Local Climate Governance in Action: The Significance of Glen Oaks Village Owners v. City of New York

Christopher St. Jeanos

Introduction

In recent years, there has been an increased sense of urgency to address climate change, prompting governments at all levels to act. Local governments, such as New York City’s government, have taken various steps to tackle the challenges of climate change. For example,      in 2019 when New York City enacted Local Law 97 to cut emissions from buildings. However,      Local Law 97 created unintended legal challenges. One of these legal challenges can be seen in the Glen Oaks Village Owners v. City of New York case. This case comment analyzes the significance of that 2023 legal battle.  To better understand the Glen Oaks Village Owners case, this comment will provide a background of Local Law 97. Additionally, this paper will discuss the implications of both the Glen Oaks Village Owners case and Local Law 97, as well as the      future of local climate governance.

Local Law 97

Emissions from buildings contribute to about two-thirds of the greenhouse gas emissions in New York City.^[1]Previous New York City mayors as well as the current, Mayor Adams, have been committed to lowering these emissions as part of the city's initiative to achieve carbon neutrality by 2050.^[2] Local Law 97 is one of the more ambitious plans for emission reduction across the nation.^[3] This law was included in the Climate Mobilization Act which was passed by the New York City Council in 2019.^[4] This innovative Act requires that, starting in 2024, most buildings exceeding 25,000 square feet follow the new standards for energy deficiency and greenhouse gas emissions. However, Local Law 97 will provide even harsher emissions regulations to take effect by 2030.^[5] The main objective behind these regulations is to cut emissions from the city’s largest buildings by 40 percent by 2030. This will help the city to achieve net-zero emissions by 2050.^[6] Additionally, the law establishes the Local Law 97 Advisory Board and Climate Working Groups to provide guidance on meeting these ambitious sustainability targets.^[7] Generally, Local Law 97 covers: (1) buildings that exceed 25,000 gross square feet;  (2) combinations of two or more buildings on the same tax lot totaling over 50,000 square feet, and; (3) two or more buildings governed by the same board of managers within a condo association collectively exceeding 50,000 square feet.^[8]

Beginning in 2025, owners of a building that falls within the parameters of Local Law 97 who submit  reports indicating that their building has surpassed their  annual emissions limit will incur civil penalties.^[9] These penalties will be proportionate with the disparity between the specified building emissions limit for the given period and the emissions reported for that year.^[10] The city projected that around 20% to 25% of the applicable buildings will exceed the emission limits provided for them under Local Law 97 by 2024.^[11] Soon after in 2025, building owners will be faced with stiff penalties and fines if they fail to submit their building energy reports.^[12]  Currently it is predicted that by 2030, without intervention, an estimated 75% to 80% of buildings are expected to fall short of complying with their emission limits.^[13]Alongside the civil penalties outlined in Local Law 97, the Department of Buildings (“DOB”) reserves the right to levy violations for non-compliance with the regulations.^[14]      

Local Law 97 has forced building owners to undergo massive renovations to cut down their emissions. In 2023, an analysis conducted by the city estimated that the renovations needed to comply with the new law would cost between 12 and 15 billion dollars.^[15] This substantial expense is attributed in part to the aging infrastructure of the city. Since many buildings were constructed during an era when oil and natural gas heating systems were prevalent, these buildings will need renovations.^[16]  An example of an older building being renovated can be seen at 345 Hudson Street in lower Manhattan. This property was originally built in 1931 with concrete flooring intended for accommodating printing presses and a Sears mail-order plant.^[17]  At 345 Hudson Street, modern systems are being installed as tenant leases come to an end.^[18] Despite the significant financial investment required for renovations, building owners are confident in the future potential returns.^[19] Beyond the significant reduction in energy expenses, building owners anticipate that eco-friendly spaces will command premium rents.^[20] However, Local Law 97 did not go unchallenged, as evidenced by Glen Oaks Village Owners v. New York. The next part of this paper will analyze the Glen Oaks Village Owners case.

