Mid-Atlantic Health Law TOPICS

In 2022, the Maryland General Assembly passed The Climate Solutions Now Act (CSNA), which is one of the most ambitious examples of climate change legislation in the country.

As a result of the CSNA, the Maryland Department of the Environment (MDE) was tasked with creating new regulations, requiring owners of certain large buildings (covered buildings) in Maryland annually to report greenhouse gas emissions and the energy efficiency of the buildings, as well as paying significant fees and penalties for failing to meet specific emission and efficiency goals. 

From a practical standpoint, BEPS will, over time, force owners of covered buildings to replace fossil fuel heating and water heating systems with electric heat pumps. An additional mandate will force buildings owners to reduce energy consumption by using only very high efficiency heat pumps, reduce electricity use by other building sources and, potentially, make structural changes to increase insulation and decrease heating demand.  

Covered Buildings

A “covered building” subject to BEPS is any commercial or multifamily residential or state-owned building that is 35,000 square feet or larger (excluding the parking garage area) with certain specific exceptions. The excep-tions include some historic properties, public and nonpublic elementary and secondary schools, manufacturing buildings, and agricultural buildings.
 
MDE estimates that there are approximately 9,000 buildings that meet this definition, and they are spread across every county in Maryland. 
Note that hospitals, nursing homes, health care facilities, and labs are not exempt from these requirements. Below are the published standards for relevant buildings within the health care industry. 

Net Direct Emissions Standards Kg CO2e per square foot

Building owners who do not comply with these standards will be required to pay an alternative compliance fee. 

Reporting Notices    

These regulations were officially enacted in December 2024, with the first reporting requirement due in September 2025 (for the 2024 year). MDE plans to send out notices in April 2025 in regard to such reporting requirements to owners of covered buildings. 

The initial notices may include some buildings that are not required to meet the criteria and, in other cases, may inadvertently omit covered buildings. This 2025 notification from MDE should not be the sole determining factor as to whether a building is subject to these requirements. It is the building owner’s responsibility to determine if the rules apply to the structure.

Impact on Tenants   

This initiative does not just affect building owners. Tenants will be required to provide landlords with utility data within 30 days of a landlord making that request. Further, depending on lease terms, tenants may be liable for the costs of retrofitting the building, or at least a portion of those costs. Structuring future leases to account for these new regulations will be essential.

Pending Litigation   

A large group of building owners have filed suit against the Secretary of MDE, seeking to enjoin BEPS. If successful, the litigation would prevent MDE from enforcing many of the BEPS requirements. 
The litigation seeks an injunction, but, until and unless relief is granted, BEPS will continue to apply. Also, nothing in the pending litigation seeks a delay in the benchmarking reports due on September 1st of 2025, so building owners should assume they will need to comply with that deadline.

Maxwell T. Cooke
410-576-4141 • mcooke@gfrlaw.com