On April 22, 2024, the Colorado Apartment Association, Apartment Association of Metro Denver, Colorado and Lodging Association, Inc., and NAIOP Colorado Chapter filed a complaint in federal district court against the State of Colorado and City of Denver challenging building performance standard regulations designed to decrease energy use and consequent GHG emissions in new and existing covered buildings (Colorado Apartment Association, et. all v. Ryan, et. all, Case No. 1:24-cv-01093 (Filed 4/22/24). This litigation follows the same legal challenge used against the City of Berkeley that overturned the City of Berkeley’s new construction natural gas plumbing ban in the 9th Circuit alleging violation of the Energy Policy Conservation Act (“EPCA”) (previous blogs on this issue can be accessed here). Importantly, the 9th Circuit opinion is only persuasive authority in the 10th Circuit and is not binding on the District Court for the District of Colorado. This may result in a different outcome both because of the circuit and because Colorado and the City of Denver took a different approach from the City of Berkeley.
This is the first in a series of blogs that will shed light on several EPCA questions specific to this line of litigation:
- Does the EPCA preempt all state and local authority to regulate energy use (City of Denver) and GHG emissions (State of Colorado) of buildings by setting performance standards for new and existing buildings?
- And if not, what is the limit of building performance standards under the EPCA for both new and existing buildings?
- Finally, what is the extent of EPCA “concerning energy efficiency, energy use, or water use of a covered product” preemption over state and local government authority to regulate GHG emissions from sources?
- Is there a distinction between criteria and toxic pollutants and GHG emissions?
This will focus on the complaint itself to then discuss the Colorado statutory language creating the benchmarking and energy reduction regulations and the City of Denver’s adoption of standards that apply across more buildings. This blogs will give an overview of the statutory and regulatory differences between California and Colorado to discuss the litigation approach. Future blogs will discuss how these questions shape local government action in California and look at the only two other unpublished cases on the topic of building performance standards and the EPCA.
EPCA Preemption: Application of EPCA Concerning Energy Efficiency and Energy Use of Covered Products Language to State and Local Regulations
The basis of this complaint is the allegation that the State of Colorado via its Colorado Air Quality Control Commission (“Commission”) adoption of Regulation 28 (5 CCR 1001-32) that implements Colorado House Bill 21-1286 and City of Denver adoption of Energize Denver Ordinance (Ordinance No. 20211310) are preempted by the EPCA under 42 U.S.C § 6297(c). The complaint alleges that both the State of Colorado regulation and City of Denver ordinance: 1) force covered buildings to install appliances that exceed U.S. DOE covered products and consumer products energy efficiency standards; and 2) require installation of all-electric appliances to comply with the site energy use intensity (EUI) or GHG intensity thresholds by the target date. The complaint further alleges that 1) the Colorado State regulation and City of Denver ordinance do not meet the parts of 42 U.S.C. § 6297 (c)(2) that allow higher appliance energy standards through a U.S. DOE approved waiver of a higher state energy efficiency, energy use, or water use standard to be used in existing buildings and that 2) these regulations fail to meet 42 U.S.C. § 6297 (c)(3) that allows new construction building codes where 42 U.S.C. § 6297 (f)(3) is met. 42 U.S.C. § 6297 is how California’s Title 24 and any reach codes adopted in California as an amendment to Title 24 are oriented to avoid preemption. It is important to understand that there is a separate analysis for how these regulations apply to new construction and whether these parts meet 42 U.S.C § 6297 (f)(3). It is possible that the regulation will survive for new construction but not for existing buildings.
It is important to understand that these are allegations in a complaint that is in the early stages of litigation. The factual record is not fully developed, nor has it been presented to a court. The complaint seeks to avoid developing a factual record by redress through preliminary and permanent injunctions. This requires a showing that the moving party will suffer irreparable harm; that the threatened injury to the moving party will outweigh whatever damage the property injunction may cause the opposing party; that an injunction is not adverse to the public interest; and that there is substantial likelihood that the moving party will eventually prevail on the merits. It is likely that the plaintiffs will meet their burden to prevail under an injunction analysis for all or part of the complaint that relates to EPCA preemption for existing buildings. It is less clear as it relates to new construction. There is no EPCA preemption of the benchmarking requirements.
What this litigation seeks to define in the 10th Circuit is the extent of federal EPCA preemption over state and local energy and consequent GHG emissions authority over buildings using building codes. It seeks to determine whether these two building performance standards violate the EPCA. What it must prove in this regard is whether the EPCA has this level of reach and where the line of preemption should end. Said another way, is GHG or energy efficiency regulatory authority over existing buildings preempted by the EPCA in all instances where additional action or expense is required? Is there non-preempted authority to offer flexibility as a means of compliance and how is this determined legally?
It remains unclear whether Congress intended the EPCA to preempt state and local regulation of GHG emissions through building performance standards that address the energy use of whole buildings and not by regulating individual appliances or energy use. It is possible that for this reason the State of Colorado’s regulation could survive preemption while the City of Denver’s performance standard that focuses on energy efficiency may not. It is also possible that in both cases there is preemption because GHG regulation “concerns .. energy use …of a covered product…”. Therefore, where the GHG regulation requires the installation of a covered product that exceeds the federal standard or prohibits the installation of a covered product for its energy use and consequent GHG emission, there is preemption.
Additionally, only the City of Denver requires replacement of natural gas space heating and cooling and water heating with electric or partial electric at end of life. Can this type of provision survive EPCA preemption because it does not require an appliance that exceeds a federal efficiency standard, but it does eliminate natural gas as an option subject to exceptions for emergency replacement and economic hardship?
The goal of decreasing GHG emissions from buildings is not expressly preempted by the EPCA, in fact it is not even addressed by the EPCA, and it appears that decreasing energy consumption using national standards is foundational to decreasing GHG emissions from end-uses. However, it is not legally defined by a court as to what extent GHG emission regulation can limit access to approved covered products for existing buildings. It is likely that there is no way to regulate energy in existing building if the regulation requires appliances that exceed federal standards, eliminates energy use of natural gas, and/or allows a federal approved covered product but with increased cost by requiring other action such as early replacement or installation of additional measures like insulation or renewable energy.
There are also pathways that allow natural gas end-uses if a building is unable or unwilling to comply, including the use of renewable energy as an offset or being fined under the same authority used for all code violations. However, these compliance pathways may require additional action and/or expense to comply. It will be telling whether a factual record is allowed to be developed, and if so, whether it will address all the means of compliance available under a performance standard. If the factual record is developed, will it show whether there are or are not actions that do not increase cost or limit choice? Is this enough to survive EPCA preemption?
The second blog in this series will take a closer look at benchmarking as a basis for building performance. It will focus on how Colorado’s Regulation 28 seeks GHG reductions while and the Energize Denver Ordinance seeks energy efficiency to discuss whether this a legally relevant distinction under EPCA preemption analysis. It will then focus on the actual building performance standards and the strategy of offering flexibility both on how the standard applies to a building and how a covered building can comply to discuss whether this is relevant in avoiding EPCA preemption. It will end by setting up a third blog that will discuss this case in the context of two other unpublished cases, one against the State of Washington and one against the City of Albuquerque, to provide context on how other district courts have analyzed building performance standards in the last two decades under the EPCA.
