S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8469
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             December 29, 2023
                                ___________
 
 Introduced by M. of A. KELLES -- read once and referred to the Committee
   on Environmental Conservation
 
 AN  ACT  to  amend  the  environmental  conservation  law and the public
   authorities law, in relation to establishing an economy-wide  cap  and
   invest  program  to support greenhouse gas emissions reductions in the
   state

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Legislative findings and declaration. 1. Pursuant to arti-
 cle 75 of the environmental conservation law, as added  by  the  Climate
 Leadership and Community Protection Act, the department of environmental
 conservation  must promulgate regulations, by January 1, 2024, to ensure
 achievement of the statewide greenhouse gas emission limits, as  defined
 and  established  therein.  Among  other  requirements,  the regulations
 promulgated by such department pursuant to section 75-0109 of the  envi-
 ronmental  conservation  law must ensure that the aggregate emissions of
 greenhouse gases from greenhouse gas emission sources  will  not  exceed
 the  statewide  greenhouse  gas  emissions limits established in section
 75-0107 of the environmental conservation law; include legally enforcea-
 ble emissions  limits,  performance  standards,  or  measures  or  other
 requirements  to control emissions from greenhouse gas emission sources;
 prioritize emissions and co-pollutant reductions in disadvantaged commu-
 nities; do not result in a net increase  in  co-pollutant  emissions  or
 otherwise   disproportionately  burden  disadvantaged  communities;  and
 reflect, in substantial part, the findings of the scoping plan  prepared
 by  the  Climate Action Council pursuant to section 75-0103 of the envi-
 ronmental conservation law.
   2. The scoping plan prepared by the Climate Action Council pursuant to
 section 75-0103 of the environmental conservation  law  recommends  that
 the  department  of  environmental  conservation  and the New York state
 energy research and development authority adopt an economy-wide cap  and
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11961-03-3
              

 A. 8469                             2
 
 invest  program  to,  among  other  purposes,  ensure achievement of the
 statewide greenhouse gas limits, as defined and established  in  article
 75 of the environmental conservation law.
   3.  An  economy-wide cap and invest program, established through regu-
 lation by the department of environmental conservation and the New  York
 state energy research and development authority, would meet the require-
 ments of section 75-0109 of the environmental conservation law.
   §  2.  Subdivision 1 of section 75-0101 of the environmental conserva-
 tion law, as added by chapter 106 of the laws of 2019,  is  amended  and
 fourteen  new  subdivisions  16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26,
 27, 28 and 29 are added to read as follows:
   1. "Allowance" means an authorization  to  emit,  during  a  specified
 year,  up  to  [one ton] A FIXED AMOUNT of carbon dioxide equivalent, AS
 DETERMINED AND ISSUED BY THE DEPARTMENT.
   16. "AUTHORITY" MEANS THE NEW YORK STATE ENERGY RESEARCH AND  DEVELOP-
 MENT AUTHORITY.
   17.  "CAP AND INVEST PROGRAM" MEANS AN ECONOMY-WIDE PROGRAM, AS ESTAB-
 LISHED THROUGH REGULATIONS ADOPTED BY THE DEPARTMENT AND THE  AUTHORITY,
 INCLUDING,  BUT  NOT  LIMITED TO, THE FOLLOWING PARAMETERS:  AN ANNUALLY
 DECLINING "CAP" OR LIMIT FOR THE MAXIMUM AMOUNT OF GREENHOUSE GAS  EMIS-
 SIONS  FROM  ALL REGULATED SOURCES IN AGGREGATE; AN ANNUAL EMISSIONS CAP
 THAT ENSURES THAT OVERALL STATEWIDE GREENHOUSE GAS EMISSIONS  ARE  LOWER
 THAN  THE LIMITS SET FORTH IN SECTION 75-0107 OF THIS ARTICLE; A MARKET-
 BASED, ALLOWANCE-BASED SYSTEM WHICH CREATES AND ISSUES A CERTAIN  NUMBER
 OF ALLOWANCES TO PERSONS, COMPANIES, ORGANIZATIONS OR OTHER ENTITIES FOR
 SALE  BY  AUCTION  OR BY DIRECT ALLOCATION; A REQUIREMENT THAT THE TOTAL
 NUMBER OF ALLOWANCES MADE AVAILABLE IN A COMPLIANCE PERIOD SHALL BE LESS
 THAN  THE  ANNUAL  EMISSIONS  CAP;  A  DESIGN  TO  PRIORITIZE  EMISSIONS
 REDUCTIONS  IN  DISADVANTAGED COMMUNITIES, AS DEFINED IN SECTION 75-0111
 OF THIS ARTICLE, AND SETTING A  LOWER  CAP  FOR  EMISSIONS  WITHIN  SUCH
 COMMUNITIES AND WITHIN A FIVE-MILE RADIUS OF SUCH COMMUNITIES TO ACHIEVE
 SUCH PRIORITY.
   18. "COMMISSION" MEANS THE NEW YORK PUBLIC SERVICE COMMISSION.
   19.  "COMPLIANCE OBLIGATION" MEANS THE REQUIREMENT OF A COVERED ENTITY
 TO SUBMIT ALLOWANCES SUFFICIENT FOR ALL  EMISSIONS  WITH  RESPECT  TO  A
 COMPLIANCE PERIOD TO THE AUTHORITY.
   20. "COMPLIANCE PERIOD" MEANS A ONE-YEAR PERIOD DURING WHICH A COVERED
 ENTITY'S CARBON DIOXIDE EQUIVALENT EMISSIONS SHALL NOT EXCEED THE ALLOW-
 ANCES OBTAINED AND SUBMITTED BY SUCH COVERED ENTITY TO THE AUTHORITY FOR
 SUCH PERIOD.
   21.  "COVERED SOURCE" MEANS A GREENHOUSE GAS EMISSIONS SOURCE WHICH IS
 REGULATED TO THE CAP AND INVEST PROGRAM, AND SUBJECT TO PARAGRAPH  B  OF
 SUBDIVISION TWO OF SECTION 75-0109 OF THIS ARTICLE.
   22.  "ENERGY-INTENSIVE  AND TRADE-EXPOSED FACILITIES" OR "EITES" MEANS
 BUSINESSES IDENTIFIED BY THE DEPARTMENT PURSUANT TO SUBDIVISION THREE OF
 SECTION 75-0121 OF THIS ARTICLE; PROVIDED THAT THE DEPARTMENT SHALL  NOT
 INCLUDE  FACILITIES  THAT PARTICIPATE IN AND SUPPORT PROOF-OF-WORK CRYP-
 TO-MINING OPERATIONS AS ENERGY-INTENSIVE AND TRADE-EXPOSED FACILITIES OR
 EITES.
   23. "FIRST COMPLIANCE PERIOD" MEANS THE  COMPLIANCE  PERIOD  BEGINNING
 JUNE FIRST, TWO THOUSAND TWENTY-FOUR.
   24.  "GREENHOUSE  GAS  EMISSIONS  REDUCTION  ACCOUNT"  MEANS A GENERAL
 ACCOUNT TO BE ESTABLISHED BY THE AUTHORITY, INTO  WHICH  THE  DEPARTMENT
 SHALL ALLOCATE ALLOWANCES.
   25.  "LINK"  OR  "LINKAGE"  MEANS  THE ESTABLISHMENT OF A BILATERAL OR
 MULTILATERAL NON-BINDING AGREEMENT THAT CONNECTS  TWO  OR  MORE  MARKET-
 A. 8469                             3
 
