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Can an Enviro Lawsuit Salvage Cap and Trade in New Jersey?

This Week in Clean Economy: The success or failure of a lawsuit to force Gov. Christie to rejoin RGGI comes down to whether the public has a say.

Jun 8, 2012
New Jersey Gov. Chris Christie

Environmental groups took what might be their last recourse to reinstate New Jersey into a multistate cap-and-trade initiative: suing the governor.

The Natural Resources Defense Council (NRDC) and Environment New Jersey filed a lawsuit Wednesday in a state court against Republican Gov. Chris Christie. The groups say Christie's exit from the Regional Greenhouse Gas Initiative, or RGGI, was unlawful because it didn't give the public any chance to weigh in.

"The governor acted unilaterally ... We think it's illegal for him to act that way," Matt Elliott of Environment New Jersey told InsideClimate News.

If successful, the lawsuit could force the Christie administration to immediately rejoin RGGI—and then to hold public hearings on the future of the state's participation, if it chooses to drop out again.

Larry Ragonese, press director for the New Jersey Department of Environmental Protection (DEP), said the administration did nothing wrong. "Our exit from RGGI was done lawfully," he told InsideClimate News. "We did it in conjunction with the state attorney general's office, and we fully complied with all the legal requirements."

The lawsuit came after earlier strategies by RGGI supporters failed—including flooding the governor's office with 50,000 calls and emails and hosting rallies across the state. The governor has called RGGI "a failure" and an ineffective way to reduce climate-changing emissions.

"For a long time, we simply tried to change the governor's mind," Elliot said.

Some state lawmakers, too, tried—to no avail. Last year Christie vetoed legislation that would have kept New Jersey in the climate initiative. A second, similar bill approved by both houses last month seems likely to suffer the same fate.

Possibly a Political Maneuver, but Illegal?

New Jersey joined RGGI in 2008 under Democratic Gov. Jon Corzine, along with nine other states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

The states agreed to set a ceiling on carbon dioxide emissions from power plants, and to require facilities to pay for their emissions by buying pollution allowances from states in quarterly auctions.

In May 2011, Christie said he would yank New Jersey from the pact. RGGI does "nothing more than tax electricity, tax our citizens [and] tax our businesses," he said at the time.

The announcement was widely seen as a political maneuver by Christie, a rising star of the Republican party. The GOP's stance in favor of climate skepticism had hardened, and support of cap and trade was viewed as a political liability on the national stage.

A week later, the DEP announced the state would exit RGGI on Dec. 31, 2011. The move required no approval by the State Legislature.

The problem, the lawsuit argues, is that the repeal took effect without public hearings or a comment period, in alleged violatation of the New Jersey Administrative (Procedure Act N.J. Stat. § 52:14B-4), which requires a process of public input.

When adopting, amending or repealing rules, the state must "afford all interested persons reasonable opportunity to submit data, views, or arguments, orally or in writing," the act states.

"We had businesses lined up, public health folks, a wide array of stakeholders who were interested in seeing the program continue—[and] who would testify at public hearings," said Luis Martinez, senior attorney for NRDC.

"Left without an opportunity to comment," Martinez said, the group decided in January to file a lawsuit, which took about five months to prepare.

Patrick Parenteau, a professor at the Vermont Law School and senior counsel to the Environmental and Natural Resources Law Clinic, said the success or failure of the environmentalists' strategy seems to come down to one issue: Does the state's adoption/repeal of RGGI fall under the Administrative Procedures Act?

If so, he noted, then "the legal question simply is, does the [act] require notice and comment for the decision to leave RGGI?"

Legal Precedent and Timing

NRDC says that environmental groups have been known to file these types of suits against governors on occasion.

The most recent example in New Jersey was a March case brought against Christie by the Sierra Club and 26 other groups. The groups claimed the governor abused his authority by approving a rule that allows the DEP to waive environmenal laws to speed access to project permits. The DEP maintains the charges are unwarranted.

This week's RGGI suit could take the state Superior Court until late 2013 to reach a decision, Martinez said.

In the meantime, Elliott of Environment New Jersey said he hopes they can pressure the DEP to allow public vetting before the courts weigh in. "That's the ideal scenario ... We don't want to go to court. We're not a group that sues very often."

"We'll respond to the lawsuit and follow up on the normal legal requirements," said Ragonese, the DEP spokesperson.

Economic and Environmental Benefits

RGGI advocates say that cap and trade is key to achieving the goals of New Jersey's five-year-old Global Warming Response Act, which requires the state to reduce its greenhouse gas emissions by 20 percent by 2020.

Over three years, New Jersey took in more than $113 million in RGGI auction proceeds. More than half of that money, however, was diverted to fill budget holes. The rest went to renewable energy projects and to help low-income customers pay their electricity bills. Those investments generated more than $150 million in economic activity and created nearly 1,800 jobs in the state, according to an independent analysis by the Analysis Group.

In all RGGI states, $912 million in total proceeds spurred $1.6 billion in economic activity and created 16,000 jobs in the first 13 auctions, the Analysis Group study found. States like Massachusetts that used the bulk of auction proceeds to invest in energy efficiency programs saw the greatest economic benefit.

Greenhouse gas emissions also fell under the program. According to a study this week, power plants across the region slashed their emissions by 23 percent from 2009 to 2011. The reductions were also the result of power suppliers using more natural gas due to historically low prices and the economic downturn, among other factors.

Environmentalists have long said that states have yet to see the true potential of RGGI, both in terms of economic and environmental benefits, because the cap is too lax. Power plant emissions are currently 33 percent below the cap of 188 million tons, according to RGGI Inc., the nonprofit that gives technical and administrative support to states in the pact.

Ragonese said the Christie administration believes it can achieve the goals of RGGI, reducing greenhouse gas emissions and promoting clean and efficient energy use, without cap and trade. (New Jersey is the nation's second-largest solar market behind California.)

"We have been implementing many of the steps that the RGGI bureaucracy would have wanted ... without the need for the RGGI bureaucracy," he said. "Unfortunately, some groups are stuck on the the four-letter acronym."

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