On June 20, 2019, the New York State legislature enacted the Climate Leadership and Community Protection Act.  Governor Andrew Cuomo is expected to sign the bill into law.  If implemented, the new law will have an extraordinary impact on virtually every sector of the State economy, requiring reductions in statewide greenhouse gas emissions to 60% of 1990 levels by 2030 and 15% of 1990 levels by 2050.  Separate provisions of the law – those relating to “community protection” – address environmental justice and toxic air pollution impacts on disadvantaged communities.  This Client Alert summarizes the most important provisions of the new law.

Greenhouse Gas Inventory

The law requires that the State Department of Environmental Conservation (“DEC”) issue annual reports on “statewide greenhouse gas emissions,” to be expressed as tons of carbon dioxide equivalent emitted per year.  The law defines “statewide greenhouse gas emissions” as “the total annual emissions of greenhouse gases produced within the state from anthropogenic sources” and “greenhouse gases produced outside of the state” associated with: (i) “the generation of electricity imported into the state” or (ii) “the extraction and transmission of fossil fuels imported into the state.”   Thus, in calculating statewide greenhouse gas emissions, out-of-state methane emissions associated with the extraction and transportation of natural gas imported into New York State to fuel in-state facilities will presumably be “counted” together with the carbon dioxide emitted by the combustion of the natural gas within the state.  DEC must also estimate statewide greenhouse gas emissions in the 1990 baseline year. 

The Policy Making Apparatus

Apart from specific provisions relating to the electric sector (discussed below), the law contains little specificity as to how the State is to achieve its extraordinarily ambitious cuts in greenhouse gas emissions.  Instead, it establishes a Climate Action Council (the “Council”), which is charged with preparing reports, proposals and plans as to the specific policies to be put into place to attain the law’s goals.  The Council is to be co-chaired by the DEC commissioner and the president of the New York State Energy Research and Development Authority (“NYSERDA”).  The Council has twenty other members: the leaders of various State departments, commissions or authorities (transportation, health, economic development, agriculture and markets, housing and community renewal, labor, public service, New York power authority, Long Island power authority, and state); two non-agency appointees of the governor; three appointees of the temporary president of the state senate; three appointees of the speaker of the assembly; one appointee of the minority leader of the senate; and one appointee of the minority leader of the assembly.  To proceed with its work, the Council is directed to convene various advisory panels and working groups, which will address a host of issues implicated by the required transformation of our carbon-based economy. 

By the law’s second anniversary, the Council is to issue a draft “scoping plan” setting policies that will achieve the emission reductions required by the law.  The draft is then to be subject to extensive public hearings, and the opportunity for public comment.

By the law’s third anniversary, the Council is to publish the final scoping plan.  The scoping plan will not itself have regulatory effect, but must identify the “regulatory measures and other state actions that will ensure the attainment of the [law’s] statewide greenhouse gas emissions limits.”  Thus, the scoping plan will form the bedrock upon which the State’s greenhouse gas reduction strategies will be built.

The scoping plan must include the following elements: (i) performance-based standards for greenhouse gas emission sources in the transportation, building, industrial, commercial and agricultural sectors; (ii) measures to reduce emissions from the electricity sector by displacing fossil-fuel fired electricity with renewable electricity or energy efficiency; (iii) land use and transportation planning measures to reduce greenhouse gas emissions from motor vehicles; (iv) measures to sequester carbon; (v) measures to achieve 6 gigawatts of solar energy capacity by 2025, 3 gigawatts of energy storage capacity by 2030 and 9 gigawatts of offshore wind by 2035; [1] (vi) a specified reduction of 185 trillion Btus of electric energy consumption by 2025 below the 2025 forecast; (vii) measures to promote electrification of personal and freight transport and other strategies to reduce greenhouse gas emissions from the transportation sector; (viii) measures to reduce energy use in existing residential and commercial buildings; (ix) measures to transition the state workforce; (x) measures to achieve healthy forests; (xi) measures to limit the use of chemicals that when released to the atmosphere contribute to global climate change; and (xii) mechanisms to limit emission “leakage” (defined as a “reduction in emissions of greenhouse gases within the state that is offset by an increase in emissions of greenhouse gases outside of the state”).

Promulgation of Implementing Regulations

By the law’s fourth anniversary, DEC is required to: (i) promulgate regulations to ensure compliance with the statewide emissions reduction limits and (ii) assist other state agencies in promulgating their own regulations, as necessary, to achieve these limits.[2]  The regulations are to “reflect, in substantial part, the findings of the scoping plan.”