 BASED  PROGRAMS  DESIGNED  TO REDUCE CARBON-DIOXIDE EQUIVALENT EMISSIONS
 AND WHICH:
   A.  ARTICULATES  A MUTUAL UNDERSTANDING OF HOW PARTICIPATING JURISDIC-
 TIONS WILL COLLABORATE TO FACILITATE REDUCTIONS OF CARBON-DIOXIDE EQUIV-
 ALENT EMISSIONS;
   B. AUTHORIZES PROCESSES FOR ENSURING THAT THE SATISFACTION OF  COMPLI-
 ANCE  OBLIGATIONS  IN  ONE PARTICIPATING JURISDICTION PARTIALLY OR FULLY
 SATISFIES, AS APPROPRIATE, COMPLIANCE OBLIGATIONS OF REGULATED  ENTITIES
 IN OTHER PARTICIPATING JURISDICTIONS; AND
   C. OTHERWISE PROVIDES FOR THE COORDINATION OF ACTIVITIES TO FACILITATE
 THE OPERATION OF A JOINT MARKET.
   26.   "PARTICIPATING  JURISDICTIONS"  MEANS  JURISDICTIONS  WHICH  ARE
 LINKED.
   27. "RESERVE ALLOWANCE" MEANS AN ALLOWANCE PROVIDED BY THE  DEPARTMENT
 PURSUANT TO SUBDIVISION FIVE OF SECTION 75-0121 OF THIS ARTICLE.
   28. "WORKING GROUP" MEANS THE CLIMATE JUSTICE WORKING GROUP.
   29. "BEST AVAILABLE TECHNOLOGY" AND "EMISSIONS MITIGATION" MEANS TECH-
 NOLOGIES  AND MITIGATION TECHNIQUES CURRENTLY BEING USED ANYWHERE IN THE
 WORLD TO REDUCE EMISSIONS AND INCREASE EFFICIENCY. SUCH TECHNOLOGIES AND
 MITIGATION TECHNIQUES SHALL  NOT  INCLUDE  THE  USE  OF  ALTERNATE  FUEL
 COMBUSTION, OR CARBON CAPTURE AND SEQUESTRATION.
   §  3.  Subdivision 2 of section 75-0109 of the environmental conserva-
 tion law is amended by adding two new paragraphs e  and  f  to  read  as
 follows:
   E.  NOTWITHSTANDING  ANY  OTHER  PROVISION OF LAW OR REGULATION TO THE
 CONTRARY, UTILIZE  SOFTWARE  SYSTEMS  AND/OR  ELECTRONIC  MECHANISMS  TO
 ENSURE  ADEQUATE  DATA  COLLECTION  AND  ASSESS  GREENHOUSE GAS EMISSION
 SOURCE COMPLIANCE WITH DEPARTMENT REGULATIONS.
   F. AT THE DISCRETION OF THE DEPARTMENT, REQUIRE GREENHOUSE  GAS  EMIS-
 SION  SOURCES TO SUBMIT COMPLIANCE ITEMS ELECTRONICALLY AND MAINTAIN AND
 UTILIZE ELECTRONIC SIGNATURES FOR VERIFICATION PURPOSES.
   § 4. Section 75-0109 of the environmental conservation law is  amended
 by adding five new subdivisions 5, 6, 7, 8 and 9 to read as follows:
   5.  NO  LATER  THAN ONE YEAR AFTER THE EFFECTIVE DATE OF THIS SECTION,
 THE DEPARTMENT SHALL SET STATEWIDE GREENHOUSE GAS EMISSIONS  LIMITS  FOR
 EACH  COMPLIANCE  PERIOD FOR THE PURPOSE OF DETERMINING INTERIM PROGRESS
 IN ACHIEVING THE STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS SET FORTH  IN
 SECTION 75-0107 OF THIS ARTICLE. SUCH STATEWIDE GREENHOUSE GAS EMISSIONS
 LIMITS  SHALL  BE  SET BY THE DEPARTMENT AS INTERIM GREENHOUSE GAS EMIS-
 SIONS REDUCTION TARGETS TO INFORM DECISION-MAKING REGARDING THE NEED  TO
 REDUCE TOTAL ALLOWABLE GREENHOUSE GAS EMISSIONS UNDER THE CAP AND INVEST
 PROGRAM, AND SHALL BE REVIEWED ANNUALLY. IF, IN THE DETERMINATION OF THE
 DEPARTMENT,  SUCH STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS ARE SET AT A
 LEVEL WHICH IS INSUFFICIENT TO INCENTIVIZE STATE  GREENHOUSE  GAS  EMIS-
 SIONS  REDUCTIONS  PROGRESS NECESSARY TO ACHIEVE THE EMISSIONS REDUCTION
 TARGETS SET FORTH IN SECTION 75-0107 OF  THIS  ARTICLE,  THE  DEPARTMENT
 SHALL  IMMEDIATELY  MODIFY THE STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS
 SET PURSUANT TO THIS SUBDIVISION TO CORRECT SUCH  INSUFFICIENCY,  BEGIN-
 NING WITH THE NEXT COMPLIANCE PERIOD.
   6.  NO LATER THAN JANUARY FIRST, TWO THOUSAND TWENTY-FOUR, THE DEPART-
 MENT SHALL ASSESS AND SET  SITE  OR  FACILITY  SPECIFIC  CAPS  FOR  EACH
 STATIONARY  SOURCE  EMITTER OF GREENHOUSE GAS FOR EACH COMPLIANCE PERIOD
 IN DISADVANTAGED COMMUNITIES FOR  THE  PURPOSE  OF  DETERMINING  INTERIM
 PROGRESS  IN ACHIEVING THE STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS SET
 FORTH IN SECTION 75-0107 OF THIS ARTICLE. SUCH SITE OR FACILITY SPECIFIC
 CAPS ON GREENHOUSE GAS EMISSIONS SHALL  BE  SET  BY  THE  DEPARTMENT  AS
 A. 8469                             4
 
 INTERIM  GREENHOUSE  GAS EMISSIONS REDUCTION TARGETS TO INFORM DECISION-
 MAKING UNDER THE CAP AND INVEST PROGRAM, AND SHALL BE REVIEWED ANNUALLY.
   7.  NO LATER THAN JANUARY FIRST, TWO THOUSAND TWENTY-FOUR, THE DEPART-
 MENT SHALL ASSESS AND SET  SITE  OR  FACILITY  SPECIFIC  CAPS  FOR  EACH
 STATIONARY  SOURCE  EMITTER OF GREENHOUSE GAS FOR EACH COMPLIANCE PERIOD
 IN DISADVANTAGED COMMUNITIES FOR  THE  PURPOSE  OF  DETERMINING  INTERIM
 PROGRESS  IN ACHIEVING THE STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS SET
 FORTH IN SECTION 75-0107 OF THIS ARTICLE. SUCH SITE OR FACILITY SPECIFIC
 CAPS ON GREENHOUSE GAS EMISSIONS SHALL  BE  SET  BY  THE  DEPARTMENT  AS
 INTERIM  GREENHOUSE  GAS  EMISSION REDUCTION TARGETS TO INFORM DECISION-
 MAKING REGARDING THE NEED TO REDUCE TOTAL ALLOWABLE GREENHOUSE GAS EMIS-
 SIONS UNDER THE CAP AND INVEST PROGRAM AND SHALL BE REVIEWED ANNUALLY.
   8. NO LATER THAN JANUARY FIRST, TWO THOUSAND TWENTY-FOUR, THE  DEPART-
 MENT SHALL SET SECTOR SPECIFIC BENCHMARKS AND GOALS FOR THE REDUCTION OF
 GREENHOUSE  GAS  EMISSIONS  IN EACH COMPLIANCE PERIOD FOR THE PURPOSE OF
 DETERMINING INTERIM PROGRESS IN ACHIEVING THE STATEWIDE  GREENHOUSE  GAS
 EMISSIONS  LIMITS  SET  FORTH  IN  SECTION 75-0107 OF THIS ARTICLE. SUCH
 SECTOR SPECIFIC GOALS ON GREENHOUSE GAS EMISSIONS SHALL BE  SET  BY  THE
 DEPARTMENT  AS  INTERIM  GREENHOUSE  GAS  EMISSION  REDUCTION TARGETS TO
 INFORM DECISION-MAKING REGARDING THE NEED TO REDUCE OR  ELIMINATE  TOTAL
 ALLOWABLE  GREENHOUSE  GAS  EMISSIONS  UNDER THE CAP AND INVEST PROGRAM,
 INCLUDING MEASURES TO PRIORITIZE GREENHOUSE GAS EMISSIONS AND  CO-POLLU-
 TANT  REDUCTIONS  IN  DISADVANTAGED  COMMUNITIES,  AND SHALL BE REVIEWED
 ANNUALLY.
   9. ALL REVENUE, INTEREST, AND PENALTIES RECEIVED  UNDER  PROGRAMS  AND
 REGULATIONS  ADOPTED  PURSUANT TO THIS ARTICLE SHALL BE DEPOSITED IN THE
 GREENHOUSE GAS EMISSIONS REDUCTION ACCOUNT.
   § 5. Subdivision 1 of section 75-0111 of the  environmental  conserva-
 tion law is amended by adding a new paragraph d to read as follows:
   D.  WORKING  GROUP  MEMBERS  SHALL  RECEIVE  NO COMPENSATION FOR THEIR
 SERVICES BUT SHALL BE  REIMBURSED  FOR  ACTUAL  AND  NECESSARY  EXPENSES
 INCURRED IN THE PERFORMANCE OF THEIR DUTIES.
   §  6.  Paragraphs  a  and b of subdivision 2 of section 75-0111 of the
 environmental conservation law, as added by chapter 106 of the  laws  of
 2019, are amended to read as follows:
   a. The [council] WORKING GROUP shall hold at least six regional public
 hearings  on  the  draft  criteria  and  the draft list of disadvantaged
 communities, including three meetings in the upstate  region  and  three
 meetings  in  the downstate region, and shall allow at least one hundred
 twenty days for the submission of public comment.
   b. The [council] WORKING GROUP shall also ensure that there are  mean-
 ingful  opportunities  for  public comment for all segments of the popu-
 lation that will be impacted by the criteria, including  persons  living
 in  areas  that may be identified as disadvantaged communities under the
 proposed criteria.
   § 7. Paragraph b of subdivision 2 of section 75-0119 of  the  environ-
 mental conservation law, as added by chapter 106 of the laws of 2019, is
 amended to read as follows:
   b.  An assessment of existing regulations [and], whether modifications
 are needed to ensure fulfillment of the statewide greenhouse  gas  emis-
 sions limits, AND A DESCRIPTION OF ANY SUCH MODIFICATIONS THE DEPARTMENT
 HAS MADE AND INTENDS TO MAKE PURSUANT TO SECTIONS 75-0121 AND 75-0125 OF
 THIS ARTICLE.
   §  8. The environmental conservation law is amended by adding five new
 sections 75-0121, 75-0123, 75-0125, 75-0127   and  75-0129  to  read  as
 follows:
 A. 8469                             5
 
