Green Building Law Update

The Intersection of Real Estate, Science, and Law

2025 Year in Review of Environmental Blog Posts

As 2025 draws to a close, environmental law once again proved to be less about ideology and more about adaptation.

The environmental issues that resonated most this year, from political, cultural to economic, reflected in our Top 10 most read blog posts, were those that sat squarely at the intersection of regulation, innovation, and market opportunity, acknowledging that “sometimes I am a conspiracy theorist, but I only believe in conspiracy theories that are true,” quoting Vice President J.D. Vance.

Framed in a David Letterman style countdown, this retrospective highlights an amazing year shaped by technological acceleration, litigation risk, and a new Presidential administration that rewarded businesses and policymakers who prioritized flexibility, embraced market based solutions, and treated environmental change as a competitive advantage rather than a compliance burden.

Yes, the U.S. Mint stopped production of the penny this past November, after 232 years, but given that pennies have, since 1982, been mostly zinc with a thin copper plating, economic chaos is not expected, although there is much else to obsess over from this unpredictable year.

Top 10 List of Blog Posts

As we prepare for 2026, let’s revisit the blog posts that defined environmental change in 2025:

10. Stablecoin to Access Capital to Accelerate Green Building Market Transformation

9. Battery Storage: The New “Must Have” Amenity in Commercial Leases

8. Federal Bank Regulators Withdraw Climate Mandates

7. EPA Moves to Overturn California’s Motor Vehicle Emission Standards

6. Maryland Should Allow Off Grid Electricity Providers, as Should the Whole Country

5. Greenwashing Lawsuits Surge in 2025: Navigating the Expanding Risk

4. Offshore Wind Projects are Now ‘Really’ Dead

3. Mold Testing in Maryland Real Estate under the New Law

2. Mandatory GHG Disclosures in Maryland Real Estate Contracts

1. From Boilerplate to Benchmarking: The New Era of Climate Smart Leases

Two Bonus Blog Posts

While not among the Top 10 most read by our blog readers, I commend to your reading:

11. Exposomics Is the Environmental Issue Business Should Take Seriously

12. Potable Water Bankruptcy as Environmental Crisis

Awaiting Us in 2026

Year end retrospectives often look backward, but environmental law has never been a backward looking discipline. As 2025 closes, our most read blog posts tell a story about where environmental policy is heading, not where it has been.

Unsurprisingly, our readers gravitated toward content focused on innovation, market driven solutions, and the disruption of traditional public policy approaches.

The common thread is telling. In a year shaped by a new U.S. President, evolving technologies, and persistent regulatory friction, our most read posts consistently favored innovation, rapid adaptation, and market based solutions over incremental change. In short, they reflect an audience focused less on preserving the status quo and more on reshaping it for a profit.

Next week’s blog will dive into what we are confident will be “the” defining environmental issue and opportunity of 2026 (.. and no, we are not going to write about the emergence of Artificial General Intelligence). Until then, thank you for being part of our journey this year! If you are not currently a subscriber, please visit www.greenbuildinglawupdate.com to subscribe and receive email notifications of our weekly posts.

Wishing you a successful and prosperous New Year!

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Exposomics is the Environmental Issue Your Business Should Take Seriously” on Tues, Jan 20 at 9 am. The webinar is complimentary, but you must register here.

Extended Producer Responsibility – A Rapidly Changing Environmental Landscape in Maryland and Elsewhere

By Stuart Kaplow on December 21, 2025 Posted in Codes and Regulations, recycling

Extended Producer Responsibility laws, often referred to simply as EPR, represent one of the most consequential shifts in U.S. environmental policy affecting businesses from manufacturers and multi family residential building owners to distributors and retailers. These laws fundamentally change who pays for, manages, and is accountable for the end of life of consumer product packaging, paper, e-waste, and paint.

EPR has its origins in a 1990 academic paper penned at Lund University in Sweden by Thomas Lindquist.

For businesses, it is no longer an academic public policy debate; it is an immediate compliance obligation with real financial, operational, and reputational consequences. This is where we, as experienced environmental counsel, can play a critical role.

What EPR Laws Require and Why They Matter to Business

Producer Responsibility Laws shift the financial and operational burden of managing products at the end of their useful life away from end users (.. for example, an accounting firm that pays to have its dumpster collected where the trash hauler then pays to dispose of the solid waste in a landfill), or sometimes municipalities that accept waste (.. often residential trash) without tipping fees, and onto the companies that place those products into the stream of commerce.

In practice, EPR laws typically require producers to:

Register with states or a designated Producer Responsibility Organization (PRO)
Report detailed data on materials placed on the market
Pay fees that fund recycling, collection, education, and infrastructure
Meet performance standards tied to recycling or reuse outcomes

The stated policy objective is counterintuitive; that is, when producers of products bear the cost of waste management they have an incentive to design products and packaging that are easier to recycle, less toxic, and more efficient; as opposed to packaging that best protects the product in the stream of commerce, today often involving overnight delivery to the end user, ceding control to single large monopolistic stewardship organization (.. Maryland selected Circular Action Alliance as the single nonprofit PRO in the state), including hindering innovation and reuse. The loftier social engineering goal is the creation of a circular economy in which materials are reused rather than discarded.

From a legal and business perspective, however, EPR creates a complex, state by state (among progressive states) checkerboard compliance matrix. California, Colorado, Maine, Maryland, Minnesota, Oregon, and Washington have all enacted packaging EPR laws, each with its own definitions, thresholds, reporting timelines, and enforcement mechanisms. California’s SB 54, for example, requires most single use packaging and food service ware to be recyclable or compostable and obligates producers to fund roughly $500 million per year in system costs. Other states have adopted vastly different frameworks with meaningful differences that matter for compliance by a national producer.

Failure to comply can lead to penalties, enforcement actions, and, in some states, bans on selling noncompliant products.

Maryland’s Expanding EPR Framework

Maryland has embraced EPR across several product categories. Businesses should already be familiar with:

Electronics (E-Waste): Maryland’s Statewide Electronics Recycling Program requires manufacturers of covered electronics to provide free take back at retail locations where their products are sold, and charges manufacturers per unit sold.
Paint: Under the Maryland Paint Stewardship Act, paint manufacturers will fund and operate a statewide program beginning in 2026 for the collection and proper recycling or disposal of leftover paint, with a gallon of paint surcharge.
Packaging and Paper Products: The most significant recent development is the Packaging and Paper Products Producer Responsibility Plans Act, signed into law on May 13, 2025. This statute requires producers of packaging and paper products to pay fees to support recycling and waste management systems.

The Maryland Department of the Environment has just released draft regulations, which will govern how this new packaging and paper products EPR program will operate and it is dramatically larger than the E-Waste and Paint programs. These proposed regulations are expected to affect not only large brand owners, but also certain small businesses that qualify as “producers” or that provide services within the regulated system. Public comments are being accepted until December 27, 2025.

The New Proposed Maryland Regulations

Objective and Scope. The proposed regulations in COMAR 26.04.14, Extended Producer Responsibility (EPR) for Packaging and Paper Products, implement Maryland’s EPR framework authorized by Environment Article §§ 9-2501 – 9-2512 of the Maryland Code. They detail how producers must register, report, and participate in a statewide system to manage the end of life handling of covered materials.

