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Assessment of Public Comments Summary Part 242

Comments Received from April 29, 2020 to June 29, 2020

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative, historic effort among New York and nine Participating States1 and is the first mandatory, market-based carbon dioxide (CO2) emissions reduction program in the United States. Since its inception in 2008, RGGI has utilized a market-based mechanism to cap and cost-effectively reduce emissions that cause climate change. Recently, New York along with the Participating States completed a comprehensive program review and announced a proposal to lower the regional emissions cap established under RGGI to approximately 75 million tons in 2021, declining 3.0 percent a year through 2030.2 Accordingly, New York and the then-Participating States committed to propose revisions, pursuant to state-specific regulatory processes, to their respective CO2 Budget Trading Programs to further reduce CO2 emissions from power plants in the region. To implement the updated RGGI program in New York State, the Department of Environmental Conservation (Department) proposed revising 6 NYCRR Part 242, CO2 Budget Trading Program (the Program) and 6 NYCRR Part 200, General Provisions.

The Department proposed revisions to Part 242 on April 29, 2020. The public comment period closed at 5:00 P.M. on June 29, 2020. The Department received written and video comments from just over 500 commenters on the proposed revisions to Part 242 and on the New York State Energy Research and Development Authority's (NYSERDA's) May 13, 2020 proposal for 6 NYCRR Part 507, "CO2 Allowance Auction Program". All of these comments have been reviewed, summarized, and responded to by the Department and/or NYSERDA.

The vast majority of commenters, while supportive of the revisions to the Program, emphasized the need to align the revisions with the Climate Leadership and Community Protection Act (CLCPA).3 Most notably, comments on specific aspects of the proposed revisions to the Program addressed the reduction in the CO2 emission cap relative to the goals and requirements of the CLCPA, the process and use of RGGI CO2 allowance auction proceeds by NYSERDA and the need to dedicate a minimum percentage of the overall benefits of such investments to disadvantaged communities in accordance with the CLCPA, the applicability expansion to certain units 15 megawatts (MW) and larger and the need to cover additional sources, as well as the need for transparency in emission reporting. A couple of commenters expressed some technical concerns regarding the Third Adjustment for Banked Allowances (TABA). The Department's responses to these and all other comments received are summarized below.

First, a substantial number of comments were received asking the Department to ensure that the reduction targets under the Program reflect the greenhouse gas (GHG) emissions reduction and renewable energy requirements of the CLCPA. In response the Department recognized that additional GHG emission reductions from power plants beyond those addressed in the revisions to Part 242 will be necessary on a Statewide basis to meet the requirements of the CLCPA. The Department noted that the CO2 budgets established are consistent with the State's commitment to implement the proposed changes previously announced by RGGI participating states. Furthermore, the next program review scheduled to begin in 2021 will allow New York to factor the CLCPA's requirements and process in that review.

Second, a substantial number of commenters also noted that the Program should ensure that RGGI proceeds are invested in ways that prioritize frontline, environmental justice, and disadvantaged communities, with at least 40% of the revenue dedicated to projects and programs that directly benefit disadvantaged communities. The Department's response acknowledged that the percentage and process for distribution of proceeds are addressed in a companion rulemaking, 21 NYCRR Part 507, proposed by NYSERDA on May 13, 2020. NYSERDA responded that the changes to Part 507 mandate that disadvantaged communities receive 40%, and no less than 35%, of the overall benefits from the investment of the CO2 Allowance Auctions proceeds, consistent with the CLCPA. By preserving this 40% overall benefits goal and 35% minimum, the changes to Part 507 ensure that future RGGI proceeds will be invested in ways that prioritize benefits to these communities. NYSERDA further noted that the Climate Justice Working Group (CJWG) established by the CLCPA is tasked with developing a definition and list of disadvantaged communities.

A couple of commenters, while noting that the Program reduced the number of offset categories, offered suggestions about the potential for additional offset categories in the future with a primary focus on farming. The Department responded by indicating it would take this potential for additional offsets under the RGGI program into consideration during the next RGGI program review. The Department also noted that the Agriculture and Forestry Advisory Panel of the CAC is considering various policies to further reduce or sequester GHG emissions from this sector, as part of the overall implementation of the CLCPA.

A couple of commenters suggested that the Department should track and report emissions of CO2 and co-pollutants from affected sources in a transparent manner. The Department responded that emissions for facilities are already posted on a quarterly basis in a transparent manner in the RGGI CO2 Allowance Tracking System (COATS) found at: https://rggi-coats.org/eats/rggi/. In addition, co-pollutant emissions, including criteria pollutants and hazardous air pollutants, are posted to the Open NY website at: https://data.ny.gov/Energy-Environment/Title-V-Emissions-Inventory-Beginning-2010/4ry5-tfin.

While a number of commenters approved of the Program revisions to expand applicability to units 15 MW, they suggested a further applicability expansion to units smaller than 15 Mw given the disproportionate impact these facilities have on environmental justice communities. The Department noted that the CLCPA includes multiple provisions that recognize that historically disadvantaged communities often suffer disproportionate and inequitable impacts from climate change, and that the revisions to Part 242 to expand its applicability are consistent with those provisions. The Department added that it will consider further expansion of the applicability provisions in Part 242 as part of the next RGGI program review. In addition to factoring in the requirements of the CLCPA process, this will allow the Department to be informed by the deliberations and actions of the CJWG established by the CLCPA, including the CJWG's identification of disadvantaged communities pursuant to the statute.