 § 75-0121. CAP AND INVEST PROGRAM; ALLOCATION OF ALLOWANCES.
   1.  A.  THERE IS HEREBY CREATED AN ECONOMY-WIDE CAP AND INVEST PROGRAM
 PURSUANT TO THE REQUIREMENTS OF SECTIONS 75-0107  AND  75-0109  OF  THIS
 ARTICLE  THROUGH EMISSIONS REDUCTIONS METHODS ADOPTED AND IMPLEMENTED BY
 THE DEPARTMENT AND THE AUTHORITY. THE DEPARTMENT AND THE AUTHORITY SHALL
 UNDERTAKE SUCH ADOPTION AND IMPLEMENTATION SO  AS  TO  PROVIDE  FOR  THE
 PROGRAM TO BEGIN AS OF THE START OF THE FIRST COMPLIANCE PERIOD. THE CAP
 AND  INVEST  PROGRAM  SHALL  BE  SUBJECT  TO  PUBLIC NOTICE AND COMMENT,
 INCLUDING AT LEAST FIVE PUBLIC HEARINGS, AND SHALL  INCLUDE  SUBSTANTIAL
 CONSULTATION  WITH  THE  CLIMATE  JUSTICE  WORKING  GROUP AND MEMBERS OF
 DISADVANTAGED COMMUNITIES.
   B. THE CAP AND INVEST PROGRAM SHALL  PROVIDE  FOR  ANNUALLY  DECLINING
 AGGREGATE GREENHOUSE GAS EMISSIONS LIMITS BY SETTING A MAXIMUM ALLOWABLE
 AMOUNT  OF  GREENHOUSE GAS EMISSIONS FROM ALL COVERED SOURCES IN A GIVEN
 COMPLIANCE PERIOD.
   C. A CERTAIN NUMBER OF ALLOWANCES SHALL BE CREATED BY  THE  DEPARTMENT
 TO  BE  TRANSFERRED TO THE GREENHOUSE GAS EMISSIONS REDUCTION ACCOUNT SO
 AS TO BE MADE AVAILABLE BY THE AUTHORITY TO THE COVERED SOURCES PURSUANT
 TO THIS SECTION AND SUBDIVISION TWENTY-FIVE OF SECTION EIGHTEEN  HUNDRED
 FIFTY-FOUR OF THE PUBLIC AUTHORITIES LAW. THE TOTAL NUMBER OF ALLOWANCES
 CREATED  AND TRANSFERRED SO AS TO BE MADE AVAILABLE BY THE AUTHORITY FOR
 AUCTION OR SALE IN A GIVEN COMPLIANCE PERIOD SHALL NOT  EXCEED  THE  CAP
 FOR SUCH COMPLIANCE PERIOD.
   D. ALL COVERED SOURCES MUST REGISTER WITH THE DEPARTMENT IN A FORM AND
 MANNER  TO  BE PRESCRIBED BY THE DEPARTMENT AND SHALL BE SUBJECT TO SUCH
 REQUIREMENTS AS THE DEPARTMENT MAY ESTABLISH  BY  REGULATION  TO  ENSURE
 COMPLIANCE WITH THIS ARTICLE.
   E.  IN  IMPLEMENTING  THE CAP AND INVEST PROGRAM, THE DEPARTMENT SHALL
 PRIORITIZE GREENHOUSE  GAS  EMISSIONS  AND  CO-POLLUTANT  REDUCTIONS  IN
 DISADVANTAGED COMMUNITIES, INCLUDING BUT NOT LIMITED TO, BY ESTABLISHING
 MAXIMUM  ALLOWABLE  GREENHOUSE  GAS  LIMITS  FOR  ALL INDIVIDUAL SOURCES
 LOCATED IN OR PROXIMATE TO, OR OTHERWISE CONTRIBUTING TO  THE  POLLUTION
 BURDEN  IN,  A DISADVANTAGED COMMUNITY. MAXIMUM ALLOWABLE GREENHOUSE GAS
 EMISSIONS LIMITS ON INDIVIDUAL SOURCES SHALL DECLINE AT A RATE WHICH  IS
 PROPORTIONAL  TO  THE DECLINE OF THE CAP. SUCH EMISSIONS LIMITS SHALL BE
 SUFFICIENT TO ENSURE THAT DISADVANTAGED COMMUNITIES EXPERIENCE POLLUTION
 REDUCTION AT RATES EXCEEDING THE RATES OF POLLUTION REDUCTION  IN  OTHER
 COMMUNITIES  AS  A  RESULT  OF  THE  CAP AND INVEST PROGRAM, AND ARE NOT
 DISPROPORTIONATELY NEGATIVELY AFFECTED AS A RESULT OF THE CAP AND INVEST
 PROGRAM PURSUANT TO PARAGRAPH C OF SUBDIVISION THREE OF SECTION  75-0109
 OF  THIS ARTICLE, TAKING INTO ACCOUNT THE CHARACTERISTICS OF SUCH COMMU-
 NITIES AND SUCH SOURCES. THE DEPARTMENT MAY SET EMISSIONS  LIMITS  AT  A
 LOWER  LEVEL  FOR  SOURCES  LOCATED  IN  OR  PROXIMATE  TO, OR OTHERWISE
 CONTRIBUTING TO THE POLLUTION BURDEN IN, A DISADVANTAGED COMMUNITY  THAN
 WOULD OTHERWISE BE REQUIRED UNDER THE CAP AND INVEST PROGRAM.
   F.  THE DEPARTMENT SHALL PROVIDE FOR APPROPRIATE MECHANISMS TO ADDRESS
 COVERED SOURCES FOR WHICH REGULATION UNDER THE CAP AND INVEST PROGRAM IS
 PREEMPTED BY FEDERAL LAW.
   G. THE DEPARTMENT AND THE AUTHORITY SHALL COORDINATE WITH THE  COMMIS-
 SION  TO  DETERMINE  A  TIMELINE  AND  RELATED  PLANNING PROCESS FOR THE
 RETIREMENT OF FOSSIL FUEL GENERATION FACILITIES OR THEIR  CONVERSION  TO
 RENEWABLE ENERGY FACILITIES TO ENSURE THE EMISSIONS REDUCTIONS NECESSARY
 TO COMPLY WITH THE STATEWIDE GREENHOUSE GAS EMISSIONS LIMITS ESTABLISHED
 BY SECTION 75-0107 OF THIS ARTICLE.
   2. THE DEPARTMENT SHALL TRANSFER ALL ALLOWANCES, AS CREATED AND ISSUED
 BY  THE DEPARTMENT PURSUANT TO THE CAP AND INVEST PROGRAM ESTABLISHED BY
 A. 8469                             6
 
 SUBDIVISION ONE  OF  THIS  SECTION,  TO  THE  GREENHOUSE  GAS  EMISSIONS
 REDUCTION ACCOUNT FOR AUCTION, SALE, OR DIRECT ALLOCATION THEREOF IN THE
 MANNER  SET  FORTH  IN  THIS  ARTICLE  AND IN SUBDIVISION TWENTY-FIVE OF
 SECTION  EIGHTEEN  HUNDRED  FIFTY-FOUR  OF  THE  PUBLIC AUTHORITIES LAW;
 PROVIDED, HOWEVER, THAT THE DEPARTMENT SHALL NOT  ALLOCATE  PERMITS  FOR
 ZERO OR DE MINIMIS COST.
   3.  A.  THE DEPARTMENT SHALL ADOPT REGULATIONS THAT ESTABLISH CRITERIA
 AND METHODS FOR DETERMINING ENERGY INTENSITY AND TRADE EXPOSURE FOR  THE
 PURPOSE OF IDENTIFYING FACILITIES WHICH MAY BE SIGNIFICANTLY IMPACTED BY
 THE  CAP AND INVEST PROGRAM SUCH THAT THEY MAY BE DESIGNATED AS EITES IN
 A MANNER WHICH IS CONSISTENT WITH THE TREATMENT OF EITES IN THE  SCOPING
 PLAN,  INCLUDING  APPENDIX C THEREOF.   THE DEPARTMENT SHALL ENSURE THAT
 ANY DESIGNATED EITES ATTEMPT STRATEGIES TO PROACTIVELY REDUCE  THE  RISK
 OF  LEAKAGE  BY  RELYING  ON  INCENTIVE-ORIENTED APPROACHES OR TECHNICAL
 SUPPORT PRIOR TO APPROVING ANY REDUCED COST ALLOWANCES.  THE DEVELOPMENT
 OF SUCH REGULATIONS SHALL INCLUDE AT LEAST  THREE  PUBLIC  HEARINGS  AND
 OTHER  EFFORTS  TO  PROVIDE  MEANINGFUL OPPORTUNITIES FOR PUBLIC COMMENT
 FROM ALL PERSONS WHO WILL BE IMPACTED BY THE SCOPING PLAN, INCLUDING BUT
 NOT LIMITED TO, PERSONS WORKING FOR EITES AND PERSONS LIVING  IN  DISAD-
 VANTAGED  COMMUNITIES. SUCH REGULATIONS SHALL BE DEVELOPED IN COMPLIANCE
 WITH THE PROVISIONS OF PARAGRAPH B OF THIS SUBDIVISION.
   B. SUCH REGULATIONS SHALL:
   (I) IDENTIFY A PROCEDURE FOR DEMONSTRATING THAT  SUCH  FACILITIES  ARE
 USING  BEST AVAILABLE TECHNOLOGY FOR CONTROL OF GREENHOUSE GAS EMISSIONS
 AND BEST AVAILABLE ENERGY EFFICIENCY PRACTICES TO REDUCE SUCH  EMISSIONS
 AND  INCORPORATE  CO-POLLUTANT REDUCTION MEASURES OR MITIGATION REQUIRE-
 MENTS FOR SUCH FACILITIES  LOCATED  IN  OR  PROXIMATE  TO  DISADVANTAGED
 COMMUNITIES;  PROVIDED, HOWEVER, THAT THE TERM "BEST AVAILABLE TECHNOLO-
 GY" SHALL NOT INCLUDE THE USE OF ALTERNATE FUEL  COMBUSTION,  OR  CARBON
 CAPTURE AND SEQUESTRATION;
   (II)  CONSIDER  HOW  PROGRAM  DESIGN  CAN FURTHER MITIGATE THE COST OF
 REDUCING EMISSIONS FOR SUCH FACILITIES WHILE PROVIDING AN  INCENTIVE  TO
 IMPROVE  EFFICIENCY  AND  REDUCE  EMISSIONS; PROVIDED, HOWEVER THAT SUCH
 MITIGATION SHALL NOT INCLUDE THE USE OF ALTERNATE  FUEL  COMBUSTION,  OR
 CARBON CAPTURE AND SEQUESTRATION;
   (III)  INCORPORATE  CO-POLLUTANT  REDUCTION  MEASURES  OR CO-POLLUTANT
 MITIGATION REQUIREMENTS FOR SUCH FACILITIES LOCATED IN OR PROXIMATE  TO,
 OR  OTHERWISE  CONTRIBUTING  TO THE POLLUTION BURDEN IN, A DISADVANTAGED
 COMMUNITY;
   (IV) ENSURE THAT ACTUAL EMISSIONS REDUCTIONS BY EACH  EMITTER  ARE  IN
 COMPLIANCE WITH SITE OR FACILITY SPECIFIC CAPS FOR FACILITIES LOCATED IN
 OR  PROXIMATE  TO, OR OTHERWISE CONTRIBUTING TO THE POLLUTION BURDEN IN,
 DISADVANTAGED COMMUNITIES; AND
   (V) PROVIDE FOR AN APPLICATION PROCESS FOR A FACILITY TO BE DESIGNATED
 BY THE DEPARTMENT AS AN EITE, WHICH SUCH APPLICATION SHALL INCLUDE:
   (A) SUCH INFORMATION AS THE DEPARTMENT MAY REQUEST TO ESTABLISH WHETH-
 ER SUCH FACILITY SATISFIES  THE  ENERGY  INTENSITY  AND  TRADE  EXPOSURE
 CRITERIA ESTABLISHED PURSUANT TO PARAGRAPH A OF THIS SUBDIVISION;
   (B) A DESCRIPTION OF THE EXPECTED IMPACT OF THE CAP AND INVEST PROGRAM
 ON SUCH FACILITY;
   (C)  SUCH FACILITY'S PLANS TO REDUCE EMISSIONS OF GREENHOUSE GASES AND
 CO-POLLUTANTS; AND
   (D) CONTRACTUAL COMMITMENT ON THE PART OF THE FACILITY TO AVOID  LEAK-
 AGE  AND  CONTINUE TO MEET SUCH ECONOMIC DEVELOPMENT OR ECONOMIC MAINTE-
 NANCE REQUIREMENTS AS DETERMINED TO BE APPROPRIATE BY THE DEPARTMENT, IN
 A. 8469                             7
 