Key Definitions and Coverage. “Covered materials” include most packaging (primary, secondary, tertiary) and paper products sold or distributed in Maryland, including beverage containers, carryout bags, and multimaterial items. Exemptions apply to certain infant formula, medical, and other regulated packaging. A “producer” is defined by a hierarchy (manufacturer, brand owner, importer, distributor) depending on how the material enters the Maryland market. The regulations also define Producer Responsibility Organizations and terms such as recycling, reuse, composting, and responsible end markets.

Producer Registration and Plans. Producers must register with the Maryland Department of the Environment and either participate in a PRO or submit an Individual Producer Responsibility Plan. Annual registration must categorize covered materials

Why Recycling Policy Is Harder Than It Looks

EPR laws are being adopted against the backdrop of a failed recycling system. Nationally, less than 24% of discarded materials are recycled or composted. Cost allocation is arguably a barrier, but not the only impediment. Recycling requires capital intensive infrastructure, specialized equipment, and labor, while the market value of recycled materials is often lower than that of virgin materials.

Contamination further undermines system efficiency. Single stream recycling programs can experience contamination rates approaching 25%, driven by “wish cycling,” improper sorting, and the inclusion of non-recyclable items such as plastic bags, batteries, or food soiled materials. These mistakes increase processing costs, damage equipment, and ultimately reduce the value of recycled outputs.

It is significant that despite Maryland’s newly proposed packaging and paper products regulations, there is not a single paper processing facility within the state. Paper products may be collected, sorted, and baled but must then be shipped to out of state mills (.. because Maryland environmental laws would not permit a recycling facility), nearly all of which are overseas, for recycling. The environmental efficacy of transporting that recycling and processing it somewhere else is an issue.

Recycling also has environmental tradeoffs. Paper recycling consumes large amounts of potable water and chemicals; plastic recycling can release pollutants. While recycling is preferable to landfilling, solid waste collection in Maryland has been largely operated by local governments since the late 1880s; it is not a silver bullet.

Well designed EPR programs (.. possibly good examples are in battery recycling) must balance environmental benefit, economic feasibility, and practical implementation. An interesting example is the Washington Department of Ecology adopted new rule, the Battery Stewardship Program, to implement requirements under Washington’s battery EPR law that takes effect on January 16, 2026. Other states, including Maryland, are considering battery and battery containing product EPRs.

The Attorney’s Role in EPR Compliance and Strategy

We have worked in this space for more than a decade, including structuring one of the earliest Producer Responsibility Organizations. An environmental attorney does far more than interpret statutory language.

In this substantive space, we have experience working with businesses, including in the US Green Building Council’s TRUE Zero Waste Certification Program, where we have assisted organizations in developing a framework for drastically reducing waste, aiming for more than 90% diversion from landfills.

A Critical Moment for Maryland Businesses

Maryland’s proposed paper and packaging regulations will be expensive to comply with, costs that will be passed onto Maryland consumers, and will certainly not deliver commensurate environmental benefits. That makes participation in the current rulemaking process especially important. Businesses, from multi family residential to retailers, that remain silent now may find themselves locked into a regulatory structure that is costly, rigid, and difficult to unwind later.

Maryland’s EPR is actually designed to be a revenue source for government and nothing more. Does anyone think the Maryland Paint Stewardship Act has resulted in paint manufacturers changing the “design products and packaging that are easier to recycle, less toxic, and more efficient ..” or does a gallon of paint still look like a gallon of paint, just with a new 99 cent fee on every can? Moreover, the Maryland law does not have eco modulation features with bonuses for recycled content, bio based materials, or the like.

EPR is not going away, in Blue states, despite being bad public policy. For businesses, the question is whether compliance will be reactive and fragmented or strategic, informed, and legally defensible. Engaging experienced environmental counsel early may be the difference between treating EPR as an unmanaged cost center or utilizing it as an opportunity to reduce risk, influence policy, and plan intelligently.

The alternative attributed to Thomas Lindquist is embracing the concept that if a consumer product cannot be reused or recycled at the end of its life, then it should not be sold at all.

Note that the content above has been generated by an artificial intelligence language model transcribing and combining my comments as a guest on a podcast last week. My words may not be entirely error free, and should you have questions, please reach out to me.

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Exposomics Is the Environmental Issue Business Should Take Seriously

By Stuart Kaplow on December 14, 2025 Posted in Environmental, Green Building

For decades, environmental law focused on the visible and the catastrophic: spills, smokestacks, Superfund sites, and enforcement actions after damage was done. Today, a quieter but far more pervasive environmental issue is moving to the center of serious scientific and commercial attention: exposomics.

Businesses should be paying close attention because exposomics reframes environmental risk not as an abstract regulatory concern, but as a measurable driver of human health, workforce productivity, liability exposure, and asset value.

At its core, the exposome describes the totality of environmental exposures an individual experiences over a lifetime and how those exposures affect biology and health.

Exposomics is the science devoted to studying those exposures from conception to death. It complements genetics by examining how chemicals, diet, lifestyle, stress, socioeconomic conditions, infections, radiation, and physical activity interact with our biology to influence disease and in particular, a modern chronic illness epidemic. Using advanced “omics” tools, wearable sensors, and environmental monitoring, exposomics seeks to connect environmental drivers to biological responses, revealing nongenetic causes of disease and opening the door to prevention rather than treatment.

Why should businesses care? Because the long promised revolution of genetics did not fully materialize. The Human Genome Project was supposed to explain disease and unlock cures. Instead, the Centers for Disease Control and Prevention now acknowledge that genetics accounts for roughly 10 percent of disease, with the remaining causes largely environmental. In other words, what surrounds us, and what we allow into our air, water, food, and buildings, matters far more than what we inherit.

Recent research underscores this point. In a study of nearly half a million people in the United Kingdom, Oxford researchers concluded that environment and lifestyle were ten times more likely than genetics to explain premature death. That finding should be a wake up call for anyone responsible for workplaces, housing, or consumer products.

Consider Parkinson’s disease. It is now the second most common neurological disorder in the United States after Alzheimer’s, with approximately 90,000 new diagnoses each year. Parkinson’s rates have doubled over the past 30 years and are projected to increase another 15 to 35 percent per decade. That is not how inherited genetic diseases behave. The latest research suggests that only 10 to 15 percent of Parkinson’s cases are fully explained by genetics.

As Dr. Ray Dorsey, a neurologist at the University of Rochester, has put it: “The health you enjoy, or don’t enjoy, today is a function of your environment in the past.” That environment includes air pollution, pesticides, PFAS, solvents, and legacy contaminants embedded in buildings and infrastructure. In his book Ending Parkinson’s Disease, Dorsey argues that Parkinson’s is largely an environmental disease, with up to 90 percent of cases linked to chemical exposures, including pesticides and solvents such as trichloroethylene (TCE). If that is correct, Parkinson’s is not inevitable; it is preventable.

TCE is a particularly troubling example. No one knows precisely how much of the world’s drinking water is contaminated, but the CDC estimates that between 4 and 18 percent of Americans are exposed, while the Environmental Working Group places the number at roughly 17 million people. While TCE’s link to cancer is well established, its neurological impacts are still being unraveled.

The pesticide paraquat, strongly associated with Parkinson’s among farmworkers, remains legal in the United States despite being banned in Europe and China. This uneven regulatory landscape does not inspire confidence.

The broader chemical picture is even more concerning. Of the roughly 350,000 chemicals in commerce, only about 1 percent have ever been tested for safety. In more than half a century, the U.S. Environmental Protection Agency has banned or meaningfully restricted only a dozen or so substances, while the European Union has restricted more than 2,000.

