Legal Bulletins

As readers of our earlier bulletins know, the Maryland Department of the Environment (MDE) previously published draft regulations requiring owners of covered buildings (35,000 square feet and larger) to (1) reduce greenhouse gas emissions from on-site use of fossil fuels and to (2) meet extremely stringent building efficiency standards (called energy use intensity (EUI) standards). 

During the 2024 legislative session, language inserted by amendment in the state budget required MDE to delay the finalization of the EUI standards until bench marking data for current building performance was obtained.

Today, on July 15, 2024, MDE withdrew the previous regulations and re-proposed the draft Building Energy Performance Standard (BEPS) regulations. As indicated by MDE, the revised regulation proposes to keep unchanged the draft requirements for net greenhouse gas reductions but make the following changes relevant to the EUI standards:

• Change the start of annual reporting of EUI and emission data from December 2023 to June 1, 2025. 
• MDE has stated that the June 1, 2025 report should include data for all of calendar year 2024.
• Remove, for now, the proposed site EUI standards with an indication that final standards will be proposed in 2027; and 
• Modify the agricultural building definition, manufacturing building definition, exemption procedure, public infrastructure property types, and the consumer price index for clarification.

The definition of an agricultural building now references “livestock” and defines an agricultural building as follows: A structure that is used primarily to cultivate, manufacture, process, or produce agricultural crops, raw materials, products, livestock, or commodities. “Agricultural building” includes a greenhouse.

The definition of manufacturing building now reads as follows: A building involved in the process of substantially transforming, or a substantial step in the process of substantially transforming, tangible personal property into a new and different article of tangible personal property by the use of labor or machinery, or otherwise designated as a manufacturing building by the Department. 

Both agricultural buildings and manufacturing buildings are exempt from the BEPS regulations.

Note that the expected EUI provisions will apply even to buildings that do not use fossil fuels on site. The draft standards were designed to force buildings to use less energy through measures such as replacements of HVAC systems, improvements to building insulation and eliminating any on-site activities that consume energy.

MDE guidance indicates that new EUI standards will be created in 2027, but the financial penalties for not meeting these eventual standards are not yet determined. MDE also indicated that they will be hosting several public outreach sessions in August 2024.

While EUI standards have been temporarily removed from the regulations, building owners will still have to meet the prescribed net direct emissions standards outlined in the BEPS regulations and will need to benchmark their buildings in 2024, and submit the first report in June 2025. This June 2025 bench marking report should include data from the entire calendar year of 2024.

Public Comments on the revised BEPS regulations are due on Thursday, July 25, 2024. MDE plans to hold a public hearing in October 2024 to discuss these regulations. We encourage owners of impacted buildings to review the potential impact of the draft regulations on their buildings and make their opinions known. Many owners will want to benchmark their buildings now to access the potential future impacts.

More details on the regulations can be found in our earlier bulletin or by contacting:

Max Cooke
410-576-4141 • mcooke@gfrlaw.com

Michael Powell
410-576-4175 • mpowell@gfrlaw.com