Congestion pricing expected to clear final federal hurdle

Jun 26, 2023

Presented by

Good morning and welcome to the Monday edition of the New York & New Jersey Energy newsletter. We’ll take a look at the week ahead and look back on what you may have missed last week.

CONGESTION PRICING GREEN LIGHT OUTRAGES NEW JERSEY — POLITICO’s Ry Rivard: Federal transportation officials are giving a final green light to New York’s plan to toll drivers coming into parts of Manhattan, members of the New Jersey congressional delegation say.

Sen. Bob Menendez and Reps. Josh Gottheimer and Bill Pascrell, all New Jersey Democrats, said they are “outraged” after hearing the Federal Highway Administration will not require New York to do more outreach and environmental studies before putting in tolls that will affect New Jersey drivers.

The New Jersey trio said highway officials are moving ahead with a “Finding of No Significant Impact” document about congestion pricing. In May, highway officials issued a letter approving the New York Metropolitan Transportation Authority environmental assessment and issued a draft impact finding, which was out for 30 days of public review. New Jersey opponents of the tolling plan had hoped to get the administration to reconsider that decision and make MTA do a more exhaustive environmental impact statement, which could delay a tolling plan that has been repeatedly delayed.

“This is nothing more than a cash grab to fund the MTA,” the New Jersey Democrats said in a statement to POLITICO. “There is no excuse for FHWA and the Department of Transportation’s failure to require New York to meaningfully engage with stakeholders across New Jersey and to not adequately consult the New Jersey congressional delegation and other elected officials.”

The New Jersey delegation got wind of the administration’s sign off and its plans to publish something in the Federal Register this week. After that, the MTA officials have said they would need about a year to set up the new tolling infrastructure.

New York supporters, including environmental activists and transit advocates, argue the tolls will help reduce traffic, improve air quality and help the MTA improve its service. New Jersey Gov. Phil Murphy, a fellow Democrat, said earlier this month he is preparing to lawyer up to challenge the tolling plan and he has threatened to hold up business at the Port Authority of New York and New Jersey to get back at New York.

PAYING FOR WIND — The New Jersey Assembly and Senate’s budget committees are both expected to take up legislation Tuesday meant to save the state’s first offshore wind farm from rising costs that imperil the project. The move, just before the June 30 state budget deadline, suggests they could be on a fast track.

The legislation would save energy company Orsted’s plan to put 100 turbines 15 miles off the South Jersey coast to generate power for 500,000 homes. The project, known as Ocean Wind 1, is supposed to be finished next year but has yet to begin construction as Orsted worries it can’t make money from the deal because of inflation, higher interest rates and supply chain issues.

This bill would change a 2019 deal, allowing Orsted to keep tax credits that didn’t exist when the Board of Public Utilities approved Ocean Wind 1 four years ago. Supporters argue the tax credits are still helping customers by helping the company pay for the project, even if the money isn't going directly back to customers. Opponents will argue Orsted has gotten enough from the state and if it’s project can’t pencil out, it should not build it.

The bills are scheduled to be taken up in the Senate Budget and Appropriations Committee at 11 a.m. on Tuesday and by the Assembly Budget Committee at 1 p.m. on Tuesday. The Assembly bill is A5651, the Senate bill is S4019. — Ry Rivard

PLANNING FOR WIND — New York and New Jersey need offshore wind energy to meet climate goals and transmission lines that are coming can benefit communities, according to a new report from the Regional Plan Association and Karp Strategies. The association, a not-for-profit organization that makes planning recommendations for the tri-state region, has not often focused on energy issues but has taken an interest in offshore wind. The report, titled “Making Offshore Wind Transmission Work for Communities,” takes stock of a new industry in America that, in RPA’s estimation, will require cooperation from numerous coastal communities, plus inland communities that host transmission lines to bring power ashore.

“We wanted to make sure this process around transmission is better understood,” said Robert Freudenberg, RPA vice president for energy and environmental programs. “These are projects that are happening, we want to make sure everyone involved can benefit from the outcome.” The report, done in conjunction with Karp Strategies, an urban planning group with experience in offshore projects, comes just as offshore wind has become a major political issue in both states. It lays out all the different projects, their locations and various timelines.

The group’s insight and support could come in handy right now for offshore wind developers and carbon-free energy advocates. Offshore wind foes view each onshore transmission line's landfall as a pain point to try to block offshore wind farms. Now, New York utilities are preparing for one of the most ambitious transmission projects in America – a multi-gigawatt power line to connect multiple offshore wind farms and route the power into New York City.

The report also serves as a sort of tip sheet about how offshore wind supporters might want to communicate about transmission projects. The report includes a video of a roadway in Long Island where a transmission line has been installed. Though the road was torn up to lay the cable, it was repaved and it would be nearly impossible for a layperson to tell the line was there.

Rebecca Karp, the CEO and founder of Karp Strategies, said the key is to build coalitions of supporters, engage early, center “equity and justice,” and consider so-called community benefit agreements, which are packages of money or benefits that developers provide communities hosting offshore wind infrastructure. That last part has been key to winning hearts and minds in some communities. The benefits include typical industrial policies, like workforce development plans, but also things the community needs, like daycare or a new bus stop for workers or donations to local nonprofits.