Glen Oaks Village Owners v. City of New York

            The following portion of this paper will look to provide a summary of the Glen Oaks Village Owners case, which provided needed clarity to the NYC real estate industry. In this case, plaintiffs sought to challenge the validity of Local Law 97, which was implemented by the city to regulate greenhouse gas emissions as discussed in the above sections of this paper.^[21] First, they argued that Local Law 97 is preempted by New York State's Climate Leadership and Community Protection Act ("CLCPA"). Second, the Plaintiffs argued that Local Law 97       violated both the United States Constitution and the New York State Constitution by depriving the Plaintiffs of property without due process of law. Finally, the Plaintiffs argued that                that Local Law 97 violated New York State's Municipal Home Rule Law.^[22] The Plaintiffs requested a permanent injunction to prevent the Defendants from enforcing any provisions of Local Law 97.^[23]

The Plaintiffs, Glen Oaks and Terrace, are two cooperative corporations located in Queens, New York, with Friedrich and Schreiber serving as their respective board presidents, shareholders, and residents.^[24] The 9-11 Maiden is a limited liability corporation based in New York that owns a building encompassing both residential and commercial spaces in Manhattan.^[25] The City constitutes a municipal corporation established under the laws of New York State.^[26]The DOB is tasked with the implementation and enforcement of Local Law 97.^[27] Ulrich, who served as the Commissioner of the DOB at the time of the complaint, is named as a Defendant in his official capacity.^[28]

This action brought by the Plaintiffs encompasses several causes of action. The subsequent sections of this paper will provide a concise examination of each cause of actions and the corresponding rulings of the court.

1. New York State's Climate Legislation does not preempt Local Law 97

The Defendants argue that the Plaintiffs failed to establish a cause of action for preemption because the Climate Leadership and Community Protection Act (CLCPA) does not explicitly state an intent to preempt Local Law 97 and does not constitute a comprehensive regulatory scheme indicating such intent.^[29] They further contend that there is no direct conflict between Local Law 97 and the CLCPA. In contrast, the plaintiffs assert that the CLCPA preempts Local Law 97, asserting that New York's State Legislature intended to occupy the field of greenhouse gas emissions regulation and that the CLCPA constitutes a detailed regulatory framework.^[30]

New York’s Constitution and the Municipal Home Rule Law grant the City broad powers regarding health and safety within municipal boundaries.^[31] Article IX, Section 2 of the New York Constitution defines the home rule powers of local governments, indicating that the state legislature has the power to act in relation to local government affairs only by general or special law.^[32] The Municipal Home Rule Clause grants local governments significant independence relative to local concerns. However,  there exists a zone where state and city concerns overlap.^[33] A local law enacted under the state’s Constitution and Home Rule Law may be invalidated if it is inconsistent with state law, particularly if the state has expressed a desire to preempt an entire field of regulation.^[34] The Plaintiffs failed to demonstrate that Local Law 97 would prohibit conduct permitted by state law or impose additional restrictions on rights granted by state law, thereby not identifying an inconsistency to base a preemption inference on.^[35] Additionally, evidence presented by the Defendants shows no conflict between state and local law regarding greenhouse gas emissions abatement.^[36] Instead, the state has expressed its intention to collaborate with local governments to achieve emissions reduction goals.^[37]Therefore, the Court granted the defendants' motion to dismiss the plaintiffs’ claim that Local Law 97 is preempted by the CLCPA.^[38]

2. Penalties under Local Law 97 Are Not an Unauthorized Tax

Under this cause of action, the Plaintiffs contend that the penalties prescribed for violations of Local Law 97 constitute improper taxes on greenhouse gas emissions rather than legitimate penalties.^[39] They argue that the Defendants lack explicit authorization from the State Legislature to impose such taxes, thus violating New York State’s Constitution.^[40] Conversely, the Defendants assert in their motion that the penalties under Local Law 97 are a valid exercise of the city's police power and do not equate to taxes.^[41] The Defendants cite legal precedents emphasizing the punitive nature of penalties and the primary purpose of taxes to raise revenue for government support.^[42] Additionally, the Defendants argue that the Plaintiffs misapply the legal test concerning fees and taxes. The Defendants argue that the Plaintiffs’ reliance on cases discussing fees versus taxes is inappropriate in the context of penalties.^[43] The Plaintiffs counter by asserting that the penalties serve no regulatory purpose and are therefore tantamount to improper taxes.^[44]However, their arguments fail to address the Defendants’ contentions and rely on cases that do not directly discuss penalties.^[45] The Plaintiffs also conflate the terms “fees” and “penalties,” but provide no relevant authority supporting their comparability.^[46] Consequently, the Court granted the Defendants’ motion to dismiss, finding that the Plaintiffs failed to demonstrate that Local Law 97’s penalties constitute unconstitutional tax levies.^[47]

