Over the course of three auctions since last September, the Regional Greenhouse Gas Initiative (RGGI) – a cap-and-trade program limiting power plant emissions in 10 Northeastern states – has already raised more than $262 million. RGGI was designed to be an incubator for national cap-and-trade legislation, and for the most part it has been successful in that role. That success, however, has also left RGGI’s future uncertain.
On May 15, New York officials filed a brief in state court defending the global warming initiative against a challenge brought by Indeck Energy Services, an Illinois-based company with five power plants in New York. The following week, the House of Representatives Energy and Commerce Committee passed federal climate legislation that would preempt state carbon trading efforts, including RGGI, between 2012 and 2017 – the first five years of the bill’s national cap-and-trade program.
While the House climate bill (summary available from the link below), introduced by Reps. Henry Waxman (D-CA) and Ed Markey (D-MA), would allow RGGI states to revive their program after 2017, reaction from affected state officials has been mixed. Ian Bowles, Massachusetts Secretary of Energy and Environmental Affairs, has previously supported the Waxman-Markey approach, while W. Michael Sullivan, director of Rhode Island’s Department of Environmental Management, expressed concerns about the lost revenue stream due to the federal preemption.
The leading climate bill in the last Congress, which was filibustered in the Senate last June, did not preempt state climate efforts, instead providing free emissions allowances to states that voluntarily deferred to the federal program. While the Waxman-Markey bill does not offer RGGI states additional allowances, it would allow regulated facilities that have already purchased credits under RGGI or other state programs to exchange them for federal credits “sufficient to compensate for the cost of obtaining and holding such state allowances,” an amount determined by the average auction price in the year in which the allowance was issued.
Earlier this year, the Private Environmental Law Enforcement Act (“PELEA”) was introduced in both the New York State Senate and Assembly (S. 1730, A. 4272). The bill was passed in the Assembly and it is now being considered by the Senate. Unlike past years where similar proposals met a chilly reception in the Republican-controlled State Senate, this year the proposed legislation is getting serious consideration by the Democratically-controlled State Legislature.
The legislation, if enacted by the legislature and signed into law by Governor Patterson, would substantially increase access to New York courts by private citizens seeking to bring actions against parties alleged to be in violation of various state laws, regulations or permit requirements, or to enforce against a violation of an administrative or court order requiring remediation of an inactive hazardous waste disposal site. Notably, the current PELEA bill would relax the requirements for standing, granting the right to initiate such litigation to “any person who has suffered or may suffer an injury in fact, regardless of whether such injury is different in kind or degree from that suffered by the public at large.” That is a significant departure from the existing law which requires that a plaintiff demonstrate that it has suffered an injury different in kind or degree from that suffered by the public at large, and a significant difference between federal citizen suit statutes, which generally do not have a relaxed standing requirement.
Prospective plaintiffs would be required to provide notice to the alleged violator, the Commissioner of the State Department of Environmental Conservation (“DEC”) and the Attorney General at least 60 days prior to initiating litigation. However, such notice requirement may be waived if the party can demonstrate a “substantial and imminent hazard to the environment.” Private enforcement actions are prohibited if DEC or the Attorney General is already prosecuting an action for the alleged violation, has reached a settlement or decision in such an action, or is seeking remediation of the site at issue.
The Act would require judicial approval of all settlements and only after notice has been provided to all parties, DEC and the Attorney General. The Act specifically provides for the recovery of costs and “reasonable” attorneys’ fees and expert witness fees by the prevailing party. Although prevailing defendants may also recover costs and fees, they may only do so by motion showing that the action was frivolous and their recovery is capped at $10,000. We will keep you posted to the extent there are further developments in the legislature regarding this potential game changer environmental litigation in New York.