It is easy to mock suburban “MAHA moms” making their own food coloring or refusing to microwave plastic. But their instincts are not irrational. Increasing numbers of Americans, including this author, filter drinking water, run air purifiers, choose fragrance and dye free products, buy organic produce, and avoid heating food in plastic. They are responding to uncertainty in U.S. commerce that has not kept pace with modern science. Who thinks it is a good idea to use artificial food dyes in children’s breakfast cereal that are synthetic chemicals derived from petroleum?

Autism offers another sobering data point. Diagnoses have increased from approximately 1 in 10,000 children in the 1970s to 1 in 36 today. Genetics and improved screening do not fully explain that rise, according to experts such as Johns Hopkins toxicologist Thomas Hartung.

Since the 1990s, more than 75 percent of American adults live with at least one chronic disease, including autoimmune disorders, insulin resistance, and neurodevelopmental conditions. Hartung estimates that only five percent of disease is purely genetic, and fewer than 40 percent have any meaningful genetic component at all.

This is where exposomics becomes directly relevant to business. It has already gone mainstream in commercial real estate and corporate operations. Tenants increasingly negotiate for purified drinking water and indoor air quality, demanding minimum standards for healthy air, use of low emitting materials, requiring better ventilation and pollutant testing (like formaldehyde, fine particulate matter, and VOCs), and healthy food options,with the aim of better occupant health, productivity, and energy efficiency. These are not fringe demands. They are risk management strategies informed by emergent science and driven by workforce and other stakeholder expectations as well as competitive differentiation.

From an environmental attorney’s perspective, exposomics also foreshadows liability. As science improves our ability to link specific exposures to specific health outcomes, the evidentiary gap that once protected polluters and product manufacturers will narrow. Businesses that proactively reduce exposures, including with green buildings (.. LEED, Green Globes, and the like), will be better positioned than those that wait for regulation or litigation to force change.

Exposomics is not about panic. It is about precision, measuring what we are exposed to, understanding how it affects us, and making informed decisions. For business owners, that means recognizing that environmental health is no longer a populist slogan in a political movement or a public relations exercise. It is a core operational, legal, and financial concern.

Exposomics is the environmental issue you should take seriously because your employees, tenants, customers, and balance sheet already are.

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Reopening a 10 Year Old Bankruptcy for Environmental Claims to Bring Finality to CERCLA Liability

By Stuart Kaplow on December 7, 2025 Posted in Codes and Regulations, Federal

Environmental and real estate practitioners spend a great deal of time counseling clients on how to avoid or allocate liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA a/k/a Superfund). For purchasers of property, the Phase I Environmental Site Assessment is often the talisman performed to establish the innocent landowner or bona fide prospective purchaser defenses to CERCLA.

But another, often overlooked, doctrine can be just as powerful in establishing certainty and defending against environmental claims: the finality of a confirmed bankruptcy plan, and a bankruptcy court’s authority, even years later, to interpret and enforce its own orders. Make no mistake, the Bankruptcy Act of 1800 can trump CERCLA of 1980.

The Third Circuit’s recent decision in In re Congoleum Corp., 149 F.4th 318 (3d Cir. 2025), underscores just how potent that tool can be. In a divided opinion, the court affirmed a bankruptcy court’s decision to reopen a Chapter 11 case that had been closed for more than a decade, for the purpose of interpreting whether environmental claims against a former affiliate were barred by the plan and confirmation order. The court’s support for the Bankruptcy court’s jurisdiction and its reaffirmation of the binding effect of confirmation findings should be welcomed by companies seeking certainty in environmental risk allocation.

Section 350(b): The Narrow Doorway to Reopening

Bankruptcy cases, after full administration of the estate, are to be closed under Section 350(a). Yet Congress provided an escape hatch in Section 350(b), allowing reopening “to administer assets, to accord relief to the debtor, or for other cause.” Courts have long described this as a narrow doorway, used sparingly, and only in circumstances where reopening serves a compelling purpose that outweighs the need for finality.

In Congoleum, the Bankruptcy court found cause to reopen a long closed case because the motion implicated the interpretation and enforcement of core bankruptcy orders: the approval of a major insurance settlement and the plan confirmation order. The Third Circuit agreed that this was a paradigmatic example of “other cause.” Not only environmental lawyers but all owners of real estate should pay close attention here. Even when environmental claims arise outside the bankruptcy context and years after case closure, the question of whether those claims were barred, allocated, or addressed in a bankruptcy plan can still be squarely within a bankruptcy court’s jurisdiction.

Bankruptcy Court Jurisdiction Even Over Environmental Claims Involving Non Debtors

A substantial portion of the Third Circuit’s analysis focused on jurisdiction and appropriately so. After all, bankruptcy judges are Article I judges, not Article III judges. And the District court below held that only the original confirming court (a District judge) could interpret the confirmation order.

The Third Circuit majority rejected that argument. It emphasized that confirmation of plans is a core proceeding under 28 U.S.C. § 157(b)(2), and that interpreting and enforcing plan provisions is within the bankruptcy court’s authority, regardless of the fact that a District judge originally entered the confirmation order. The panel also underscored that the District court had long since referred the case back to the bankruptcy court, which had already meaningfully adjudicated related issues in a later bankruptcy case.

For environmental lawyers, this is a significant signal: when environmental claims collide with bankruptcy allocation of liabilities, the bankruptcy forum remains central, even years later.

Notice Matters: CERCLA Claims Cannot Escape the Binding Effect of a Plan

One of the core holdings in Congoleum was the rejection of Occidental Chemical Corporation’s argument that it was not adequately notified of the plan provisions and settlement findings that assigned sole responsibility for the flooring business’s liabilities to Congoleum, not Bath Iron Works, the former affiliate. The Third Circuit majority held that Occidental received proper notice of the settlement, the plan, and the confirmation hearing, and therefore was bound by the resulting orders.

Environmental lawyers frequently see CERCLA defendants attempt to escape prior orders by asserting lack of notice or by arguing that environmental liabilities cannot be limited or reallocated in bankruptcy without violating CERCLA. The Third Circuit rejected that framing. The court held that the bankruptcy court’s findings did not release a party in the case from liability; instead, they established that the party never had such liability. That distinction is critical and powerful. It frames the bankruptcy court’s action not as a prohibited third party release, but as a determination of historical fact tied to ownership and successor liability and that is huge as companies are bought and sold or transferred by merger of the sale of assets.

Res Judicata: Finality Protects Those Who Rely on the Bankruptcy System

Perhaps most important, the Third Circuit affirmed that confirmation orders are final judgments with full res judicata effect, binding all creditors with notice, including parties with environmental claims. The court found that the issues Occidental sought to litigate in District court were the same issues resolved years earlier in the bankruptcy case. That is a strong and clear statement: CERCLA’s formidable strict liability scheme does not override the binding finality of bankruptcy orders.

And that matters, not just for the extraordinary facts of Congoleum, but for the thousands of real estate transactions conducted every year. Buyers rely on environmental due diligence. Sellers rely on indemnities. And when environmental liabilities are addressed in bankruptcy, as they often are in reorganizations involving industrial sites, manufacturers, and chemical operations, the market needs confidence that those allocations will stick.

