Maryland’s Building Energy Performance Standards survived a federal lawsuit and a state repeal bill this spring, leaving owners of commercial and multifamily buildings 35,000 square feet and larger staring down a $230-per-ton compliance fee that begins to bite in 2030. U.S. District Judge Deborah Boardman dismissed a preemption challenge on March 31, 2026, and a separate House effort to scrap the program died in committee the same month. Together the two decisions close the most recent avenues of relief and put the program’s full weight back on building owners.
How Maryland’s BEPS Reached Buildings Over 35,000 Square Feet
Maryland’s BEPS program was created by the Climate Solutions Now Act of 2022 and is enforced by the Maryland Department of the Environment. The act directed the agency to write greenhouse-gas limits for large buildings and to push them toward $230 per metric ton-of-emissions compliance, with electrified retrofits as the underlying requirement.
Under the regulation, a “covered building” is any existing commercial, multifamily, or state-owned building over 35,000 square feet, not counting parking garage area. Those buildings must cut net direct greenhouse-gas emissions in phases: 20% by 2030, 60% by 2035, and net-zero direct emissions by 2040. Maryland published the proposed rules in December 2023, issued a revised draft in July 2024, and adopted the regulation in late 2024.
The regulations took effect December 23, 2024. Energy benchmarking began in 2025, with the first emissions compliance year arriving in 2030. Building owners who miss the interim targets face the alternative compliance fee for every excess metric ton of carbon dioxide.
The $230-a-Ton Compliance Fee and What It Costs Owners
The alternative compliance fee is the legal escape hatch for owners who cannot meet the targets on time. Maryland set it at $230 per metric ton of excess CO2-equivalent emissions, denominated in 2020 dollars and adjusted for inflation in 2030, with an automatic $4-per-ton increase each following year. The fee is paid in lieu of cutting emissions, and it resets every year a building is out of compliance.
Buildings 35,000 square feet and larger cover most apartment blocks of any size, full-scale office towers, hotels, and big-box retail. State-owned buildings of the same size fall under the same rules. Hospitals were exempted in 2025; a small set of other property types, including manufacturing, agricultural, and federal buildings, can apply for relief. Everyone else is on the hook for the 2030 interim cut.
A Washington Times column on the program contrasts the net-zero by 2040 fee with the federal social cost of carbon. The columnist puts Maryland’s fee at $230 per metric ton and the federal estimate at $51 per ton. The comparison is the columnist’s framing, not a regulatory one; either way, the dollar gap between the two figures is the centerpiece of the policy argument against the program.
Testimony to the Maryland General Assembly last year made the cost concrete for one landlord. A realty group operating nearly 2,000 apartments in Baltimore City and Baltimore County told lawmakers that its internal estimate of BEPS compliance ran at least $40,000 per unit. The company said it would have to increase rent by about $400 on every unit to absorb the work.
- Covered-building floor: 35,000 square feet
- First interim target: 20% emissions cut by 2030
- Second interim target: 60% cut by 2035
- Final target: net-zero direct emissions by 2040
- Alternative compliance fee: $230 per metric ton CO2e, rising $4 per ton each year
- Regulations effective: December 23, 2024
Federal Judge Upholds the Standard
A coalition of management companies, utilities, and trade groups sued the Maryland Department of the Environment in January 2025, weeks after the standards were adopted. The plaintiffs were the Maryland Building Industry Association, the Maryland Multi-Housing Association, the Building Owners and Managers Association of Greater Baltimore, Washington Gas, and the management companies of four Montgomery County apartment complexes. They argued the regulation was preempted by the federal Energy Policy and Conservation Act and would hurt business, drive up costs, and worsen the state’s housing shortage.
Judge Boardman granted the state’s motion to dismiss with prejudice on March 31, 2026. Writing that “there are no facts the plaintiffs can allege to establish that EPCA preempts the BEPS,” she found the regulation governs buildings’ emissions, not the appliances inside them, and noted that owners can comply by paying the fee or installing carbon-capture technology without replacing a single gas appliance. She also distinguished the fee from a penalty, calling it “an elective option, a means of complying with the law rather than a punishment for violating it.” the federal ruling upholding the standards is the third district-court win for local building decarbonization rules in a single week.
Washington Gas said it was disappointed and was weighing next steps. “We are concerned that these regulations will limit consumers’ energy options and increase housing and energy costs statewide,” spokesman David Loewenberg wrote. The Building Owners and Managers Association of Greater Baltimore declined to comment. Environmental groups that filed amicus briefs in support of the regulation, including the Sierra Club and the Chesapeake Climate Action Network, celebrated the result.
