Agency staff completed work on 'cap and invest' draft rules before delay

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Jan 27, 2025 View in browser
 
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By Marie J. French and Ry Rivard

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Good morning and welcome to the weekly 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.

Driving the day

CAP AND INVEST DRAFT RULES WERE SHELVED — POLITICO’s Marie J. French: State officials completed work on draft regulations to implement Gov. Kathy Hochul’s pollution pricing and climate funding program just days before the governor chose to delay it. Staff from NYSERDA and the Department of Environmental Conservation sent completed draft regulations for the cap-and-trade style program to Hochul’s office on Jan. 9, according to emails reviewed by POLITICO. The draft rules for “cap and invest,” which were originally set for an early release in mid-January and formal publication in mid-February, would still have been subject to public comment.

In response to POLITICO’s questions about the governor’s decision, Hochul spokesperson Paul DeMichele pointed to her proposal for $1 billion in climate spending in this year’s budget and said that money would accelerate clean energy investments while agencies continue with the rulemaking process “beginning with issuing reporting regulations in the coming months.”

“It’s standard operating procedure for State agencies to prepare multiple contingency plans and policy options — in fact, it would be irresponsible not to evaluate every possible scenario,” DeMichele said.

The intense effort by agency staff to implement the program before the end of this year, followed by Hochul’s abrupt decision to shelve key parts of it for an undisclosed period echoes the governor’s reversal on congestion pricing. Her shift on cap and invest has brought some environmentalists to a breaking point with the unpopular Democratic governor as they brace for President Donald Trump’s dismantling of federal climate policies.

“I’m not sure anyone in the climate world is seeing anything but a cynical governor who is trying to sound bite her way through this when what we need is funding,” said Eddie Bautista, the executive director of the New York City Environmental Justice Alliance, who joined two other advocates in publicly rebuking Hochul by resigning from a state climate justice panel.

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NEW DEC CHIEF IN THE WINGS — POLITICO’s Marie J. French: Hochul plans to nominate a former Biden official as head of the state Department of Environmental Conservation. Hochul is expected to give the nod for the high-profile post to Amanda Lefton, who works for an offshore wind developer and has a long history in Albany, according to two people familiar with the hiring process who requested anonymity to discuss the pending appointment.

If confirmed by the Senate, Lefton would replace Sean Mahar, a longtime DEC official who has served as the interim commissioner since Basil Seggos left the role in April after nearly nine years.

Hochul is facing criticism from many environmental advocates for once again delaying her own signature climate funding policy, “cap and invest.”

DEC is responsible for implementing regulations to achieve New York’s goals of slashing emissions 40 percent from 1990 levels by 2030. Agency staff have been working on Hochul’s “cap and invest” program to charge fuel distributors and polluters for emissions, rebate some money to consumers and invest the rest in the clean energy transition.

DEC, which has a staff of more than 3,300, has sweeping responsibility to formulate and enforce environmental policies, penalize polluters and issue or deny key permits. The agency oversees hunting and fishing licenses and policies, monitors air and water quality, runs campgrounds and manages state lands. The agency is also overseeing spending of the $4.2 billion environmental bond act passed in 2022. The annual salary for DEC Commissioner is $245,000.

Here's what we're watching this week:

MONDAY

— The Legislature holds a hearing on the parks and agriculture portion of Gov. Kathy Hochul’s proposed budget, 1 p.m., Hearing Room B, LOB, Albany.

— The MTA board’s committees meet, starting 8:45 a.m.

— The New Jersey Assembly Environment, Natural Resources, and Solid Waste Committee meets, 1 p.m.

TUESDAY

— The Legislature holds a hearing on the environmental portion of Hochul’s budget proposal, 9:30 a.m., Hearing Room B, LOB, Albany.

— The New York Power Authority board of trustees meets to discuss NYPA’s plans to build new renewables, 9:30 a.m.

WEDNESDAY

— The MTA board meets, 9 a.m.

— The NYSERDA board meets with committee meetings starting at 10 a.m., Albany and New York City. The program planning committee will get an update on the authority’s advanced nuclear strategy.

