Oil & Gas News

Denver Building Owners Sue Over Costly Green Regulations

Denver, Lawsuit, Natural Gas

Recent legal actions have arisen in Denver and Colorado as building owners, hoteliers, and real estate developers oppose new environmental mandates they argue are overly costly and conflict with existing federal standards. A coalition including the Colorado Apartment Association, the Apartment Association of Metro Denver, the Colorado Hotel and Lodging Association, and NAIOP, which represents commercial real estate developers, has filed a lawsuit challenging these mandates. The legal complaint, submitted to the U.S. District Court in Denver, contends that the city and state’s environmental regulations preempt federal rules on the performance of heating, cooling, and other building systems.

The plaintiffs argue that these green-energy rules will necessitate a shift from natural gas to electric heating and cooling systems, imposing heavy financial burdens on property owners. The new mandates are part of broader efforts by Colorado and Denver to curb greenhouse gas emissions, which include carbon dioxide, methane, and nitrogen oxide. These gases trap heat in the atmosphere, contributing to global warming and deteriorating air quality, which impacts human health. The state’s Front Range, in particular, has been designated a severe violator of federal air quality standards.

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Specifically, the regulations require large buildings, those over 25,000 square feet in Denver and 50,000 square feet statewide, to significantly reduce their greenhouse gas emissions in the coming years. The city’s Energize Denver plan mandates a 100% reduction in greenhouse emissions by 2040 for all large buildings. Similarly, state regulations demand a 6% reduction by 2026 and 20% by 2030. These rules could affect approximately 3,000 buildings in Denver and 8,000 across Colorado.

The lawsuit underscores the practical implications of these regulations. Building owners would initially be able to meet requirements through less costly updates like adding insulation, installing LED lighting, and replacing windows. However, as mandates tighten, more substantial changes would be necessary, such as replacing natural gas systems with electric alternatives—a transition that could entail significant retrofitting costs.

According to Andrew Hamrick, general counsel and senior vice president for the apartment associations, such upgrades could lead to higher rents and utility bills, further burdening tenants. Hamrick asserts that the rules effectively ban natural gas appliances, which he sees as an unbalanced approach to a relatively minor source of emissions.

Mineral RightsIn their court filings, various property managers and hotel operators outline the financial impact of compliance. For example, Anthony Dunn, general manager of the Downtown Denver Sheraton, estimates that conducting an energy audit could cost between $100,000 and $200,000 per building, depending on size and complexity. Meanwhile, Jack Damioli, president and CEO of the Broadmoor in Colorado Springs, notes that even annual benchmarking reports could cost up to $10,000, with detailed energy audits reaching $200,000.

The legal challenge also highlights a broader debate about the most effective and equitable ways to address environmental concerns. While proponents of the regulations argue that they are necessary steps toward reducing the environmental footprint of urban centers, critics contend they impose undue financial strain on businesses and residents, possibly without delivering proportional environmental benefits.

The defendants in the lawsuit, including the Colorado Department of Public Health and Environment and its executive director, the Colorado Energy Office, the Denver Office of Climate Action, Sustainability and Resiliency, and city and state leadership, have not commented on the litigation, adhering to policies restricting discussion of ongoing legal matters.

As the case progresses, it will likely ignite further discussions on the balance between environmental stewardship and economic viability, a crucial issue as cities and states across the U.S. grapple with the complexities of implementing sustainable practices in the face of climate change.

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