 CONSULTATION WITH THE AUTHORITY AND THE DEPARTMENT OF ECONOMIC  DEVELOP-
 MENT.
   C.  UPON A SATISFACTORY SHOWING BY AN EITE TO THE DEPARTMENT THAT SUCH
 EITE WILL BE SIGNIFICANTLY NEGATIVELY IMPACTED BY  COMPLIANCE  WITH  THE
 CAP  AND  INVEST  PROGRAM SO AS TO RESULT IN LEAKAGE, THE DEPARTMENT AND
 THE AUTHORITY MAY, IN A MANNER NOT INCONSISTENT WITH ANY OTHER PROVISION
 OF THIS ARTICLE OR THE SCOPING PLAN, PROVIDE FOR ALLOWANCES TO INITIALLY
 BE ISSUED TO ELIGIBLE EITES AT REDUCED COST. THE AMOUNT OF SUCH  REDUCED
 COST  SHALL  BE  THAT  AMOUNT WHICH IS NECESSARY TO PREVENT LEAKAGE WITH
 RESPECT TO THE FACILITY, AS DETERMINED BY THE DEPARTMENT,  IN  CONSULTA-
 TION  WITH  THE AUTHORITY AND THE DEPARTMENT OF ECONOMIC DEVELOPMENT, AS
 LONG AS THE EITE EMPLOYS BEST AVAILABLE TECHNOLOGY TO REDUCE  ITS  EMIS-
 SIONS; PROVIDED, HOWEVER, THAT THE TERM "BEST AVAILABLE TECHNOLOGY" WILL
 NOT  INCLUDE THE USE OF ALTERNATE FUEL COMBUSTION, OR CARBON CAPTURE AND
 SEQUESTRATION.  FOR THE FIRST COMPLIANCE PERIOD, ANY  ALLOWANCES  ISSUED
 TO  AN  EITE  AT  REDUCED COST SHALL NOT REPRESENT MORE THAN THE MINIMUM
 AMOUNT OF ALLOWANCES NECESSARY TO AUTHORIZE SUCH EITE TO EMIT AN  AMOUNT
 OF  CARBON  DIOXIDE  EQUIVALENT  EMISSIONS  EQUAL TO SUCH EITE'S AVERAGE
 ANNUAL CARBON DIOXIDE EQUIVALENT EMISSIONS FOR THE THREE YEARS FOLLOWING
 THE EFFECTIVE DATE OF THIS SECTION AS DETERMINED BY THE DEPARTMENT. SUCH
 AMOUNT SHALL BE ADJUSTED  DOWNWARD  AS  NECESSARY  TO  ACCOUNT  FOR  THE
 REQUIREMENT  THAT  SUCH  EITE EMPLOY BEST AVAILABLE TECHNOLOGY TO REDUCE
 ITS EMISSIONS. IN SUBSEQUENT COMPLIANCE PERIODS, ANY ALLOCATION TO EITES
 OF ALLOWANCES AT  REDUCED  COST  SHALL  DECLINE  IN  PROPORTION  TO  THE
 REDUCTION IN TOTAL AVAILABLE ALLOWANCES FOR A GIVEN COMPLIANCE PERIOD IN
 ACCORDANCE  WITH  THE CAP FOR SUCH COMPLIANCE PERIOD.  AN EITE SHALL NOT
 BE ISSUED AN ALLOWANCE AT REDUCED COST FOR AN AMOUNT WHICH IS LESS  THAN
 THE  AMOUNT PAID BY SUCH EITE FOR A REDUCED COST ALLOWANCE IN THE PREVI-
 OUS COMPLIANCE PERIOD.
   D. EITES SHALL NOT RECEIVE ALLOWANCES AT REDUCED COST AFTER THE  TENTH
 COMPLIANCE PERIOD. THE DEPARTMENT SHALL CEASE THE ISSUANCE OF ALLOWANCES
 TO AN EITE AT REDUCED COST IF IT DETERMINES THAT:
   (I)  ISSUANCE  OF ALLOWANCES AT REDUCED COST TO SUCH EITE IS NO LONGER
 NECESSARY TO LIMIT LEAKAGE;
   (II) SUCH EITE IS NOT EMPLOYING BEST AVAILABLE  TECHNOLOGY  TO  REDUCE
 EMISSIONS;
   (III) SUCH EITE IS LOCATED IN OR PROXIMATE TO, OR OTHERWISE CONTRIBUT-
 ING  TO  THE  POLLUTING  BURDEN  IN, A DISADVANTAGED COMMUNITY, AND SUCH
 EITE'S CO-POLLUTANT EMISSIONS HAVE INCREASED RELATIVE  TO  THE  PREVIOUS
 COMPLIANCE PERIOD;
   (IV)  SUCH EITE NO LONGER QUALIFIES AS AN EITE PURSUANT TO PARAGRAPH B
 OF THIS SUBDIVISION; OR
   (V) SUCH EITE MADE MATERIAL MISSTATEMENTS ON ITS APPLICATION FOR  EITE
 DESIGNATION,  OR  MATERIALLY  VIOLATED  (A) THE TERMS OF ANY APPROVAL OF
 SUCH APPLICATION, (B) ANY AGREEMENT IN RESPECT THEREOF, OR (C) ANY  LAW,
 RULE, OR REGULATION ADOPTED PURSUANT TO THIS ARTICLE OR ARTICLE NINETEEN
 OF  THIS  CHAPTER,  INCLUDING  WITHOUT  LIMITATION THE INDIVIDUAL SOURCE
 EMISSIONS LIMITS SET PURSUANT TO PARAGRAPH E OF SUBDIVISION ONE OF  THIS
 SECTION.
   E. IF THE ACTUAL GREENHOUSE GAS EQUIVALENT EMISSIONS OF AN EITE EXCEED
 THE  ALLOWANCES  ISSUED TO SUCH EITE AT REDUCED COST FOR THAT COMPLIANCE
 PERIOD, SUCH EITE MUST ACQUIRE ADDITIONAL ALLOWANCES AT FULL  PRICE  AND
 SUBMIT SUCH ALLOWANCES AS NECESSARY TO SATISFY ITS COMPLIANCE OBLIGATION
 DURING SUCH COMPLIANCE PERIOD.
   F.  IF  THE DEPARTMENT ISSUES ALLOWANCES TO EITES AT REDUCED COST, THE
 DEPARTMENT SHALL:
 A. 8469                             8

