The downtown Denver skyline on July 3, 2023. (Kathryn Scott/Special to The Denver Post)
Five months after throwing out a lawsuit that apartment and hotel groups hoped would stop new building energy standards from taking effect, a Denver judge has granted a mulligan.
U.S. District Judge Regina Rodriguez ruled Aug. 21 that industry organizations can file a new lawsuit now that they have shown their members are being harmed by the rules.
“Certain emissions reduction deadlines are as soon as 2026,” she noted. “With the final quarter of 2025 fast approaching, the plaintiffs’ members’ injuries are certainly impending.”
In 2024, the Colorado Apartment Association, Apartment Association of Metro Denver and two other such groups sued the city and state. They argued that the new regulations were illegal because only the federal government can regulate the energy efficiency of home appliances, such as stoves, air conditioners, water heaters, furnaces, and washers and dryers.
Their argument was indirect. While conceding that Energize Denver and Regulation 28, as the state law is known, do not regulate appliances, the landlords argued they effectively do because the only way to comply with the new rules is to replace the appliances in their buildings with products that exceed the U.S. Department of Energy’s efficiency standards.
In late March, Rodriguez dismissed the case, finding that energy regulations do not amount to home appliance regulations. She also determined that the apartment and hospitality groups lacked standing to file a lawsuit because they had not been harmed by rules that have not taken effect.
That has since changed. In an amended complaint, the groups say their members have paid for energy audits as a result of the pending rules and those audits show that some buildings will require millions of dollars in upgrades. The harm is no longer hypothetical, they say.
The Sheraton Denver Downtown Hotel, the city’s largest hotel, estimates it will need to spend $23.3 million replacing pipes and heat pumps. That cost does not account for revenue lost during construction.
“These government regulations and resulting anticipated costs were not anticipated as a part of Eagle Four’s investment in the Sheraton Downtown,” Kory Kramer, a partner at Eagle Four Partners, said in an affidavit attached to the lawsuit. Eagle Four bought the Sheraton in 2018.
The Belmont Buckingham apartment building in Capitol Hill will need $540,000 in new boilers and more than $1 million in total upgrades, according to an affidavit from its owner, and the 1300 Apartments in Congress Park will need to spend $440,000, apartment manager Cornerstone says. At least three other apartment buildings will need seven-figure upgrades, their owners say.
The Hotel Clio in Cherry Creek expects to spend $250,000 on new HVAC and the Courtyard Denver Downtown will need $300,000, according to owner DiamondRock Hospitality. The Hotel Teatro estimates $360,000 in improvements and the Curtis Hotel expects to pay $692,000.
“These costs do not include other design challenges, including whether there is sufficient electrical infrastructure to run the new equipment,” according to an affidavit from Steve Fletcher, whose company owns a warehouse at 4010 Holly St. that will require $260,000.
Both the city of Denver and state of Colorado have adamantly defended the legality of their regulations, and Rodriguez’s decision last week to allow a new lawsuit does not mean she will side with the industry groups. In fact, she cautioned the plaintiffs that she “has concerns” with their lack of evidence that buildings will soon require unusually efficient appliances.
“That said, the court does not see it appropriate to reject the (lawsuit) at this early stage and will allow … for their claims to be decided on the merits,” the federal judge wrote Aug. 21.
The downtown Denver skyline on July 3, 2023. (Kathryn Scott/Special to The Denver Post)
Five months after throwing out a lawsuit that apartment and hotel groups hoped would stop new building energy standards from taking effect, a Denver judge has granted a mulligan.
U.S. District Judge Regina Rodriguez ruled Aug. 21 that industry organizations can file a new lawsuit now that they have shown their members are being harmed by the rules.
“Certain emissions reduction deadlines are as soon as 2026,” she noted. “With the final quarter of 2025 fast approaching, the plaintiffs’ members’ injuries are certainly impending.”
In 2024, the Colorado Apartment Association, Apartment Association of Metro Denver and two other such groups sued the city and state. They argued that the new regulations were illegal because only the federal government can regulate the energy efficiency of home appliances, such as stoves, air conditioners, water heaters, furnaces, and washers and dryers.
Their argument was indirect. While conceding that Energize Denver and Regulation 28, as the state law is known, do not regulate appliances, the landlords argued they effectively do because the only way to comply with the new rules is to replace the appliances in their buildings with products that exceed the U.S. Department of Energy’s efficiency standards.
In late March, Rodriguez dismissed the case, finding that energy regulations do not amount to home appliance regulations. She also determined that the apartment and hospitality groups lacked standing to file a lawsuit because they had not been harmed by rules that have not taken effect.
That has since changed. In an amended complaint, the groups say their members have paid for energy audits as a result of the pending rules and those audits show that some buildings will require millions of dollars in upgrades. The harm is no longer hypothetical, they say.
The Sheraton Denver Downtown Hotel, the city’s largest hotel, estimates it will need to spend $23.3 million replacing pipes and heat pumps. That cost does not account for revenue lost during construction.
“These government regulations and resulting anticipated costs were not anticipated as a part of Eagle Four’s investment in the Sheraton Downtown,” Kory Kramer, a partner at Eagle Four Partners, said in an affidavit attached to the lawsuit. Eagle Four bought the Sheraton in 2018.
The Belmont Buckingham apartment building in Capitol Hill will need $540,000 in new boilers and more than $1 million in total upgrades, according to an affidavit from its owner, and the 1300 Apartments in Congress Park will need to spend $440,000, apartment manager Cornerstone says. At least three other apartment buildings will need seven-figure upgrades, their owners say.
The Hotel Clio in Cherry Creek expects to spend $250,000 on new HVAC and the Courtyard Denver Downtown will need $300,000, according to owner DiamondRock Hospitality. The Hotel Teatro estimates $360,000 in improvements and the Curtis Hotel expects to pay $692,000.
“These costs do not include other design challenges, including whether there is sufficient electrical infrastructure to run the new equipment,” according to an affidavit from Steve Fletcher, whose company owns a warehouse at 4010 Holly St. that will require $260,000.
Both the city of Denver and state of Colorado have adamantly defended the legality of their regulations, and Rodriguez’s decision last week to allow a new lawsuit does not mean she will side with the industry groups. In fact, she cautioned the plaintiffs that she “has concerns” with their lack of evidence that buildings will soon require unusually efficient appliances.
“That said, the court does not see it appropriate to reject the (lawsuit) at this early stage and will allow … for their claims to be decided on the merits,” the federal judge wrote Aug. 21.
