March 29, 2023

Karen G. Sabasteanski

1111 East Main Street, Suite 1400

P.O. Box 1105

Richmond, VA 23218

Re: Comments of Heather Barden on Proposed Rule to Repeal CO2 Budget Trading Program (Action 6082)

Dear Karen G. Sabasteanski,

I respectfully submit my comments in response to the request from the Department of Environmental Quality ("DEQ") on its Notice of Proposed Rulemaking ("NPRM") concerning repealing the CO2 Budget Trading Program.[1] I oppose the proposed rule on several legal and policy grounds. First, the DEQ has no legal authority to, in effect, remove Virginia from its participation in the Regional Greenhouse Gas Initiative ("RGGI"). The General Assembly directed the DEQ and the Air Pollution and Control Board ("Board") to promulgate rules to effectuate the state's participation in RGGI.[2] By giving authority to the DEQ to promulgate rules related to RGGI participation, the General Assembly did not explicitly nor implicitly give DEQ discretion in the matter. Second, the proposed rule likely violates key provisions of the Environmental Justice Act and Virginia Clean Economy Act.[3] Namely, the rule negatively affects environmental justice communities throughout the Commonwealth and does nothing to help "increase access to clean energy and the benefits from clean energy in historically economically disadvantaged communities."[4] Finally, it is not the Board's purpose to create regulations that could result in reduced energy costs throughout the Commonwealth. In addition, the stated purpose of the proposed rule, to reduce energy costs, can be attained in several less burdensome and less intrusive ways.

I. Statement of Interest

First and foremost, I am a citizen of Virginia and have called this state my home for almost thirty years. I care deeply about the welfare of my home state and its citizens. Currently I am pursuing my J.D. degree at the University of Richmond School of Law. I am interested in pursuing a legal career in environmental law with a focus in environmental justice and energy justice. My interest in environmental justice and energy justice as well as my concern for the welfare of Virginia and its citizens has compelled me to respond to the NPRM concerning repealing the CO2 Budget Trading Program.

II. Argument

A. The Board has no legal authority to, in effect, remove Virginia from participating in RGGI.

In 2020, with the passage of the Virginia Clean Economy Act, Virginia became the first state in the south to join the Regional Greenhouse Gas Initiative. The law states that the DEQ is "authorized to establish, implement, and manage an auction program to sell allowances into a market-based trading program consistent with the RGGI program..."[5] "Authorize" in this context is understood as the General Assembly directing the DEQ to ensure regulations are updated and/or created in order for Virginia to participate in RGGI. The Fiscal Impact Statement that accompanied SB 1027 provides insight into the meaning of the word "authorize." The Fiscal Impact Statement for SB 1027 states that the bill "[d]irects the Department of Environmental Quality to incorporate into regulations previously adopted by the state Air Pollution Control Board certain provisions establishing a carbon dioxide cap and trade program to reduce emissions released by electric generation facilities..."[6]

Ultimately, if the DEQ repealed the CO2 Budget Trading Program, Virginia would no longer be able to participate in RGGI. The DEQ does not have authority to choose whether the Commonwealth participates in RGGI. Through the passage of the VCEA in 2020, the General Assembly directed the DEQ to update and create regulations that allowed for Virginia's participation in RGGI. The General Assembly did not explicitly nor implicitly give the DEQ the discretion to, in effect, remove the state from participating in RGGI.

B. The Board's proposed rule likely violates key provisions of the Environmental Justice Act ("Act") and the Virginia Clean Economy Act ("VCEA").

The Environmental Justice Act provides that it is "the policy of the Commonwealth to promote environmental justice and ensure that it is carried out throughout the Commonwealth, with a focus on environmental justice communities and fenceline communities."[7] The Act further defines "environmental justice" as "...the fair treatment and meaningful involvement of every person, regardless of race, color, national origin, income, faith or disability, regarding the development, implementation, or enforcement of any environmental law, regulation or policy."[8] State lawmakers amended the VCEA in 2021 to include language that further illustrates the state's commitment to environmental justice principles. The VCEA's amended provisions state, in relevant part that ".... it shall be the policy of the Commonwealth to.... increase access to clean energy and the benefits from clean energy in historically economically disadvantaged communities."[9]

Auction revenue produced from RGGI participation is funneled into state programs that improve energy efficiency in low-income households.[10] Forty-five percent of RGGI auction revenue is used to assist residents and localities affected by recurrent flooding, sea level rise, and flooding from severe weather events.[11] To date, Virginia has received more than $523 million from RGGI auction revenues.[12] Of the $523 million, roughly $260 million has gone towards improving energy efficiency in low-income households.[13] Communities that struggle with extreme flooding, like Norfolk, VA , have already received millions of dollars from the Virginia Community Flood Preparedness Fund thanks to the Virginia's participation in RGGI. [14]

The NPRM claims that by removing Virginia from participating in RGGI, residents and businesses will see their energy costs decrease. However, the cost-savings would be extremely nominal. A purported savings of under $3 per month for residents does not outweigh the many financial benefits low-income households are currently experiencing because of the state's participation in RGGI. 

It cannot be disputed that low-income households in environmental justice communities are currently receiving many financial benefits from state programs that are funded by RGGI auction revenues. The Board's proposed rule would remove Virginia's participation in RGGI and therefore, remove funding of key state programs that are having a positive impact on environmental justice communities throughout the Commonwealth.

C. The Board is not responsible for ensuring just and reasonable energy rates throughout the Commonwealth.  

The stated purpose of repealing the CO2 Budget Trading Program is to reduce energy costs for residents and businesses. The NPRM explains that it is the Board's responsibility to promote public health, safety, and welfare. However, the Board confuses its responsibility to promote health, safety, and welfare related to air pollution with the public interest goal of cutting energy costs. It is nonsensical to argue that it is the Air Pollution and Control Board's responsibility to promote lower energy costs for Virginia residents and citizens. Simply put, cutting energy costs is not the Board's responsibility. However, it is the responsibility of the State Corporation Commission to set just and reasonable electricity rates for Virginia citizens.[15] There are several actions that can be taken by the General Assembly and/or the State Corporation Commission to cut energy costs that do not have such intrusive and burdensome consequences as removing the state's participation in RGGI. The General Assembly could work to amend the provisions of the VCEA to disallow utilities to pass on costs of RGGI compliance to ratepayers. Beyond statutory amendments, the State Corporation Commission could re-assess the current methods in which Dominion Energy and others pass costs of compliance with RGGI to ratepayers.

Ultimately, it is not the Board's responsibility to promulgate rules that result in potentially lower energy costs for residents and businesses. There are less intrusive and less burdensome avenues to ensuring energy costs are lowered throughout the Commonwealth.  

III. Conclusion

I do not support the DEQ's proposed action to repeal the CO2 Budget Trading Program as required by Executive Order 9. The DEQ does not have the legal authority to, in effect, remove Virginia from participating in the RGGI. In addition, the removal of the state's participation in RGGI raises serious environmental justice concerns. Finally, the purpose behind the agency action is incongruent with the overall purpose and responsibilities of the Board. There are less intrusive and less burdensome ways in which energy costs can be decreased across the state.

Sincerely,

Heather Barden, M.T.