A Repeal Bill Dies in Committee
House Bill 988, titled “Environment – Building Energy Performance Standards – Repeal,” was introduced by Delegate Wayne Hartman, a Republican, on February 6, 2026, with 29 Republican co-sponsors. A hearing was scheduled in the House Environment and Transportation Committee, then canceled. The bill’s status moved to “died in committee” at 25% progression. The bill’s status in committee leaves Hartman and his co-signers with the option of reintroducing the legislation next session.
A separate bill in the 2025 session went a different direction. House Bill 49, the Maryland Department of the Environment’s own proposal, was the vehicle for trimming the program: it exempted hospitals, exempted emissions from steam sterilization and back-up generators at medical facilities, and reconciled BEPS with Montgomery County’s parallel building rules. Lawmakers passed it on April 7, 2025. The pattern across the two sessions is the same shape: when legislators tried to weaken BEPS in 2025, they narrowed it; when they tried to repeal it in 2026, it went nowhere.
Hospitals Won an Exemption. Landlords Did Not.
The hospital carve-out came in HB49 in April 2025. The Maryland Hospital Association told lawmakers that intensive care units, emergency rooms, and operating rooms require continuous power, and that patient safety requires a special exemption. Hospitals were made eligible to apply for a total exemption from BEPS requirements, and emissions tied to steam sterilization and back-up generators at health-care facilities, nursing homes, and laboratories were excluded under the same bill.
“BEPS was trimmed, not cut down,” said Jamie DeMarco, a lobbyist for the Chesapeake Climate Action Network, after the session ended. On the hospital carve-out itself, DeMarco was blunt: “We think it was unnecessary. No other BEPS in the country exempts hospitals. But that’s what happened.” The bill also clarified that buildings in Montgomery County, where a separate BEPS program with earlier deadlines is already in force, can be waived from the state rules once the county program is certified.
Residential and commercial landlords were not offered a parallel exit. The Maryland Multi-Housing Association, a plaintiff in the dismissed federal lawsuit, continues to operate under the standard. The 2025 trimming of the rules cut hospitals out of BEPS while keeping apartment buildings and office towers inside it.
Why Critics Say Maryland’s Grid Undercuts the Law
The structural objection to BEPS, voiced most often by Republican lawmakers and gas utilities, is that the law pushes buildings off natural gas and onto electricity at the same time that a large share of Maryland’s imported grid power still comes from coal-fired plants in West Virginia and Pennsylvania. The argument is that the emissions math does not improve by switching fuels, and that statewide electric demand will rise faster than the grid can absorb.
If the BEP standards are implemented as is, it will increase electric demand and exacerbate the ongoing energy crisis felt by all Marylanders.
State Sen. Johnny Mautz, a Republican representing District 37 in Caroline, Dorchester, Talbot, and Wicomico counties on the Eastern Shore, made that case to the Baltimore Sun in October. Mautz sits on the Senate Finance Committee.
The Washington Times column goes further, arguing that buildings already running on natural gas are effectively cutting their greenhouse-gas emissions by about 18% compared with what they would emit drawing the same power from the grid. That figure is the columnist’s framing, drawn from the same op-ed; it has not been independently verified by the Maryland Department of the Environment. Either way, the policy argument from critics is the same: forcing a faster switch to electricity in a coal-leveraged grid is, in their telling, an exercise in shifting emissions rather than reducing them.
Frequently Asked Questions
When did Maryland’s Building Energy Performance Standards take effect?
The regulations took effect December 23, 2024. Energy benchmarking for covered buildings began in 2025, and the first performance standards for direct greenhouse-gas emissions begin to apply in 2030.
What buildings does BEPS cover?
BEPS covers most existing commercial, multifamily, and state-owned buildings of 35,000 square feet or more in Maryland, excluding parking garage area. Hospitals are exempted under a 2025 amendment; manufacturing, agricultural, federal, and certain historic buildings can apply for separate relief.
What are the emissions targets and on what timeline?
Covered buildings must reduce net direct greenhouse-gas emissions by 20% by 2030, by 60% by 2035, and to net-zero direct emissions by 2040, measured against a 2025 baseline.
How much is the alternative compliance fee?
The fee is $230 per metric ton of excess CO2-equivalent emissions, expressed in 2020 dollars and adjusted for inflation in 2030. It increases by $4 per metric ton each following year for as long as a building remains out of compliance.
Can a building owner avoid the standards altogether?
Only through narrow exemptions: financial distress, vacancy for a full calendar year, demolition, the hospital carve-out, or the parallel Montgomery County program for buildings inside that county. Otherwise, covered buildings must hit the targets, pay the fee, or buy offsets.
