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

New York City's landmark climate legislation, Local Law 97, has faced significant resistance from various quarters. Building owners, including co-op and condo boards, have raised concerns about the financial burden of retrofitting their properties to meet the law's carbon emission standards. In response, the city has introduced exceptions for buildings that make "good faith" efforts to comply.

The Department of Buildings (DOB) recently issued rules stating that non-compliant buildings could qualify for a mediated resolution. Furthermore, these rules extend to building owners who show any “other demonstrated effort” to comply.

However, this leniency has sparked new controversy.

“DOB has given themselves a blank check to do whatever they want,” says William McCracken, a partner at Moritt Hock & Hamroff, in an interview with City Limits. “The rule doesn’t specify what kinds of efforts would qualify for a mediated resolution, nor does it detail what the mediated resolution would entail.”

The DOB maintains that this option is not an easy escape. “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 clarifies.

Despite this assurance, there are concerns about the enforcement capability of the DOB. With only 11 employees currently tasked with enforcing LL97, advocates worry that owners might exploit the clause to evade substantial efforts to reduce their buildings' pollution.

“They’re not going to be able to deeply investigate the intentions of each landlord,” says Pete Sikora, climate and inequality campaigns director at New York Communities for Change. “Mediation mechanisms signal to those who can afford sophisticated lawyers that they can get a free pass. This sets the stage for letting people off the hook.”

Local Law 97 imposes caps on the carbon emissions of large New York City buildings over several compliance periods, starting this year and becoming stricter over time. By May 1, 2025, buildings covered by LL97 must file their first report with the DOB, detailing their 2024 greenhouse gas emissions. Approximately 1,400 properties will exceed the 2024 emissions limits unless they undertake retrofits, potentially facing fines of $268 per metric ton of carbon dioxide over the cap.

“We have two choices,” says John Mandyck, CEO of the nonprofit Urban Green Council and a major advocate of LL97. “We either fine them and lose the carbon savings we need, or we find a practical way to get them back on track to comply.”

The mediated resolution option is available if landlords file an annual carbon emissions report, prove the resolution will help future compliance, and demonstrate “good faith efforts” to meet their emissions targets.

The rules outline a comprehensive list of “good faith effort” criteria, such as compliance with earlier city regulations like Local Law 84 (energy consumption measurement) and Local Law 88 (lighting upgrades and submetering system establishment).

Building owners must also choose one of six pathways to qualify for the exemption, such as providing a detailed plan to decarbonize their building or proving that compliance-related work is already in progress.

McCracken points out that the rules grant the DOB considerable discretion in applying the clause. “[DOB] has given themselves a lot of leeway to determine the course of action for any particular building,” he says. “This may not necessarily be a way to get a free pass, but it’s something that warrants close scrutiny.”

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