“There is really an opportunity to mitigate risk of delay, of lawsuits, of misinformation,” Karp said. — Ry Rivard

HAPPY MONDAY MORNING: Let us know if you have tips, story ideas or life advice. We're always here at mfrench@politico.com and rrivard@politico.com. And if you like this letter, please tell a friend and/or loved one to sign up.

A message from Leading Light Wind:

As Independence Day approaches, Leading Light Wind – the only American-led offshore wind project in the New York Bight – is celebrating our commitment to building a domestic offshore wind industry that will chart a clean energy future. Using American know-how, we will deliver clean energy, good-paying jobs, and economic benefits to the communities where we live and work. Learn more about our bold, American-led vision for a clean energy future at leadinglightwind.com.

Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.

AROUND NEW YORK

— More tar problems seen on Lewis County roads with heavy truck traffic from power line construction project.

— City to add safe e-bike chargers at NYCHA buildings.

Around New Jersey

— School of Conservation settles into a new chapter.

A message from Leading Light Wind:

What you may have missed

Stories and items from last week:

INJECTION POINT NYC — POLITICO’s Ry Rivard: State utility regulators on Thursday began planning for a major new underwater transmission project to bring offshore wind energy into New York City, the same day Gov. Kathy Hochul announced a key milestone at the state’s first offshore wind farm. The two unrelated events show that New York is betting big on offshore wind and seeing results, despite financial uncertainty facing the industry.

Hochul announced the first underwater foundation has been installed at South Fork Wind, a wind project off the coast of Long Island. The announcement puts the state well ahead of its main regional competitor, New Jersey. There, construction has yet to begin on any offshore wind project amid intense political opposition and debates over costs.

At the same time, the New York Public Service Commission is starting to think a decade ahead to meet the state’s climate and clean energy goal of having at least 9 gigawatts of offshore wind energy by 2035. Each gigawatt is enough power for hundreds of thousands of homes. The commission at a Thursday meeting approved an order that begins a lengthy process to approve a project that would collect energy from multiple wind farms and send up to 4.7 gigawatts of wind energy ashore to New York City. The project is meant to be in service by Jan. 1, 2033. The transmission project would be used by future offshore wind farms and end an era in which each wind farm needs to build its own transmission line, known as a radial. Because of that, the PSC expects the project will help lower costs of future wind farms.

GATEWAY SUMMER CONSTRUCTION — POLITICO’s Ry Rivard: The long-awaited Hudson River train tunnel project is getting $25 million to kick off summer construction. The federal Department of Transportation money to be announced Thursday is small compared with the $17 billion cost of the tunnel, but will pay for critical work — a new overpass in North Bergen, N.J., to carry Tonnelle Avenue over the future railroad right-of-way for the tunnel. Senate Majority Leader Chuck Schumer, who has championed the project, hailed the money and the work ahead. “Securing of these federal dollars means more Gateway tunnel construction for 2023 is happening and moving forward on schedule,” Schumer said in a statement. “I commend the DOT for keeping this pace of progress going because Gateway is so vital to the Northeast economy, and this upcoming construction work on the Tonnelle Bridge is a critical next step along the way.” The tunnel is a key part of a regional Gateway infrastructure program to improve passenger rail in the Northeast. This year, there will also be shovels on the New York side at Hudson Yards.

BOOST TO PAULSBORO WIND HUB — POLITICO’s Ry Rivard: A bill to save the state’s first offshore wind farm from financial uncertainty has a South Jersey sweetener — $200 million for a port facility in Paulsboro. The Paulsboro Marine Terminal in Gloucester County is supposed to be a manufacturing hub for the giant underwater foundations that offshore wind turbines sit atop. But the facility is behind schedule. A big boost would come from a bill, NJ A5651 (22R), introduced Tuesday in the Assembly by Majority Leader Lou Greenwald (D-Camden) with a Senate companion expected to be backed by Sen. Bob Smith (D-Middlesex). The bill is mainly needed to save what would be the first offshore wind project in the state, known as Ocean Wind 1— energy company Orsted’s plan to put 100 turbines 15 miles off the South Jersey coast to generate power for 500,000 homes.

