Two Colorado Building Energy Performance Standards (BEPS) laws were challenged last week in a much anticipated lawsuit commenced in the United States District Court for Colorado.

The lawsuit mirrors a successful ‘substantially similar’ federal court ruling last year that voided a natural gas ban in Berkely, California when this suit challenges Colorado’s Regulation 28 and the Energize Denver Ordinance, averring that they are preempted by the federal Energy Policy and Conservation Act (EPCA).

This lawsuit is a big deal at a time when emergent BEPS laws appear to be de rigueur among the environmental industrial complex, forsaking broader ideals like green building and the like, in what in many instances are flawed attempts by states and local governments to ration energy, through energy use intensity (EUI) standards and the like.

This judicial redress has national implications both because the two separate Colorado BEPS laws were modest enactments when compared with much more burdensome (.. if not all but impossible to comply with for many buildings) laws like those in Maryland and because the complaint challenges not only the EUI standards (.. that legal commentators suggest is low hanging fruit) but also greenhouse gas (GHG) intensity that would void the entire field of BEPS as interfering with the express federal authority over a consistent nationwide energy conservation policy that has existed since the 1975 Gerald Ford brokered post Arab oil crisis compromise that was the Congressional enactment of EPCA.

The plaintiffs in this case are the Colorado Apartment Association, Apartment Association of Metro Denver, Colorado Hotel and Lodging Association, Inc., and NAIOP Colorado Chapter. They are suing various Colorado officials and entities, including the Colorado Department of Public Health and Environment.

The allegations stretch over the 47 pages of the complaint. The crux of the averments is that Regulation 28 and the Energize Denver Ordinance, each a BEPS law, set energy limits for buildings over 25,000 or 50,000 square feet respectively. The standards focus on energy use, requiring building owners to comply with EUI and GHG intensity thresholds.

The complaint explains that the practical implications of these standards “effectively require” building owners to replace existing natural gas equipment and appliances with electric versions that exceed current federal energy efficiency standards.

The complaint alleges that the Colorado standards conflict with EPCA’s express preemption provisions, which are an absolute bar to state and local regulations concerning energy efficiency or energy use of federally regulated products.

The complaint seeks declaratory relief that Regulation 28 and the Energize Denver Ordinance are preempted by EPCA requesting injunctions to prevent their enforcement.

Just some days ago, we blogged about the City of Berkeley, Settlement Portends Broad Failure in Attempts to Ban Natural Gas, after the Ninth Circuit, which the Court had last year found regulations having the effect of banning natural gas were expressly preempted by the federal EPCA  statute when that court denied a petition to rehear the case.

That case is expressly referenced in this complaint and particularly instructive on the likely outcome of this new Colorado litigation when it is beyond dispute from the opinion that EPCA’s preemptive scope extends beyond regulations of covered products or building codes, but also expressly includes “concerning the energy use” within buildings that contain such products, delivering a fatal blow to state and local government attempt to regulate site EUI in BEPS and the like. Lest there be any doubt, to ascertain what Congress meant by “energy use,” we turn to the statutory definitions. EPCA defines “energy use” as “the quantity of energy directly consumed ..” and preempts states and local governments from regulating it, whether disguised as BEPS, site EUI, or otherwise.

It is possible a properly drafted BEPS law might stand but is clear that these Colorado laws fail as being precisely what Congress was barring with the express preemption mandate in EPCA.

Drew Hamrick of the Apartment Association of Metro Denver also makes a key point that strikes at the heart of BEPS laws, “That’s a boatload of money for the amount of carbon reduction it achieves,” .. when these laws are only regulating a subset of Scope 1 GHG emissions and note the more than 95% of GHG emissions that are not even proposed to be touched.

Of course, others see these matters otherwise, including the Sierra Club and Conservation Colorado whose representative responded, “This lawsuit is a baseless attack on innovative programs to tackle pollution from buildings, ..”

As we concluded an earlier blog post, “.. the only question may be how quickly extremist regulatory schemes like Maryland’s building energy performance standards regulations, with the concomitant ban of natural gas, even in existing buildings, and imposing penalties for exceeding arbitrary EUI maximums, will be vanquished.” The Maryland regulations seek not only to ban new natural gas pipe installations but to force the replacement of existing gas appliances and removal of gas piping from every existing covered building (.. far more than Berkeley intended to do and far more draconian than the Colorado mandates) and not only unreasonable but unquestionably preempted by EPCA. Of import, BEPS is on “Hold” in Maryland because of actions by the state legislature (.. not the courts) including inserting a provision in the 2024 budget prohibiting the use of state money to draft EUI regulations.

Plans by state and local authorities to ration energy are wrongheaded and as this legal challenge will show, preempted by federal law under the Supremacy Clause of the U.S. Constitution. We will blog more as this BEPS litigation plays out.

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