— The New Jersey Board of Public Utilities meets, 10 a.m.

 

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Around New York

— The New York Times declares the results of congestion pricing “mixed” so far.

— The Times Union examines how Kingston is dealing with the rising Hudson River.

— Hochul moved $35 million in state funds to reopen applications for emergency heating assistance after they closed when federal funds were tapped out.

— AT&T is dropping broadband service in New York as requirements to offer low-cost plans to low-income families go into effect.

— Long Island’s last large commercial duck farm hit by bird flu outbreak.

Around New Jersey

— NJ Transit’s refund debacle.

— A federal grant will allow the Port Authority to study how to more efficiently use bus lanes in the Lincoln Tunnel.

 

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What you may have missed

MARTUCCI TO REGION 2: Former New York state Sen. Mike Martucci is now leading the Environmental Protection Agency region for New York and New Jersey.

Martucci’s name appeared on an EPA website as the Region 2 administrator, a post that gives him oversight of two major industrial states as well as Puerto Rico, the U.S. Virgin Islands and eight Indian nations.

Martucci, a one-term member of the Senate who represented part of the Hudson Valley, did not respond to requests for comment this week. The posting was first reported Thursday by POLITICO’s E&E News. A source familiar with the EPA confirmed the posting to POLITICO.

During his last year in Albany in 2022, Martucci received one of the best scores of any Republican lawmaker in rankings by the New York League of Conservation Voters.

He describes himself as a farmer and founder of a school bus business, which he drove for. He was once the head of the New York School Bus Contractors Association.

In an official biography, edited by his staff just before he left the Senate, he said Albany has been too focused on the needs of New York City. He declined to run again in 2022, citing a prolonged redistricting process. In early 2023, just after leaving office, he bought the Mid-Hudson News.

Traditionally, the Region 2 posting has rotated among states. But Martucci is the third New Yorker in a row to hold the post. During the Biden administration, the office was led by Lisa Garcia, who had been an associate administrator and adviser to Obama-era national EPA Administrators Lisa Jackson and Gina McCarthy. Before Garcia, Pete Lopez, another former New Yorker state lawmaker, was regional administrator during President Donald Trump’s first term. — Ry Rivard 

CLEAN ENERGY BRIGHT SPOT: The New Jersey Board of Public Utilities celebrated a clean energy bright spot — solar energy. At an event in Secaucus on Thursday, BPU President Christine Guhl-Sadovy visited a public skating rink to mark the 5 gigawatts of solar that have now been installed across the state — more than half of it since Gov. Phil Murphy took office in 2018.

The state’s solar capacity is spread across 209,000 installations — about 80 percent of them are net-metered on homes and businesses, 16 percent are grid-scale solar projects and the rest is community solar, which is aimed at making sure lower-income customers can receive clean energy. And solar projects keep coming.

“That means consistent demands now and into the future, driving job creation and job stability for over 7,000 local solar installers in the state,” Guhl-Sadovy said. “These workers are our neighbors, siblings, and friends — and they are jobs that cannot be outsourced.”— Ry Rivard

CLOUDS BLOW IN FOR WIND: In a sign of how hard large-scale clean energy projects may be for states, President Donald Trump took aim at Atlantic Shores, the offshore wind project closest to breaking ground in New Jersey. “It needed MASSIVE GOVERNMENT SUBSIDY that was impossible to justify,” Trump said on Truth Social. “Hopefully the project is dead and gone, as almost all unsightly and environmentally unsound Windmill project should be. Congratulations to the great people of New Jersey. You have FINALLY won your war on stupidity!!!” Atlantic Shores needs more money from the BPU but has not indicated it’s given up. The BPU is currently evaluating bids that include Atlantic Shores’ request for more money. — Ry Rivard

EXTREME HEAT PROTECTION PLANNING: The Public Service Commission is moving to address rising concerns about more frequent heat waves by formalizing consumer protections during high temperatures. The PSC’s new proceeding targets the state’s electric and large water utilities which “lack a uniform definition for extreme heat,” the order approved Thursday says.