Two commenters had concerns with the timing of and with specific language in the revisions to Part 242 for the TABA. The Department agreed with both commenters that there was a typographical error in the definition for TABA and made the correction to reflect the correct date of March 15, 2021 in the final rule. The Department also addressed both commenters' concerns about the timing of the TABA relative to final compliance true-up, by noting that all compliance account holdings are known and frozen as of March 1st and that the remaining information, such as emissions, will be readily available on March 15th. Lastly, the Department added text to further clarify that the TABA would properly account for interim compliance for 2018 and 2019.

One commenter mentioned in detail that practices that improve on-farm resiliency represent great untapped potential in climate policy in New York and that a soil health program should be a major component of or companion parallel program to any serious effort to address climate change. Another urged measures to help farmers sequester carbon in soils and site wind turbines. In response, while outside the scope of this rulemaking, the Department recognized that additional GHG emission reductions will be informed by the deliberations of the CAC pursuant to the CLCPA and noted that the Agriculture and Forestry Advisory Panel of the CAC is considering various policies to further reduce or sequester GHG emissions from this sector, as part of the overall implementation of the CLCPA.

One commenter indicated that they supported the revisions to the Cost Containment Reserve (CCR) but noted that the Department should consider moving the CCR under the cap during the next program review. In response, the Department and NYSERDA noted they will work with the other RGGI participating states to evaluate all aspects of the Program as part of the next RGGI program review, including whether to continue to include the CCR above the cap or bring it underneath the cap. Another commenter suggested that the Department use the non-baseload or marginal emission rate in calculating the allowance surrender under the Voluntary Renewable and Eligible Biomass Set-Aside provisions of the Program. Similar to previous responses, the Department replied that this would be considered during the next program review.

One commenter raised concerns about the lack of solar on state and municipal buildings. While outside the scope of this rulemaking, the Department noted that this would be addressed by various advisory panels of the CAC as part of the overall implementation of the CLCPA.

Lastly, one commenter had a number of concerns and disagreements with the justification to support the revisions to Part 242; the resources cited in the Regulatory Impact Statement for the need and benefits from reductions in GHGs and co-pollutants; the reductions attributable to the Program; the proposed applicability expansion to units 15 MW and larger; the revised budgets, cap decline and potential allowance shortage; impacts of a binding cap and anticompetitive behavior; apportionment; impacts of the Program on Jamestown and Freeport; and other miscellaneous comments that were outside of the scope of the revisions to the Program.

In response to the first concern, the Department respectfully disagreed with the commenter's conclusions and noted that there is overwhelming scientific evidence that action to address climate change is necessary. In response to the reports cited, the Department reiterated that the science is clear and that the cited reports should be considered as additional background in support of the rulemaking. In its response to the reductions attributable to the cap over time, the Department noted that while other market drivers may have contributed to GHG reductions, the cap ensures that such reductions are maintained. To address the concerns about applicability expansion, the Department mostly agreed with the commenter's analysis regarding the quantity of facilities and emissions covered by the expansion, while replying that the expansion would be retained because it adds a carbon price to these sources and brings their emissions underneath the cap as part of the State's continued efforts to address climate change.

The Department addressed this commenter's concerns about the revised budgets and cap decline by noting that actual CO2 emissions continue to be well below the regional cap for all participating states. Any concerns about an allowance shortfall are addressed by the fact that this beneficial emission trend continued since the completion of program review, existing Program flexibility, and the 10 percent of additional allowances that could be added to the market under the CCR. To address the commenter's concerns about a binding cap and anti-competitive behavior, the Department noted that while the potential for this behavior may increase as the surplus of allowances decreases, the market monitor would continue to evaluate the market for this type of behavior. The Department added that the potential for anti-competitive behavior is diminished by important Program design elements, including the CCR, emission containment reserve (ECR), relatively long compliance periods, the size and scope of the overall Program, and low barriers to access to the allowance market. To address the apportionment comment, the Department replied that the environmental benefits of the Program are set by the regional cap and other design elements, and that apportionment is the manner in which that regional cap is split between participating states. While the Department agreed with and modified the RIS to address the commenter's concerns about the range of compliance options available to Jamestown and Freeport, the Department made it clear that the cost of a CO2 allowance does not constitute a tax. Lastly, the Department replied accordingly when a comment was outside the scope of the proposed Program revisions.

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1 In addition to New York, the RGGI Participating States include: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, and Vermont. Pennsylvania has expressed interest in potentially becoming a RGGI Participating State, while Virginia recently finalized its own regulation so that it will become a RGGI Participating State as of January 1, 2021.
2 The Participating States released the Updated Model Rule on August 23, 2017. The Participating States also released Principles to Accompany Model Rule Amendments on December 19, 2017.
3 Actions under the CLCPA can be tracked at: https://climate.ny.gov/.


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