   (I) CONDUCT REGULAR AUDITS OF SUCH EITES  TO  DETERMINE  WHETHER  SUCH
 EITES  CONTINUE  TO  QUALIFY  AS EITES FOR PURPOSES OF RECEIVING REDUCED
 COST ALLOWANCES UNDER THIS SUBDIVISION; AND
   (II) REGULARLY REVIEW THE NEED TO ISSUE ALLOWANCES TO EITES AT REDUCED
 COST.
   G.  THE  DEPARTMENT  SHALL  CREATE  AN  ONLINE  PUBLIC DATABASE ON ITS
 WEBSITE AND REPORT TO THE GOVERNOR AND THE LEGISLATURE  AT  LEAST  EVERY
 COMPLIANCE  PERIOD  ON  THE EMISSIONS AND LOCATION OF ALL EITES AT LEAST
 ONCE PER COMPLIANCE PERIOD.
   H. NOTWITHSTANDING ANYTHING IN THIS SUBDIVISION TO THE  CONTRARY,  THE
 TOTAL NUMBER OF ALLOWANCES ISSUED AT REDUCED COST FOR A COMPLIANCE PERI-
 OD  SHALL  NOT  EXCEED  FIFTEEN PERCENT OF THE TOTAL ALLOWANCES FOR SUCH
 COMPLIANCE PERIOD. TO THE EXTENT THAT THIS PARAGRAPH LIMITS  THE  NUMBER
 OF REDUCED COST ALLOWANCES OTHERWISE ALLOCATED TO EITES PURSUANT TO THIS
 SUBDIVISION,  ALLOCATIONS OF REDUCED COST ALLOWANCES SHALL BE REDUCED AS
 NECESSARY, IN A MANNER TO BE DETERMINED APPROPRIATE BY  THE  DEPARTMENT,
 IN CONSULTATION WITH THE AUTHORITY.
   4.    A. THE DEPARTMENT SHALL PROVIDE SUPPORT TO THE AUTHORITY FOR THE
 AUCTION OR SALE OF ALLOWANCES PURSUANT  TO  SUBDIVISION  TWENTY-FIVE  OF
 SECTION EIGHTEEN HUNDRED FIFTY-FOUR OF THE PUBLIC AUTHORITIES LAW.
   B.  THE  DEPARTMENT,  IN  CONSULTATION WITH THE AUTHORITY, SHALL ADOPT
 SUCH RULES AND REGULATIONS AS IT DEEMS NECESSARY TO GOVERN  THE  AUCTION
 OR  SALE  OF  ALLOWANCES,  AND  MAY  ENTER INTO SUCH CONTRACTS AS MAY BE
 NECESSARY OR CONVENIENT FOR SUCH PURPOSE.
   C. THE DEPARTMENT, IN COORDINATION WITH  THE  AUTHORITY,  SHALL  ADOPT
 SUCH  RULES  AND REGULATIONS AS IT DEEMS NECESSARY TO PROTECT THE CONFI-
 DENTIALITY OF PURCHASERS OF ALLOWANCES, GUARD AGAINST  BIDDER  COLLUSION
 AND  MINIMIZE  THE  POTENTIAL  FOR MARKET MANIPULATION OF THE AUCTION OR
 SALE OF ALLOWANCES.
   5. THE DEPARTMENT MAY RESERVE A SMALL PORTION OF ALLOWANCES UNDER  THE
 CAP FOR PURPOSES OF MARKET STABILITY AND TO INCENTIVIZE ADDITIONAL EMIS-
 SIONS  REDUCTIONS  SO LONG AS SUCH ALLOWANCES ARE NOT IN ADDITION TO THE
 TOTAL ALLOWANCES UNDER THE CAP. SUCH ALLOWANCES MAY  BE  TRANSFERRED  TO
 THE  GREENHOUSE  GAS  EMISSIONS  REDUCTION  ACCOUNT  UPON  NOTICE TO THE
 DEPARTMENT BY THE AUTHORITY AT SUCH TIMES AS IS DEEMED NECESSARY BY  THE
 AUTHORITY.  SUCH RESERVE ALLOWANCES MAY BE AUCTIONED OR SOLD IN A MANNER
 AND AT A TIME AS DETERMINED TO BE APPROPRIATE  BY  THE  AUTHORITY.  SUCH
 RESERVE ALLOWANCES SHALL BE AUCTIONED OR SOLD FOR A PRICE WHICH IS EQUAL
 TO  OR GREATER THAN THE MAXIMUM ALLOWANCE PRICE PROVIDED FOR IN SUBDIVI-
 SION TWO OF SECTION 75-0125 OF THIS ARTICLE. THE SALE  OF  THESE  ALLOW-
 ANCES MAY BE USED FOR COST CONTAINMENT, PROVIDED THAT SUCH SALE DOES NOT
 VIOLATE  ANY  OTHER SECTION OF THIS ARTICLE OR EXCEED THE CURRENT ANNUAL
 CAP.
 § 75-0123. USE OF ALLOWANCES.
   1. ALLOWANCES MUST BE SUBMITTED TO THE DEPARTMENT FOR THE FULL  AMOUNT
 OF GREENHOUSE GAS EMISSIONS EMITTED DURING A GIVEN COMPLIANCE PERIOD. IF
 GREENHOUSE GAS EMISSIONS EMITTED DURING A GIVEN COMPLIANCE PERIOD EXCEED
 ALLOWANCES SUBMITTED FOR SUCH COMPLIANCE PERIOD, SUCH SHORTFALL SHALL BE
 PENALIZED PURSUANT TO SECTION 75-0129 OF THIS ARTICLE.
   2. ANY ALLOWANCES NOT SUBMITTED AT THE END OF THE COMPLIANCE PERIOD IN
 WHICH  THEY  ARE  ISSUED BY THE AUTHORITY SHALL AUTOMATICALLY EXPIRE ONE
 HUNDRED EIGHTY DAYS AFTER THE END  OF  SUCH  COMPLIANCE  PERIOD  IF  NOT
 SUBMITTED PRIOR TO SUCH DATE OF EXPIRATION.
   3. ALLOWANCES SHALL NOT BE TRADABLE, SELLABLE, EXCHANGEABLE, OR OTHER-
 WISE TRANSFERABLE.
 § 75-0125. PRICE OF ALLOWANCES.
 A. 8469                             9
 
   1.  IN CONSULTATION WITH THE AUTHORITY, THE DEPARTMENT SHALL ESTABLISH
 BY REGULATION A MINIMUM ALLOWANCE PRICE FOR EACH COMPLIANCE PERIOD AND A
 SCHEDULE FOR THE AMOUNT BY  WHICH  THE  MINIMUM  ALLOWANCE  PRICE  SHALL
 INCREASE  EVERY  YEAR.  EXCEPT  WITH  RESPECT  TO ALLOWANCES PROVIDED AT
 REDUCED  COST  TO EITES PURSUANT TO SUBDIVISION THREE OF SECTION 75-0121
 OF THIS ARTICLE, ALLOWANCES SHALL NOT BE SOLD OR AUCTIONED AT AN  AMOUNT
 LOWER  THAN  SUCH  MINIMUM ALLOWANCE PRICE FOR THE APPLICABLE COMPLIANCE
 PERIOD.
   2. IN CONSULTATION WITH THE AUTHORITY, THE DEPARTMENT SHALL  DETERMINE
 AND ESTABLISH A MAXIMUM ALLOWANCE PRICE FOR EACH COMPLIANCE PERIOD AND A
 SCHEDULE  FOR  THE  MAXIMUM  PRICE TO INCREASE BY A PREDETERMINED AMOUNT
 EVERY YEAR AT A RATE WHICH IS GREATER THAN  OR  EQUAL  TO  THE  RATE  OF
 INCREASE  OF  THE  PRICE  FLOOR SET BY THE PRICE FLOOR INCREASE SCHEDULE
 PURSUANT TO SUBDIVISION ONE OF THIS SECTION. THE PRICE CEILING  SCHEDULE
 MUST  BE SET AT A LEVEL SUFFICIENT TO INCENTIVIZE INVESTMENTS TO ACHIEVE
 FURTHER GREENHOUSE GAS EMISSION REDUCTIONS BEYOND THOSE ENABLED  BY  THE
 PRICE CEILING FOR A GIVEN COMPLIANCE PERIOD.
   3.  IN  CONSULTATION WITH THE AUTHORITY, THE DEPARTMENT SHALL INCREASE
 THE PRICE FLOOR AND PRICE CEILING FOR ANY GIVEN COMPLIANCE PERIOD  ABOVE
 THE  SCHEDULES  OF PRICE INCREASES SET FORTH IN SUBDIVISIONS ONE AND TWO
 OF THIS SECTION IF NECESSARY TO  ENSURE  ACHIEVEMENT  OF  THE  EMISSIONS
 REDUCTIONS  NECESSARY  TO COMPLY WITH THE STATEWIDE GREENHOUSE GAS EMIS-
 SIONS LIMITS ESTABLISHED BY SECTION 75-0107 OF THIS ARTICLE. THE DEPART-
 MENT SHALL ASSESS WHETHER SUCH INCREASES ARE NECESSARY ON  AT  LEAST  AN
 ANNUAL  BASIS.  IN MAKING SUCH ASSESSMENT, THE DEPARTMENT SHALL CONSIDER
 ACTUAL EMISSIONS REDUCTIONS, PROGRESS TOWARDS  ACHIEVING  THE  STATEWIDE
 GREENHOUSE  GAS  EMISSIONS LIMITS ESTABLISHED BY SECTION 75-0107 OF THIS
 ARTICLE, AND PERFORMANCE WITH RESPECT TO THE  STATEWIDE  GREENHOUSE  GAS
 EMISSIONS  LIMITS  ESTABLISHED  PURSUANT  TO SUBDIVISION FIVE OF SECTION
 75-0109 OF THIS ARTICLE.
   4. A. THE DEPARTMENT SHALL MAKE ALL DETERMINATIONS UNDER THIS  SECTION
 WITH REFERENCE TO THE FOLLOWING CONSIDERATIONS:
   (I)  THE  NEED  FOR  CERTAINTY  IN  ACHIEVING  THE EMISSIONS REDUCTION
 REQUIREMENTS SET FORTH IN SECTION 75-0107 OF THIS ARTICLE AND THE STATE-
 WIDE GREENHOUSE GAS EMISSIONS LIMITS  ESTABLISHED  PURSUANT  TO  SECTION
 75-0109 OF THIS ARTICLE;
   (II)  THE  SOCIAL  COST  OF  CARBON  AS DETERMINED PURSUANT TO SECTION
 75-0113 OF THIS ARTICLE;
   (III) OTHER GREENHOUSE GAS PRICING PROGRAMS THROUGHOUT THE WORLD,  AND
 THE  SUCCESSES AND FAILURES OF SUCH PROGRAMS WITH RESPECT TO THE PRICING
 OF ALLOWANCES;
   (IV) THE STATEWIDE GREENHOUSE GAS EMISSIONS REPORT DEVELOPED  PURSUANT
 TO SECTION 75-0105 OF THIS ARTICLE;
   (V)  COST-OF-LIVING  INFLATION,  WITH  REFERENCE  TO THE UNITED STATES
 BUREAU OF LABOR STATISTICS CONSUMER PRICE INDEX OR, IF SUCH INDEX IS NOT
 AVAILABLE, ANOTHER APPROPRIATE INDEX APPROVED BY THE DEPARTMENT; AND
   (VI) SUCH OTHER INFORMATION AS  MAY  BE  NECESSARY  OR  CONVENIENT  TO
 COMPLY WITH THE PROVISIONS OF THIS SECTION.
   B.  THE DEPARTMENT AND THE AUTHORITY MAY SEEK AND OBTAIN SUCH INFORMA-
 TION AS MAY BE NECESSARY OR CONVENIENT  FOR  THE  DETERMINATION  OF  THE
 PRICING OF ALLOWANCES FROM OTHER STATE OR FEDERAL AGENCIES OR THE FEDER-
 ALLY DESIGNATED ELECTRIC BULK SYSTEM OPERATOR.
 § 75-0127. LINKAGE WITH OTHER JURISDICTIONS.
   1. THE DEPARTMENT SHALL DETERMINE AN EQUITABLE AND EFFICIENT MANNER TO
 LINK  THE CAP AND INVEST PROGRAM WITH THE REGIONAL GREENHOUSE GAS INITI-
 ATIVE. SUCH LINKAGE  SHALL  PROVIDE  THAT  ANY  SOURCE  SUBJECT  TO  THE
 A. 8469                            10
 
