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Clean Air Mkts. Group v. Pataki

Citation: 33 ELR 20247
No. Nos. 02-7519, -7569, (2d Cir., 08/01/2003) Aff'd

The court affirms a district court decision that New York Air Pollution Mitigation Law §66-k is preempted by the Clean Air Act (CAA) Title IV cap-and-trade system and violates the Supremacy Clause of the U.S. Constitution. Section 66-k requires the assessment of an air pollution mitigation offset on New York utilities that sell or trade sulfur dioxide (SO2) allowances to 1 of 14 upwind states. To avoid assessment, utilities must attach a restrictive covenant to allowances they sell prohibiting subsequent transfer to the 14 upwind states. Section 66-k, however, impermissibly interferes with CAA Title IV's methods of reaching its goal of decreased SO2 emissions. The text of CAA Title IV, its legislative history, and U.S. Environmental Protection Agency regulations indicate that CAA Title IV was intended to create a national system of tradable pollution permits where the permits may be transferred to any other person anywhere in the country who holds such allowances. Although §66-k does not technically limit the authority of New York utilities to transfer their allowances, it clearly interferes with their ability to effectuate such transfers by imposing the assessment and by requiring a restrictive covenant to avoid assessment. Moreover, the CAA §116 state authority savings clause allowing state regulation of in-state air pollution does not authorize §66-k because §66-k attempts to control emissions in other states. Similarly, the CAA §403 provision allowing states to regulate electric utility rates and charges does not authorize §66-k because §66-k does not regulate utility rates and charges.

[A prior decision in this litigation is published at 32 ELR 20553.]

Click here for the decision.
Counsel for Plaintiffs
Norman W. Fichthorn
Hunton & Williams
1900 K St. NW, Washington DC 20006
(202) 955-1500

Counsel for Defendants
Robert M. Rosenthal, Ass't Attorney General
Attorney General's Office
State Capitol, Albany NY 12224
(518) 474-7330