N.Y. State Sued Over Role in Cap-and-Trade Scheme

N.Y. State Sued Over Role in Cap-and-Trade Scheme
August 2, 2011

Thomas Tanton

Mr. Tanton is President of T 2 & Associates, a firm providing consulting services to the energy... (read full bio)

A pair of New York business executives is suing the state over its participation in the Regional Greenhouse Gas Initiative (RGGI). The lawsuit seeks to terminate New York State’s participation in the ten-state RGGI.

The suit, filed in New York Supreme Court and naming Gov. Andrew Cuomo (D) and two state agencies as defendants, claims the multistate RGGI cap-and-trade system imposes cost burdens on Empire State electricity consumers in what amounts to an illegal tax.

The plaintiffs in the case are Lisa Thrun and Ava Ashendorff. The case is being presented by Attorney Mark W. Smith, of New York-based Smith Valliere PLLC, and Competitive Enterprise Institute (CEI) General Counsel Sam Kazman.

Legislature Never Approved
The complaint says the state's participation in the RGGI violates state law, since the legislature never approved the interstate compact. The 2005 compact among 10 Northeastern and Mid-Atlantic states requires each participating state to reduce carbon dioxide emissions by imposing restrictions on utilities and forcing them into a cap-and-trade scheme.

New Jersey Gov. Chris Christie (R) has already indicated his state will leave the compact, which would lower RGGI participation to nine states. Christie stated he based his decision on similar concerns about illegal taxation and said the program was not doing much to reduce carbon dioxide emissions.

States Soaking Consumers
RGGI emissions permits have yielded the participating states more than $700 million in revenue. Electricity producers pass the costs of the permits on to consumers, who end up paying more for their power. Plaintiffs in the lawsuit say the RGGI amounts to a simple tax-and-revenue raising measure to advance various policy goals without the necessary legislative approval.

“New York’s governor has attempted to pull the state into a greenhouse gas cap-and-trade scheme whose only real impact has been to raise electricity bills,” said CEI general counsel Sam Kazman. “He acted without the approval of his state legislature, and the deal he struck with nine other northeastern states was never ratified by Congress, contrary to the requirements of the U.S. Constitution’s Compact Clause. This illegal deal has gone far enough.

"While there are 10 states in this compact, New York is distinct because the governor entered into the compact without any approval from his state legislature,” Kazman added

Tom Tanton (ttanton@fastkat.com) is principal of T2 & Associates, a California-based energy technology and policy consulting group.

Thomas Tanton

Mr. Tanton is President of T 2 & Associates, a firm providing consulting services to the energy... (read full bio)