To explore a sector undergoing rapid transformation, the 2026 Law Week Colorado Energy and Natural Resources Deep Dive brings together leading voices from across the field:
- Justine Beckstrom, senior counsel, Clark Hill PLC
- David Camp, partner, Senn Fortis LLC
- Scott Clark, member, Clark Hill PLC
- Mimi Larsen, of counsel, Brownstein Hyatt Farber Schreck LLP
- Zach Pilchen, senior counsel, Holland & Knight LLP
- Gabe Racz, member, Clark Hill PLC
- Julia Rhine, shareholder, Brownstein Hyatt Farber Schreck LLP
- John Watson, of counsel, Spencer Fane LLP
The result is a portrait of an expanding legal framework shaping how energy projects are developed, financed and regulated in Colorado.
LWC: What are the most significant legal and regulatory issues facing Colorado’s energy and natural resources sector right now?
Racz: Change, uncertainty and drought. Significant, impactful policy change at both the federal and state levels has been an accelerating trend over the last 10 years, making it more difficult to project the regulatory environment for significant resources projects.
Watson: Colorado’s energy and natural resources sector is currently navigating a dense and evolving web of legal and regulatory challenges, with climate policy at the center. The state continues to tighten air emissions and methane regulations for oil and gas operators, while also implementing new requirements such as greenhouse gas intensity tracking and stricter disclosure obligations.
At the same time, water use has become a major regulatory issue, highlighted by the state’s forthcoming mandate requiring significant recycling of water used in hydraulic fracturing.
Overlaying these developments is a broader structural shift driven by policies aimed at decarbonizing the economy, including the regulation of natural gas utilities through mechanisms like the Clean Heat Plan. These changes are increasing compliance burdens, raising enforcement risks and creating new grounds for administrative and judicial challenges.
Pilchen: Three structural forces are converging to reshape Colorado’s energy and natural resources legal landscape.
The first is a shift in federal regulatory posture. The Trump administration has pursued what it calls the biggest deregulatory agenda in U.S. history. Congress has moved in a similar direction. The net effect is that federal environmental regulation is becoming less certain as a compliance baseline.
The second is the federal judiciary. Loper Bright ended Chevron deference in June 2024. Combined with West Virginia v. EPA’s major questions doctrine and other developments in administrative law, federal courts are redrawing the boundaries of agency authority. These doctrinal shifts create new uncertainties for existing federal programs, litigation risk for future actions and overall restrict the room that federal agencies have to regulate.
The third is state acceleration. Colorado’s Air Quality Control Commission adopted first-in-the-nation GHG emissions caps for midstream fuel combustion equipment under Regulation Number 7, which are essentially company-specific caps that begin ratcheting down the GHG intensity of midstream companies’ asset portfolios in 2030, plus a credit trading program launching in 2028.
What makes this moment distinctive is the interaction among these forces. As the federal government steps back and courts constrain federal agency discretion, states like Colorado are stepping forward with increasingly sophisticated regulatory programs.
Camp: The most significant legal issue facing Colorado’s energy and natural resources sector right now is HB19-1261, which requires reducing greenhouse gas emissions by 90% to 100% by 2050 and 50% by 2030. The most notable challenge is that federal regulations and incentives change significantly with each new administration, which can leave a state like Colorado at a disadvantage to less restrictive states that may have a more attractive business environment during periods of lax federal regulation. This creates pressure to roll back rules or delay compliance, particularly during an economic downturn, which in turn creates problems for businesses because they lack certainty around environmental regulations.
Larsen: One of the most significant issues is the cumulative effect of layered regulatory changes across air, water, land use and climate policy. Recent rulemakings — including the Water Quality Control Division’s adoption of the new Regulation 87 (5 CCR 1002-87) water rules — reflect a broader shift toward more prescriptive standards, expanded permitting requirements and increased compliance monitoring. While many of these rules advance important environmental objectives, they also add complexity, cost and uncertainty for regulated entities.
Another major issue is implementation: Agencies are translating ambitious statutory directives into enforceable regulations at a rapid pace. We saw this with the oil and gas industry and SB19-181. And you see it consistently at the Air Quality Control Commission, which has been in constant rulemakings over the last several years. These efforts raise concerns about permitting timelines, administrative capacity and the risk of uneven application.