The regulations may include offset projects as an alternative compliance mechanism to be used by sources subject to greenhouse gas emissions limits.  The law, however, places tight limits on such offset projects.  In aggregate, they may not account for more than 15% of statewide greenhouse gas emissions.  Each offset project must be approved by DEC upon individual application that must demonstrate, among other things, that: (i) compliance with the greenhouse gas emissions limit is not technologically feasible; (ii) the source has reduced emissions to the maximum extent practicable; (iii) the project provides a discernable benefit to the environment; (iv) the offset project is located in the same county, and within 25 miles of the regulated source, to the extent practicable; and (v) the project enhances the geographic area affected.  Sources in the “electric generation sector” are prohibited from utilizing the offset mechanism, and projects that contribute to educational research and certain other specified sorts of projects (including those involving biofuels) may not generate offsets.  In light of these constraints, the offset mechanism may provide limited flexibility to sources required to reduce emissions. 

Renewable Energy Program

The law requires the Public Service Commission to establish a renewable energy program by June 30, 2021.   That program is to require that: (i) by 2030 renewable energy systems account for at least 70% of statewide electric generation; and (ii) by 2040, the statewide electrical system result in “zero emissions.”  For purposes of this mandate “renewable energy systems” are defined to include “systems that generate electricity or thermal energy through the use of … solar thermal, photovoltaics, on land and offshore wind, hydroelectric, geothermal ground source heat, tidal energy, wave energy, ocean thermal, and fuel cells which do not utilize a fossil fuel resource.”  In establishing the program, the Commission is directed to consider its impacts “on  safe and adequate electric service in the state under reasonably foreseeable conditions” and is authorized to modify the foregoing targets in light of such considerations.

Moreover, the Commission is authorized to “temporarily suspend or modify” the targets upon making certain findings relating to the provision of safe and adequate electric service and other specified concerns.  No later than July 1, 2024, the Commission is required to establish programs to require the state’s load-serving entities to procure at least 9 gigawatts of offshore wind electricity generation by 2035, 6 gigawatts of solar electricity by 2025, and 3 gigawatts of energy storage capacity by 2030.

State Permitting and Approvals

State agencies, when considering and issuing permits, licenses, and other administrative approvals and decisions, including grants and loans, must consider whether such decisions are “inconsistent with or will interfere with the attainment of the statewide greenhouse gas emissions limits” that DEC is to promulgate and, if there is an inconsistency, provide “a detailed statement of justification as to why such limits/criteria may not be met and identify alternatives or greenhouse gas mitigation measures to be required where such project is located.”

Environmental Justice

The law contains several provisions requiring that the policies and regulations to be promulgated to achieve greenhouse gas emission limits not unduly burden disadvantaged communities.  The most stringent provision of the law pertaining to environmental justice, however, is a separate provision stating that “all state agencies, offices, authorities, and divisions shall not disproportionately burden disadvantaged communities” when “considering and issuing permits, licenses, and other administrative approvals and decisions, including but not limited to the execution of grants, loans, and contracts.”  This provision is not itself limited to policies and regulations pertaining to climate change.  Its broad language could well be interpreted as prohibiting state agencies from approving or providing financial assistance to any new industrial or commercial facility, waste-related facility or other development proposed to be located in a disadvantaged community if such development were to have a disproportionate impact on that community.  Since major projects often impose some burdens on the immediately affected area, the provision has the potential to steer significant economic development to other areas.  The law establishes a specific mechanism for identifying disadvantaged communities.

Community Air Monitoring Program

The law requires DEC to develop a program to monitor air quality in disadvantaged communities “with potentially high exposure burdens for toxic air contaminants and criteria air pollutants.”  On or before June 1, 2024, DEC is required to prepare “a strategy to reduce emissions of toxic air contaminants and criteria air pollutants in disadvantaged communities affected by a high cumulative exposure burden.”  DEC is also directed to “select disadvantaged communities around the state for preparation of community emissions reduction programs” and is authorized to adopt implementing regulations with respect to such programs.  These provisions are not directly related to the provisions of the new law regulating greenhouse gas emissions.

Conclusion

The new law will have profound implications for all sectors of the State’s economy, as well as the environment.  Its goals can be achieved only through: (i) discontinuing most uses of fossil fuels to generate electricity, provide heat to buildings or power vehicles; and (ii) substantially improving energy efficiency.  Although the law will impose substantial costs on businesses, universities, hospitals, governments and individuals who rely on fossil fuels, it will also promote economic activity by requiring massive new investment to decarbonize the State’s economy.
  


  
[1]   
By way of comparison, the State’s largest electric generation facility – Indian Point Energy Center – has a capacity of approximately 2 gigawatts.  The only currently existing offshore wind turbine facility in the United States, near Block Island, has a capacity of 30 megawatts, which is 0.03 gigawatts.

  
[2]   
The law directs numerous state agencies to promulgate regulations to “contribute to achieving the statewide greenhouse gas emission limits” established by DEC.  The list includes the Public Service Commission, NYSERDA, Department of Health, Department of Transportation, Department of State, Department of Economic Development, Department of Agriculture and Markets, Department of Financial Services, Office of General Services, Division of Housing and Community Renewal, various public utility authorities, and “any other state agency.”