of Denver BEPS regulations are preempted by the federal Energy Policy and Conservation Act (EPCA).

The EPCA regulates the energy efficiency of a wide range of residential, commercial and industrial appliances and products, including space and water heating equipment, air conditioning systems, stoves and clothes washers and dryers.

Primary responsibility for setting energy efficiency standards is vested with the U.S. Department of Energy (DOE).  The federal standard is intended to provide a consistent national approach that explicitly preempts, with limited exceptions, a patchwork of local and state regulations concerning the energy efficiency and energy use of consumer and commercial appliances for which the DOE has set a federal standard.

According to the complaint, both Colorado BEPS exceed state and local authority by regulating the energy efficiency and energy use of EPCA-covered equipment and products.  Energy audits conducted by the associations found that greenhouse gas emissions and energy use limitations in the two BEPS regulations are set so low that compliance will effectively require covered building owners to replace existing mechanical equipment that meets current federal energy efficiency standards with equipment that exceeds federal standards.

EPCA provides a narrow set of exceptions for cases where a state applies for and is granted a waiver of the appliance standard preemption. Such an exemption is based on a finding by the DOE that the state regulation is needed to meet “unusual or compelling state or local water or energy interests that are substantially different in nature or magnitude than those prevailing in the United States generally.”

Similarly, a DOE waiver for performance-based building codes applied to new construction and major renovations is predicated on providing multiple performance pathways, including options that allow the use of appliances and other products that meet but do not exceed the applicable federal standards. Neither BEPS regulation has been granted a DOE waiver.

A press release from the Colorado Sierra Club called the lawsuit “a baseless attack on innovative programs to tackle pollution from buildings” and asserted that “buildings have countless options for how to reduce their energy waste and pollution – both for new construction and for retrofits.”

The release goes on to say, “Instead of just making their buildings more efficient to benefit air quality and cut energy bills, these groups would rather put their money to attorneys to fight popular regulations. It’s telling that corporate landlords and real estate groups are paralleling the oil and gas industry, which fights energy efficiency and clean energy solutions to protect their profits over local interests of working families, small businesses, and those suffering from chronic health conditions exacerbated by air pollution.”

NAIOP Maryland has consistently advocated for cost-effective, technically feasible building and energy codes.  On January 29, the Maryland General Assembly committee charged with providing oversight of the regulatory activities of state agencies notified the governor that it intended to put adoption of MDE’s draft BEPS regulations on hold. The General Assembly subsequently approved a provision in the budget withholding funding for adoption of portions of the BEPS regulations until MDE includes additional provisions related to specific building types and uses and completes a cost and alternatives analysis of the proposed EUI limits on electricity use in buildings.

The outcome of the Colorado litigation could influence how Maryland proceeds with development and adoption of its own BEPS regulations.