Business and industry groups have publicly expressed concern that the cumulative regulatory burden is increasing operating costs and influencing decisions about whether to invest or remain in the state. How regulators manage that tension will have real implications for economic competitiveness.
Clark: PFAS, also known as forever chemicals, are a never-ending source of concern for water resources. The number of distinct chemicals that fall into this category is in the thousands and keeps growing. Currently, only a few are directly regulated with respect to water supplies, and some are subject to regulatory standards that are below levels that can be detected by current methods. We still are in the early stages of understanding these chemicals and their impact on our water supplies, soil, food supply and air.
LWC: How would you describe the current balance in Colorado between advancing clean energy goals and maintaining affordability and reliability for consumers?
Larsen: Colorado has clearly prioritized clean energy and climate policy, and that direction has strong statutory backing. The challenge now is ensuring that implementation maintains reliability and affordability, particularly as the state requires utilities and other regulated entities to make significant capital investments in new technologies, infrastructure and compliance systems.
From a regulatory perspective, affordability concerns are becoming more prominent. Rate impacts, cost recovery and system reliability are recurring issues in Colorado Public Utilities Commission proceedings, especially as utilities seek approval for large, multiyear investment plans tied to clean energy mandates. Business groups have cautioned that higher energy and compliance costs ultimately flow through to consumers and employers, and those concerns are increasingly part of the public conversation.
While data centers are often singled out as a cause of rising electric rates, Colorado regulators have identified multiple drivers of load growth.
Achieving balance will require careful pacing, transparent cost analysis and continued attention to grid reliability as legacy resources retire.
Pilchen: Colorado is in the midst of a recalibration. The state set some of the nation’s most aggressive greenhouse gas reduction targets, including net zero by 2050. Those targets drove a comprehensive regulatory buildout. But Colorado fell short of its 2025 interim target, and the gap between ambition and implementation is surfacing in concrete ways.
There are a number of signals not of a retreat, but a course adjustment, including pending legislation that would extend compliance deadlines, reduction targets being moderated in rulemakings and significant utility rate increase requests. I would say these are signs of a policy framework starting to mature past big-picture goals and getting into the harder work of implementation, where you have to start considering all these factors like affordability, grid reliability and decarbonization simultaneously.
The big wild card here, of course, is demand growth, particularly the speed at which artificial intelligence and data center energy requirements are building out, adding load pressure at the same time Colorado policymakers are pursuing an energy transition.
Camp: There is always a trade-off between advancing clean energy goals and maintaining affordability and reliability for consumers. One of the reasons Colorado is a leader in this area is that its citizens have a strong appreciation for the outdoors, and the state’s tourism industry relies heavily on limiting climate change. Without snow, the winter sports industry would suffer. Without the water that comes from snowpack, the agricultural sector would struggle, and the cost of living would increase as water becomes scarcer and more expensive.
The challenge is that these are long-term issues with complex cause-and-effect dynamics. While investment in green energy may deliver significant long-term benefits, in the short term, consumers often bear higher costs, which makes these kinds of investments more difficult for politicians to advocate for.
Beckstrom: Colorado’s energy transition will require reconciling regulatory hurdles to mining and the demand for metals and minerals critical for wind, solar, electric vehicles and nuclear energy.
Many of the metals and minerals used in these technologies and their infrastructure occur in Colorado, but the state’s complex and rigid environmental permitting regulations have delayed, and even deterred, development of these resources. Colorado’s shift away from general to individual discharge permits for stormwater discharges for mining and exploration has increased the permitting timeframes by several years. This, along with the inclusion of conditions above and beyond what other states and EPA require, discourages development in Colorado.
In addition, nuclear energy is part of Colorado’s clean energy portfolio, but local efforts to adopt regulations restricting mining in areas of the state could limit access to Colorado’s world-class uranium deposits.
Clark: Colorado has done a good job of advancing clean energy as statewide policy and local governments have recognized the economic benefits of clean energy projects in their communities. But these are difficult times. We still are highly dependent on oil and gas. At the same time, we need to severely reduce carbon emissions. Clean sources of energy have become very economical, but switching over facilities, equipment and vehicles to run on electricity instead of oil and gas is expensive. On top of all that, the current federal administration is openly hostile to clean energy and actively attempting to thwart its advancement. It is apt to strike anywhere and at any time, creating great uncertainty for clean energy projects and slowing planned and early-stage projects.
