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New York Supreme Court strikes down suit against state's nuclear subsidy

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New York Supreme Court strikes down suit against state's nuclear subsidy

The New York Supreme Court in Albany County has struck down a lawsuit challenging the state's clean air subsidy for three uneconomic nuclear power plants.

In an Oct. 8 ruling, the State Supreme Court rejected the plaintiffs' argument that the state Public Service Commission misapplied the social cost of carbon when determining the zero-emissions credit, or ZEC, payments for at-risk emissions-free nuclear generation. At a cost of up to $7.6 billion over 12 years, the ZEC subsidy compensates the Exelon Corp.-operated nuclear plants of James A. FitzPatrick, Nine Mile Point and R.E. Ginna/Ontario Sta. 13 power plants for avoided emissions to stave off threatened early plant retirements. New York regulators approved the subsidy for the three upstate nuclear plants in August 2016.

Filed in December 2016 by the Hudson River Sloop Clearwater, several anti-nuclear groups and others, the lawsuit sought to overturn the state's ZEC subsidy, which plaintiffs argued violates state statutes and is based on an arbitrary misapplication of the social cost of carbon. The plaintiffs also disputed the assertion that the reactors are "publicly necessary" and claimed that the resulting rates are unjust, unreasonable and discriminatory.

In a decision penned by Acting Justice Roger McDonough, New York's Supreme Court ruled that the use of the social cost of carbon in calculating subsidy payments was well supported, legal and reflect state energy and climate policies. In particular, the court said the PSC's usage of the social cost of carbon had a rational basis. It also cited "the detailed, persuasive advocacy" by a New York University School of Law think tank in a brief explaining why the social cost of carbon is "the best tool to reflect the environmental monetary damages attributable to reduced carbon emissions."

Regarding the "public necessity" of the ZEC subsidy, the court found that the PSC "meaningfully correlated" the continued operation of the nuclear plants with the state's goal of reducing greenhouse gas emissions by 40% by the year 2030.

Federal courts have previously rejected other industry challenges to New York's ZEC subsidy and a copycat program in Illinois. In April, the U.S. Supreme Court declined to hear appeals of lower court decisions upholding the legality of both states' ZEC subsidies.

Richard Revesz, director of the Institute for Policy Integrity at the New York University School of Law, said in a press release that the latest ruling affirms the social cost of carbon as "an appropriate and effective tool for state policymakers."

"New York was right to use the social cost of carbon in valuing the environmental benefits of avoided carbon emissions," Revesz said. "The court ruling could help provide guidance for other states pursuing climate policies.” Hudson River Sloop Clearwater v. New York PSC (Case No. 07242-16)