Coal fired units at Dominion Energy’s Chesterfield Power Station would close by 2024 under the Clean Economy Act that passed the General Assembly in 2020. (Ryan M. Kelly/ For the Virginia Mercury)
In December, Republican Gov. Glenn Youngkin pledged to pull Virginia out of the Regional Greenhouse Gas Initiative, a carbon reduction market involving 10 other Mid-Atlantic and New England states.
The move put the new administration immediately at odds with state Democrats, who saw participation in RGGI, which caps carbon emissions from power plants and compels generators to buy carbon allowances, as one of their party’s signature environmental successes during their two years of control in Richmond.
The caucus, which holds a narrow 21-19 majority in the Senate, has indicated its members intend to hold the line on RGGI, a program that they say not only will drive down carbon emissions but is already channeling hundreds of millions of dollars from allowance sales, most of which ultimately comes from utility ratepayers, toward state flood protection and low-income energy efficiency programs.
Youngkin’s strategy for how he’ll fulfill this early promise has shifted as he’s taken office. Here’s four approaches he’s taking:
Prior to taking office this January, the governor’s transition team said that because the state’s participation in RGGI is governed by a contract agreement signed by the Department of Environmental Quality, the governor can withdraw Virginia from that agreement by executive action.
Virginia’s contract is with RGGI, Inc., the nonprofit organization that coordinates the states’ participation in the carbon market. Every RGGI state holds a contract with RGGI Inc. that allows the nonprofit to act as an agent for the state to do things like allowance tracking and auction arrangements.
Each state also appoints two people to sit on the RGGI, Inc. Board of Directors, typically the heads of its environmental and energy agencies. Former Gov. Ralph Northam appointed DEQ Director David Paylor, who has since been replaced by Youngkin, and State Corporation Commissioner Jehmal Hudson.
Youngkin’s Executive Order 9, issued the day of his inauguration, includes a directive for DEQ to notify RGGI, Inc. of “the governor’s intent to withdraw from RGGI, whether by legislative or regulatory action.”
Neither the governor’s office nor DEQ responded to a question about whether the notification had been sent or provided a copy of any such notification. RGGI, Inc. also did not respond to an inquiry.
Despite Youngkin’s early statements that his administration would rely on the contract to withdraw Virginia from RGGI, Executive Order 9 makes clear that the governor will in fact have to unroll existing state regulations governing participation in the program.
Executive Order 9 lays out a two-pronged approach: Youngkin orders DEQ to first develop an “emergency regulation” to repeal the current one on the books and to then develop a permanent regulation.
Emergency regulations are governed by Virginia’s Administrative Process Act and are allowed either when an agency determines one is “necessitated by an emergency situation” — with “the necessity for such action” being “at the sole discretion of the governor” — or when state or federal law requires that a new regulation go into effect in 280 days or less. They can only remain in force for 18 months, although the governor can extend them by an additional six months if a permanent replacement can’t be adopted in time.
Both regulations will need to be approved by the State Air Pollution Control Board, a seven-member citizen board stacked with Northam appointees.
Nate Benforado, an attorney with the Southern Environmental Law Center, said emergency regulations are typically only used in the case of a natural disaster or change in federal law and warned that the emergency process “cuts out public involvement and public engagement and forces the Air Board to rule with essentially no record.”
Del. Alfonso Lopez, D-Arlington, in a speech on the House of Delegates floor Wednesday, characterized the tactic as “a political stunt.”
“This is never what emergency regulatory powers were supposed to be for,” he said. “Power should not be misused this way.”
While an emergency regulation can go into effect as soon as it is approved by the air board and filed with the Virginia Register, a permanent replacement regulation will take much longer.
For the permanent rule, a notice of intended regulatory action will have to be filed within 60 days of the emergency regulation’s effective date and the actual proposal will have to be filed within 180 days. The rule will then go through the normal public comment and review procedures laid out by state law, a process that at the absolute minimum will take six months but usually stretches much longer.
The most pressing question swirling around Youngkin’s RGGI plans is whether legislation is required to withdraw the state from the program.
Democrats and environmental groups firmly believe General Assembly action is needed, a view bolstered by a formal advisory opinion from former Democratic Attorney General Mark Herring that Youngkin cannot withdraw the state from RGGI solely through executive action.
“To change a statutory requirement, you need to change the statute,” Lopez told the House Wednesday.
The 2020 law authorizing Virginia’s participation in RGGI “was not a sort of general delegation to DEQ, giving it some authority and letting it figure out what to do,” said Benforado. “The General Assembly decided Virginia was participating in RGGI and wrote a law requiring it.”
Youngkin spokesperson Macaulay Porter did not answer a question about whether the administration believes it can withdraw Virginia from RGGI without legislation, saying instead that “the governor pledged to remove RGGI because of the unfair burden it places on Virginia taxpayers. On Day One, he issued an executive order to do just that.”
Andrew Wheeler, the former Environmental Protection Agency chief who has been nominated by Youngkin to serve as Virginia secretary of natural and historic resources, initially said during a Senate committee meeting Tuesday that on RGGI withdrawal, “I understand part of that decision would be up to the legislature.” Later, however, when pressed by Sen. Joe Morrissey, D-Richmond, on whether RGGI repeal would need to be done by the General Assembly, he declined to offer a legal opinion and said DEQ was assessing the issue as part of a cost-benefit review required by Executive Order 9.
An inquiry to new Republican Attorney General Jason Miyares’ office Wednesday about the necessity for legislation was not returned.
Two Republican lawmakers — House Majority Leader Terry Kilgore, R-Scott, and Sen. Richard Stuart, R-Stafford — have also filed bills this session to repeal the enabling legislation for RGGI, the Clean Energy and Community Flood Preparedness Act.
“The governor’s ability to begin the withdrawal process is clear. But without legislation, some future governor may attempt to restart this bad deal for ratepayers,” said House Republican spokesperson Garren Shipley.
Through the budget
Finally, Youngkin’s administration is seeking to unwind RGGI through budget language.
Among the governor’s 23 budget amendments proposed as part of his legislative agenda is budget amendment number 22, which “begins the process of withdrawing from the Regional Greenhouse Gas Initiative.”
Specifically the amendment would insert language into the budget that “notwithstanding the Clean Energy and Community Flood Preparedness Act or any other provision of the Code of Virginia,” any state agency, board or office “shall stop participation in an auction program to sell allowances into a market-based trading program consistent with, or participation in, the Regional Greenhouse Gas Initiative (RGGI), and shall stop enforcing and rescind any regulation that adopts its authority from or is directly supportive of participation in such an auction program.”
Additionally, the language would require the termination of all RGGI contracts and forbid any agency from spending any funds or directing the payment of revenues related to the program “without prior written approval by the governor.”
The maneuver will be familiar to RGGI-watchers in Virginia: it echoes the Republicans’ successful 2019 attempt to block Virginia from participating in the program through the budget. But, like any legislation to repeal the program, it will also need to clear the Democrat-controlled Senate during budget negotiations in order to take effect.
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