Colorado and Denver officials asked a US district court to once again dismiss a legal challenge to their building decarbonization policies, just five months after a judge rejected a complaint brought by building and hotel groups.
Lawyers for the Denver defendants said the industry groups had once again failed to demonstrate that their members will suffer harm from its policy. Both the city and state rejected the plaintiffs' core argument that the federal Energy Policy and Conservation Act (EPCA) preempts their policies (Case No. 1:24-cv-01093).
Those policies, known as building performance standards, require owners to renovate their properties in order to progressively reduce energy use and greenhouse gas emissions over time.
The lawsuit is one of several that says building electrification and decarbonization regulations conflict with the US Energy Department's authority under EPCA to set appliance standards. Industry groups around the nation adopted that approach after the US Court of Appeals for the 9th Circuit opined that EPCA preempted a first-in-the-nation gas ban in Berkeley, Calif.
The US District Court for the District of Colorado dismissed the building and hotel groups' initial complaint in March. The groups failed to show that they could not comply with Colorado and Denver building performance standards without replacing natural gas equipment covered by EPCA, the court found.
The plaintiffs filed an amended complaint in June, submitting energy audits from 10 building owners that showed the owners cannot achieve compliance without replacing EPCA-covered appliances. That would force the property owners to scrap gas-powered building systems in favor of electric alternatives before that equipment's useful life has ended, they said.
Plaintiffs have not exhausted compliance paths
Lawyers for the City and County of Denver defendants said the plaintiffs' challenge is still not ripe for review, because the 10 companies named in the complaint have not taken advantage of provisions designed specifically to prevent the injuries that the groups allege they will suffer.
Denver's Office of Climate Action, Sustainability, and Resiliency (CASR) has modified its Energize Denver regulation, allowing property owners to seek a compliance deadline extension in order to let major building systems reach the end of their useful life, defendants said. The office also introduced a custom target adjustment, which lowers the building's final energy use intensity performance target in cases where the property cannot viably achieve its target, even after CASR grants a standard target adjustment.
CASR has granted seven of the 10 building owners standard target adjustments, but none of them have applied for timeline or custom target adjustments. The owners should seek relief through those provisions before the plaintiffs ask the court to find that Energize Denver would force the owners "to imminently and prematurely replace functioning equipment at great economic costs to them," the defendants said.
"Otherwise plaintiffs cannot establish whether their alleged injuries rise from the application of the program or from their own failures to follow the express provisions of the program," they said.
The defendants also argued that the statute of limitations bars the plaintiffs' claims, citing a recent Colorado District Court decision on EPCA preemption challenges.
Defendants advocate for narrow EPCA interpretation
Echoing its previous arguments, Denver continued to assert that Energize Denver does not regulate the energy use of EPCA-covered products, and therefore EPCA does not preempt the regulation.
The Colorado state defendants said the plaintiffs' claims rely on a broad interpretation of EPCA preemption followed by the 9th Circuit. They urged the district court to adopt a more limited interpretation, saying the plain language of EPCA and its legislative history support that approach.
That narrower interpretation holds that courts must determine whether a state regulation would undermine the uniform application of DOE's energy efficiency and use standards, they said. They noted that EPCA has evolved since its inception to avoid subjecting manufacturers to a patchwork of conflicting appliance standards across the country.
The US District Court for the Southern District of New York also rejected the 9th Circuit's interpretation, lawyers for both the Denver and Colorado defendants noted.
Colorado argues EPCA does not preempt policy
Colorado's building performance standard, Regulation 28, does not concern energy efficiency and use standards of EPCA-covered products, the defendants said. Instead, it requires property owners to cut emissions tied to building energy consumption, they said. Further, it offers owners multiple compliance pathways, they noted.
Importantly, none of those pathways attempt to establish appliance standards that would conflict with DOE-issued standards, defendants said.
"This optionality is important," they said. "There are a range of actions that owners can take to comply based on what can work best for each individual" building, "most of which do not even implicate" EPCA-covered products, the lawyers said.
Even under the broader interpretation, EPCA would not preempt Regulation 28, defendants said. The regulation is "flexible and open-ended" and — like Energize Denver — allows property owners to request performance target and timeline adjustments for compliance. Further, unlike the Berkeley ordinance, Regulation 28 does not require or prohibit the use of any energy source, they said.