Watson: The balance between advancing clean energy goals and maintaining affordability and reliability is still very much in flux. Colorado has set ambitious statutory targets for reducing greenhouse gas emissions and transitioning to clean electricity, but the costs of achieving those goals — particularly infrastructure investments, grid upgrades and early retirement of fossil fuel assets — are putting upward pressure on utility rates. Additionally, reliability concerns are becoming more prominent as the resource mix changes and the electric grid becomes more dependent on renewables, storage and transmission that are still being built out. As a result, much of the real balance occurs not in legislation, but in regulatory proceedings, where stakeholders are actively litigating how costs should be allocated and how reliability standards should be maintained.
LWC: What recent legislative or regulatory developments are having the biggest impact on your clients or practice?
Racz: In 2023, the U.S. Supreme Court decision in Sackett v. EPA significantly changed the scope of the Clean Water Act. Since that date, the state of Colorado has acted to address the withdrawal of federal programs. The implementation is still in its early days.
Rhine: There is always a bit of lag time between the adoption of rules and seeing how they are implemented. For Colorado oil and gas operators, the 2024 Colorado Energy and Carbon Management Commission’s Cumulative Impacts Analysis and Enhanced Systems and Practices Rulemaking is just starting to be the applicable framework for permitting decisions. Operators are navigating new concepts such as the Area of Evaluation for cumulative impacts analyses and the content of a Practicability Assessment where certain operations are impracticable. These are big issues that can have dispositive outcomes on permit applications and, while I appreciate that no two permit applications are alike, outcomes seem to have little predictive value, even after adjusting for the permit application specifics.
Watson: At the federal level, in particular, it’s the negative impacts of the regulatory flip-flop. The Obama administration does this (e.g., Clean Power Plan, wetland regulation); the first Trump administration does that (abolished those regulations); the Biden administration brings those programs back; now the second Trump administration puts the brakes on those programs.
Camp: The biggest impact often comes from regulations.
For developers, changing building performance standards affect upfront construction costs. While more efficient buildings and construction methods may reduce operating expenses, those costs are often borne by tenants in commercial settings, meaning developers may not realize significant economic benefit from the higher initial investment.
For building operators, greenhouse gas reporting requirements are in the process of being implemented. This represents an entirely new layer of compliance that building owners have not previously had to manage, and many industry insiders view it as a precursor to future taxation or regulation tied to emissions. This shift is already influencing how owners evaluate the value of their properties.
At Senn Fortis, we have seen some clients walk away from new developments out of concern that strict greenhouse gas limits could push them toward untested or uncertain energy sources.
LWC: Where are you seeing the greatest tension between state policy and federal energy priorities, and how is that playing out legally?
Watson: Tension between state and federal energy priorities is becoming more pronounced, and it’s starting to show up in litigation and regulatory disputes. Colorado’s push toward renewable energy and emissions reductions can conflict with federal priorities that emphasize energy affordability, domestic production or grid reliability. That creates legal friction in areas like Clean Air Act compliance and energy market regulation. For clients, it means navigating two sets of priorities that don’t always align and being prepared to defend their positions in multiple forums, including federal and state courts.
Pilchen: Having spent most of my career at EPA, I’ve seen the federal-state dynamic from inside a federal agency. There’s always a push and pull: EPA sets minimum standards; states are free to exceed them. But vehicles are the exception. The Clean Air Act preempts most states from independently regulating vehicle emissions.
That makes the vehicle space the sharpest point of tension right now. There’s an exception for California if it can meet certain requirements, and then states like Colorado are allowed to adopt California’s standards. Those include, for example, parts of California’s Advanced Clean Cars II, which on paper requires a significant portion of new passenger vehicles sold in California to be electric. But Congress used the Congressional Review Act to repeal several California rules, and EPA is rescinding its own vehicle GHG standards as part of the Endangerment Finding repeal.
This matters acutely for Colorado because the Denver Metro and North Front Range region is in nonattainment for ozone, which means levels of ground-level ozone (smog) exceed federal health standards. Vehicles are a significant part of that problem, but outside of that Section 177 process, states have very few legal tools to address vehicle emissions on their own because of that Clean Air Act preemption. So when the federal government pulls back in this impactful environmental area where the federal government has given itself near-exclusive authority, states like Colorado are left trying to wring additional reductions out of the stationary sources they can control. That makes programs like Regulation Number 7 even more consequential.
