NYC Local Law 97 in Effect
New York City’s Local Law 97 (LL 97) is currently in effect. Any eligible building’s energy usage will count against this law and will need to be accounted for next year. There is no question that LL 97 will have major impacts on the bottom lines of many buildings and companies. Six-figure annual fines are expected as early as in 2025.
Background
LL 97 is one of several laws in New York City promulgated in response to Climate Change and to improve our electric grid, called the Greener, Greater Building Plan. NYC realized that buildings are by far the greatest contributor to greenhouse gas (GHG) emissions that cause Climate Change and began promulgating laws. The early laws did not mandate that GHGs be reduced, but mandated GHG emissions and energy efficiency be published in public forums to embarrass building owners to improve. Then came mandatory energy audits that present feasible, economic strategies to reduce GHG emissions. Neither approach had a major impact. Thus, LL 97 is the first law to require that certain GHG emission levels be met or else the owner faces a major fine.
Basics of LL 97
While LL 97 regulates GHG emissions, it is really an energy rule, as GHG emissions are tied to energy usage. A building (greater than 25,000 gross sq. ft. in size) must compile its total energy usage for each year, including from tenant usage (even if the owner has no control over tenant usage). Energy usage from four sources must be compiled for the year. These include:
- electricity
- natural gas
- oil and
- purchased steam
Each total amount is multiplied by a factor converting the energy usage to GHG emissions. Then the four are totaled up and divided by the square footage of the building to get an intensity (kg CO2e / sf). This is compared to an allowable intensity for its category. The report must be computed, signed by a design professional, and submitted by May 1 for the previous year. If the actual GHG intensity is less than the allowable, the facility complies.
If it exceeds allowable, then the building is not in compliance with LL 97 and must pay a fine of $268 for every metric ton of GHGs that the building is over its limit. For some, this could be 6-figures per year!
Changes to LL 97
When LL 97 was first promulgated in 2019, NYC announced that changes would be implemented to the law before it initially went into effect in 2024. In fact, in 2023, NYC modified the rule several times. For example, it greatly increased the number of building categories from the small number in the initial rule. Perhaps the most consequential change was the issue of affordable housing which may be hard pressed to have funding to make the necessary energy upgrades in order to comply.
Therefore, the final LL 97 consists of two parts, Article 320 and Article 321. Article 320 is the “traditional” LL 97, requiring a subject building to compile total energy usage, compute GHG intensity and compare it to a limit (with a few minor changes of 2023). Article 321 is specifically for “affordable housing”.
Such buildings may do the Article 320 track or could elect to do a second option, a prescriptive path. Instead of compiling energy usage data and comparing to a limit, the prescriptive path allows the building to automatically comply with LL 97 if it implements all of 13 listed energy efficiency practices. It is likely that a given building is already doing several of these.
However, some are a bit advanced and would be new. Although the prescriptive path allows automatic compliance (independent of actual usage), it may be expensive to implement all of the listed practices and technologies. Therefore, an Article 321-subject building should be careful in determining which path to take.