 REGIONAL  GREENHOUSE GAS INITIATIVE AND THE CAP AND INVEST PROGRAM SHALL
 RECEIVE  INTERJURISDICTIONAL  CREDIT  FOR   GREENHOUSE   GAS   EMISSIONS
 REDUCTIONS AND AMOUNTS PAID FOR ALLOWANCES ACQUIRED UNDER THE RESPECTIVE
 PROGRAMS  THROUGH A REDUCTION IN THE PRICE OF AN ALLOWANCE EQUIVALENT TO
 THE AMOUNT PAID FOR AN ALLOWANCE FOR AN EQUIVALENT AMOUNT  OF  EMISSIONS
 IN  ANOTHER PARTICIPATING JURISDICTION. IN DETERMINING SUCH REDUCTION IN
 PRICE, THE DEPARTMENT SHALL EVALUATE THE  RELATIVE  COST  OF  ALLOWANCES
 WITH  RESPECT TO EMISSIONS COVERED BY THE REGIONAL GREENHOUSE GAS INITI-
 ATIVE AS COMPARED TO THE CAP AND INVEST PROGRAM, AND MAKE SUCH  DETERMI-
 NATION  IN  A  MANNER  THAT RESULTS IN AN EQUAL TREATMENT OF THE COST OF
 ALLOWANCES RELATIVE TO COVERED SOURCES WHICH  ARE  NOT  SUBJECT  TO  THE
 REGIONAL  GREENHOUSE  GAS INITIATIVE. NO SOURCE OTHERWISE SUBJECT TO THE
 CAP AND INVEST PROGRAM SHALL BE EXCLUDED FROM THE CAP AND INVEST PROGRAM
 BECAUSE IT IS SUBJECT TO THE REGIONAL GREENHOUSE GAS INITIATIVE.
   2. A. THE DEPARTMENT MAY LINK THE CAP AND INVEST PROGRAM WITH  ONE  OR
 MORE  SIMILAR  PROGRAMS  IN JURISDICTIONS OTHER THAN THE REGIONAL GREEN-
 HOUSE GAS INITIATIVE IF IT DETERMINES THAT:
   (I) SUCH LINKAGE WILL RESULT IN CAP AND INVEST  PROGRAM  MARKET  BENE-
 FITS, REDUCE COSTS, AND RESULT IN ECONOMIC BENEFITS TO THE PEOPLE OF THE
 STATE  WITHOUT  REDUCING  THE OVERALL EMISSIONS REDUCTIONS OR SLOWING OR
 REDUCING EMISSIONS REDUCTIONS IN DISADVANTAGED COMMUNITIES; AND
   (II) THE DEPARTMENT HAS:
   (A) AT LEAST SIX MONTHS PRIOR TO ANY SUCH LINKAGE, RELEASED A PLAN FOR
 ANY PROPOSED LINKAGE WHICH INCLUDES (1) A DETAILED  EXPLANATION  OF  THE
 DEPARTMENT'S  DETERMINATIONS  WITH  RESPECT  TO THIS PARAGRAPH AND PARA-
 GRAPHS A, B, AND C OF SUBDIVISION THREE OF THIS SECTION, AND  (2)  PROC-
 ESSES FOR REGULAR REVIEW AND AUDIT OF SUCH LINKAGE;
   (B)  SOLICITED  PUBLIC  COMMENT  ON SUCH PLAN FOR A PERIOD OF AT LEAST
 THIRTY DAYS; AND
   (C) CONSIDERED SUCH PUBLIC COMMENTS AND, IF APPROPRIATE,  UPDATED  THE
 PLAN IN RESPONSE TO SUCH PUBLIC COMMENTS.
   (D)  IF ANY ANALYSIS SUBMITTED AS PUBLIC COMMENTS SHOWS THAT THE LINK-
 AGE WILL  RAISE  EMISSIONS  OR  INCREASE  UNEQUAL  CUMULATIVE  POLLUTION
 BURDENS  IN DISADVANTAGED COMMUNITIES, ANY SUCH LINKAGE SHALL BE DELAYED
 FOR AT LEAST TWELVE MONTHS WHILE THE IMPACT OF  SUCH  LINKAGE  SHALL  BE
 REASSESSED.
   B.  IF  ANY  ANALYSIS  OF A PLAN FOR ANY PROPOSED LINKAGE SUBMITTED AS
 PUBLIC COMMENTS SHOWS THAT THE LINKAGE WILL RAISE EMISSIONS OR  INCREASE
 UNEQUAL  CUMULATIVE POLLUTION BURDENS IN DISADVANTAGED COMMUNITIES, THEN
 THE LINKAGE MUST BE DELAYED FOR AT LEAST TWELVE MONTHS, AND  THE  IMPACT
 OF THE LINKAGE MUST BE REASSESSED.
   3. ANY LINKAGE SHALL PROVIDE ASSURANCE THAT:
   A.  IT  DOES  NOT  COMPROMISE,  LIMIT,  OR  IMPINGE  UPON  THE STATE'S
 PROGRESS, ABILITY, OR LIKELIHOOD OF MEETING OR  EXCEEDING  THE  REQUIRE-
 MENTS OF THIS ARTICLE;
   B.  CREDIT  FOR  GREENHOUSE GAS EMISSIONS REDUCTIONS UNDER ONE PROGRAM
 SHALL NOT REDUCE COMPLIANCE  OBLIGATIONS  IN  THE  OTHER  JURISDICTIONAL
 PROGRAM  MORE  THAN  AN  EQUIVALENT  AMOUNT  OF GREENHOUSE GAS EMISSIONS
 REDUCTIONS IN SUCH PROGRAM; AND
   C. SUCH LINKAGE WILL NOT RESULT IN INCREASED CO-POLLUTANT EMISSIONS IN
 DISADVANTAGED COMMUNITIES.
   4. IF THE DEPARTMENT DETERMINES  THAT  LINKAGE  WITH  ANOTHER  SIMILAR
 PROGRAM MADE PURSUANT TO SUBDIVISION TWO OF THIS SECTION NO LONGER MEETS
 THE  REQUIREMENTS SET FORTH IN PARAGRAPH A OF SUCH SUBDIVISION AND PARA-
 GRAPHS A, B, AND C OF SUBDIVISION THREE OF THIS SECTION, THE  DEPARTMENT
 SHALL  TAKE  IMMEDIATE ACTION TO ENSURE COMPLIANCE WITH SUCH PARAGRAPHS.
 A. 8469                            11
 
