Implementing the CLCPA: New York is Amping up the Electrification of its Transportation Sector

Posted on August 26, 2020 by Gail Port

In September 2019, I wrote about the banner year it had been for the environment and environmental legislation in New York, particularly with the passage of the Climate Leadership and Community Protection Act (CLCPA) which was signed into law in July 2019.  The CLCPA sets a bold, aggressive, statewide framework to reduce net greenhouse gas emissions to zero by 2050—a very high bar for state-led action to address climate change.

To keep the state on track to achieve its goals, the CLCPA called for the creation of two significant decision-making bodies. The first, the Climate Action Council, is in charge of developing the scoping plan for New York’s economy to achieve the State’s bold clean energy and climate agenda. The second is the Climate Justice Working Group, which will guide the state in carrying out its ambitious climate targets by ensuring that the environmental justice provisions of the CLCPA—such as clean energy spending, green jobs, and affordable resources—are enforced and distributed equitably to low-income communities of color. Appointees to both of these bodies have been made and meetings have been held. The Advisory Panels called for in the CLCPA, which consist of representatives from public, private, academic, environmental and community groups covering six economic sectors areas—transportation, energy efficiency and housing, agriculture and forestry, land use and local government, energy intensive and trade-exposed industries, and power generation—were filled on August 24th.  Members of the Just Transition Working Group, which is charged with helping to ensure NY’s workforce is prepared for and will benefit from the transition to renewable energy, were also appointed on that date. 

Governor Cuomo has taken other steps to meet the CLCPA’s ambitious goals, including,

While guiding New York through the difficult and challenging process to flattening the enormous curve of COVID-19 cases, Governor Cuomo continued to work on advancing the CLCPA’s ambitious goals and in mid-July announced a nation-leading initiative to expand electric vehicle use to help combat climate change.  Our Governor prudently recognizes that well after the Coronavirus is no longer a threat, the existential threat of climate change will still be with us. 

The program to accelerate New York’s transition to cleaner mobility is expected to stimulate $1.5 billion in new investments and to provide more than $2.6 billion in consumer benefits and economic opportunities (translation: lots of green jobs).   The package of initiatives to electrify New York’s transportation sector includes: (i) an “EV Make Ready” initiative to accelerate the deployment of more than 50,000 charging stations by 2025 and (ii) $206 million set aside to benefit low-income and disadvantaged communities, which includes $85 million to fund three innovative clean transportation prize competitions.

Back in January 2020, the New York Department of Public Service (“DPS”) released a white paper proposing a bold statewide electric vehicle charging program. That program, which was alluded to in the Governor’s State of the State, is intended to spur the installation of infrastructure to support widespread electric vehicle deployment throughout the state. It is estimated that New York needs about 850,000 electric vehicles on the road to cut pollution from transportation to meet the clean car Zero Emission Vehicle (ZEV) standards. The state will need over 100,000 public and workplace charging stations and over 4,000 Direct Current Fast Charging (DCFC) stations to support that number of electric vehicles.

EV Make Ready Program

The EV Make-Ready Program will be funded by investor-owned utilities in New York State and creates a cost-sharing program that incentivizes utilities and charging station developers to site electric vehicle charging infrastructure in places that will provide a maximal benefit to consumers. Specifically, this program will provide funding to create more than 50,000 level 2 charging plugs, which are capable of charging a vehicle at least twice as fast as a standard wall outlet. Providing drivers with assessable charging stations is the key to encouraging the wide-spread adoption of electric vehicles. Given that the transportation sector is responsible for the largest contribution to greenhouse gas pollution in the U.S., with those emissions increasing more than any other sector over the last 30 years, coupled with the fear of many New Yorkers of using crowded mass transit options during the Coronavirus pandemic, this is clearly a step in the right direction. 

Competitions

Solving onerous problems requires innovative thinking and the creation of incentives to foster that creative thinking often can be a winning strategy. This program includes $85 million to fund three competitions to support clean transportation options to benefit lower socio-economic communities. The three competitions are:

  1. the Environmental Justice Community Clean Vehicles Transformation Prize, a $40 million program focused on reducing harmful air pollution in frontline communities and creating transportation “green zones” across New York State;
  2. the Clean Personal Mobility Prize, a $25 million program soliciting innovative and high impact approaches that enable access to clean transportation services for disadvantaged and underserved communities; and
  3. the Clean Medium- and Heavy-Duty Vehicle Innovation Prize, a $20 million program designed to achieve direct benefits; allow concrete investigation of opportunities, costs, and benefits; and prove out innovative and high-impact approaches to medium- and heavy-duty electrification that can be replicated at scale, including for “last-mile” solutions, one of the fastest growing emissions sources in this class of vehicles. 