3. Local Law 97’s Penalties Are Not Excessive Fines

The Plaintiffs also assert that the penalties under Local Law 97 for exceeding future annual emissions limits would result in excessive deprivation of their property without due process, thus violating both the United States and New York State Constitutions.^[48] However, the Defendants argue in their motion to dismiss that the Plaintiffs failed to state a cause of action.^[49] The Defendants assert that Local Law 97’s penalties are not inherently excessive and that the Plaintiffs have raised this cause of action prematurely, as no penalties have yet been assessed, and the law provides ample opportunity for challenge before any court or administrative tribunal.^[50] The Plaintiffs contend that the penalties are disproportionate and unreasonable, relying on precedent by way of the Golan v. FreeEats.com, Inc. case.^[51] The Plaintiffs  also refer to St. Louis, I.M. & S. Ry. Co. v. Williams, emphasizing the requirement that penalties are not to be oppressive or disproportionate to the offense committed.^[52] Defendants counter by citing Oriental Blvd. Co. v. Heller and Kaufman v. O'Hagan to support their argument that the penalties under Local Law 97 are not excessive.^[53] They argue that the penalties are a reasonable exercise of the city’s police power, necessary for public safety and welfare, and that courts should not substitute their judgment for that of legislative bodies.^[54] Ultimately, the Court granted the Defendants’ motion to dismiss the Plaintiffs’ second cause of action, ruling that the penalties under Local Law 97 did not violate their due process rights.^[55]

4. Plaintiffs’ Due Process Rights Are Not Violated by Defendants’ Retroactive Application of Local Law 97

In their third cause of action, the Plaintiffs argue that their due process rights are being infringed upon by the Defendants’ purported “retroactive” application of Local Law 97, which they contend is irrational and arbitrary.^[56]However, the Defendants posit that the Plaintiffs failed to present a viable cause of action because Local Law 97 is not retroactive.^[57] The Plaintiffs assert that their buildings were planned, built, and renovated in adherence to environmental standards existing at prior points in time, and that the penalties under Local Law 97 would essentially penalize the owners for not anticipating potential future regulations enacted by the city.^[58] Nonetheless, this argument is deemed invalid.^[59]The law dictates that property owners who have constructed or maintained their properties in accordance with prevailing laws at the time do not acquire vested rights or immunity against subsequent exercises of police power that introduce new requirements for property maintenance or usage.^[60] Consequently, the Defendants’ motion to dismiss concerning this cause of action is also granted.^[61]

5. Local Law 97 Is Not Unconstitutionally Vague

In their fourth cause of action, the Plaintiffs argue that Local Law 97 violates their due process rights because it is unconstitutionally vague as it fails to provide individuals of ordinary intelligence with a reasonable understanding of the prohibited conduct and opens the door to arbitrary enforcement.^[62] However, the Defendants assert the Plaintiffs have not presented a valid cause of action as Local Law 97 is not unconstitutionally vague.^[63] Courts employ a two-part test to evaluate the constitutionality of statutes or regulations in such cases.^[64] First, the court assesses whether the statute sufficiently defines prohibited conduct to give individuals fair notice.^[65] Second, the court examines whether the enactment provides clear standards for enforcement to prevent arbitrary application.^[66] The Plaintiffs’ challenge against Local Law 97 demands a heavy burden, requiring them to demonstrate that the statute is impermissibly vague in all its applications.^[67] The court relies on a Void-For-Vagueness Doctrine, embodying a concept of fairness, that does not demand impossible specificity but requires a reasonable degree of certainty.^[68] The Plaintiffs claim Local Law 97 lacks clarity regarding emission limits, penalties, and adjustment factors.^[69] However, they fail to show that the statute is so vague as to permit unfettered discretion.^[70] Terms like “reasonable” and “good faith” used in the law do not render it unconstitutionally vague.^[71] Thus, the Defendants’ motion to dismiss the Plaintiffs’ cause of action based on the void for vagueness doctrine is granted.^[72] In sum, the Defendants’ motion to dismiss the Plaintiffs’ complaint was granted for each cause of action and the case was dismissed.^[73]

In the following section of this case comment, we will look at the implications of the Glen Oaks Village Owners case. Using the Court’s reasoning drawn out in the above sections, we will analyze how this case could impact New York’s ability to tackle the climate crisis pursuant to their police powers.

