CSG Law Alert: How Building Owners Can Show Good Faith Efforts to Comply with Local Law 97’s Emissions Limits

In advance of building emission limits for New York City’s (“NYC”) Local Law 97 going into effect on January 1, 2024, the NYC Department of Buildings (“DOB”) issued rules on December 18 clarifying, among other things, how building owners can mitigate penalties imposed by Local Law 97 by demonstrating good faith efforts to comply with the law.

By way of background, Local Law 97 seeks to reduce greenhouse gas emissions in large buildings with the goal of achieving a 40% reduction in citywide emissions by 2030 and 80% by 2050.

Local Law 97 applies to buildings greater than 25,000 square feet, multiple buildings on the same tax lot that together exceed 50,000 square feet, and two or more buildings owned by the same condominium association and governed by the same board that together exceed 50,000 square feet (“Covered Buildings”), subject to some exceptions.

Starting in 2024, Covered Buildings must have emissions equal to or lower than emissions limits calculated by multiplying building square footage by an energy intensity factor based on building type.

Building owners must file a report certified by a registered design professional every year by May 1, starting May 1, 2025, stating whether the building is in compliance with emissions limits for the previous calendar year and, if not in compliance, the amount by which the building exceeds limits.

Buildings that fail to file must pay a penalty equal to $0.50 multiplied by the building’s square footage. Buildings that fail to meet building emissions limits must pay a penalty equal to the difference between the applicable emissions limit and actual building emissions, multiplied by $268.

According to the new DOB rules, “good faith efforts”, which can be used to mitigate penalties for non-compliant emissions, can be established by, among other things:

  • Having a fully approved application and permit issued for work necessary to achieve compliance;
  • Having an approved alteration application and letter from a utility attesting that conversion of the building to all electric is underway; or
  • Submitting a plan demonstrating reduction of the building’s carbon emissions to comply with 2024 emissions limits by 2026 and with 2030 limits by 2030.

Of note, the new rule clarifies that renewable energy credits (“RECs”) cannot be purchased to offset emissions in connection with submission of a carbon reduction plan.

For more information on Local Law 97, including compliance, exceptions and good faith efforts, contact a member of our Renewable Energy & Sustainability Team.

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