 IF SUCH COMPLIANCE IS NOT ACHIEVED WITHIN ONE YEAR OF SUCH DETERMINATION
 OF NON-COMPLIANCE, THE DEPARTMENT SHALL DISCONTINUE SUCH LINKAGE  WITHIN
 ONE HUNDRED EIGHTY DAYS THEREAFTER.
   5. ANY LINKAGE SHALL REQUIRE APPROVAL OF THE LEGISLATURE.
 § 75-0129. ENFORCEMENT; PENALTIES.
   1.  ALL COVERED ENTITIES ARE REQUIRED TO SUBMIT ALLOWANCES IN A TIMELY
 MANNER TO SATISFY COMPLIANCE OBLIGATIONS UNDER THIS  ARTICLE  AND  SHALL
 COMPLY  WITH  ALL  REQUIREMENTS  FOR MONITORING, REPORTING, HOLDING, AND
 TRANSFERRING EMISSION ALLOWANCES PURSUANT TO THE CAP AND INVEST  PROGRAM
 ESTABLISHED  BY  SECTION 75-0121 OF THIS ARTICLE AND OTHER PROVISIONS OF
 THIS CHAPTER.
   2. ANY PERSON THAT VIOLATES THE PROVISIONS OF THIS ARTICLE OR AN ORDER
 ISSUED UNDER THIS ARTICLE SHALL INCUR A PENALTY OF UP TO TWELVE THOUSAND
 FIVE HUNDRED DOLLARS PER DAY FOR EACH DAY THAT SUCH VIOLATION CONTINUES.
 IN THE EVENT OF MULTIPLE VIOLATIONS, EACH VIOLATION SHALL BE  CONSIDERED
 A SEPARATE OFFENSE.
   3.  ALL  PENALTIES  COLLECTED UNDER SUBDIVISIONS TWO AND SEVEN OF THIS
 SECTION SHALL BE CREDITED TO THE NEW YORK  CLIMATE  ACTION  FUND  ESTAB-
 LISHED  PURSUANT TO SECTION NINETY-NINE-QQ OF THE STATE FINANCE LAW, AND
 SHALL BE SUBJECT TO SUBDIVISIONS TWENTY-SEVEN, TWENTY-EIGHT AND  TWENTY-
 NINE  OF  SECTION  EIGHTEEN HUNDRED FIFTY-FOUR OF THE PUBLIC AUTHORITIES
 LAW.
   4. ANY ELECTRIC CORPORATION, GAS CORPORATION, OR COMBINATION  GAS  AND
 ELECTRIC  CORPORATION,  AS  SUCH TERMS ARE DEFINED IN SECTION TWO OF THE
 PUBLIC SERVICE LAW, WHICH PAYS A MONETARY  PENALTY  UNDER  THIS  SECTION
 MUST  NOTIFY  ITS  CUSTOMERS  IN  PUBLISHED  FORM WITHIN THREE MONTHS OF
 PAYING SUCH MONETARY PENALTY.
   5. IN ADDITION TO THE RIGHT CONFERRED UPON THE DEPARTMENT UNDER SUBDI-
 VISION TWO OF THIS SECTION, THE ATTORNEY GENERAL SHALL HAVE THE RIGHT TO
 SEEK THE PENALTIES SET FORTH IN SUBDIVISION TWO OF  THIS  SECTION  IN  A
 CIVIL  ACTION  BROUGHT  PURSUANT TO SUBDIVISION TWELVE OF SECTION SIXTY-
 THREE OF THE EXECUTIVE LAW.
   6. NOTHING IN THIS SECTION SHALL RELIEVE ANY PERSON, PRIVATE ENTITY OR
 PUBLIC AGENCY OR ENTITY OF COMPLIANCE  WITH  OTHER  APPLICABLE  FEDERAL,
 STATE, OR LOCAL LAWS OR REGULATIONS OR LIMIT THE EXISTING AUTHORITY OF A
 STATE,  MUNICIPAL  OR COUNTY AGENCY OR ENTITY OF ADOPTING, IMPLEMENTING,
 OR ENFORCING GREENHOUSE GAS REDUCTION MEASURES INCLUDING CIVIL PENALTIES
 UNDER SECTION 71-4003 OF THIS CHAPTER.
   § 9. Section 1854 of the public authorities law is amended  by  adding
 five new subdivisions 27, 28, 29, 30 and 31 to read as follows:
   27.  TO  CONDUCT,  FOSTER,  ASSIST, EVALUATE, AND SUPPORT PROGRAMS AND
 SERVICES  RELATED  TO:  GREENHOUSE   GAS   EMISSIONS   OR   CO-POLLUTANT
 REDUCTIONS;  RESEARCH, ANALYSIS AND SUPPORT OF CLIMATE MITIGATION, ADAP-
 TATION, AND RESILIENCE; OTHER MEASURES AS IDENTIFIED IN THE SCOPING PLAN
 DEVELOPED PURSUANT TO SECTION 75-0103 OF THE ENVIRONMENTAL  CONSERVATION
 LAW,  INCLUDING WITHOUT LIMITATION THOSE MEASURES IDENTIFIED RELATIVE TO
 A JUST TRANSITION  OR  WORKFORCE  DEVELOPMENT;  FOSSIL  FUEL  GENERATION
 RETIREMENT  PLANNING;  CONVERSION OF FOSSIL FUEL GENERATION TO RENEWABLE
 ENERGY PLANNING; OR MEASURES IDENTIFIED IN THE STATE ENERGY PLAN  DEVEL-
 OPED PURSUANT TO ARTICLE SIX OF THE ENERGY LAW.
   28.  TO  ESTABLISH,  ADMINISTER, IMPLEMENT, AND SUPPORT THE GREENHOUSE
 GAS EMISSIONS REDUCTION ACCOUNT AS DEFINED IN  SECTION  75-0101  OF  THE
 ENVIRONMENTAL  CONSERVATION LAW, CONSISTENT WITH ARTICLE SEVENTY-FIVE OF
 THE ENVIRONMENTAL CONSERVATION LAW, AND PURSUANT TO REGULATIONS  ADOPTED
 PURSUANT  TO  SUCH  ARTICLE  AND  OTHER EXISTING AUTHORITY, INCLUDING BY
 MAKING ALLOWANCES AVAILABLE FROM SUCH ACCOUNT FOR AUCTION OR SALE PURSU-
 A. 8469                            12
 
 ANT TO THE CAP AND INVEST PROGRAM, AS DEFINED BY SECTION 75-0101 OF  THE
 ENVIRONMENTAL  CONSERVATION LAW. SUCH AUCTION OR SALE SHALL BE CONDUCTED
 ON A QUARTERLY BASIS AND IN A MANNER THAT, SUBJECT TO THE OTHER REQUIRE-
 MENTS  OF ARTICLE SEVENTY-FIVE OF THE ENVIRONMENTAL CONSERVATION LAW AND
 REGULATIONS ADOPTED PURSUANT THERETO,  IS  EFFICIENT,  TRANSPARENT,  AND
 PROVIDES  CERTAINTY FOR PARTICIPANTS TO THE EXTENT PRACTICABLE, PROVIDED
 THAT WITH RESPECT TO RESERVE ALLOWANCES AS DEFINED IN SECTION 75-0101 OF
 THE ENVIRONMENTAL CONSERVATION LAW, AUCTIONS NEED NOT BE QUARTERLY.  THE
 AUTHORITY  SHALL ESTABLISH PROCEDURES TO GUARD AGAINST THE POTENTIAL FOR
 MARKET MANIPULATION, INCLUDING BUT NOT LIMITED TO  BIDDER  COLLUSION  OR
 OTHER  IMPROPER  RELEASE  OR  DISCLOSURE  OF  ANY BIDDING INFORMATION. A
 VIOLATION OF RULES WITH RESPECT TO MARKET MANIPULATION SHALL BE  SUBJECT
 TO  A  CIVIL PENALTY OF SIXTY THOUSAND DOLLARS PER VIOLATION FOR A FIRST
 VIOLATION, AND ONE HUNDRED TWENTY THOUSAND DOLLARS FOR  EACH  SUBSEQUENT
 VIOLATION,  AND  ANY APPLICABLE CRIMINAL PENALTIES.  THE AUTHORITY SHALL
 DEVELOP RULES AND PROCEDURES IN RESPECT OF ALL  SUCH  REQUIREMENTS.  THE
 PROCEEDS  FROM  THE AUCTION OR SALE OF ALLOWANCES AND ANY PENALTIES WILL
 BE PLACED INTO  A  SEGREGATED  AUTHORITY  FUNDING  ACCOUNT,  ESTABLISHED
 PURSUANT TO SECTION EIGHTEEN HUNDRED FIFTY-NINE OF THIS TITLE, AND SHALL
 NOT  BE  COMMINGLED  WITH OTHER AUTHORITY FUNDS. EXCEPT AS OTHERWISE SET
 FORTH IN THIS TITLE, THE AUTHORITY MAY USE A PORTION  OF  SUCH  PROCEEDS
 FOR ADMINISTRATIVE COSTS, AUCTION OR SALE, DESIGN AND SUPPORT COSTS, AND
 PROGRAM DESIGN, IMPLEMENTATION, AND EVALUATION COSTS DIRECTLY RELATED TO
 IMPLEMENTING  THE  CAP  AND  INVEST  PROGRAM, PROVIDED THAT SUCH AMOUNTS
 SHALL NOT EXCEED THE GREATER OF TEN MILLION DOLLARS OR  ONE  PERCENT  OF
 SUCH AGGREGATE ANNUAL PROCEEDS.
   29.  WITHIN  THIRTY  DAYS FOLLOWING RECEIPT OF PROCEEDS COLLECTED FROM
 THE AUCTION OR SALE OF ALLOWANCES ALLOCATED BY THE DEPARTMENT  OF  ENVI-
 RONMENTAL  CONSERVATION  TO THE AUTHORITY PURSUANT TO SUBDIVISION TWO OF
 SECTION 75-0121 OF THE ENVIRONMENTAL CONSERVATION  LAW  AND  REGULATIONS
 ADOPTED  BY  THE  DEPARTMENT  OF  ENVIRONMENTAL CONSERVATION PURSUANT TO
 ARTICLE SEVENTY-FIVE OF THE ENVIRONMENTAL  CONSERVATION  LAW  AND  OTHER
 EXISTING  AUTHORITY,  THE  AUTHORITY SHALL TRANSFER SUCH FUNDS FROM SUCH
 SEGREGATED AUTHORITY FUNDING ACCOUNT TO THE NEW YORK CLIMATE ACTION FUND
 ESTABLISHED PURSUANT TO SECTION NINETY-NINE-QQ OF THE STATE FINANCE LAW.
   30. WITHIN SIXTY DAYS FOLLOWING THE DEPOSIT OF PROCEEDS COLLECTED FROM
 THE AUCTION OR SALE OF ALLOWANCES AS OUTLINED IN SUBDIVISION  TWENTY-SIX
 OF  THIS  SECTION,  THE  AUTHORITY  SHALL  ISSUE TO THE GOVERNOR AND THE
 LEGISLATURE, AND POST ON ITS WEBSITE,  A  DETAILED  REPORT  WHICH  SHALL
 INCLUDE,  BUT  IS NOT LIMITED TO, THE AMOUNT OF REVENUE GENERATED BY THE
 AUCTION OR SALE OF ALLOWANCES  UNDER  SUBDIVISION  TWENTY-FIVE  OF  THIS
 SECTION, THE NUMBER OF ENTITIES THAT PURCHASED ALLOWANCES, THE NUMBER OF
 ENTITIES THAT RECEIVED REDUCED COST ALLOWANCES, THE NUMBER OF ALLOWANCES
 SOLD AT REDUCED COST, AND THE AMOUNTS PAID FOR REDUCED COST ALLOWANCES.
   31.  THE AUTHORITY SHALL ANNUALLY ISSUE TO THE GOVERNOR AND THE LEGIS-
 LATURE, AND POST ON ITS WEBSITE, BEGINNING THE NEXT FISCAL YEAR SUCCEED-
 ING THE FIRST  ALLOCATION  OF  FUNDS  FROM  THE  CLIMATE  AND  COMMUNITY
 PROTECTION  FUND,  A  REPORT  DETAILING THE USE OF SUCH FUNDS, INCLUDING
 INFORMATION REGARDING THE PROGRAMS TO WHICH SUCH FUNDS ARE APPROPRIATED,
 RECIPIENTS OF FUNDS PURSUANT TO SUCH  PROGRAMS,  AND  OUTCOMES  OF  SUCH
 PROGRAMMATIC SPENDING.
   §  10.  Any  and  all  funds  received  pursuant  to sections 75-0121,
 75-0123, 75-0125, 75-0127, and 75-0129 of the environmental conservation
 law or subdivisions 27, 28, 29, 30, and 31 of section 1854 of the public
 authorities law must be allocated pursuant to state law only to the  New
 York Climate Action Fund, and the state comptroller and office of budget
 A. 8469                            13
 