“Protecting consumers is a top priority for the Commission,” said Commission Chair Rory Christian in a statement. “The primary purpose of this proceeding will be to assess the adequacy of the existing protections for major electric and major water utility customers during extreme heat events in view of policy objectives and to standardize them to reflect best practices.”

The action by the utility regulator follows through with elements of the state’s Extreme Heat Action Plan, which was finalized last year. Department of Public Service staff are directed to file a proposal within 90 days. “Any new standards must take into consideration potential rate impacts so that affordability is not undermined, and rates remain just and reasonable,” the order states. — Marie J. French

ZELDIN PAID BY QATARI-LED FIRM TIED TO MENENDEZ CASE — POLITICO’s Zack Colman: Lee Zeldin, President Donald Trump’s nominee to lead the Environmental Protection Agency, received consulting payments from a Qatari investor involved in the felony corruption case against former Sen. Bob Menendez (D-N.J.), Zeldin’s financial disclosure records showed.

WIND WOES GROW — POLITICO’s Ry Rivard, Kelsey Tamborrino and Marie J. French: The Biden administration and coastal Democrats pinned their energy hopes on offshore wind. President Donald Trump is trying to take the air out of them.

Within hours of taking office, he ordered a wide-ranging review of offshore wind projects in federal waters and halted any new permits.

The extent of the damage to the industry is still being sorted out. Despite the expectation that offshore wind will eventually provide clean power and well-paying construction jobs, work on wind farms has repeatedly stalled because of macroeconomic conditions and poor planning.

Trump’s order injects further uncertainty into the mix.

NJ TRANSIT CEO TRIES TO AVOID STRIKE: The new head of New Jersey Transit, Kris Kolluri, wants to resume negotiations with the train engineers union that could strike and upend the commute for tens of thousands of people across the region. A strike by the Brotherhood of Locomotive Engineers and Trainmen could begin in late March after a 60-day cooling off period required by federal law.

But Kolluri wants to avoid a strike and last-minute negotiations. “You don’t need to wait 60 days, let’s do it tomorrow, let’s do it today, I’ll work all night,” Kolluri told reporters on Wednesday following the formal release of the latest report on the labor dispute by a three-member board of mediators known as a presidential emergency board.

The board’s report was largely a win for NJ Transit because the panel found the transit agency’s last offer to raise wages by 4 percent beginning in 2027 was the “most reasonable” compared to the union’s 14 percent demand. The union’s offer was, in the board’s view, “not only unwarranted and unreasonable, but also unaffordable.” The board also rejected the union’s argument that its members should be paid the same as engineers at other commuter railroads in the region. But not every part of the report was favorable to the transit agency. For instance, the report found NJ Transit had “offered little specific explanation” for why its offer was not higher. A previous presidential board had recommended NJ Transit offer the union, known as BLET, a better deal. – Ry Rivard

NJLCV’S 2026 GOALS: The New Jersey League of Conservation voters and other major environmental groups are releasing their “Fix in ‘26” platform, which advocates hopes candidates for governor will look at this year.

“We know the environment is critical to New Jersey’s residents and voters,” the league’s executive director, Ed Potosnak, said in a statement. “We need our next governor to recognize these challenges as opportunities to lower costs for working families and create a sustainable and economically prosperous state that works for every New Jersey family, regardless of race or ZIP code.”

The group has a strong rapport with the Murphy administration. When the league came out and said Gov. Phil Murphy was no longer the nation’s greenest governor, Murphy gave a major environmental speech in early 2023 to pledge to do more. That included saying he’d turn his 100 percent clean energy goal into a law, which may be one of his final pushes before leaving office.

The league’s 2026 platform includes a handful of main policies: the 100 percent clean energy goal; investments in hardening communities for climate change; improving air and water quality; preserving open space and expanding access to parks; and expanding mass transit options. — Ry Rivard

CLIMATE BILLION STARTING PITCH: What’s Gov. Kathy Hochul’s plan to leverage $1 billion in state funding for climate? She doesn’t really have one — yet. The governor’s executive budget proposal fails to line out her much-heralded $1 billion in funding, simply including a generic description of a range of potential programs: “reducing greenhouse gas emissions and pollution; decarbonizing and retrofitting buildings; creating and utilizing renewable energy; advancing clean transportation initiatives; building, repairing, and maintaining thermal energy networks; for the design, construction, repair, or improvement of green infrastructure; and for purposes consistent with the general findings of the scoping plan … subject to a plan approved by the director of the budget.”