Why This Case Matters Beyond Its Unusual Facts

While the Congoleum case is unusual even by CERCLA standards, the Third Circuit’s opinion provides rare clarity in an intersection of law that is too often murky. Bankruptcy is not merely a financial restructuring tool; it is a powerful mechanism for resolving environmental liabilities with finality. And it is a far more common backdrop to environmental risk allocation than many appreciate.

Whether in reorganizations involving legacy manufacturing facilities, brownfields being redeveloped, or complex multi party Superfund sites, business owners should recognize that:

Bankruptcy court findings about environmental liabilities have a lasting, binding effect.
Those findings can be enforced even a decade later.
Section 350(b) provides meaningful authority to reopen cases where environmental disputes implicate the interpretation of a plan.

For environmental lawyers advising clients on CERCLA liability, and for real estate professionals evaluating historic contamination risk, the Congoleum decision is a reminder that environmental liability does not exist in a vacuum. Bankruptcy courts play a central, constitutionally grounded, and durable role in determining who ultimately bears responsibility for environmental harm.

A key takeaway is that a bankruptcy remote single asset entity, LLC or otherwise, is a preferred legal structure to be used in real estate to minimize risk.

When done right, the bankruptcy system provides what environmental law rarely does: certainty.

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Mandatory GHG Disclosures in Real Estate Contracts” on Tues, Dec 16 at 9 am. The webinar is complimentary, but you must register here.

Déjà Vu Again: Federal Agencies Move to Restore Clarity in Endangered Species Regulations

By Stuart Kaplow on November 30, 2025 Posted in Codes and Regulations, Environmental

Just before Thanksgiving, while most Americans were preparing for turkey and stuffing, the U.S. Fish and Wildlife Service and the National Marine Fisheries Service set the table for a major regulatory reset under the Endangered Species Act. And no, turkeys are not threatened or endangered, but the wood stork is, along with 89 other American bird species and more than 2,140 plants and animals currently listed under the 1973 law.

Biodiversity degradation is an existential crisis affecting planetary and human health, but the 1973 Endangered Species Act, as it has been administered, falls short. It is widely accepted that in the five decades the law has been in effect, populations of mammals, birds, amphibians, and fish have dropped a shocking 68 percent.

For those engaged in business in which real estate is an asset, last week’s announcement of four proposed ESA rules is more than administrative housekeeping. It represents a meaningful turn toward restoring the predictability, efficacy, and statutory fidelity that the regulated community relies on to make informed decisions about land and capital under a federal law up to the challenge.

The proposals would roll back Biden era ESA regulations, widely criticized for expanding federal reach, creating unnecessary complexity, and drifting away from the statute’s text, all despite more than five decades of ESA implementation history. These new rules implement Executive Orders 14154 (“Unleashing American Energy”) and 14219 (“Department of Government Efficiency”), as well as Secretary’s Order 3418, which collectively direct agencies to remove regulatory barriers that impede responsible resource development and economic growth while maintaining the conservation mission Congress intended.

As Secretary of the Interior Doug Burgum put it, the administration is “restoring the Endangered Species Act to its original intent, protecting species through clear, consistent and lawful standards that also respect the livelihoods of Americans who depend on our land and resources.”

What the Four Proposed Rules Would Do

1. Listing and Critical Habitat (50 CFR part 424)
This rule would return the listing process to the 2019 regulatory text. Most significantly, it would once again allow transparent consideration of economic impact information that does not dictate the listing decision but helps the public understand its implications. It also restores clarity to the “foreseeable future” standard and reinstates the longstanding two-step analysis for designating unoccupied habitat. For developers of real estate projects managing timelines and financing, a return to well understood definitions is not trivial.

2. Interagency Cooperation (50 CFR part 402)
Section 7 consultation has long been the chokepoint where project timelines can stall. The agencies propose to restore the 2019 definitions of “effects of the action” and “environmental baseline,” removing the 2024 “offset” provisions that never fit comfortably within the statute. These revisions directly respond to the Supreme Court’s landmark Loper Bright decision, which ended Chevron deference and reinforced that agencies must adhere to the ESA as written. Clarity in consultation is clarity in project management.

3. Threatened Species Protections (section 4(d))
FWS proposes to eliminate the “blanket 4(d) rule,” replacing it with species specific rules for threatened species. This aligns FWS with NMFS’s longstanding approach and reflects the best reading of the statute under Loper Bright. Importantly for real estate interests, this ensures that restrictions are narrowly tailored, avoiding one size fits all prohibitions that needlessly burden otherwise routine activities.

4. Critical Habitat Exclusions (section 4(b)(2))
Finally, FWS proposes to reinstate its 2020 critical habitat exclusion rule governing how economic, national security, and other impacts are considered when evaluating whether to exclude areas from critical habitat. This process had been disrupted by the 2024 rules. The reinstated framework promises transparency and predictability while retaining the agency’s authority to protect species from extinction.

Director Brian Nesvik of FWS emphasized that these actions “restore clarity and predictability” and keep the focus on “recovery outcomes, not paperwork.” That message resonates strongly across industries that depend on stable regulatory expectations.

What These Changes Mean on the Ground

While none of these rules individually upends the ESA landscape, their collective impact is significant. Pending lawsuits challenging the 2024 regulations may become moot or need to be amended, and new challenges are likely. Of particular note: these proposed rules do not address the Service’s recent proposal to rescind the ESA’s definition of “harm,” a high stakes issue to watch closely.

Because all four proposed rules are prospective, current ESA determinations remain valid. Existing consultations, biological opinions, and critical habitat designations continue to control ongoing operations. But regulated entities should anticipate that threatened species protections may shift once species specific 4(d) rules come online, and consultation procedures for new projects will almost certainly change.

In short, the rules promise more clarity, but also more change, both of which will better respond to biodiversity degradation.

Of note, these changes will not impact state laws, like the Maryland Nongame and Endangered Species Act where the state has its own list of protected species not on the federal list, including legislatively (i.e., not through any scientific or data driven process) protecting species not federally listed, like the eastern small footed bat (after the U.S. Fish and Wildlife Service “found that listing was not warranted” because the culprit in its decline was not humans but a fungus), further expanding the state’s regulatory reach and imposing significant economic burdens on landowners in the State with no real benefit to planetary or human health.

A Look Back and Forward

Veterans of ESA practice may recall that the first federal endangered species list included a handful of charismatic megafauna, including the grizzly bear. The ESA’s scope has since expanded dramatically, even as biodiversity loss accelerates. Critics argue the statute has failed to meet the scale of today’s ecological challenges. Supporters emphasize that the law remains one of the strongest conservation tools ever enacted.

Regardless, the regulated community functions best under clear, consistent rules. These proposals aim to deliver just that.

The agencies are accepting comments through December 21, 2025. Stakeholders in real estate, construction, infrastructure, and energy development would be wise to weigh in. When it comes to ESA regulation, clarity is not merely good governance; it is a competitive advantage that is also good for biodiversity degradation.

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Greenwashing Lawsuits Surge in 2025: Navigating the Expanding Risk

By Stuart Kaplow on November 23, 2025 Posted in Environmental, Green Washing, greenwashing

The delicate space of business environmental marketing statements and public disclosures became markedly more treacherous in 2025. From food producers to fashion brands and consumer products to commercial real estate, businesses today face a rapidly expanding universe of greenwashing lawsuits. These claims, once niche and episodic, are now multifaceted, evolving, and spreading across industries with astonishing velocity.

