A New York trial court judge has dismissed a lawsuit challenging the legality of Local Law 97 ("LL97"), New York City's ambitious effort to curb greenhouse gas emissions from buildings over 25, 000 square feet. See Glenn Oaks Village Owners, Inc. v. City of New York, Index No. 154327/2022 (Sup. Ct. N.Y. Cnty.). In a 28-page decision Justice J. Machelle Sweeting granted in its entirety the City's motion to dismiss the high profile lawsuit brought by two cooperative housing corporations, their board presidents, and the owner of a mixed use building.
The 2019 Climate Mobilization Act, also known as Local Law 97, requires owners of most buildings over 25,000 square feet, approximately 50,000 buildings, to dramatically reduce their building emissions in phases over the coming decade and beyond or face progressively steeper penalties. The law sets emissions limits based on square footage and occupancy category (i.e., commercial, residential, etc.) and ratchets those limits down over time. While the vast majority of buildings in the City are already in compliance with the emissions standards for the 2024-2030 compliance period, the more restrictive standards that will take effect in 2030 will require significant and costly investments in energy efficiency, electrification and fuel conversion for many buildings.
Justice Sweeting rejected outright the plaintiffs' multipronged attack on the law. Plaintiffs argued that LL97 was "preempted," and therefore invalid, because of the State's groundbreaking 2020 climate law, the Climate Leadership and Community Protection Act ("CLCPA"). In rejecting this argument, Justice Sweeting observed that the State in implementing CLCPA "has repeatedly expressed its desire and intent to collaborate with the City and other local governments to abate GHG emissions under the CLCPA," and expressly embraced the City's efforts under LL97. The plaintiffs also advanced a number of other arguments that fared no better under Justice Sweeting's appraisal, including that LL97's penalties amounted to an illegal tax, without express authorization from the state legislature, and that the law's fines violate the due process clause of the U.S. Constitution because they are excessive and unfairly retroactive.
Although the plaintiffs may appeal the ruling, the dismissal removes a major cloud of uncertainty hanging over the law, with just a few months to spare before it takes effect on January 1, 2024. While building owners are unlikely to get relief from the courts, they may get some from the Department of Buildings. Amidst growing outcry from the regulated community to postpone implementation of LL97, the Department issued draft regulations on September 12 that, among other things, would create a two-year pause on LL97 penalties if a building owner can demonstrate a "good faith" effort to decarbonize, with specific guidance for how such an effort can be demonstrated. DOB has accepted public comment on these proposed regulations; final regulations are forthcoming.
We will continue to follow developments around the implementation of LL97 and provide timely updates as the compliance period approaches.
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