“The state fails to have a comprehensive energy transition and resilience plan and once again there’s a proposal to spend money without the details of where it's going to go,” said Citizens Budget Commission president Andrew Rein. “We’d be much more successful if we identified the needs of the state and plugged spending programs into those needs.”

Blake Washington, Hochul’s budget director, said the plan is still under development. “We want to make sure we do transformative investments, things that matter, things that help to move the needle,” he said. “What she’s not interested in is pork projects. She wants things that actually matter and are consequential and where we can actually provoke — maybe demonstrate that some projects work really well,” Washington added. “I think it's a discussion we’ll be having with the Legislature to help form out where the dollars will be pledged but she wants consequential projects, the governor doesn’t want nickel and dime projects.”

The money from the “Sustainable Future Program” isn’t expected to get out the door all at once. The financial plan estimates the $1 billion appropriation will be disbursed evenly over five years at $200 million each year. It’s not unusual for environmental spending to take a while to go out the door — look no further than the $4.2 billion environmental bond act passed by voters in 2022 or the $500 million for the offshore wind supply chain in the budget passed in 2022. But environmental advocates were still disappointed at the potentially slow pace of spending. Earthjustice said it “falls far short of the funding communities desperately need.”

“It’s an appropriation of a billion,” Washington said. When asked about the pace of spending from the bond act, Washington said there’s a “rhythm” to spending by state government. “It’s contingent on any number of factors,” like contractor availability and costs, vendor sophistication and ability to sign contracts, and more, he added. — Marie J. French

 

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ENVIRONMENTAL JUSTICE ADVOCATES THROW IN THE TOWEL ON HOCHUL — POLITICO’s Marie J. French: Three prominent environmental justice leaders criticized Gov. Kathy Hochul for failing to prioritize climate action as they resigned from a state panel Tuesday.

The resigning members of the Climate Justice Working Group, which was created by the 2019 climate law and consists of some agency heads and environmental justice members selected by the governor, wrote in a letter that they could no longer serve “in good conscience” and cited Hochul’s “backpedaling and her lack of vision, commitment and focus.”

TRUMP MOVES TO HALT OFFSHORE WIND — POLITICO's Kelsey Tamborrino and Ry Rivard: President Donald Trump took executive action Monday to halt leasing, permitting and approvals for wind projects in a bid to undermine the clean energy source that has drawn his derision for years.

Trump’s new executive order will likely further regulatory uncertainty for the nascent U.S. offshore wind industry that has suffered from economic challenges during the Biden administration and could discourage development in the capital-intensive sector.

“We’re not doing the wind thing,” Trump said Monday.

ENERGY EMERGENCY, CLIMATE WITHDRAWAL: Trump is again moving to withdraw the U.S. from the Paris climate agreement, as our own Sara Schonhardt, Zack Colman and Karl Mathiesen report. He’s planning to issue a slew of executive orders aimed at juicing already historically high fossil fuel production, including declaring an “energy emergency.”

Environmental advocates will once again look toward state leaders to step up on climate. That may prove more challenging as Democratic governors including Hochul seem poised to prioritize affordability concerns over climate action. Hochul is co-chair of the U.S. Climate Alliance, a coalition of state leaders that formed last time Trump withdrew from the Paris agreement. The group sent a letter to a United Nations official vowing that states would continue to work to cut emissions.

“States across our coalition are implementing a suite of policies and programs to secure our net-zero future, including statewide and regional carbon markets, 100 percent clean energy standards, and methane reduction programs for the oil and gas, waste, and agricultural sectors, among many others,” wrote Hochul with her fellow co-chair, New Mexico Gov. Michelle Lujan Grisham. — Marie J. French

MURPHY WRITES TRUMP ON TOLLS — POLITICO’s Ry Rivard: New Jersey's governor tried to leverage the first hours of Donald Trump's presidency to kill congestion pricing.

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