Expanding Greenwashing Litigation Landscape

At the same time, the cast of plaintiffs bringing these matters has widened, joined by increasingly sophisticated allegations. Shifting government enforcement priorities have only emboldened activists and private consumers to make claims and initiate litigation.

Greenwashing is no longer a theoretical compliance concern. It is a real and material area of risk for which there is little insurance, which American businesses, including sectors once assumed to be peripheral to environmental claims. The food production sector is one such example.

High-Profile Settlements: Tyson Foods and JBS USA

Two of the largest players in U.S. beef production, Tyson Foods and JBS USA, recently entered into high-profile settlements over alleged greenwashing. Together, these companies produce more than 50% of the beef consumed in the United States. Their settlements are a cautionary tale for every business making environmental assertions about products or operations. If they can come after the cows (.. cows belch methane, but evidently it is not an anthropogenic thing), your business could be next with a bullseye on its back.

Tyson Foods resolved litigation brought by the Environmental Working Group in a settlement agreement, agreeing to cease claiming that it aims to achieve “net zero” emissions by 2050. Tyson also decided to halt allegedly misleading marketing for its Brazen Beef line. Although the company cited a 10% reduction in greenhouse gas emissions during production relative to conventional beef, the 2024 lawsuit argued Tyson conveyed a misleading impression that its broader portfolio was “climate smart,” and most aggressively in what some have characterized as weaponizing environmental protection, that Tyson lacked a rigorous enough plan that could achieve its net zero goals, that was the reason the company was forced into a settlement. In a year when Tyson lost more than $460 million on its beef business and closed its Lexington, Nebraska, plant, one of its four major beef processing plants, in part in response to “legal settlements.”

JBS USA faced similar claims. The New York Attorney General filed complaint incredibly avers, “Even if it had developed a plan to be ‘Net Zero by 2040,’ the JBS Group could not feasibly meet its pledge because there are no proven agricultural practices to reduce its greenhouse gas emissions to net zero at the JBS Group’s current scale, and offsetting those emissions would be a costly undertaking of an unprecedented degree.” Many criticized this case as not based in science but a political attack, as we blogged in New York is Coming for Your Cheeseburger with Greenwashing Case. This case concluded with JBS entering into an Assurance of Discontinuance and agreeing to pay $1.1 million to settle allegations that it misled the public about its climate commitments.

Navigating Compliance and Mitigating Risk

While lacking full statistical rigor, we have seen a surge at our law firm in inquiries seeking counsel in defending greenwashing allegations. We have posted more than a dozen blogs on the subject, including recently, Reverse Greenwashing: The Battle Over ExxonMobil’s Recycling, and Greenwashing? Court Says Coca-Cola’s Aspirational Statements May Mislead Consumers.

Just last week, the US Supreme Court let stand a Ninth Circuit Court of Appeals ruling that Amazon is not liable for third party greenwashing claims, upholding its protection under Section 230 of the Communications Decency Act. The case was brought by Planet Green Cartridges, a printer cartridge recycler, which alleged that Amazon profited from other sellers falsely advertising their products as recycled.

So where should a business begin?

While nearly a dinosaur in regulatory terms, the best foundation remains the Federal Trade Commission’s “Green Guides,” found at 16 C.F.R. § 260. These Guides represent the FTC’s current views on environmental claims, even if “current” is a bit generous, with the last update in 1998. Still, they offer practical examples of what the FTC considers impermissible or misleading environmental marketing. The existing Guides remain the most authoritative baseline for evaluating environmental claims.

Key Takeaways for Businesses

The lesson from 2025 is unmistakable: environmental statements must be precise, substantiated, and contextualized. Truth is not an absolute defense. Aspirational statements about future climate goals are no longer immune from challenge. Claims about renewable energy, carbon, climate, sustainability, recyclability, or renewable content must be anchored in verifiable, defensible evidence.

As greenwashing litigation continues to evolve and expand, companies must remain vigilant. By consulting knowledgeable counsel at the outset, before a product launch, a website refresh, or an annual report, companies can safeguard their reputation, avoid costly disputes, and help foster a marketplace where environmental claims are to be believed. If environmental zealots can come for the cows, they are similarly capable of targeting your business.

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Potable Water Bankruptcy as Environmental Crisis

By Stuart Kaplow on November 16, 2025 Posted in Environmental

In the past few days, as many environmental advocates have gathered in Belém, Brazil, for COP30, the world’s media has focused, elsewhere, on the unfolding catastrophe in Iran, where one truth has become unavoidable: potable water, not carbon, may be the most immediate environmental emergency of our time. The term now dominating headlines is “water bankruptcy,” and the phenomenon unfolding in Tehran is becoming a case study in what happens when water mismanagement, geopolitics, and climate converge.

Tehran Nears “Water Bankruptcy”

The world has watched Tehran, a metropolis of roughly 10 million people, begin to ration potable water as decades of mismanagement collide with the worst drought Iran has seen in sixty years. Reservoirs that once held the capital’s lifeblood are now running on empty. Rainfall has fallen to historic lows.

Iranian President Masud Pezeshkian recently warned that continued drought could force the evacuation of parts of Tehran, even raising the once unthinkable prospect of moving the nation’s capital. It is difficult to overstate the gravity of such a statement, yet experts say even that does not capture the full extent of the crisis.

Kaveh Madani, director of the United Nations University Institute for Water, Environment, and Health, and former deputy head of Iran’s Department of Environment, has been unsparing:

“The level of their warnings is too low compared to the reality on the ground.”

Madani emphasizes what many in the post Covid era understand too well: governments hesitate to issue the direst warnings for fear of inciting panic, even when the situation demands nothing less.

What Does Water Bankruptcy Mean?

“Water bankruptcy” is not a metaphor. It is a technical condition in which water consumption exceeds water supply, and the deficit becomes irreversible.

This condition is nearly always driven by bad policy decisions,particularly efforts to artificially boost agricultural output in arid regions. Iran’s push for food self sufficiency, understandable in light of decades of sanctions, has resulted in the nation producing 85% of its own food. But the cost has been aquifers and reservoirs drained far beyond sustainable levels.

Today:

Tehran’s five main reservoirs hold only 11% of capacity.
In Mashhad, a city of 4 million, reservoirs are below 3%.
Nineteen major dams nationwide have run completely dry.
More than 20 others are below 5% of capacity.

These numbers are staggering. And yet a concrete, nation scale solution has yet to be presented. Officials continue to downplay the crisis, wary of provoking public unrest or admitting mismanagement.

But water shortages have already repeatedly sparked protests across Iran, including in Khuzestan Province in 2021, where the demonstrations led to fatal crackdowns. And as trust in government declines, public willingness to cooperate with conservation measures, a critical component of emergency response, declines along with it.

Beyond Tehran: The Kabul Emergency That the World Barely Sees

While Tehran dominates global coverage, Kabul, Afghanistan, may be facing an even more imminent water collapse, but the world barely hears a whisper, in part because the Taliban government provides little transparency and there is no free press.

The facts that do sneak out are alarming:

Kabul’s aquifer levels have fallen up to 30 meters in a decade.
Annual groundwater extraction exceeds natural recharge by 44 million cubic meters.
Nearly half of all boreholes are already dry.
As many as 120,000 private borewells are draining the aquifer.
Up to 80% of groundwater is contaminated with sewage and chemical waste.
Schools and healthcare facilities are closing for a lack of clean water.
Water prices have soared beyond affordability for many families.