Camp: Our clients tend to view government support for energy efficiency and green building as a single line item in their budgets. In practice, they understand that some funding comes from the state and some from the federal government, but what ultimately matters is the total value of that combined support.
Even though the state of Colorado has remained relatively consistent in its environmental requirements, shifts at the federal level can have a significant impact. In some cases, changes in federal priorities reduce overall incentives to a point where state-level support alone may not be enough to encourage developers to pursue greener projects.
LWC: How is the growth of renewable energy reshaping legal work in this space?
Camp: There is a thriving bar associated with the growth of renewable energy, such as wind, solar and storage. After decades of promises, the costs of wind and solar are finally approaching those of fossil fuel energy, even without subsidies. This expands the scope of potential projects and allows for greater focus on storage systems, which are evolving quickly. The rise of data centers, which often include a proprietary or dedicated energy provider, is also expanding opportunities for this type of development and storage.
Watson: The growth of renewable energy is driving a different kind of legal work. A lot of it centers on siting, transmission, and interconnection, where delays and disputes with landowners, local governments and regulators are common. On the regulatory side, there’s a significant amount of work before the Public Utilities Commission, particularly around resource planning and how to pay for new infrastructure while addressing existing assets. Transactions are also becoming more complex, with evolving contract structures, including power purchase agreements and financing arrangements tied to renewable projects and storage.
Pilchen: The obvious reshaping is in transmission, interconnection and project finance, all of which are generating substantial legal work. But the less obvious and increasingly significant shift is happening in the building sector. Colorado’s climate regulatory philosophy is expanding from energy into real estate.
Many of these large commercial buildings have on-site power generation, like natural gas cogeneration equipment to provide cheaper and more reliable electricity. As a result of new requirements though, buying a commercial building in Colorado increasingly means inheriting energy performance obligations, benchmarking requirements, potential retrofit costs and penalty exposure. Energy compliance is becoming something that must be evaluated, disclosed and allocated in every deal. This is the same regulatory philosophy behind Regulation Number 7 for oil and gas, the idea that compliance obligations travel with the asset, applied to a different sector entirely. That shift is accelerating, and it’s pulling environmental regulatory expertise into transactions that wouldn’t have triggered environmental review five years ago.
LWC: What trends are you seeing in oil and gas development in Colorado, particularly in light of increasing environmental and regulatory scrutiny?
Larsen: Oil and gas development in Colorado is continuing but under significantly more constrained conditions. Increased environmental and regulatory scrutiny — including expanded application of air quality regulations — has led to longer project timelines, higher upfront costs and more extensive planning and mitigation obligations. Development is increasingly concentrated among operators with the scale and capital needed to navigate this environment.
Rhine: Apace with the increasing environmental and regulatory scrutiny has been the oil and gas industry’s parallel increase in thoughtful siting and commitment to as many best management practices and enhanced systems and practices as practicable that reduce environmental impacts and help protect public health, safety, welfare and wildlife. Another positive trend is that operators continue to build their community outreach programs. Operators appreciate that there may be an informational imbalance among stakeholders and are working hard to make information accessible to the public such that any concerns they may have are addressed in an easy to understand, transparent manner.
Pilchen: A major trend I’m seeing is that environmental compliance has become a distinct value layer in Colorado oil and gas transactions. Regulation 7 has created an interesting incentive scheme where companies may seek to offload assets that will carry greenhouse gas (GHG) liability when the compliance period starts but keep the valuable credits from that asset for themselves. It’s adding a layer of regulatory complexity and cost to transactions that doesn’t necessarily show up on the balance sheet but will in a few years when the bill comes due.
Specifically, under Regulation Number 7’s midstream GHG caps, the credits associated with company-specific caps can be traded as part of an asset transaction, and the exchange of credits doesn’t have to be proportionate to the emissions of the equipment being conveyed. That changes the economics fundamentally. I’ve worked on a transaction where the midstream fuel combustion equipment sold for a pittance because one party retained the associated credits. The credits were literally more valuable than the physical assets.