2019 was off to a good start in New York with much promise on how we planned to confront the threat of climate change. Then came 2020, the year we stayed home, changed the way we live (perhaps forever), lost over 172,000 US citizens to COVID-19, wore masks, and saw large-scale protests and long overdue calls for racial and social justice.  I for one hope that 2020 will also be remembered as a defining time in the fight against climate change—at least in New York.

A Green New York State of Mind

Posted on September 26, 2019 by Gail Port

In what has been heralded as a banner year in New York State for environmental legislation, the icing on the cake was the recent passage of the most groundbreaking climate action plan in the nation to date.  On July 22, 2019, Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA) into law.  The CLCPA sets an admirable, albeit aggressive, statewide framework to reduce net greenhouse gas emissions to zero by 2050. Notably, while setting ambitious goals to reduce greenhouse gas emissions from all anthropogenic sources, the Act also recognized that improvements to the State’s resiliency—that is, adaptation, to address those impacts and risks of climate change that cannot be avoided ( e.g., infrastructure hardening to withstand climate induced disasters) was also necessary.

In enacting the CLCPA, the State legislature touted New York as a leader, and the CLCPA as a legislative model, in the climate change arena:  “Actions undertaken by New York to reduce greenhouse emissions will have an impact on global greenhouse gas emissions and the rate of climate change.  In addition, such action will encourage other jurisdictions to implement complementary greenhouse gas reduction strategies and provide an example of how such strategies can be implemented.”  The CLCPA’s legislative findings proclaim that “[b]y exercising a global leadership role on greenhouse gas mitigation and adaptation, New York will position its economy, technology centers, financial institutions and businesses to benefit from national and international efforts to address climate change.”  Clearly, the CLCPA is viewed as a potential economic development engine that can “advance the development of green technologies and sustainable practices within the private sector, which can have far-reaching impacts such as a reduction in the cost of renewable energy components, and the creation of jobs and tax revenues in New York.”      

Recognizing that climate change “especially heightens the vulnerability of disadvantaged communities”, the legislature made environmental justice a cornerstone of the CLCPA by providing that State actions to reduce greenhouse gas emissions “should prioritize the safety and health of disadvantaged communities, control potential regressive impacts of future climate change mitigation and adaptation policies on these communities and prioritize the allocation of public investments” in those areas.  The CLCPA calls for the formation of a twenty-two member state panel, the New York State Climate Action Council, to guide the State in meeting its progressive goals.  The Commissioner of the New York State Department of Conservation and the President of the New York State Energy Research and Development Authority (NYSERDA) are to be the Co-Chairs of the Council, and the remaining members will be the heads of certain state agencies and appointees from the Governor (two “non-agency” expert members), and the leaders of the State legislature (a total of 8 members).

In essence, the details for putting in place the plan and to propose regulations and other actions required to implement the new law will be left to the Council. Once the Council is formed, it will have three years to come up with a final scoping plan--a specific proposal to recommend mandates, regulations, incentives, and other measures to ensure New York meets the lofty carbon neutral goals outlined in the CLCPA. To fulfill its legislative mandates, the Council will receive input from to be-created subject-specific Advisory Panels, comprised of experts on transportation, energy intensive and trade-exposed industries, local government, energy efficiency and housing, power generation, and agriculture and forestry, a Climate Justice Working Group, with representatives from communities bearing disproportionate pollution and climate change burdens and a Just Transition Working Group (chaired by the State Labor Commissioner and the President of NYSERDA) giving business leaders a seat at the table to advise on workforce development and training issues and business impacts arising from New York’s “new energy economy.” Time will tell whether this structure will result in “too many cooks in the kitchen” or will function as a “well-oiled machine”.

Here are some of the highlights of the CLCPA benchmarks:

·      By 2030, 70% of New York’s electric generation has to come from renewable sources such as wind, solar or hydropower and must reach 100% by 2040. (According to the New York State Department of Environmental Conservation, 23% of New York’s electric power currently comes from renewable sources—chiefly hydroelectric).  The CLCPA incorporates Governor Cuomo’s renewable energy goals for offshore wind, distributed solar, storage and energy efficiency.

·       New York will have to cut its total green-house gas emissions—from 1990 levels—by 40% by 2030 and 85% by 2050. The remaining 15% will have to be offset by reforestation, restoring wetlands, carbon capture or certain other green projects which will make the state carbon neutral by 2050.

·       The State’s load serving entities will have to procure at least 6 gigawatts of photovoltaic solar energy by 2025 and 9 gigawatts of offshore wind energy by 2035, and to support 3 gigawatts of statewide energy storage capacity by 2030.

