Indeck Energy files lawsuit challenging New York's authority to implement RGGI
Indeck Energy has filed suit against several New York state agencies over their participation in the Regional Greenhouse Gas Initiative (RGGI), a carbon trading system between 10 Northeastern states designed to limit greenhouse gas emissions by power plants. Indeck Energy is the owner of Indeck-Corinth Generating Station, a combined-cycle natural gas plant in upstate New York. RGGI began its first compliance period on January 1, 2009. The Indeck lawsuit alleges that the agencies did not have authority from the New York legislature to implement the system. The complaint further alleges that the multi-state RGGI compact is unconstitutional without Congressional authorization. The complaint names Governor David Paterson, the New York State Department of Environmental Conservation, the New York State Energy Research and Development Authority, and the New York State Public Service Commission as defendants.
According to Indeck, regulations implemented pursuant to the RGGI would essentially impose an unauthorized tax on it. Under RGGI, power plants must buy permits or allowances to cover the amount of carbon they produce. Furthermore, Indeck alleges, it would not have a fair opportunity to recover its costs. Indeck contends that because the RGGI regulations target clean, low-emitting stations with onerous costs, the net result would be to actually increase emissions.
In a statement released to the press, Indeck’s President Gerald F. DeNotto claimed, “The regulations arbitrarily discriminate against a few electric generators that are bound by long-term fixed price contracts.” Furthermore, he contends that “New York’s version of RGGI levies a ‘RGGI tax’ on electric generators.” According to DeNotto, this leaves Indeck’s Corinth plant with “a heavy cost of the allowance tax, and no opportunity to recover it.” These claims echo statements made by DeNotto in public comment hearings regarding RGGI implementing regulations in 2007.
Environmental groups and the New York state agencies named in the complaint have begun to respond quickly to Indeck’s allegations. According to Peter Iwanowicz, director of the Office of Climate Change in New York’s Department of Environmental Conservation, Indeck’s claims are without merit. Iwanowicz claims that his department adopted the RGGI pursuant to authority the legislature had previously provided. As to the issue of the constitutionality of the multi-state compact, Iwanowicz denied that was an issue, noting that each state in the RGGI adopted separate regulations and maintained full sovereignty. State government watchdog group Environmental Advocates of New York (EANY) also issued two statements objecting to Indeck’s claims. Among other statements, EANY notes that the two-year public process to finalize RGGI regulations already resulted in a 1.5 million ton set aside for power plants in long term contracts.
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