If current trends continue, Kabul may become the first modern city of its size to run out of water entirely. This is not theoretical. It is happening now.

An International Crisis: Water Bankruptcy Goes Global

Iran and Afghanistan are not outliers; they are warnings.

The World Resources Institute has identified 17 countries as facing “extremely high water stress,” defined as consuming more than 80% of available water annually. India, though 13th on the list, has a population more than three times the size of the other 16 countries combined. Cities like Chennai already teeter on the brink.

A quarter of the world’s population lives a few dry weeks away from disaster.

Water scarcity does not respect political boundaries. Where it emerges, it destabilizes:

Food production
Energy generation
Public health
Regional security
Mass migration to cities and other countries

A drought was the tipping point with the resultant civil unrest in 2011 that destabilized the Syrian government. As we see in Iran, it can even threaten the physical viability of national capitals cities.

What About the United States?

While the U.S. is not yet Tehran or Kabul, it is a mistake, an increasingly dangerous one, to assume American water infrastructure is immune.

Cities across the United States face profound water challenges:

San Antonio, reliant on the porous fractured limestone Edwards Aquifer vulnerable to contamination and fluctuating water levels
Phoenix and Las Vegas, dependent on the drought impacted rapidly declining Colorado River, including diminishing Lake Meade
Miami, where saltwater intrusion threatens increasingly overtaxed groundwater supplies
Communities throughout the Great Plains are watching the Ogallala Aquifer drop to levels that will permanently end irrigated agriculture in some regions
Baltimore, with contamination in infrastructure, includes disinfection byproducts and E. coli, and water conservation challenges due to low legacy reservoir levels

The U.S. does Not face water bankruptcy today, but it is accruing debt.

Conclusion: A Call to Refocus Environmental Priority

This week, many environmental advocates are gathered in Belém, Brazil, for COP30, where climate change takes center stage. But the unfolding crises in Tehran, Kabul, Chennai, and even parts of the United States demand a recalibration of global environmental priorities.

Access to clean, safe drinking water is not a distant threat. It is a present tense emergency affecting billions.

Matters of climate remain critical, but it is a long arc. Potable water is the immediate curve at our feet.

Water is the foundational resource on which human survival, economic stability, and geopolitical security rest. We can transition energy systems over decades. We cannot transition away from water.

The era of water bankruptcy has arrived. The question is whether policymakers and businesses will recognize the urgency and act before more cities find themselves where Tehran stands today.

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Battery Storage: The New “Must Have” Amenity in Commercial Leases

By Stuart Kaplow on November 9, 2025 Posted in Energy, Green Building, resilience, Solar Panel, Sustainability

Battery storage has become one of the hottest topics in commercial real estate leasing, a key amenity and, increasingly, a top tenant ask in Class A buildings. What was barely on the radar five years ago has now emerged as a central negotiating point between sophisticated tenants and landlords.

Electricity has become a bellwether political issue across the country, and energy reliability is at the heart of the discussion. In jurisdictions like Maryland, where electricity generation shortfalls are well documented, battery storage is not just a sustainability measure, it is a business continuity imperative.

Many will recall the famous scene from the 1967 film The Graduate in which Dustin Hoffman’s character is told the secret of future economic success, “just one word .. plastics.” In 2025, the one word is now batteries.

PJM Interconnection, which manages the regional electric grid serving Maryland and much of the Mid Atlantic, has repeatedly warned that “rolling brownouts or blackouts are a possibility” and that the state faces “risks of electricity supply shortfalls during periods of more extreme conditions,” such as severe heat waves or cold snaps. These warnings are not theoretical; they were issued in 2025, now shaping how tenants view energy resilience in site selection and lease negotiations.

This is not a partisan political issue. “There’s some bad energy policies in some of our neighboring states ..,” Democrat Virginia Governor elect Abigail Spanberger said this Sunday on Face the Nation. “We have to be clear-eyed about the fact that we will have an energy crisis headed into the future.”

Energy Resilience

Tenants, especially those whose operations depend on uninterrupted power, not only hospitals, but also data driven enterprises, AI companies, financial institutions, and life sciences tenants, increasingly view on site battery storage as a critical feature, not to mention those that occupy any building with an elevator. These systems provide backup power during brownouts, grid outages, or severe weather events, ensuring business continuity when the public grid cannot.

Moreover, tenants are rejecting buildings where owners have agreed to participate in demand response programs with electric utilities.

Cost Management

Battery storage also offers clear economic benefits. Through “peak shaving” drawing stored electricity during periods of high demand tenants can dramatically reduce utility costs. Energy arbitrage, storing energy during off peak hours for use during peak times, provides another layer of cost optimization. These features allow tenants to manage their energy budgets with precision, particularly as utility rate structures become more dynamic.

Sustainability and Regulatory Drivers

The sustainability story is equally compelling. Businesses in some locales face mounting pressure to meet statutory carbon reduction benchmarks. Buildings that offer on site renewable energy, such as solar paired with battery storage, may enable tenants to meet those goals. In Maryland, the Building Energy Performance Standards (BEPS) and similar schemes require reductions in Scope 1 greenhouse gas emissions and total energy use. For many buildings, compliance is only achievable through the integration of renewable generation with battery storage systems.

At the same time, some governments are actually banning fossil fuel backup generators, including in Maryland, which has laws moving toward all electric buildings. In some jurisdictions, using natural gas, petroleum, or other fossil fuel backup systems is becoming unlawful even in extreme emergencies. That regulatory shift makes battery storage even more valuable as the sole viable form of on site energy resilience.

The Technology Behind the Trend

From Alessandro Volta’s 1800 “voltaic pile,” a stack of zinc and copper discs separated by brine soaked cloth, to today’s advanced lithium ion systems, battery technology has come a long way. Most commercial building installations today use lithium ion batteries, though other types such as large scale lead acid and flow batteries, exist.

The next generation is already here: solid state batteries. These offer higher energy density, improved safety (no flammable liquid electrolytes), and faster charging. Costs remain high, but are falling fast. In our own building, we have installed pilot solid state batteries sourced domestically, an important distinction in light of U.S. dependence on foreign critical minerals, child labor, and other ethical concerns that surround parts of the global battery supply chain.

At its core, a battery converts chemical energy into electrical energy through an electrochemical reaction between an anode (negative terminal), a cathode (positive terminal), and an electrolyte. In the built environment, batteries are transforming from small scale backup devices for computers and servers into building scale infrastructure.

A Real Estate Revolution

Significantly, in a recent survey by a global commercial real estate firm, battery storage ranked among the top five issues in U.S. lease negotiations for the first time ever. This is a major shift. As battery storage becomes standard in Class A buildings, the trend will inevitably cascade to other building classes, reshaping expectations across the market.

Even government buildings are in the mix. Many public sector facilities are subject to “demand response” mandates that require them to reduce energy use first during grid strain. Talked about scenarios include school and government office “brown outs,” temporarily, so private businesses and residences maintain reliable electricity without interruption.

The Broader Context

Electricity is essential to modern society, powering everything from healthcare systems to data centers to smartphones. Yet in Maryland, which already imports over 40% of its electricity from other PJM states, energy independence is a long way off. Battery storage is not merely an amenity; it is key short and mid term nonlinear progress to human innovation, if not survival.

Globally, batteries expand access to reliable electricity, combating poverty and improving quality of life. Here at home, they are already redefining what it means to occupy a quality commercial property with state of the art infrastructure and amenities.