·     To the extent practicable, disadvantaged communities are to receive 40% of the overall benefits of State spending on clean energy and energy efficiency programs, projects and investments in the areas of housing, workforce development, pollution reduction, low income energy assistance, transportation and economic development, with a floor of receiving at least 35% of those benefits. (The CLCPA defines disadvantaged communities as “communities that bear burdens of negative public health effects, environmental pollution, impacts of climate change, and possess certain socioeconomic criteria, or comprise high-concentrations of low- and moderate- income households.”)

In recognition of the fact that climate change presents an existential crisis that must be addressed without delay, the CLCPA sets an implementation timeline that also is very aggressive.

The most significant challenge to achieving the CLCPA’s bold directives is figuring out how it will be accomplished in practice. By establishing the Council, the State, prudently, will be engaging a wide-pool of talent tasked to come up with novel and practical approaches. Nonetheless, there are significant questions that, at least as of now, are unanswered. Investments in renewables, energy storage and power generation will be necessary and costly, especially considering the projected retirements of the New York nuclear fleet.  Where will those funds come from?  Powerful incentives will be required to push the private sector towards electrifying the transportation, residential, and commercial sectors—what will those incentives look like? Is the establishment of a State-wide carbon marketplace necessary and, if so, how will it affect the pocket book of New Yorkers?  And how will New York ensure that greening its economy will be good for its business community and not scare them off? Does the statute inadvertently inject too much uncertainty into the State’s economy?

With the Trump administration on a mad dash to roll back a number of regulations designed to address and mitigate climate change, New York has embarked on a praiseworthy plan to achieve aggressive goals to address the existential crisis of climate change. Sure, there are innumerable obstacles that need to be overcome and, yes, the specific action plans have not yet been conceived, but setting these goals—and ultimately making them enforceable—is certainly a giant leap in the right direction.  Kermit the Frog once said, “it’s not easy being green” —but sometimes doing what is hard is what is necessary.

Disclosures: Do They Help Reduce the Risks of Climate Change?

Posted on January 26, 2016 by Gail Port

           In 2010 the U.S. Securities and Exchange Commission issued interpretive guidance titled Commission Guidance Regarding Disclosure Related to Climate Change on how to apply existing SEC disclosure requirements concerning the risks of climate change to public companies, material climate-related trends, legal proceedings, legislation and other climate associated matters that could affect those companies. Specifically, the SEC's interpretative guidance highlighted the following areas as examples of when climate change may trigger SEC disclosure requirements:

  • Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.
  • Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
  • Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.
  • Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.

           Although the SEC advised it would “monitor” the impact of its interpretive guidance on company filings, the SEC has yet to engage in any significant enforcement actions regarding climate change disclosures in light of its 2010 guidance.  However, the New York Attorney General Eric T. Schneiderman has taken up the charge.  On November 8, 2015, Peabody Energy Corporation, the world’s largest private-sector coal company, entered into a settlement agreement with the Attorney General with respect to Peabody’s statements regarding climate change in its SEC filings and other public statements.  This settlement may well mark the first chapter in greater scrutiny of the substance of the climate change disclosures by companies. 

           Using the Martin Act (a New York state securities law that grants the Attorney General broad authority to investigate financial fraud and misleading disclosures) the Attorney General, in 2013, commenced an investigation into Peabody’s climate change disclosures.  The November 8th settlement found that Peabody made two misleading public statements.  First, Peabody’s statement in its annual reports filed with the SEC that it could not “reasonably predict the future impact of any climate change regulation on its business” was found to be misleading to investors.  Peabody, in conjunction with its consultants, had prepared market projections of the potential impact of certain proposed climate change regulations and failed to disclose such projections. The market projections forecasted that “certain potential regulatory scenarios could materially and adversely impact Peabody’s future business and financial condition.”  

           Second, in several of Peabody’s SEC filings, Peabody’s disclosure regarding the International Energy Agency’s (“IEA”) projections of future coal demand failed to note the IEA’s less-favorable projections.  Peabody’s discussion of the IEA’s projections misled investors by cherry picking the high case for coal usage, which “assumes that governments do not implement any recent commitments that have yet to be backed-up by legislation and will not introduce other new policies bearing on the energy sector in the future, even those that are likely to be implemented by various nations.”  The IEA’s projections also include a low case for coal usage and a central position and, while the IEA does not endorse any particular scenario, Peabody omitted both the low case and central position in several of its SEC filings.

            Pursuant to the settlement agreement, Peabody agreed (i) to include specific disclosures in its next quarterly report with the SEC and (ii) that in future SEC filings or communications with shareholders, the financial industry, investors, the general public and others (a) it will not represent that it cannot reasonably project or predict the range of impacts that any future laws, regulations and policies relating to climate change would have on Peabody’s markets, operations, financial condition or cash flow or (b) any citation to the IEA’s projections will include an explanation of the IEA’s various scenarios.

