New York court nixes challenge to carbon market

June 13 Wed Jun 13, 2012 10:11pm EDT

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June 13 (Reuters Point Carbon) - A New York state court on Wednesday dismissed a Tea Party-backed lawsuit that tried to block the state from participating in a cap-and-trade system to cut carbon emissions in the Northeast, finding that the plaintiffs had no grounds to challenge the program.

State Attorney General Eric Schneiderman, who represented New York in the case, argued that they lacked a credible reason to challenge the state's participation in the program.

He also said the plaintiffs took too long to file their suit - nearly three years after New York began implementing the Regional Greenhouse Gas Initiative (RGGI) in late 2008.

Under RGGI, nine member states have agreed to cut greenhouse gas emissions in their electricity sectors by 10 percent by 2018 by participating in a carbon market in which they can buy, sell or trade carbon emission rights.

Two New York-based business executives filed the suit last June, arguing that former Governor George Pataki, a Republican, signed on to RGGI without the support of the state legislature in 2005.

They were backed by two groups who actively opposed federal legislation to create a national cap-and-trade scheme - the Competitive Enterprise Institute and Americans for Prosperity.

The groups, which are affiliated with the conservative Tea Party, advocate for cutting government spending and taxes and have called federal and state proposed cap-and-trade policies, "cap-and-tax" plans.

Schneiderman, a Democrat, contended that the executives were backed by "out-of-state political interests" and that the lawsuit jeopardized the health of New Yorkers.

Counsel for the plaintiffs did not reply to a request for comment.

States' participation in RGGI has been challenged in the courts, by state legislatures and in one case by a governor.

New Jersey Governor Chris Christie, a Republican, last year pulled his state out of RGGI, claiming the program unfairly raises electric rates for consumers without any environmental benefits.

Two green groups sued Christie last week, arguing he did not follow the proper procedure to pull the state out and failed to get public feedback on his decision.

In New Hampshire, state lawmakers made a second attempt to force their governor to withdraw from RGGI, passing a bill last week that would force the state to pull out if two other RGGI members withdrew from the program.

Democratic Governor John Lynch has repeatedly said he would veto bills to withdraw from RGGI.

(Reporting by Valerie Volcovici; Editing by Phil Berlowitz)

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