Regional Cap-and-Trade Program Challenged in Court


A New York-based energy company, Indeck Corinth, has sued the Governor of New York and the state’s Environmental Protection Agency over their decision to enter into a regional cap-and-trade program with nine other Northeastern states without obtaining the Legislature’s approval.

The states that have entered into the Regional Greenhouse Gas Initiative (RGGI) are required to cap greenhouse gas emission from their power sector and reduce emissions 10 percent by 2018.

The lawsuit alleges that New York entered into RGGI without the consent of the State Legislature, and thus is a violation of the separation of powers under the New York Constitution. 

The complaint further alleges that by entering into RGGI, the state:

  • imposed an unconstitutional tax;
  • lacks the Congressional authorization constitutionally required for multi-state compacts in violation of the United States Constitution;
  • arbitrarily discriminated against the energy company; and
  • enacted regulations that are inconsistent with the federal Public Utility Regulatory Polices Act and regulations of the Federal Energy Regulatory Commission.

The lawsuit, if successful, could have ramifications for Wisconsin. Currently, Wisconsin is in discussions with other Midwestern states to potentially adopt a similar cap-and-trade system. Known as the Midwestern Greenhouse Gas Reduction Accord, Wisconsin, along with five other states and one Canadian province, are crafting a model rule that would significantly restrict the amount of greenhouse gas emissions in the Midwest.

For more information about the Midwestern Accord and the other regional cap-and-trade programs, click here.