Maryland’s Aggressive Climate Legislation’s Impact on Providers

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 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. The CSNA is broad and will influence decisions in al-most every sector of our daily lives. Doc-tors, 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.

A. What We Know

The Building Codes Administration and Maryland Public Service Commission (PSC) are providing recommendations that will re-quire new buildings to rely solely on electricity for internal use (as opposed to fossil fuels), for example, for heating. The PSC is required to provide these recommendations to the Maryland General Assembly by September 30, 2023. The earliest these recommendations will be implemented is 2024, but there are currently more questions than answers.

For existing buildings, the Maryland Department of the Environment is scheduled to adopt regulations for “covered buildings” in the summer 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 Green¬house Gas Emissions.” Direct Greenhouse Gas Emissions are emissions produced on site.

Specifically, each covered building will be required to:

1.    Report its Direct Emissions starting in 2025;
2.    Achieve 20% reduction of its Direct Emissions by January 1, 2030; and
3.    Achieve net-zero emissions by January 1, 2040.

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.

While the regulations are not yet implement-ed, they will have to account for unique needs of particular building types, including health care facilities, laboratories, assisted living and nursing facilities, critical infrastructure, and others.

Once these regulations are implemented, buildings that exceed the emission targets will pay a fee. That fee cannot be less than the “social cost of carbon”, which is established by the U.S. Environmental Protection Agency (EPA).

While we don’t yet know how health care facilities will be impacted, we can be sure that they will be required to reduce emissions significantly. Retrofitting buildings to become reliant solely on electricity will be an eventual requirement. Those who don’t comply could face large financial penalties.

Also, due to the incentives surrounding electric vehicles (EVs), existing buildings may be required to install EV charging equipment in parking lots and garages. This requirement could apply to hospitals, doctors offices, physical therapy offices, nursing facilities, etc.

B. What We Don’t Know

Until the Maryland Department of the Environment implements these regulations, health care providers, business owners, and building owners will be in the dark with respect to many questions, including the following:

What is the social cost of carbon? The EPA sets this number, which is currently at $51/ton. The federal government has sought to increase this number by more than double. This number will guide the penalties that health care providers, business owners, and building owners may have to pay if they do not follow the new regulations.

Many EPA observers are predicting an in-crease to $151/ton coupled with subsequent future increases.

Will all buildings be treated equally? As mentioned above, the Maryland Department of the Environment will have to specifically consider health care facilities, laboratories, assisted living and nursing facilities, critical infrastructure, and other types of buildings when implementing these regulations.

Health care buildings could receive the benefit of reduced penalties, a longer transition period, and reduced requirements compared to other “covered buildings.”

How will buildings know the base number for 20% reduction of its Direct Emissions by January 1, 2030? This number will be based upon an “average building of similar construction.” The issue here is that there is no clarity as to what is considered similar. For example, is a five-story office building similar to a five-story hospital?

Despite all of these uncertainties, it is clear that Maryland’s ambitious climate legislation will impact many businesses, including every-one who provides services in a large health care building.

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

A version of the article was published on October 16, 2023, by The Daily Record.