While battery storage did not even make the top ten list of tenant concerns five years ago, today it is one of the most sought after features. And interestingly, another new top five issue is enhanced building security, a blog topic for another day.

For now, it is enough to say this: battery storage is no longer a futuristic option. It is a present day necessity, and the newest hallmark of thriving commercial real estate.

In 2025, the one word is batteries.

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “From Boilerplate to Benchmarking: The New Era of Greenhouse Gas Lease Provisions” on Tues, Nov 18 at 9 am. The webinar is complimentary, but you must register here.

Federal Bank Regulators Withdraw Climate Mandates

By Stuart Kaplow on November 2, 2025 Posted in Climate Change, Codes and Regulations, Federal

On October 16, the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency jointly “.. announced the withdrawal of their interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions.”

This is a positive and, frankly, refreshing development, a rare instance of government appropriately narrowing its focus and returning to its statutory mission. The decision, effective immediately, recognizes that banking regulation is not the right tool to fight climate change.

What Happened

In their joint release, the threesome explained:

“The agencies do not believe principles for managing climate-related financial risk are necessary because the agencies’ existing safety and soundness standards require all supervised institutions to have effective risk management commensurate with their size, complexity, and activities.”

In short, the existing regulatory framework already obligates banks to manage all material risks. There is no need nor a rational basis for a bespoke climate overlay.

The Background

The now withdrawn 2023 guidance would have applied to banks with more than $100 billion in assets (.. being the banks the large majority of Americans do business with), requiring the boards of directors to explicitly incorporate climate risk into their long term planning. While environmental advocates applauded the move, financial institutions and many regulators expressed concern that the agencies had gone far beyond their statutory authority.

As Federal Reserve Governor Chris Waller aptly observed, the risks posed by global climate change are not “sufficiently unique or material to merit special treatment relative to other risks.” And Vice Chair for Supervision Michelle Bowman warned that the principles “far exceed the narrow mandate of the Fed, which is stable inflation and maximum employment.”

The Federal Reserve’s purpose is not to manage the Earth’s climate. Its role is to safeguard U.S. monetary stability and the financial system. Using unelected banking regulators to steer capital away from carbon intensive industries, or to penalize banks for financing them, is mission creep, if not a whole lot more.

The Problem with Mission Creep

When the Federal Reserve or its sister agencies wade into politically charged territory, particularly one that is beyond their ability to meaningfully influence, the result is distraction, inefficiency, and, often, unintended harm.

During the pandemic, for example, the Fed missed its inflation target while devoting disproportionate attention to distributional and social objectives. The delayed rate hikes that followed arguably contributed to entrenched inflation. Expanding the Fed’s purview to climate policy risked repeating that error: chasing objectives outside its lane while losing focus on its core responsibilities.

Moreover, financial institutions are already required to manage risk. They assess credit, liquidity, operational, market, and reputational risks daily. If climate risk is truly material to a bank’s balance sheet, it will already be factored into those calculations. If it isn’t material, forcing it into regulatory frameworks distorts price signals, misallocates capital, and potentially constrains legitimate lending.

Unintended Consequences of the Withdrawn Guidance

The now rescinded principles introduced uncertainty and additional compliance burdens without a clear quantifiable benefit. Banks were expected to conduct “long-term scenario analysis” extending far beyond the horizon of traditional financial modeling, often decades into the future.

But financial regulation must rest on measurable, near term risks. Predicting the financial implications of climate trends 50 years from now is inherently speculative (.. and yes, we have undertaken that conjectural scenario analysis for clients). Worse, the vague language in the 2023 principles meant institutions faced unclear expectations and the risk of ever tightening oversight.

The “transition risk” framework, in which banks were expected to treat carbon intensive businesses as inherently riskier, posed particular problems. It effectively sought to constrain lending to lawful industries through regulatory pressure rather than through transparent legislative action. That is not the role of a prudential regulator.

The predictable result would have been reduced credit availability and higher borrowing costs for energy producers, manufacturers, and even home builders, not because of actual credit risk, but because of regulatory signaling. That is policymaking by proxy, not risk management.

The Correct Course

By withdrawing the climate risk guidance, the Fed, FDIC, and OCC have reaffirmed a crucial principle: regulators must operate within their mandates. Prudential oversight should focus on the safety and soundness of the U.S. banking system, not on climate policy objectives.

This does not mean banks should ignore climate related factors. To the contrary, financial institutions must continue to identify, measure, and manage all material risks, including those arising from environmental conditions when relevant. But they should do so within the existing risk management frameworks, not under the weight of politically charged, redundant guidance.

The rescission also helps restore the credibility of financial regulators by signaling restraint. Regulatory sprawl undermines confidence; disciplined focus restores it.

A Broader Shift

This action aligns with the current administration’s broader rollback of climate related mandates across federal agencies. In recent months, executive orders have rescinded prior climate initiatives, the SEC has halted its defense of its climate disclosure rule, and several federal departments have eliminated previously articulated ESG driven programs.

At the same time, many financial institutions are unwinding voluntary commitments such as membership in the Net Zero Banking Alliance, which formally disbanded this month after widespread withdrawals by global banks.

Even climate advocate Bill Gates recently wrote that the “doomsday view” of climate change is wrong, and “it’s diverting resources from the most effective things we should be doing to improve life in a warming world.” That realism, not resignation, is the current proper mindset.

Staying Grounded in Law and Economics

Environmental lawyers understand addressing climate change. But we also understand that sound environmental policy must be grounded in law, not aspiration. It is not the Fed’s job to impose environmental schemes through the back door of financial supervision.

Climate risk belongs where it can be measured and managed, in environmental law, in energy policy, and in the marketplace of ideas and investment. Banks should evaluate it as part of their general risk frameworks, not as a special category elevated by politics.

Conclusion

The withdrawal of the interagency climate risk principles is not a rejection of environmental stewardship. It is a reaffirmation of disciplined governance.

The Federal Reserve, FDIC, and OCC have rightly recognized that their role is to ensure financial stability, including increasingly in non bank transactions in bitcoin and Stablecoin, not to dictate global environmental outcomes. Climate change is real, but it is not a financial crisis, and it should not be treated as one by bank supervisors.

By refocusing on their statutory mandates, regulators can strengthen both financial and environmental outcomes: a stable banking system and a more honest, effective dialogue about how best to protect human health and the environment, in the right forums, through the right tools, and for the right reasons.

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From Boilerplate to Benchmarking: The New Era of Climate Smart Leases

By Stuart Kaplow on October 26, 2025 Posted in Codes and Regulations, Energy, GHG, Green Building, greenhouse gas

It would be convenient if this were only a prospective conversation about the leases you are about to sign. It isn’t. Tens of thousands of existing leases (many with long renewal terms) are for premises that are subject to greenhouse gas disclosure and reduction laws already on the books and now being phased into effect. That reality makes this subject urgent: leases drafted decades ago, long before anyone contemplated building energy performance standards (BEPS) or whole building emissions reporting or net zero energy mandates, must now be revisited.

Public sentiment about government climate measures ebbs and flows. Laws do not. From Maryland to California, New York City to Denver, and Seattle to Washington, D.C., jurisdictions have enacted BEPS, clean heat rules, and related regimes that are forcing building owners to reduce emissions or face penalties. These rules typically target building owners, but the right (or wrong) lease language will determine whether those costs and obligations ultimately fall on landlords, tenants, or both. And these issues arise not only in commercial leases, many multifamily leases implicate the same concerns.

