S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3975
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 30, 2025
                                ___________
 
 Introduced by M. of A. KELLES, BICHOTTE HERMELYN, SIMON, EPSTEIN, GONZA-
   LEZ-ROJAS,  LEVENBERG,  SIMONE,  SHIMSKY,  FORREST, TAPIA, R. CARROLL,
   STIRPE, DINOWITZ, SHRESTHA, MAMDANI, COLTON, STECK, ROSENTHAL, PAULIN,
   REYES, HEVESI -- read once and referred to the Committee  on  Environ-
   mental 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 was required to 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  regu-
 lations  promulgated  by  such department pursuant to section 75-0109 of
 the environmental conservation law must ensure that the aggregate  emis-
 sions  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
 enforceable emissions limits,  performance  standards,  or  measures  or
 other  requirements  to  control  emissions from greenhouse gas emission
 sources; prioritize emissions and co-pollutant reductions  in  disadvan-
 taged communities; do not result in a net increase in co-pollutant emis-
 sions  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 environmental conservation law.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07281-02-5
 A. 3975                             2
              

 
   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
 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 CRYPTO
 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-SIX.
 A. 3975                             3
 
   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-
 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-SIX,  THE  DEPART-
 MENT  SHALL  ASSESS  AND  SET  SITE  OR  FACILITY SPECIFIC CAPS FOR EACH
 A. 3975                             4
 
 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 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-SIX, 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-SIX,  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
 A. 3975                             5
 
 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 six new
 sections 75-0121, 75-0123, 75-0125, 75-0127, 75-0129 and 75-0131 to read
 as follows:
 § 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
 A. 3975                             6
 
 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
 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. NO LATER THAN SIX  MONTHS  AFTER  THE  EFFECTIVE  DATE  OF  THIS
 SECTION,  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;
 A. 3975                             7

   (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
 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
 A. 3975                             8
 
 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:
   (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. NO LATER THAN SIX MONTHS AFTER THE EFFECTIVE DATE OF THIS  SECTION,
 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 NECES-
 SARY 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.
 A. 3975                             9
 
   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.
   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.
 A. 3975                            10
 
   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
 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
 A. 3975                            11
 
 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.
 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.
 § 75-0131. PROGRAM REVIEW.
   1.  NO  LATER  THAN TWO YEARS AFTER THE EFFECTIVE DATE OF THIS SECTION
 AND EVERY TWO YEARS THEREAFTER, THE DEPARTMENT, IN CONSULTATION WITH THE
 AUTHORITY, SHALL, AFTER NOTICE AND  PROVISION  FOR  THE  OPPORTUNITY  TO
 COMMENT,  ISSUE  A  COMPREHENSIVE  REVIEW  OF THE CAP AND INVEST PROGRAM
 ESTABLISHED PURSUANT TO SECTION 75-0121 OF THIS ARTICLE.
   2. THE REVIEW SHALL, AT MINIMUM, INCLUDE:
   A. WHETHER THE STATE IS ON TRACK TO MEET THE STATEWIDE GREENHOUSE  GAS
 EMISSIONS LIMITS ESTABLISHED IN SECTION 75-0107 OF THIS ARTICLE.
 A. 3975                            12
 
   B.  AN  ASSESSMENT  OF  EXISTING  REGULATIONS  ESTABLISHED IN SECTIONS
 75-0121, 75-0123, 75-0125, 75-0127  AND  75-0129  OF  THIS  ARTICLE  AND
 WHETHER  MODIFICATIONS ARE NEEDED TO ENSURE FULFILLMENT OF THE STATEWIDE
 GREENHOUSE GAS EMISSIONS LIMITS.
   C.  AN OVERVIEW OF SOCIAL BENEFITS FROM THE REGULATIONS OR OTHER MEAS-
 URES, INCLUDING REDUCTIONS IN GREENHOUSE  GAS  EMISSIONS  AND  CO-POLLU-
 TANTS,  DIVERSIFICATION  OF  ENERGY  SOURCES,  AND OTHER BENEFITS TO THE
 ECONOMY, ENVIRONMENT, AND PUBLIC HEALTH.
   D. AN OVERVIEW OF COMPLIANCE COSTS FOR REGULATED ENTITIES AND FOR  THE
 DEPARTMENT AND OTHER STATE AGENCIES.
   E.  WHETHER  REGULATIONS  OR  OTHER  GREENHOUSE GAS REDUCTION MEASURES
 UNDERTAKEN ARE EQUITABLE, MINIMIZE COSTS AND MAXIMIZE THE TOTAL BENEFITS
 TO THE STATE, AND ENCOURAGE EARLY ACTION.
   F. WHETHER ACTIVITIES UNDERTAKEN  TO  COMPLY  WITH  STATE  REGULATIONS
 DISPROPORTIONATELY BURDEN DISADVANTAGED COMMUNITIES AS IDENTIFIED PURSU-
 ANT TO SECTION 75-0111 OF THIS ARTICLE.
   G.  AN  ASSESSMENT  OF LOCAL BENEFITS AND IMPACTS OF ANY REDUCTIONS IN
 CO-POLLUTANTS RELATED TO REDUCTIONS IN STATEWIDE  AND  LOCAL  GREENHOUSE
 GAS EMISSIONS.
   H. RECOMMENDATIONS FOR FUTURE REGULATORY AND POLICY ACTION.
   3.  IN  PREPARING  THE  REVIEW,  THE  DEPARTMENT  SHALL, AT A MINIMUM,
 CONSULT WITH THE COUNCIL AND THE CLIMATE JUSTICE  WORKING  GROUP  ESTAB-
 LISHED PURSUANT TO SECTION 75-0111 OF THIS ARTICLE.
   4.  THE  REVIEW  SHALL  BE  PUBLISHED  AND  POSTED ON THE DEPARTMENT'S
 WEBSITE.
   § 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-
 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
 A. 3975                            13
 
 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
 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.  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.
   § 12. This act shall take effect immediately.