Md. climate legislation’s impact on providers - Maryland Daily Record

Md. climate legislation’s impact on providers - Maryland Daily Record

Commentary://October 13, 2023

//October 13, 2023
//

Every health care provider rents or owns the space in which they treat patients. Therefore, every Maryland health care provider will be significantly impacted by Maryland’s very aggressive climate legislation.

In 2022, the General Assembly passed The Climate Solutions Now Act, which is one of the most ambitious examples of climate change legislation in the country. The CSNA is broad and will influence decisions in almost every sector of our daily lives. Doctors, health care providers, and building owners will need to stay engaged with the upcoming developments to understand how exactly the CSNA will impact the health care industry.

At a high level, the CSNA calls for Maryland to reduce greenhouse gases by 60% (compared to a 2006 baseline) by 2031, and for Maryland to reach net-zero emissions by the year 2045. No other state has required a 60% reduction by 2031 in legislation.

More specifically, the CSNA will implement these goals through regulating transportation and new and existing buildings, as well as several other means. For example, Maryland is following California’s lead in adopting the Advanced Clean Cars II rule. This rule will ban the sale of new gasoline-only powered cars in Maryland by 2035.

While the ban on the sale of new gasoline-only powered cars in Maryland by 2035 will grab most headlines, there are also changes coming that will require complete electrification of new, and eventually existing buildings.

What we know

The Building Codes Administration and Maryland Public Service Commission are providing recommendations that will require new buildings to rely solely on electricity for internal use (as opposed to fossil fuels), for example, for heating. The earliest these recommendations will be implemented is 2024, but there are some knowns and many unknowns.

For existing buildings, the Maryland Department of the Environment is scheduled to adopt regulations for “covered buildings” in the fall of 2023. These regulations will require that commercial buildings with a gross floor area (excluding parking garages) of 35,000 sq. ft. or more significantly reduce their “Direct Greenhouse Gas Emissions,” emissions that are produced on site.

Specifically, each covered building will be required to:

Historic properties, schools, manufacturing buildings and agricultural buildings are excluded from the definition of covered buildings. However, health care facilities are not excluded from these changes.

Once these regulations are implemented, buildings that exceed the greenhouse gas reduction targets will pay an alternative compliance fee. The fees begin in 2030 at $230 per metric ton of excess CO2. This number will steadily increase (while adjusting for inflation) and will reach $270 per metric ton of excess CO2 by 2040.

In addition to this alternative compliance fee, building owners will be also responsible for EUI compliance and financial penalties for failure to meet the EUI targets. Buildings that do not meet these EUI goals will be subject to large potential penalties of thousands of dollars per day.

Sales of covered buildings

These regulations also have implications on the sale of covered buildings. Before a buyer signs a contract to purchase a covered building, the current owner must disclose to the buyer that the building is subject to building performance requirements. Additionally, the current owner must transfer benchmarking data and documentation of compliance payments to the buyer.

If building ownership changes in 2030 or any subsequent calendar year, then the building owner of the building on Dec. 31 of that year is responsible for regulation compliance, for paying alternative compliance fees (if any), or for penalties for the calendar year ending on Dec. 31 and every calendar year thereafter until that person is no longer the owner of that covered building.

Once MDE implements these regulations, health care providers, business owners, and building owners will need to pay close attention to compliance requirements.

It is clear that Maryland’s ambitious climate legislation will impact many businesses, including everyone who provides services in a large health care building.

Barry F. Rosen is the chairman & CEO of the law firm of Gordon Feinblatt LLC, heads the firm’s health care practice group, and can be reached at 410-576-4224 or