OFFSHORE WIND BILL PASSES: The New York Assembly passed a measure to kick off an offshore wind grid planning process — and allow the state’s most powerful offshore wind developer to negotiate landing a cable in Long Beach on Long Island before heading home. Equnior is pushing the bill because it’s part of their plan for the Empire Wind 2 project. The measure lacked a “home rule” measure for the parkland alienation provision of the bill, which is required for standalone bills of this type. Assembly Republicans objected vociferously, including Assemblymember Ari Brown who represents Long Beach. “This is a shameful, shameful situation going on here. Do you have the vaguest idea about where Island Park or Long Beach is?” Brown said to the sponsor, Assemblymember Marcela Mitaynes (D-Brooklyn). — Marie J. French

PS, HAPPY BIRTHDAY — PSEG, New Jersey’s largest utility and the power provider for the Statue of Liberty, celebrated its 120th birthday. The company began as a combination of 400 gas, electric and trolley companies. “Since 1903 we have rolled up our sleeves to deliver safe, affordable and reliable services to homes and businesses across the region,” CEO Ralph LaRossa said in a statement. “We look forward to doing the same for the next 120 years.” — Ry Rivard

GATEWAY TUSSLE: Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) pressed Amtrak Board Chair Anthony Coscia during a Senate Commerce Committee nomination hearing last week to say that the total cost of the Gateway project linking New Jersey and New York City would not exceed $37 billion, asking: “Is Gateway going to come in on budget or are we going to go back and discover that $37 billion is going to become 40, 50 or 60 billion dollars?” Coscia replied that Cruz’s $37 billion figure represented the “full build out” of the Gateway project and declined to commit to a total cost. But Coscia did say he expects the Hudson Tunnel project to come in around $16.5 billion. Senators from both parties oppose Coscia’s nomination, along with a slate of other Amtrak board nominees, because the majority of them are from Northeast Corridor states while a change in the law in 2021 requires that at least half of the board’s nominees reside outside Amtrak’s busiest region. — Alex Daugherty

BILL TO SAVE NJ'S FIRST WIND FARM — POLITICO's Ry Rivard: New Jersey lawmakers are expected to introduce a bill meant to save the state’s first offshore wind farm from rising costs that imperil the project. The legislation is needed to save energy company Orsted’s plan to put 100 turbines 15 miles off the South Jersey coast to generate power for 500,000 homes. The project, known as Ocean Wind 1, is supposed to be finished next year but has yet to begin construction as Orsted worries it can’t make money from the deal because of inflation, higher interest rates and supply chain issues.

LONG ISLAND TRANSMISSION WINNER UNVEILED: The New York Independent System Operator’s board of directors selected the Propel NY Energy project to integrate offshore wind on Long Island and support the state’s climate mandates, the grid operator announced Tuesday. The project is being developed by the New York Power Authority and New York Transco, which is owned by affiliates of the state’s investor-owned utilities. It involves six new, underground transmission lines on Long Island and in New York City totaling about 90 miles and four new substations.

INDIAN POINT DISCHARGE BAN — POLITICO’s Marie J. French: The state Assembly gave final passage Tuesday to a bill prohibiting the discharge of radioactive water into the Hudson River from the decommissioning of Indian Point, kicking the issue to Gov. Kathy Hochul. The bill has been a rallying cry for environmental groups including Riverkeeper and sparked opposition from labor unions, placing Hochul in a delicate position as Holtec, the company decommissioning Indian Point, issues warnings about the measure’s impacts.

FISHY SPENDING — POLITICO’s Ry Rivard: The New Jersey Department of Environmental Protection improperly gave out $7 million in pandemic relief money to the fishing industry and now the money must be paid back, the state comptroller said Tuesday. The money is part of a $300 million fund the federal government set aside during the Covid-19 pandemic to help tribes, the commercial fishing industry, aquaculture and other fisheries-related businesses. In New Jersey, the DEP handed out about $14 million, money that was supposed to go to marine fisheries businesses that had lost 35 percent of revenue in the early months of the pandemic. But the auditor found that many of the fisheries had been made "more than whole” and received more funds than their actual losses in 2020 or failed to submit documentation. Nearly half the money seems to have been improperly awarded and may need to be turned, the agency said.

NEW ARGUMENT AGAINST GAS PLANT: Earthjustice, the Ironbound Community Corporation and the New Jersey Environmental Justice Alliance are arguing that a new backup power plant in Newark could violate the Civil Rights Act. The plant, which would be built by Passaic Valley Sewerage Commission, would be the fourth gas-fired power plant in the Ironbound section of Newark. In a letter to New Jersey Gov. Phil Murphy, the groups cite recent EPA guidance that Title VI of the federal act covers polluting facilities. “The Ironbound neighborhood where PVSC seek to build, and DEP might permit, a fourth gas plant is exactly the type of neighborhood that Title VI protects from discrimination ‘on the ground of race, color, or national origin,’” the letter says. The letter also argues New Jersey’s new environmental justice rule should be used to block the plant. The rule, though, allows exceptions for facilities that serve a compelling public interest. — Ry Rivard

A message from Leading Light Wind:

Leading Light Wind is celebrating Independence Day by advancing an American-led clean energy future. As the only American-led offshore wind project in the New York Bight, we are committed to building a domestic offshore wind industry that utilizes American know-how and labor, and advancing a just energy transition where we live and work.

To achieve this, we are prioritizing investments in the green energy economy – from bolstering local supply chains and infrastructure to launching new job training and education programs in frontline communities. Our $300 million community benefits program will support inclusive workforce development, launch new STEM education initiatives, bolster the offshore wind supply chain, and pioneer innovative and collaborative environmental research. Learn more about our bold, American-led vision for a clean energy future at leadinglightwind.com.