The cost of compliance with these new climate laws will often dwarf the value of a lease if not the building itself (e.g., converting natural gas powered HVAC to all electric).

Buildings are the sweet spot for GHG emissions reductions: they account for nearly 40% of U.S. emissions. That is why property owners and tenants must treat lease language about energy, data, and compliance as material business terms.

Below is a tactical roadmap, focused on Maryland but relevant elsewhere, to begin to help owners, tenants, brokers, and in house counsel identify the provisions in a lease that matter, and the sort of language to consider.

1. Start by reviewing every lease you have, now

A review should not be a checkbox exercise. Begin with these questions for buildings in regulated jurisdictions:

Does the lease have a general “compliance with law” clause? Who bears the obligation to comply with statutes and regulations that affect the leased premises and the building?
Does the lease address energy data sharing, submetering, or benchmarking?
Are operating expenses and capital expenditures defined in a way that captures costs of retro commissioning, BEPS compliance, or penalties?
Do tenant improvement and renovation provisions require compliance with building energy standards?
Is there express allocation of responsibility for BEPS fines, alternative compliance fees, or excess emissions charges?

A seemingly boilerplate clause about “complying with laws” historically aimed at ADA or fire sprinklers can be determinative here, but it is only the starting point.

2. Make energy and GHG emissions data sharing standard

It may be a myth that if you cannot measure it,

you cannot manage it. But Maryland law already requires utilities to provide whole building and aggregate energy data to owners for benchmarking purposes (Maryland Senate Bill 2022, 528). In practice, however, utilities’ data alone is insufficient for a building owner to calculate attributable tenant GHG emissions. Owners will need tenant level inputs: employee counts, operating hours, plug load inventories, and information about tenant equipment and processes.

As a threshold edit, virtually all leases, existing and new, should likely be amended to require tenants to share energy related data and occupant information needed for GHG reporting and benchmarking.

That clause can carve out proprietary tenant information, protect trade secrets, and limit public disclosure where legally permitted, but the core obligation to share data should be explicit.

3. Define the standards that matter

Where jurisdictions impose actual limits on building energy use or emissions (not merely reporting), the lease must define the applicable standard. Useful defined terms include:

Building Energy Performance Standard (BEPS). Identify the statute, code section, or regulatory rule, and any thresholds or compliance dates that apply to the building.
Energy Consumption Limit. A numerical limit (kWh, kBtu, or emissions metric) that the tenant is expected not to exceed.
Plug Load Standard. If tenant equipment/displays are regulated, define the metric and measurement approach.
Retro-commissioning. Define scope (e.g., HVAC, lighting, controls), the standard of work (ASHRAE, LEED enhanced credit, or equivalent), and the process/timing.
Energy Data. As above, define what data and level of granularity is required.

If a tenant will be subject to an energy consumption cap (because the building is), that cap must be expressed in the lease, tied to a recognized metric and testing/measurement protocol, and accompanied by an agreed upon method for calculating exceptions and credits.

4. Submetering and measurement

Accurate measurement is the foundation of enforcing allocation. Submetering the leased premises, with meters capable of recording demand and kWh, should be standard where practicable. In many older buildings true submetering will be difficult or regulated by public utility commissions; electronic submetering software that simulates tenant load may be a substitute but must be expressly permitted and described.

The lease should specify:

who installs and pays for submeters,
standards for meter accuracy,
how data is shared and retained,
responsibility for meter maintenance, and
consequences for meter failure or bad data.

5. Operating expenses, capital expenditures, and amortization

Expectations about what is a reimbursable operating expense versus a capital expenditure will intersect with BEPS compliance. Consider:

Including a tenant’s prorata share of the costs to undertake whole building retro commissioning and BEPS compliance in operating expenses;
Allowing certain capital improvements made to meet BEPS to be amortized and charged to tenants over a reasonable period (e.g., the useful life or the remainder of the lease term);
Requiring tenant cooperation in retro commissioning, including providing occupant data and access, and making the tenant responsible for costs that are directly attributable to its premises or operations.

These allocations are all new and while they have not existed in the past, today are negotiable commercial terms, but silence in the lease often defaults to landlord risk exposure.

6. Tenant improvements and renovations: design to perform

Leases should require that initial tenant improvements and subsequent renovations:

comply with applicable (including out year requirements of) BEPS,
not increase the tenant’s plug or energy consumption above an agreed baseline without landlord approval,
meet specified design criteria (e.g., lighting power density, HVAC efficiency), and
provide for landlord review and approval of design and scope.

That language prevents tenant buildouts from undermining whole building compliance.

7. Incentives to rebalance equities

Traditional allocations (landlord pays capital; tenant pays utilities) may no longer reflect risk and value. Creative incentives help align interests:

GHG Reduction Bonus. A landlord could pay a tenant a percentage bonus upon completion of tenant improvements that achieve modeled reductions (amortized as a rent credit).
Assignment of Incentives. Lease language can be used so that tenants receive tax deductions or incentives (e.g., 179D type benefits) through assignments or sharing mechanisms.
On site renewable participation. If the landlord installs on site renewables, require tenants to purchase that power at or below local utility rates and offer tenants participation in PPAs where feasible.

Incentive language unlocks cooperation where otherwise each party would act alone.

8. Penalties and enforcement

If a jurisdiction imposes fines, excess emissions charges, or alternative compliance payments on the building owner, the lease must allocate responsibility clearly:

Tenants should be responsible for penalties attributable to their excess consumption or failure to provide required data where their actions or admissions cause noncompliance.
Landlords should remain responsible for penalties caused by their failure to timely report, their failure to maintain building systems, or the consumption of other tenants.
The lease should specify how credits, offsets, or alternative compliance fees are applied and whether the cost of purchased credits is treated as operating expense.

This is one of the most contentious negotiation points and will soon be an issue of first impression before rent court judges. Reasonable compromise mechanisms include thresholds for tenant liability, notice and cure periods, and caps tied to a tenant’s proportionate share.

9. Litigation is inevitable, but don’t wait

There is litigation challenging BEPS statutes in several states (including leveraging federal government objections to this regulatory scheme), and including litigation pending against Maryland’s programs. Those suits will almost certainly succeed in whole or part. Litigation, however, does not eliminate the immediate practical problem: property owners must comply with the law as it exists today or risk fines, lost incentives, or reputational harm. The prudent course is to mitigate risk today by amending leases and implementing data collection and energy management systems, even as parties reserve their litigation rights.

But it is the future litigation enforcing GHG lease provisions that scares the heebie jeebie’s out of many. Beyond the cost of compliance itself, it is that risk of litigation that is contributing to significantly driving down the value of real estate subject to these climate laws.

Closing thought

Drafting leases to address GHG obligations is an art in its infancy. The risks and opportunities are not new; I wrote about many of these issues in a 2009 law review article titled Does a Green Building Need a Green Lease?, but today the dollar stakes are higher and the mandatory statutory architecture is spreading geographically.

This post is not a comprehensive legal brief. It is a call to action: review your leases, start sharing data, define the standards that will govern performance, allocate risks, share costs and penalties with clarity, and use incentives to align landlord and tenant interests. For property owners and tenants who want to minimize surprise costs and regulatory exposure, now is the time to act. This includes, importantly, not only updating lease forms; but also existing leases.

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