Implications of Glen Oaks Village Owners v. City of New York

This decision has significant implications for New York City’s fight against greenhouse emissions, as the city depends on Local Law 97 to achieve an 80% reduction in emissions from the building sector, which currently stands as the primary source of the city’s overall greenhouse gas emissions. The ruling offers reassurance to the New York City real estate sector regarding the legitimacy, enforceability, and constitutionality of Local Law 97. The legislation’s greenhouse gas emission limits are slated to come into force in 2024.^[74] Moreover, the Glen Oaks ruling not only validates Local Law 97 but also establishes the broad authority of local governments in New York to regulate greenhouse gas emissions under their police power.^[75] While the decision addresses familiar legal grounds, it confronts questions that have given local governments some hesitation - few wish to face litigation, even if their actions are legally sound.^[76] While Glen Oaks is specific to New York’s jurisdiction, its legal principles will likely resonate beyond state borders.^[77] The case offers insights into navigating challenges related to police power, due process, penalties, and state law preemption in the context of local climate regulation.^[78] In this way, it sets a precedent for defending similar climate initiatives not only within New York but also across the nation.^[79]

The Current Status of Local Law 97

Shortly following the Court’s dismissal of the challenge against Local Law 97, in December 2023, the Department of Buildings finalized a second set of regulations aimed at implementing the law.^[80] Having initially released draft regulations on September 12, 2023, and having considered public feedback, the finalized rules encompass two particularly notable elements.

First, in the upcoming compliance period from 2024 to 2029, building owners facing challenges in meeting emissions limits have the opportunity to mitigate penalties and extend their compliance deadline until 2026.^[81] To qualify for this extension, owners must demonstrate a genuine “good faith effort” to adhere to the law’s requirements.^[82]This entails several key steps, including submitting annual building emissions reports, maintaining compliance with any adjustments granted by the Department of Buildings, and adhering to energy benchmarking regulations outlined in Local Law 84 of 2009.^[83] Additionally, the second rules package outlines compliance requirements with lighting upgrades and sub-meter installation, as stipulated in Local Law 88 of 2009.^[84] Moreover, building owners can choose to submit a “Decarbonization Plan” to the Department of Buildings by May 1, 2025 which  outlines  strategies to achieve compliance with the 2024 limits by no later than 2026.^[85] These measures reflect the city's commitment to promoting sustainable practices and reducing greenhouse gas emissions within the building sector.^[86] This clause offers buildings at risk of exceeding their 2024 emissions thresholds a chance to evade penalties for both 2024 and 2025.^[87] To qualify, the struggling building owners      must fulfill various conditions, including a comprehensive strategy outlining their path to meeting the 2024 emissions limits by 2026.^[88] These plans must include an energy audit, an inventory of equipment, the presentation of clear schedules, financial arrangements, and anticipated emission reductions resulting from planned modifications aimed at achieving net zero emissions by 2050.^[89]

Furthermore, the Department of Buildings regulations for the 2024 to 2029 compliance period do not impose any restrictions on building owners’ ability to acquire Renewable Energy Credits to offset their surplus annual emissions from electricity generation.^[90] By purchasing RECs, building owners can compensate for their excess electricity emissions while still utilizing fossil fuels to power their buildings.^[91] Despite considerable criticism from environmental advocates regarding this aspect of the rule, it remains unchanged in the final Department of Buildings rules package.^[92]

A REC is a tradeable asset representing a specific quantity of renewable energy generated elsewhere.^[93]According to Local Law 97 regulations, qualifying RECs are restricted to “Tier 4” projects meaning those involving renewable energy generation within New York City or directly delivered into the city.^[94] In following rulemaking processes, as the New York City and  New York State implement more stringent emissions mandates under climate legislation, the Department of Buildings might consider limiting REC utilization to a specific portion of a building’s excess emissions.^[95]

Conclusion

In sum, theGlen Oaks Village Owners v. City of New Yorkcase serves as a pivotal moment in the realm of local climate governance, particularly within the context of New York City’s ambitious efforts to combat climate change. TheCourt’s dismissal of challenges against Local Law 97 reinforces the legitimacy and constitutionality of the city’s regulations aimed at reducing greenhouse gas emissions from buildings. By upholding Local Law 97, theCourt not only affirms the city’s authority to regulate emissions under its police powers but also sets a precedent for similar climate initiatives nationwide. The decision offers clarity and assurance to the real estate sector regarding the enforceability and legality of the law, paving the way for its implementation and fostering a culture of sustainability

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^[1] See Local Law 97, New York City Sustainable Buildings (March 24, 2024), https://www.nyc.gov/site/sustainablebuildings/ll97/local-law-97.page.

^[2] See id.

^[3] See id.

^[4] See id.

^[5] See id.

^[6] See id. at *1

^[7] See generally Local Law 97, New York City Sustainable Buildings (March 24, 2024), https://www.nyc.gov/site/sustainablebuildings/ll97/local-law-97.page.

^[8] See id.

^[9] See Local Law 97 Compliance, New York City Sustainable Buildings (March 24, 2024), https://www.nyc.gov/site/sustainablebuildings/requirements/compliance.page.

^[10] See id.

^[11] See id.

^[12]See id.

^[13] See id.

^[14] See id.

