Appeals Court Reinstates Legal Challenge to Local Law 97 Governing Emissions of Greenhouse Gases by Big Buildings in New York City

In April 2019, the New York City Council passed Local Law 97 (“LL 97”) as part of the Climate Mobilization Act. LL 97 imposes strict restrictions on greenhouse gas emissions for buildings 25,000 square feet or larger and establishes a regime of fines and penalties for buildings that fail to comply with those restrictions. For an overview of LL 97, click here.

Since its enactment, owners of  the approximately 50,000 qualifying buildings have faced the daunting prospect of carrying out renovations, upgrades, or retrofits to meet LL 97’s mandates. In May 2022, a group of building owners, cooperatives, and cooperative shareholders filed a lawsuit, titled Glen Oaks Village Owners, Inc., et al. v. City of New York, Index No. 154327/2022, which sought to invalidate LL 97 and enjoin its enforcement. The Glen Oaks Village Owners plaintiffs asserted that LL 97 (i) is preempted by New York State climate laws including the Climate Leadership and Community Protection Act (“CLCPA”) (ECL art 75, L. 2019, ch. 106), (ii) violates the due process clauses of the United States and New York State constitutions because it imposes improper penalties, applies retroactively, and is unconstitutionally vague, and (iii) constitutes an improper tax. In October 2023, the trial court granted the City’s motion to dismiss all of these challenges. Plaintiffs appealed dismissal of their preemption and due process claims. 

Last week, the Appellate Division, First Department issued a decision that gave concerned owners a glimmer of hope by reversing dismissal of the complaint on preemption grounds, reinstating the action, and sending the matter back to the trial court for further proceedings.

The Appellate Division held that local regulations on greenhouse gas emissions may be preempted by state laws under the test set out in Garcia v. New York City Dept. of Health and Mental Hygiene, 31 NY 3d 601, 617 (2018). In particular, the Court found that the CLCPA may preempt local laws concerning greenhouse gas emissions because of an express provision in Section 10 of the CLCPA that states, “[n]othing in this act shall limit the existing authority of a state entity to adopt and implement greenhouse gas emissions reduction measures.” Accordingly, the Appellate Division reinstated the claim based on its holding that, at least at the pleading stage, the City failed to show that the CLCPA did not preempt LL 97. 

However, the Appellate Division affirmed dismissal of all of the plaintiffs’ due process claims. The Court held that plaintiffs had not shown that the penalties set forth in LL 97 were “so severe and oppressive as to be wholly disproportional to the offense” on their face, or that there was no set of circumstances under which the law would be valid. The Court also held that the law – which sets standards for future compliance – was not impermissibly retroactive merely because it could penalize parties who operated their buildings consistently with prior rules and regulations. Finally, the Court held that LL 97 is not so vague as to deprive parties of due process because it sets specific emissions limits. The fact that courts and administrative tribunals can consider mitigating factors when evaluating penalties for exceeding those limits does not amount to unconstitutional vagueness.

So, what does it all mean for affected stakeholders? At least for now, LL 97 remains on the books and buildings that fail to comply with its mandates will face penalties for non-compliance. Therefore, owners should continue to work towards compliance, and can perhaps take some comfort in knowing that the steps they are taking will yield benefits for the environment. 

We will continue to monitor Glen Oaks Village Owners Inc. and keep you apprised of any relevant developments as they occur.