Key Takeaways
- What Happened: Maryland's Building Energy Performance Standards (BEPS) requires owners of large commercial, industrial, and multifamily buildings to annually report their energy use and greenhouse gas (GHG) emissions as they work toward achieving net-zero emissions by 2040. On April 7, 2025, the Maryland General Assembly passed HB49, which amends the BEPS program. Once the Governor signs the bill into law or it's otherwise enacted, these statutory changes will take effect on October 1, 2025, and will require the Maryland Department of the Environment (MDE) to update its BEPS regulations. Notably, MDE has not yet indicated any alteration to the initial September 1, 2025 deadline for BEPS reporting under the current regulations, although MDE may issue further compliance advisories in the coming weeks. The new legislation also does not directly alter the procedure for most impacted building owners to seek exemptions from the BEPS program.
- Who's Impacted: The BEPS program impacts owners of buildings over 35,000 square feet located in the state of Maryland. MDE has taken the position that owners must apply for an exemption even if their building does not meet the definition of a "Covered Building" under the regulations.
- What You Need to Do: Those impacted should begin analyzing the square footage of buildings on their properties and seek counsel for benchmark reporting or exemption applications.Benchmark data submitted before September 1, 2025, will be considered timely.
Background on the Building Energy Performance Standards
After the Maryland General Assembly passed the Climate Solutions Now Act of 2022 (CSNA), MDE engaged in a series of rulemakings; the current regulations were enacted in December 2024.
The goal of BEPS is for covered buildings to achieve "net-zero direct greenhouse gas emissions by 2040." This will divert the typical use of fossil fuels for various facets of building upkeep to more efficient forms of electrification.
Under the BEPS program, buildings that are 35,000 square feet or larger (excluding parking garages) are "Covered Buildings." Owners of these "Covered Buildings" must report their energy use and emissions annually. The first step of the BEPS process will begin this year with annual benchmarking. "Benchmarking" means that building owners must measure and report their energy consumption and emissions data for each Covered Building for the entire previous calendar year. This reporting must be completed through the ENERGY STAR Portfolio Manager every year by June 1. This year, the Department will accept and consider "timely" all initial benchmarking reports until September 1, 2025.
Covered Buildings, Excluded Uses, and Other Exemptions
Buildings over 35,000 square feet are potentially subject to BEPS, although certain buildings are excluded from the regulations. Excluded building categories are:
- Historic buildings (designated as historic buildings by law)
- Elementary and Secondary Schools
- Manufacturing Buildings
- Agricultural Buildings
- Hospitals (under the April 2025 amendments only)
The regulations also provide for other possible exemptions, including financial distress, unoccupied or demolished buildings, and affordable housing. Finally, certain energy usage—such as electricity for charging electric vehicles and for food service facilities—are also excluded.
Importantly, exemptions do not apply automatically. MDE has taken the position that owners of buildings over 35,000 square feet must apply through the BEPS Portal to apply for an exemption, even if their building falls into one of the excluded categories (e.g., a manufacturing building).
Campus Compliance
The BEPS regulations also provide for a campus compliance option, which allows multiple buildings on a larger campus to be treated as a single entity for compliance purposes. This means that the campus as a whole must meet the energy performance standards, rather than each individual building. While separately metered excluded buildings (e.g., manufacturing) may be omitted from the campus-level calculations, smaller buildings (i.e., those less than 35,000 square feet) must be included. The building owner must elect the campus compliance pathway with a special form.
Looking Forward
During the 2025 legislative session, the Maryland General Assembly passed a number of modifications to the statutory BEPS program, which are now awaiting the Governor's signature. Among other things, the recent amendments clarified the definition of manufacturing, added hospitals to the set of excluded buildings, created a crediting system for onsite generation of renewable energy, expanded the exclusion for backup generators, and created various waivers (allowing continued use of existing equipment through its useful life or for impracticality or infeasibility).
In addition, the new BEPS law directs MDE to conduct a cost-benefit analysis of the standards and include a recommendation for calculating an alternative compliance fee based on a "simple payback period" that considers any financial incentives given to the building owner.
Non-Compliance Penalties
MDE is responsible for enforcing the BEPS requirements. Benchmarking requirements are enforceable under MD Environment Code §2-610 and 2-610.1. Every day a violation continues is considered a separate violation, meaning noncompliance can be costly.
Immediate Action Items for Building Owners in Maryland
All owners of buildings that are 35,000 square feet or larger in the state of Maryland should begin the process of reporting their buildings or applying for exemptions. Beveridge & Diamond regularly assists building and property owners in exploring exemption possibilities and guiding them through the reporting process under similar state (e.g., Washington) or local (e.g., New York City and Washington, D.C.) laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
