New York Local Law 97: An Overview of New York City’s Green Building Requirements

Emissions limits for covered buildings will become increasingly stringent over a series of compliance periods.

Now that the first compliance period for New York City’s Local Law 97 began on January 1, 2024, building owners in New York City should be aware of the potential issues that exist in relation to energy efficiency and greenhouse gas emissions.

Local Law 97 (Law) was enacted on May 19, 2019, became effective on November 15, 2019, and is considered one of the most ambitious plans in the nation for reducing building emissions.¹  Given that buildings account for approximately two-thirds of greenhouse gas (GHG) emissions in New York City, the City Council included the Law as part of Mayor Bill de Blasio’s Green New Deal in the Climate Mobilization Act.²  With the nearly 50,000 “covered buildings” (defined below) across NYC, the Law will further the goal of achieving a 40% reduction in building emissions by 2030 and net zero emissions for buildings by 2050.³

With its first compliance period beginning in 2024, the Law’s emissions limits for covered buildings will become increasingly stringent over a series of compliance periods, with owners facing potential penalties for exceeding those limits. The newly created Office of Building Energy and Emissions Performance at the NYC Department of Buildings (DOB) will oversee implementation and compliance, and an advisory board will provide advice and recommendations relating to building emissions.⁴

Definitions and Exceptions

A “covered building”, for purposes of the Law, is defined as:

• A building that exceeds 25,000 gross square feet.
• Two or more buildings on the same tax lot that together exceed 50,000 gross square feet (9290 m²).
• Two or more buildings held in the condominium form of ownership that are governed by the same board of managers and that together exceed 50,000 gross square feet (9290 m²).⁵

Seven exceptions to the definition of a covered building include:

• An industrial facility primarily used for the generation of electric power or steam.
• Real property, not more than three stories, consisting of a series of attached, detached or semi-detached dwellings, for which ownership and the responsibility for maintenance of the HVAC systems and hot water heating systems is held by each individual dwelling unit owner, and with no HVAC system or hot water heating system in the series serving more than two dwelling units, as certified by a DOB-registered design professional.
• A city building.
• A housing development or building on land owned by the New York City Housing Authority (NYCHA).
• A rent regulated accommodation.
• The real estate owned by any religious corporation located in NYC as now constituted, actually dedicated and used by such corporation exclusively as a place of public worship.
• Real property owned by a housing development fund company organized pursuant to the NY Business Corporation Law and Article 11 of the NYS Private Housing Finance Law.⁶

Certain covered buildings, while not exempt from the Law, can be treated differently under Article 321’s prescriptive energy conservation measures. The measures outlined in section 28-321.2.2 are 13 actions that an eligible Article 321 covered building must implement if it chooses to follow the alternative requirements. Such buildings include those with more than 35% rent-regulated units, Housing Development Fund Corporation cooperatives, buildings with one or more units that participate in a federal project-based housing program, buildings that participate in NYCHA Permanent Affordability Commitment Together or places of worship.⁷ By December 31, 2024, Article 321 covered buildings that meet the criteria and choose to follow the alternative requirements must either complete the required list of 13 prescriptive energy conservation measures or ensure the building does not exceed the 2030 emissions limit in 2024.⁸ Additionally, building owners can submit applications starting January 1, 2025, to DOB for adjustments due to excessive emissions or special uses such as health care facilities, 24-hour operations, energy-intensive industrial processes and more.⁹

Compliance and Penalties

Following the enactment of the Law, DOB issued two rules to amend compliance requirements. In December 2022, DOB Rule 103-14 established different emissions limits for 60 building types across all compliance periods.¹⁰ These limits were determined using EPA’s Energy Star Portfolio Manager tool, which accounts for variations in energy use based on individual building types.¹¹ In December 2023, DOB introduced several additional amendments to section 103-14. Building owners can now purchase renewable energy credits to meet their emissions reduction targets. They can also defer compliance and meet the 2024 emissions limit by 2026 if they demonstrate “good faith efforts” in decarbonizing their buildings.¹² To show a good faith effort, a building owner must submit an annual report and comply with the following by May 1, 2025:

• Benchmarking (Local Law 88).
• Lighting upgrades and sub-metering requirements (Local Law 88), and one of the following:
  • Submit a de-carbonization plan.
  • Submit an approved DOB application for work that will result in meeting 2024-2029 emissions limits.
  • Submit proof that electrical service upgrades for electrification are occurring.
  • Show that the building was under the emissions limits at some point during the first compliance period.
  • Be a critical facility and show evidence that a penalty would inhibit the ability to provide services.
  • Apply for a “Financial Hardship” adjustment.¹³

More stringent emissions limits will phase in for each compliance period with the next running 2030-2034, followed by 2035-2039, 2040-2049, and ending in 2050.¹⁴ Each year on May 1st, starting May 2025, the owner of a covered building must file an annual GHG emission report showing that, for the previous year, such building is either in compliance with the emissions limit or not in compliance along with the amount the building exceeds such limit.¹⁵ Covered buildings that are satisfying the prescriptive measures must also submit annual reports.¹⁶

Building owners who have not met the limit for the calendar year are liable for a civil penalty of not more than the difference between the building emissions intensity limit for such year set forth in the Energy Star Portfolio Manager and the actual reported building emissions for such year, multiplied by $268.¹⁷ See the table below for an example calculating the penalty amount for a 50,000-square-foot, multifamily house emitting 400 metric tons.¹⁸

Failure to submit an annual report will result in a penalty of not more than an amount equal to the gross floor area of such covered building, multiplied by $0.50, for each month that the report is not submitted.²⁰ Lastly, building owners that make a false statement in the annual report will be subject to a fine of not more than $500,000, imprisonment of not more than 30 days, or both.²¹

Current Conditions

In preparation for collecting and reviewing thousands of reports and issuing penalties, DOB recently hired 10 new staff members, bringing the total to 21.²² Progress is hard to measure at this stage since the first annual report is due May 1, 2025. However, as for current building emissions, recent projections show that roughly 12% of covered buildings are over the 2024 limits, while 65% of covered buildings are over the 2030 limits.²³

The Law has faced, and may continue to face, legal challenges from various entities. In 2022, a lawsuit brought by a group of cooperative apartment and other building owners tried to invalidate the Law by arguing, amongst three other claims, that the Law is preempted by the New York State Climate Leadership & Community Protection Act (CLCPA).²⁴ The plaintiffs argued that since the CLCPA sets GHG emissions reductions goals, it preempts local law from legislating in that same topic area. However, the New York State Supreme Court ruled in 2023 that the New York State Constitution and Municipal Home Rule Law provide the City with “broad powers with respect to the protection of the health and safety of” residents.²⁵ Therefore, the Supreme Court judge dismissed the lawsuit. However, in May 2024, a five-judge panel in the Appellate Division’s First Judicial Department ruled unanimously to overturn the dismissal of the first claim, stating that the defendants failed to show that the CLCPA does not preempt the Law.²⁶ The reinstatement of the first claim does not deem the Law as invalid quite yet, but will now turn back to the trial court to analyze and interpret the CLCPA text.

Phillips Lytle will continue to monitor developments in the law and its implementation, and provide updates as they arise.