N.Y. Public Service Law § 66-k: Allowance credit trading or sales

§ 66-k. Allowance credit trading or sales. 1. Definitions. For

purposes of this section, the following terms shall have the following

meanings:

(a) "SO2" shall mean sulfur dioxide.

(b) "SO2 allowance credit" shall mean any SO2 credit issued to a

generating source within the United States pursuant to the provisions of

title four of the Federal Clean Air Act Amendments of 1990.

(c) "select SO2 allowance credits" shall mean any SO2 allowance credit

issued to generating sources located within the boundaries of the state

of New York.

(d) "acid precipitation source states" shall mean the following

states: New Jersey, Pennsylvania, Maryland, Delaware, Virginia, North

Carolina, Tennessee, West Virginia, Ohio, Michigan, Illinois, Kentucky,

Indiana and Wisconsin.

2. Air pollution mitigation offset. (a) The commission shall assess an

air pollution mitigation offset equal to any sum received by any utility

corporation, person or entity entering into contracts or engaging in the

sale or trade of select SO2 allowance credits for use in operations,

permits or for maintaining compliance with SO2 emission requirements in

acid precipitation source states, where such select SO2 allowance

credits are found to have been transferred to the allowance deductions

reserve account by a generating source located in an acid rain source

state.

(b) Any utility corporation, person or entity entering into contracts

or engaging in the sale or trade of any select SO2 allowance credits

shall provide the commission with written notice of any select SO2

allowance transaction with five business days of such transaction. Such

notice shall include the purchase price, and shall provide the

commission a copy of the Allowance Transfer Form of the United States

Environmental Protection Agency upon the issuance and/or signing of said

form relating to the sale, exchange or trade by the utility corporation,

person or entity, its subsidiaries, agents, employees, successors and

assigns of select SO2 allowance credits.

(c) The commission will annually review information contained in the

SO2 allowance tracking database operated by the United States

Environmental Protection Agency for select SO2 allowances as identified

by their unique serial number.

(d) Any moneys collected as an air pollution mitigation offset

pursuant to this subdivision shall be deposited in the air pollution

mitigation fund established pursuant to section ninety-nine-g of the

state finance law and administered by the New York state energy research

and development authority pursuant to subdivision ten-a of section

eighteen hundred fifty-four of the public authorities law.

3. Exemptions. (a) The commission, in consultation with the department

of environmental conservation, shall produce by rule or order a model

restrictive covenant for use by any utility corporation, person or

entity entering into contracts or engaging in the sale or trade of

select SO2 allowance credits. The model restrictive covenant will be a

self-enforcing contract that shall include at a minimum, the requirement

to give notice to the commission of any SO2 allowance transaction

covered by the restrictive covenant; the requirement that any subsequent

holders of the SO2 allowance covered by the restrictive covenant include

an identical restrictive covenant in any document relating to the sale

or purchase of the covered SO2 allowances; provisions restricting usage

in acid precipitation source states; and provisions for the enforcement

of the terms of the restrictive covenant by the state of New York.

(b) Any utility corporation, person or entity entering into contracts

or engaging in the sale or trade of select SO2 allowance credits may

attach a restrictive covenant as a standard provision in any document

relating to the sale or trade by the utility corporation, person or

entity, its subsidiaries, agents, employees, successors and assigns, of

select SO2 allowance credits. Such restrictive covenant must conform

with the required provisions of the model restrictive covenant produced

by the commission pursuant to this subdivision.

(c) Any utility corporation, person or entity acting in conformance

with the provisions of this subdivision shall be exempt from the

assessment of an air pollution mitigation offset.

4. Nothing contained in this section shall restrict a utility

corporation from use or transfer of SO2 allowances at New York

facilities owned, controlled or operated now or in the future by the

utility corporation, its successors, assigns or purchasers that come to

own, control or operate such facilities.

5. Nothing in this section shall discourage or prohibit allowance

trades (such as for retirement purposes) that will have a beneficial

impact on sensitive receptor areas in the state of New York.

6. Nothing within this section will invalidate or subvert any prior

contractual commitments and/or obligations made by a utility

corporation, person or entity identified in subdivision two of this

section prior to the effective date of this section.