A proposed statewide energy efficiency regulation that critics say could force large building owners to upgrade their heating and cooling systems could cost them as much as $3.1 billion by 2030, according to the Colorado Department of Health and Environment.
The proposed rule is being challenged by two apartment associations representing more than 350,000 apartments and nearly 900,000 Colorado residents. The associations say the draft regulation violates a host of state and federal laws and must be withdrawn.
The proposed rule is part of Gov. Jared Polis’ Greenhouse Gas Reduction Roadmap. House Bill 21-1286 applies to more than 8,000 buildings in the state with more than 50,000 square feet of floor space and mandates reductions in energy use of 7% by 2026 and 20% by 2030 — below 2021 levels.
At a virtual pre-hearing conference Tuesday before the Colorado Air Quality Control Commission, the Colorado Apartment Association and the Apartment Association of Metro Denver objected to the draft regulation moving forward to an upcoming rule making hearing scheduled for May 16–19.
The associations said in a letter to the commission that the schedule for the rule making is being pushed ahead with unprecedented speed and in violation of state administrative procedure laws.
Environmental and natural resources lawyer Paul Seby, who is one of the lawyers representing the associations, said in an interview with The Denver Gazette in mid-February that the Polis administration is giving the regulation a “classic bum’s rush” through the regulatory doorway.
The commission imposed a compressed schedule that pushes the rule making forward over the span of just two months.
Seby said he’s never seen a rule being “rammed through” the process this quickly.
Despite the bill being enacted June 24, 2021, and despite the state agencies involved knowing the deadlines, the Colorado Department of Health and Environment, through the Air Pollution Control Division, did not produce a final draft of the regulation for review by the public and affected building owners until March 10, 2023, said Seby.
Moreover, said the letter to the commission, the regulation is filled with “to be determined” criteria as to precisely what energy reductions are required for more than 86 different types of buildings and uses listed in the regulation.
“Proposing a rule in which the compliance obligations are 'TBD' makes a mockery of due process,” according to the letter.
The associations allege this violates state law and argued late changes in a state filing on March 10, 2023, denied them adequate time to prepare pre-hearing statements and violated the associations’ due process rights.
According to the letter, the Federal Energy Policy and Conservation Act states that state regulations concerning the energy efficiency or energy use of products for which the federal government has set a standard are not enforceable. The associations said that includes heating and air conditioning equipment.
Also, according to the letter, the proposed rule didn’t consider or quantify with any precision what the actual rate of increases in electrical and natural gas bills, or in power plant emissions, would be due to a large but unquantified increase in electrical demand, something the associations say must be assessed before the commission can say the rule is justified.
“CDPHE has not provided sufficient and necessary data and analysis, including assumptions, for the CAA and AAMD (or any interested party) to properly assess and verify the conclusions of the Initial EIA,” said the associations' letter.
Until that information is provided, parties to the proceeding are unable to “meaningfully comment on whether the costs or the benefits of the Proposed Regulation 28 are accurate nor whether the regulation is justified,” the letter states.
The associations say the state has also failed to evaluate the adverse impacts the rule will have on citizens and businesses in Colorado; has vastly understated the costs and overstated savings benefits and has not based its evaluation on facts and conditions unique to Colorado.
“The Air Pollution Control Division is reviewing prehearing statements,“ said Kate Malloy, spokesperson for the division. “We will address issues raised by parties in our response statement and throughout the rule making proceedings.”
