Federal judge dismisses lawsuit against state, Denver energy standards for large buildings

A federal judge on Friday dismissed a lawsuit seeking to overturn regulations for achieving energy reductions in large buildings, finding the plaintiffs' allegations about their injuries were too vague to sustain their legal challenge. Industry groups representing Colorado's apartment owners, hotel operators and real estate developers sued the state and the City and County of Denver in April 2024. They took issue with two related programs designed to lower greenhouse gas emissions or otherwise reduce the energy usage of large buildings: Energize Denver, whose performance goals were enacted in 2021, and Regulation 28, the state's emissions benchmarks.

In each instance, the plaintiff groups alleged the only way many of their member buildings could achieve compliance was to replace items like washing machines or furnaces with ones that are more energy efficient than federal standards. That unwritten mandate, they argued, violated the Energy Policy and Conservation Act of 1975 , in which federal energy efficiency regulations for "covered products" override state regulations. However, U.



S. District Court Judge Regina M. Rodriguez found a fatal flaw with the plaintiffs' complaint.

Even though multiple industry executives submitted statements about the significant costs of compliance, there were no specific allegations why any member building necessarily had to replace federally covered products and appliances. The plaintiffs "do not allege how they determined that the only way to comply is to install Covered Products that exceed (federal) efficiency standards. Indeed, Plaintiffs concede there are multiple compliance pathways," she wrote, "but neither the Complaint nor the Declarations identify the chosen compliance pathways for any individual building.

" She added in her March 28 order that the underlying case presented the "as yet unanswered" question of whether federal law for covered products overrides state and local regulations that affect building emissions holistically. But Rodriguez did not resolve that question because none of the industry groups had pointed to a specific building that could only comply with the programs by replacing covered products. Rodriguez dismissed the plaintiffs' claims without prejudice, meaning the industry groups have 21 days to file a new complaint addressing the deficiencies she identified.

Regulation 28 , which came in response to a 2021 state law, generally requires owners of buildings larger than 50,000 square feet to reduce energy usage or greenhouse gas emissions by 20% in 2030, compared to 2021 levels. Similarly, Energize Denver requires benchmarking and energy reduction for buildings mostly over 25,000 square feet, with a goal of achieving zero greenhouse gas emissions by 2040 for existing buildings. Denver recently extended compliance deadlines as the motions to dismiss were pending.

In their lawsuit, the industry associations alleged the "only feasible way for the vast majority of Covered Buildings to meet the energy reduction (or emissions goals) is to install electrified Covered Products that exceed federal" standards. The plaintiffs attached statements from numerous industry executives stating they will need to take action to become compliant, they will incur significant costs and they will expend thousands of dollars per building, if not hundreds of thousands. The defendants countered that one piece was missing: Any discussion of the federally covered products and appliances.

"Plaintiffs specify no particular Plaintiff association member, no particular building, no particular Covered Product nor do they give any details, other than that the information came from energy audits, as to how they have determined that Energize Denver 'effectively' requires the installation of Overly Efficient Products," wrote the Denver City Attorney's Office. The defendants also questioned the plaintiffs' reliance on a recent decision out of the San Francisco-based U.S.

Court of Appeals for the Ninth Circuit, which found a local energy ordinance in Berkeley violated the federal law for covered products. While Berkeley prohibited the installation of natural gas piping, "Energize Denver contains no express prohibition regarding any type of energy source," Denver wrote. Rodriguez agreed with the defendants that there needed to be some specifics backing up the assertion that buildings will have to satisfy an unwritten mandate by replacing covered products and appliances in order to comply with the programs.

"Plaintiffs’ members do not allege they have spent any costs replacing any of their existing Covered Products with those that exceed the (federal) efficiency standards," she wrote. "Thus, Plaintiffs have failed to show that at least one of their members will suffer an injury." The case is Colorado Apartment Association et al.

v. Ryan et al. Denver Gazette reporter Scott Weiser contributed to this article.

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