^[15] Shane Shifflett, The NYC Building Makeover Being Watched Around the Country, WSJ (March 1, 2024 11:13 AM), https://www.wsj.com/us-news/climate-environment/new-york-city-building-emissions-retrofit-0a1a4952.

^[16] See id.

^[17] See id.

^[18] See id.

^[19] See id.

^[20] See id.

^[21] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 2 (Sup. Ct., N.Y. Co. 2023).

^[22] Id.

^[23] Id.

^[24] Id.

^[25] Id.

^[26] Id. at 2.

^[27] See Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 2 (Sup. Ct., N.Y. Co. 2023)

^[28] See id.

^[29] Id. at 10.

^[30] Id.

^[31] See id.

^[32] See id.

^[33] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 11 (Sup. Ct., N.Y. Co. 2023).

^[34] See id.

^[35] Id. at 12.

^[36] See id.

^[37] See id.

^[38] Id. at 13.

^[39] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 14 (Sup. Ct., N.Y. Co. 2023).

^[40] See id.

^[41] See id.

^[42] See id.

^[43] Id. at 15.

^[44] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 15 (Sup. Ct., N.Y. Co. 2023).

^[45] See id.

^[46] See id.

^[47] See id.

^[48] Id. at 17.

^[49] See id.

^[50] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 17 (Sup. Ct., N.Y. Co. 2023).

^[51] See id.

^[52] Id. at 18.

^[53] Id. at 19-21.

^[54] See id.

^[55] Id. at 23.

^[56] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 23(Sup. Ct., N.Y. Co. 2023)

^[57] See id.

^[58] See id.

^[59] See id.

^[60] See id.

^[61] Id. at 24.

^[62] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 24 (Sup. Ct., N.Y. Co. 2023).

^[63] See id.

^[64] See id.

^[65] See id.

^[66] Id. at 24.

^[67] Id. at 25.

^[68] Glen Oaks Vill. Owners, Inc. v. City of N.Y., 2023 NY Slip Op 33867(U), 1, 25 (Sup. Ct., N.Y. Co. 2023).

^[69] Id. at 26.

^[70] See id.

^[71] Id. at 27.

^[72] See id.

^[73] Id. at 28.

^[74] Saba & Goldman, New York Supreme Court Dismisses Challenge to Local Law 97, SPR Law (October 31, 2023), https://sprlaw.com/new-york-supreme-court-dismisses-challenge-to-local-law-97/.

^[75] Amy Turner, New York State Court Upholds Local Law 97, Sabin Center For Climate Change Law (November 6, 2023), https://blogs.law.columbia.edu/climatechange/2023/11/06/new-york-state-court-holds-upholds-local-law-97/#:~:text=The%20first%20of%20the%20due,the%20federal%20and%20state%20Constitutions.

^[76] See id.

^[77] See id.

^[78] See id.

^[79] See id.

^[80] Rizzo & Nolette, Local Law 97: What NYC building owners and operators need to know now that the law’s first compliance period (2024-2029) has begun, Carter Ledyard & Milburn LLP (March 4, 2024), https://www.clm.com/local-law-97-what-nyc-building-owners-and-operators-need-to-know-now-that-the-laws-first-compliance-period-2024-2029-has-begun/.

^[81] See id.

^[82] See id.

^[83] See id.

^[84] See id.

^[85] Rizzo & Nolette, Local Law 97: What NYC building owners and operators need to know now that the law’s first compliance period (2024-2029) has begun, Carter Ledyard & Milburn LLP (March 4, 2024), https://www.clm.com/local-law-97-what-nyc-building-owners-and-operators-need-to-know-now-that-the-laws-first-compliance-period-2024-2029-has-begun/.

^[86] See id.

^[87] See id.

^[88] See id.

^[89] See id.

^[90] Rizzo & Nolette, Local Law 97: What NYC building owners and operators need to know now that the law’s first compliance period (2024-2029) has begun, Carter Ledyard & Milburn LLP (March 4, 2024), https://www.clm.com/local-law-97-what-nyc-building-owners-and-operators-need-to-know-now-that-the-laws-first-compliance-period-2024-2029-has-begun/.

^[91] See id.

^[92] See id.

^[93] See id.

^[94] See id.

^[95] Rizzo & Nolette, Local Law 97: What NYC building owners and operators need to know now that the law’s first compliance period (2024-2029) has begun, Carter Ledyard & Milburn LLP (March 4, 2024), https://www.clm.com/local-law-97-what-nyc-building-owners-and-operators-need-to-know-now-that-the-laws-first-compliance-period-2024-2029-has-begun/.