Is "Mediated Resolution" a Free Pass for Local Law 97 Deadbeats?

When it comes to New York City's landmark climate legislation, Local Law 97, it seems that every push results in a vigorous pushback. For instance, when many building owners, including co-op and condo boards, howled that they could not possibly afford retrofits that would bring their buildings' carbon emissions in line with the law, the city responded by offering exceptions for buildings that make "good faith" efforts to comply.

The Department of Buildings' (DOB) recently released rules state that such non-compliant buildings can qualify for a mediated resolution. But the rules extend that even further to include building owners who show any “other demonstrated effort” to comply. 

Now there's pushback to the pushback.

“DOB has given themselves a blank check to do whatever they want,” William McCracken, a partner at the law firm Moritt Hock & Hamroff, tells City Limits. “The rule doesn’t say what kinds of efforts would qualify for a mediated resolution, and it doesn’t say what the mediated resolution would entail.”

The DOB insists the option is not a get-out-of-jail-free card. “Failure to uphold the agreement on the part of the building owner will result in DOB issuing any penalties that were previously avoided,” a DOB spokesperson says.

But given that only 11 employees are currently in charge of enforcing LL97 at the DOB, advocates fear it could be difficult for the city to ensure owners aren’t using the clause as an escape hatch to avoid making meaningful progress on lowering their property’s pollution output.

“They’re not going to be in a position to do a real deep dive into the intentions of each particular landlord,” says Pete Sikora, climate and inequality campaigns director at New York Communities for Change. “Building in mediation mechanisms [into the rules] signals to those that can afford sophisticated lawyers to work the system, that they can get a free pass. So this is a recipe for letting people off the hook.”

Local Law 97 sets a cap on the amount of carbon large New York City buildings can emit over a series of compliance periods, which start this year and get stricter over time. By May 1, 2025, buildings covered by LL97 will be required to file their first report with the DOB detailing their annual greenhouse gas emissions for 2024. About 1,400 properties won’t meet 2024’s carbon emissions limits set by the law unless they make retrofits. They can be subjected to a fine of $268 for every metric ton of carbon dioxide above their caps. 

“So we’re left with two options," says John Mandyck, chief executive at the nonprofit Urban Green Council, a major advocate of Local Law 97. "We either fine them and forfeit the carbon savings that we need; or we find a practical way to get them back onto a compliance path so that they catch up.”

In this case, the mediated resolution is on the table if the landlord has filed an annual carbon emissions report, has proven that the resolution will help the building comply with the law in the future, and has demonstrated “good faith efforts” to meet their emissions targets. 

The rules include a long list of that “good faith effort” criteria, including that landlords are up to date with earlier city rules for large buildings: measuring their energy consumption under Local Law 84, plus upgrading to more efficient lighting and establishing a submetering system, as required by Local Law 88.

Building owners must also choose one out of six possible pathways to prove that they qualify for the exemption, such as providing a detailed plan to decarbonize their building or show “that work necessary to achieve compliance is currently underway.” 

According to McCracken, the co-op and condo lawyer, the rules as written award DOB a “tremendous amount” of discretion to evoke the clause as they see fit. “[DOB] has basically given themselves a lot of leeway to chart a course of action for any particular building,” he says. “That’s not to say that this will be a way for people to get a free pass. It may or may not be, but I think it’s something that we should all be watching very closely.”