Understanding Colorado’s Regulation 28: Building Benchmarking and Performance Standards

Colorado’s Push for Sustainability

Colorado’s commitment to reducing greenhouse gas emissions and promoting energy efficiency has culminated in the enactment of Regulation 28, officially titled “Building Benchmarking and Performance Standards.” This regulation is a key component of the state’s broader efforts to address climate change, aiming to significantly reduce energy consumption in commercial buildings. For property owners, this regulation represents both a challenge and an opportunity—one that requires careful navigation to ensure compliance and avoid potential penalties.

What is Regulation 28?

Regulation 28 mandates that certain large commercial, multifamily residential, and public buildings in Colorado must benchmark their energy use and meet specific performance standards. The regulation primarily targets buildings over 50,000 square feet, requiring owners to annually report their energy usage through the EPA’s ENERGY STAR Portfolio Manager or a similar tool.

The goal is to create a transparent system where energy usage data is collected, analyzed, and, in some cases, publicly disclosed. This data serves as the foundation for setting performance standards that buildings must meet within a defined timeframe. The regulation encourages building owners to improve energy efficiency through retrofits, renewable energy adoption, or other means to meet these benchmarks.

Key Requirements for Commercial Property Owners

1. Types of Properties Covered: Regulation 28 applies to:
   • Commercial Buildings: Office buildings, retail spaces, and other non-residential properties over 50,000 square feet.
   • Multifamily Residential Buildings: Residential properties with more than four units and a total floor area exceeding 50,000 square feet.
   • Public Buildings: Government-owned buildings, including schools, libraries, and other publicly funded facilities.

Certain properties, such as industrial buildings, including manufacturing and agricultural uses, and low-occupancy structures, including single-family homes, duplexes, triplexes, standalone parking garages and airplane hangars, may be exempt from these requirements. Regulation 28 is estimated to impact approximately 8,000 structures throughout Colorado.

1. Annual Benchmarking: Owners of covered buildings must submit their energy usage data each year using a recognized benchmarking tool. The deadlines for reporting are phased in over several years, depending on the size of the building:
   • June 1, 2024: Initial reporting deadline for buildings 100,000 square feet and larger.
   • June 1, 2025: Deadline for buildings between 50,000 and 99,999 square feet.

This phased approach allows property owners time to prepare and implement necessary data tracking systems.

1. Performance Standards Compliance: Buildings are required to meet energy performance targets by specific compliance dates. These targets vary based on the type and current energy use intensity (EUI) of the building. Property owners can meet these targets through energy efficiency improvements, renewable energy integration, or purchasing renewable energy credits (RECs). Compliance deadlines include:
   • December 31, 2026: First major compliance milestone for buildings over 100,000 square feet.
   • December 31, 2027: Compliance deadline for buildings between 50,000 and 99,999 square feet.
2. Penalties for Non-Compliance: Failure to comply with the benchmarking or performance standards can result in significant fines. The regulation is structured to escalate penalties over time for continued non-compliance, making it crucial for property owners to act promptly.
3. Public Disclosure: In some cases, the energy usage data submitted by building owners may be made publicly available. This transparency aims to foster competition and encourage property owners to improve their buildings’ energy performance.

Impact on Commercial Property Owners

For commercial property owners, Regulation 28 brings both immediate and long-term implications. In the short term, owners must invest in systems to accurately track and report energy usage. This may require upgrades to existing infrastructure or the adoption of new technologies.

In the long term, the regulation may necessitate substantial investments in energy efficiency improvements. The upfront costs of compliance on commercial property owners substantial, with the Building Owners and Managers Association (BOMA) estimating costs exceeding $3.1 billion, or an average cost of $387,500 per building.

Pending Litigation and Legal Considerations

As with many regulatory initiatives, Regulation 28 has sparked legal challenges. Some property owners and industry groups argue that the regulation imposes undue financial burdens and overreaches in its enforcement mechanisms. Pending litigation focuses on issues such as the scope of the regulation, the fairness of the penalties, and whether the state has provided adequate support for compliance.

Property owners should closely monitor these legal developments, as the outcomes could impact both the enforcement of Regulation 28 and the strategies required for compliance. Working with legal counsel can help property owners navigate these complexities, ensuring that they are prepared to meet regulatory requirements while protecting their interests.

Conclusion

Colorado’s Regulation 28 represents a significant shift toward sustainable building practices, with wide-reaching implications for commercial property owners. By understanding the regulation’s goals, requirements, and potential impacts, property owners can position themselves to not only comply with the law but also capitalize on the opportunities it presents. As the legal landscape continues to evolve, staying informed and seeking legal advice will be crucial for navigating this new regulatory environment.

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1. Colorado Department of Public Health and Environment. “Building Benchmarking and Performance Standards.” https://energyoffice.colorado.gov/bpc.
2. U.S. Environmental Protection Agency. “ENERGY STAR Portfolio Manager.” https://www.energystar.gov/buildings/benchmark.
3. “Regulation 28 – Building Benchmarking and Performance Standards.” https://drive.google.com/file/d/1XQMJqhS26ddbdbB1WDvbi5rEEK0RmYz9/view .
4. Colorado Apartment Ass’n. et. al. v. Ryan et. al, D. Colo. 1:2024cv01093, https://www.naiop.org/contentassets/20cf4df979554dd481c9e38f08bfda21/coloradocourtfilingreg282024.pdf
5. https://blog.naiop.org/2024/05/national-implications-in-legal-challenge-to-colorados-building-performance-mandates/