That’s the direction the market is heading, at least for now. With compliance deadlines looming and credit trading launching in 2028, GHG compliance obligations are being allocated in oil and gas deals with the same rigor as real property interests. The regulatory framework is selecting for operators who understand this.
LWC: What energy issues do you think will define the next 3-5 years in Colorado energy law?
Watson: Looking ahead, the biggest issues over the next several years may revolve around grid reliability, electrification and infrastructure. As more of the economy shifts to electricity, the question becomes whether the grid can keep up and who pays for the necessary upgrades. There is also expected to be increased legal activity around carbon management, water use and land use conflicts. Climate litigation is likely to continue expanding as well, which could have significant implications for energy producers.
Pilchen: I expect one force to predominate over the next few years of energy law in the Centennial state: the energy demand from AI and data center infrastructure, which is arriving as fast (or even faster) than the grid can accommodate and creating fundamental tension with decarbonization timelines. It’s a tough needle to thread with simultaneously retiring fossil-fuel generation, meeting aggressive GHG reduction targets and also supplying exponential load growth without something giving. That tension is forcing hard choices around the country and in Colorado, not to mention generating creative engineering and legal work regarding siting, grid modernization and interconnection.
Camp: The next several years in Colorado energy law will likely focus on whether aggressive legislation and regulatory frameworks remain in place. Shifting political priorities and economic downturns often lead to weakened obligations or delays in compliance deadlines. It is easy to legislate requirements that take effect 10 years in the future, but as those deadlines approach and real costs begin to materialize, there is often strong pressure to reconsider or delay those goals.
LWC: What should policymakers, businesses or the public better understand about the legal complexities of Colorado’s energy transition?
Camp: My favorite axiom is that there are no solutions, only trade-offs. Requiring greener energy, more efficient buildings and other environmental regulations will inevitably drive up costs. In the long term, those costs may prove to be a bargain compared to the impacts of climate change. However, it is difficult to convince voters to accept short-term sacrifice in exchange for a promised long-term benefit, but good things come to those who wait.
Rhine: One issue is whether the state’s encouragement of geothermal development will, in fact, lead to meaningful geothermal development. I hope so.
A second issue will be how energy development, transport and use is integrated with AI and what security risks that integration poses, along with the related issue of data centers’ high energy demand. Colorado energy law is also likely to be shaped by the issuance of Colorado’s Office of Environmental Justice’s first Environmental Equity and Cumulative Impact Analysis. ECCIAs are designed to be comprehensive reviews of environmental and public health impacts in specified geographic areas, focusing on communities disproportionately impacted by pollution and climate change. The state must complete two EECIAs pursuant to 2022 law. The first EECIA will be in the East Colfax neighborhood of Aurora. The second EECIA’s location has yet to be determined. The state will use the ECCIAs to inform local and state agency decision-making, and the results will be made public.
Finally, the concept of a carbon market seems to fall in and out of favor with certain groups. A broader consensus regarding the legitimacy of carbon credits and voluntary carbon markets and if and how the cost of carbon can or should be taken into permitting decisions would be helpful.
Pilchen: Colorado’s GHG reduction targets are visible and well-publicized: 50% by 2030, 90% by 2045, net zero by 2050. What’s far less visible is the massive regulatory infrastructure required to develop those rules, to enforce them, and to achieve them. We’re talking hundreds of pages of regulations, company-specific emissions caps and credit trading systems based on complex formulas, not to mention various financial assurance requirements, community engagement requirements and cumulative impacts analyses. Each program is individually defensible. But layered together, they create a compliance environment of extraordinary complexity — one that Colorado’s 2025 target miss suggests even the state itself has not yet fully reckoned with.
Watson: One thing policymakers and the public should better understand is that the energy transition isn’t just a policy exercise; it’s a legal and regulatory process that plays out over time. Achieving policy goals requires navigating a multilayered system of statutes, regulations, permitting processes and judicial review, each of which can introduce delays and uncertainty. Trade-offs are inevitable. Efforts to reduce emissions can increase costs or create reliability challenges, and resolving those tensions often falls to regulators and courts rather than legislators.
Moreover, misalignment between state and federal priorities adds another layer of uncertainty for businesses making long-term investment decisions. In this environment, legal strategy is not just a support function but a central component of how the energy transition is being implemented and contested.