           The NY Attorney General is also reported to be investigating ExxonMobil, under the Martin Act, over its climate change statements. While the Peabody settlement agreement reflects the Attorney General’s increased attention to climate change disclosures by energy companies, the effect may well ripple into other industries.  In addition, members of the House and Senate have requested an update on the SEC’s efforts to implement the SEC’s 2010 guidance.  Nonetheless, questions remain as to whether the obligation to disclosure climate change associated risks will, in fact, be action-forcing so as to result in a change in the behavior of public companies. Will those companies and the public take substantive steps to address the root causes and impacts of climate change or just continue to write detailed disclosures of the potential risks that pass muster with the regulators? Will those enhanced disclosures result in increased investor pressures sufficient to cause those companies to undertake serious, significant, and potentially costly, measures to reduce greenhouse gas emissions and become low-carbon? 

Mario Cuomo’s Environmental Legacy: How Green was the Governor?

Posted on February 12, 2015 by Gail Port

When one thinks of New York’s late Governor Mario Cuomo, some remember an eloquent and gifted orator, a complex man of integrity and vision, or the erudite son of Italian immigrants who ran a grocery store in South Jamaica, Queens, NY.  Others may remember him for his ideological “Tale of Two Cities” keynote address at the 1984 Democratic Convention, which highlighted his “progressive pragmatism” governing philosophy.  Yet others will recall his staunch opposition to the death penalty or his investments in public infrastructure, including convention centers, stadiums, industrial parks and his controversial prison building program.  Or perhaps he will be remembered for his aggressive and strategic skills on a basketball court. It was no secret that basketball was the Governor’s great passion and it was widely known that he was ferocious on the basketball court.    

But not too many think of Mario Cuomo for his environmental legacy.  Upon the Governor’s death on January 1, 2015, however, many memorials, tributes and articles poured in from Buffalo to the Adirondacks to the Hudson Valley to Long Island, from environmentalists and  environmental organizations such as the New York League of Conservation Voters, the Adirondack Council and Scenic Hudson,  all spotlighting a rather impressive environmental legacy.

Here are some notable examples of Mario Cuomo’s environmental accomplishments during his 12 years as Governor (1983-1994):

  • He pressed for the passage of the Hudson River Valley Greenway Act of 1991, which established the Greenway Conservancy for the Hudson River Valley and the beginnings of the Hudson River Greenway Trail System  and scenic byways which now exist as a necklace of parks, hiking trails and open space on both sides of the Hudson River running the length of the Hudson Valley.  The Greenway trails have expanded from Westchester to Albany.
  • He signed the Long Island Pine Barrens Protection Act in 1994, which protected over 100,000 acres of Long Island’s premier ecosystems in the pine barrens of Suffolk County.  Many believed that without the Act a large portion of these ecologically diverse pine barrens would have been sold off by the state for industrial or residential development.
  • He worked to gain passage of the 1986 Environmental Quality Bond Act, which funded a $1 billion hazardous waste clean-up program to address more than 1,000 sites throughout the State. It also enabled programs such as the Estuary Program to restore the Hudson River and provided $200 million for land acquisition and historic preservation.
  • In response to urging by Governor Mario Cuomo’s administration, the U.S. EPA reopened its “no action” determination against GE and commenced a lengthy CERCLA enforcement battle against GE that led to GE’s on-going remediation of the PCB-contaminated Hudson River.
  •  The Governor is also credited with the establishment of the Environmental Protection Fund (EPF), following a failed effort in 1990 for another bond act. The EPF has provided billions of dollars for farmland conservation, wastewater treatment plant upgrades, parks creation, waterfront revitalization, invasive species controls, development of recycling programs and the restoration of historic sites.  Since its 1993 enactment, the EPF has invested more than $2.7 billion to conserve some of the State’s most important scenic and ecological lands and been used to buy development rights on hundreds of thousands of acres of commercial timberland in the Adirondacks.  
  • Mario Cuomo also signed legislation establishing the Clean Water State Revolving Fund for water and wastewater infrastructure, which provides low interest loans for this critical infrastructure.

The current New York State Department of Environmental Conservation Commissioner, Joe Martens, (who was an environmental adviser to Governor Mario Cuomo in the early 1990s), recently observed that Mario Cuomo “was never comfortable” as a hiker or a canoeist.  “He was more comfortable in a suit or in sweat pants than he was in hiking clothes.” Nevertheless, Commissioner Martens noted, Mario Cuomo “regarded protection of the environment as almost a religious belief”, and “he talked about it in spiritual terms all the time.” Mario Cuomo will be missed, but his environmental legacy will live on.