 will  ensure  that  no  funds are used for any purpose not in compliance
 with and in furtherance of the  goals  in  the  Climate  Leadership  and
 Community Protection Act of 2019.
   §  11.  The  public authorities law is amended by adding a new section
 1885 to read as follows:
   § 1885. OFFICE OF EQUITY FOR ENERGY AND CLIMATE.  1.  DEFINITIONS.  AS
 USED IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEAN-
 INGS:
   (A)  "COMMUNITY  SOLUTIONS  FUND"  SHALL  MEAN  THE COMMUNITY DIRECTED
 CLIMATE SOLUTIONS FUND ESTABLISHED PURSUANT TO SUBDIVISION THREE OF THIS
 SECTION.
   (B) "OFFICE" SHALL MEAN THE OFFICE OF EQUITY FOR  ENERGY  AND  CLIMATE
 ESTABLISHED PURSUANT TO SUBDIVISION TWO OF THIS SECTION.
   (C)  "SOLUTIONS  GRANTS  PROGRAM"  SHALL  MEAN  THE COMMUNITY DIRECTED
 CLIMATE SOLUTIONS GRANTS PROGRAM  ESTABLISHED  PURSUANT  TO  SUBDIVISION
 FOUR OF THIS SECTION.
   2.  OFFICE  OF EQUITY FOR ENERGY AND CLIMATE. (A) THERE IS ESTABLISHED
 WITHIN THE AUTHORITY AN OFFICE OF EQUITY FOR ENERGY AND CLIMATE.
   (B) THE PURPOSE OF THE OFFICE OF EQUITY FOR ENERGY AND CLIMATE  IS  TO
 SUPPORT  LOCAL  AND  COMMUNALLY  DEVELOPED  CLIMATE  PROJECTS TO SUPPORT
 DISADVANTAGED COMMUNITIES, INCLUDING BY ESTABLISHING  AND  ADMINISTERING
 THE  COMMUNITY  SOLUTIONS FUND AND THE SOLUTIONS GRANTS PROGRAM PURSUANT
 TO SUBDIVISIONS THREE AND FOUR OF THIS SECTION.
   3. THE COMMUNITY DIRECTED CLIMATE SOLUTIONS FUND. THERE IS ESTABLISHED
 WITHIN THE OFFICE THE COMMUNITY SOLUTIONS FUND, OUT OF WHICH THE  OFFICE
 SHALL MAKE GRANTS PURSUANT TO THE SOLUTIONS GRANTS PROGRAM.
   4. COMMUNITY DIRECTED CLIMATE SOLUTIONS GRANTS PROGRAM. (A) THE OFFICE
 SHALL  ESTABLISH THE COMMUNITY DIRECTED CLIMATE SOLUTIONS GRANTS PROGRAM
 TO PROVIDE ASSISTANCE TO COMMUNITY-BASED  ORGANIZATIONS,  PROJECTS,  AND
 INITIATIVES  THAT MAY NOT MEET APPLICATION CRITERIA FOR OTHER ASSISTANCE
 PROGRAMS, OR FOR WHICH OTHER ASSISTANCE PROGRAMS ARE INADEQUATE.
   (B) THE OFFICE SHALL DESIGN  THE  SOLUTIONS  GRANTS  PROGRAM,  TO  THE
 EXTENT  PRACTICABLE  AND  PERMISSIBLE,  TO MAXIMIZE THE ABILITY OF GRANT
 RECIPIENTS TO USE SUCH GRANTS AS  MATCHING  FUNDS  IN  OTHER  ASSISTANCE
 PROGRAM  APPLICATIONS  AND/OR  TO  LEVERAGE THE FUNDING TO RECEIVE ADDI-
 TIONAL GRANTS FROM OTHER ASSISTANCE PROGRAMS.
   (C) THE OFFICE SHALL IDENTIFY THE NEEDS OF  DISADVANTAGED  COMMUNITIES
 TO  PRIORITIZE  GRANT  ALLOCATION.  SUCH  IDENTIFICATION  PROCESS  SHALL
 INCLUDE SIGNIFICANT CONSULTATION WITH COMMUNITY STAKEHOLDERS IN A VARIE-
 TY OF DISADVANTAGED COMMUNITIES THROUGHOUT THE  STATE,  AT  LEAST  THREE
 PUBLIC  HEARINGS,  AND  OTHER OPPORTUNITIES FOR PUBLIC INPUT. THE OFFICE
 SHALL ALSO CONSULT WITH THE CLIMATE JUSTICE  WORKING  GROUP  ESTABLISHED
 PURSUANT TO SECTION 75-0111 OF THE ENVIRONMENTAL CONSERVATION LAW.
   (D)  APPLICANTS  ELIGIBLE  FOR  THE SOLUTIONS GRANTS PROGRAM. (I) LEAD
 APPLICANTS ELIGIBLE FOR GRANTS  SHALL  BE  CONSTITUENCY-BASED  ORGANIZA-
 TIONS,  TRIBAL  NATIONS,  OR, IN COMMUNITIES WHERE NEITHER CONSTITUENCY-
 BASED ORGANIZATIONS OR TRIBAL NATIONS EXIST OR DO NOT WISH TO APPLY  FOR
 SUCH GRANTS, A MUNICIPALITY.
   (II)   SUB-APPLICANTS  MAY  INCLUDE  OTHER  NON-PROFIT  ORGANIZATIONS,
 ACADEMIC INSTITUTIONS, LOCAL BUSINESSES, MUNICIPALITIES AND OTHER  SIMI-
 LARLY-SITUATED STAKEHOLDERS.
   (E)  COMMUNITY DIRECTED CLIMATE SOLUTIONS GRANTS PROGRAM RESTRICTIONS.
 THE FOLLOWING RESTRICTIONS SHALL APPLY TO THE COMMUNITY DIRECTED CLIMATE
 SOLUTIONS GRANTS PROGRAM:
   (I) GRANTS SHALL ONLY BE MADE FOR PROJECTS THAT REDUCE  ENERGY  COSTS,
 SUPPORT  COMMUNITY OWNERSHIP AND GOVERNANCE OF ENERGY INFRASTRUCTURE, OR
 A. 8469                            14
 
 ENHANCE  CLIMATE  CHANGE  RESILIENCY,  INCLUDING  BUT  NOT  LIMITED   TO
 REDUCTION OF URBAN HEAT ISLAND EFFECTS AND FLOODING PROTECTIONS.
   (II)  AT  LEAST  SEVENTY-FIVE  PERCENT  OF  FUNDING  ALLOCATED  TO THE
 SOLUTIONS GRANTS PROGRAM MUST SUPPORT PROJECTS LOCATED WITHIN  DISADVAN-
 TAGED COMMUNITIES.
   (III)  UP TO TWENTY-FIVE PERCENT OF FUNDING ALLOCATED TO THE SOLUTIONS
 GRANTS PROGRAM MAY SUPPORT PROJECTS LOCATED OUTSIDE DISADVANTAGED COMMU-
 NITIES, PROVIDED THAT SUCH FUNDING PROVIDES A BENEFIT  TO  DISADVANTAGED
 COMMUNITIES,  INCLUDING THOSE BENEFITS IDENTIFIED IN SUBPARAGRAPH (I) OF
 THIS PARAGRAPH.
   (IV) TO THE EXTENT PRACTICABLE, GRANTS SHALL BE DISTRIBUTED  EQUITABLY
 TO DISADVANTAGED COMMUNITIES THROUGHOUT THE STATE, BASED ON POPULATION.
   (V) GRANTS SHALL ONLY BE MADE FOR PROJECTS WHICH SATISFY THE COMMUNITY
 DECISION-MAKING  AND  ACCOUNTABILITY  STANDARDS  ESTABLISHED PURSUANT TO
 SUBDIVISION FIVE OF THIS SECTION.
   (VI) PROJECTS FUNDED BY GRANTS MADE UNDER THE SOLUTIONS GRANTS PROGRAM
 SHALL BE SUBJECT TO THE PROVISIONS OF THE LABOR LAW.
   (VII) PREFERENCE SHALL BE GIVEN TO PROPOSALS THAT INCLUDE  SIGNIFICANT
 PARTICIPATION BY MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES.
   5.  THE  OFFICE  SHALL  DEVELOP  AND ESTABLISH STANDARDS FOR COMMUNITY
 DECISION-MAKING AND ACCOUNTABILITY MECHANISMS WITH RESPECT  TO  ELIGIBLE
 PROJECTS AND THE USE OF GRANT FUNDING PURSUANT TO THE PROVISIONS OF THIS
 SECTION.
   6. BEGINNING ONE YEAR AFTER ITS ESTABLISHMENT AND ANNUALLY THEREAFTER,
 THE  OFFICE  SHALL  SUBMIT A REPORT TO THE CLIMATE JUSTICE WORKING GROUP
 ESTABLISHED PURSUANT TO SECTION 75-0111 OF THE  ENVIRONMENTAL  CONSERVA-
 TION  LAW,  THE GOVERNOR, AND THE LEGISLATURE ON THE USE OF FUNDS IN THE
 COMMUNITY DIRECTED CLIMATE SOLUTIONS FUND, INCLUDING INFORMATION REGARD-
 ING RECIPIENTS OF THE SOLUTIONS GRANTS PROGRAM.
   § 12. Severability. If any provision  of  this  article  is,  for  any
 reason,  declared  unconstitutional  or invalid, in whole or in part, by
 any court of competent jurisdiction, such portion shall be deemed sever-
 able, and such unconstitutionality or invalidity shall  not  affect  the
 validity  of  the  remaining  portions  of this article, which remaining
 portions shall continue in full force and effect.
   § 13. This act shall take effect immediately.