Understanding the Penalties for Non-Compliance with Local Law 97

Local Law 97 of 2019, a pivotal component of New York City's Climate Mobilization Act, marks a significant stride towards combatting climate change within the city's built environment. Perhaps more pertinently for NYC building owners, this legislation imposes penalties on buildings that exceed specified emission limits.

As building owners navigate the complexities of compliance, understanding the potential financial ramifications of non-compliance under Local Law 97 becomes paramount. This article explains what it takes to comply with Local Law 97 and details what happens if you fail to meet the standards of this ambitious law.

The penalties for non-compliance with NYC Local Law 97 can be harsh. Be sure to follow expert advice to stay on the right side of this important local law.

Penalties for Not Complying with Local Law 97

Effective since November 15, 2019, Local Law 97 imposes strict limits on greenhouse gas emissions for covered buildings, with the goal of achieving a 40 percent reduction by 2030 and net zero emissions by 2050. To ensure accountability, covered buildings must file annual reports detailing their emissions, certified by a registered design professional. Additionally, certain buildings, including affordable housing, must implement proven energy-saving measures and report compliance. Compliance requirements for covered buildings begins this year.

Penalties under Local Law 97 are contingent upon the type of building and its current emissions. For each metric ton of CO2 equivalent (tCO2e) exceeding the designated limit, a penalty of $268 is imposed. Failure to file a report incurs a fine of $0.50 per building square foot, per month. Providing false statements may lead to fines of up to $500,000. So, for instance, a 50,000 sq./ft multi-family residential building emitting 400 metric tons of carbon would face a penalty of $19,430 for exceeding its 2024-2029 emission targets by 72.5 metric tons. The severity of penalties escalates with time, mirroring the law's phased approach to emission reduction.

The Department of Buildings prepares guidance to assist owners in meeting these requirements, and it is imperative for building stakeholders to familiarize themselves with the compliance process. Benchmarking, reporting, adjustments, deductions, and adherence to timelines are crucial elements in fulfilling the obligations set forth by Local Law 97. To get a better understanding of the costs of not complying with Local Law 97, let’s dive into an example:

How Much Will My Building Be Charged for Emissions Under Local Law 97?

Local Law 97 provides emissions factors for various energy sources, including electricity and natural gas. Based on the building's energy consumption profile, total emissions can be:

Electricity emissions: 2,167.22 tCO2e per year
Natural gas emissions: 424.88 tCO2e per year
Total emissions: 2,592.10 tCO2e per year

Exceeding these limits triggers penalties, with higher penalties incurred as emissions targets become more stringent. Let's delve into an illustrative example to grasp the calculations and implications of these penalties:

Consider a 300,000 square foot building classified under Business Group B, consuming 7,500,000 kWh of electricity annually alongside 80,000 therms of natural gas.
For Business Group B, the emission limits prescribed by Local Law 97 are 0.00846 tCO2e/sf for the period 2024-2029 and 0.00453 tCO2e/sf for 2030-2034. Applying these limits to our example yields 2,538 tCO2e/year for 2024-2029 and 1,359 tCO2e/year for 2030-2034

The building in the example above surpasses both the 2024-2029 and 2030-2034 emission limits, setting the stage for penalties unless emissions are mitigated. Local Law 97 imposes penalties of $268 per tCO2e exceeding the limit. Consequently, the building faces the following penalties:

2024-2029 penalty: $14,498.80 per year
2030-2034 penalty: $330,470.80 per year

The consequences of non-compliance are not to be underestimated. Starting in 2025, owners who exceed their building emissions limits will face civil penalties proportional to the disparity between the limit and reported emissions. The city estimates that without action, a significant portion of buildings will fall short of compliance targets, leading to widespread penalties. Furthermore, failure to submit required reports will result in stiff fines, underscoring the importance of timely and accurate reporting.

Avoid Local Law 97 Penalties by Reducing Building Emissions

Failure to meet LL97 requirements carries significant financial repercussions, including fines for failure to file reports, exceeding emissions limits, and providing false statements. These penalties can accrue swiftly, eroding property value and jeopardizing financial stability. For building owners and managers, mitigating emissions is not just an environmental imperative but a fiscal necessity – and energy reduction remains the most effective strategy for minimizing a property's carbon footprint.

Submetering is a pivotal tool in this endeavor, offering detailed consumption data crucial for identifying and rectifying energy inefficiencies. By pinpointing areas of excessive energy use, such as tenant consumption or equipment inefficiencies, submetering enables building owners to implement targeted solutions, thereby curbing energy usage, costs, and LL97 penalties. However, submetering is not your only option. EEC offers a comprehensive suite of services tailored to LL97 compliance, including:

Greenhouse gas emissions reporting and tracking
Life cycle cost analysis to project emissions limits and associated fines
Renewable Energy Credits procurement and project design for generating credits
Greenhouse gas offsets acquisition
ASHRAE Level III energy audits to identify emission-reduction measures
Preparation of annual compliance reports for submission to the NYC DOB
Implementation of energy-saving measures through continuous commissioning and real-time energy management

By embracing sustainability initiatives and investing in energy-efficient practices, properties can not only achieve LL97 compliance but also reap myriad benefits, including cost savings, operational efficiency, and enhanced tenant satisfaction. NYC building owners can gain valuable insights into tenant consumption patterns, equipment efficiency, and overall energy usage. Armed with this data, they can implement tailored energy reduction strategies, thereby curbing emissions and mitigating LL97 penalties.

Get Help with Local Law 97 Compliance

Local Law 97 represents a pivotal moment in New York City's journey towards sustainability. While its objectives are noble, the road to compliance is fraught with challenges, and the penalties for non-compliance are severe. Building owners must prioritize proactive measures to mitigate emissions and ensure adherence to regulatory requirements. By embracing the spirit of Local Law 97. However, as the law's enforcement looms, building owners must be vigilant in understanding and adhering to its mandates, lest they face significant penalties for non-compliance.

In short, mitigating penalties demands enhancing energy efficiency within buildings. A professional energy audit can identify optimal efficiency measures tailored to each property's needs, prioritizing actions with the greatest emission-reducing impact. By embracing energy efficiency and sustainability initiatives, building owners can not only comply with regulatory requirements but also contribute to a greener, more resilient future for New York City.

EEC is committed to helping building owners and managers navigate this complex regulatory landscape and achieve compliance seamlessly. If you have any questions about NYC Local Law 97 compliance, reach out to us today.