Posted on September 6, 2010

New Jersey Watchdog’s battle over the “secret” records of the Regional Greenhouse Gas Initiative’s cap-and-trade auctions will be waged in a Trenton courtroom.

Investigative reporter Mark Lagerkvist filed suit against the New Jersey Department of Environmental Protection in Mercer County Superior Court for “wrongfully and knowingly” denying access.  Under the state Open Public Records Act (OPRA), Lagerkvist is asking the court to order NJDEP to release documents showing who bought what at RGGI’s auctions of carbon dioxide emission allowances. 

In its first nine auctions, RGGI sold $729 million in CO-2 allowances, including $83 million in New Jersey permits.  Those costs are eventually passed along to consumers in higher electric rates.

At the auctions, utilities competed with speculators and financial heavyweights like Goldman Sachs, Morgan Stanley, Merrill Lunch and JPMorgan Chase, as reported by New Jersey Watchdog last month in an investigative report – “The Secrets Ten States & Wall Street Don’t Want You to Know.”  Authorities have refused to identify auction winners and how many permits each purchased.

New Jersey Watchdog initially sought the records from RGGI, but the New York-based regional non-profit cooperative contends it is not a public agency subject to OPRA.  The next request went to NJDEP, the agency that supervises New Jersey’s participation in RGGI.

NJDEP claims it does not have the requested recordsdespite regulations mandating the agency to approve auction results, issue permits to winning bidders and oversee the allowance tracking system.

In a second OPRA request, New Jersey Watchdog asked for all correspondence and emails between NJDEP and RGGI, documents likely to show which auction records the state received from the cooperative.

NJDEP responded with a demand for New Jersey Watchdog to pay $11,250, starting with a $5,625 deposit, before deciding what records to release. NJDEP also indicated it would deny much of the request, citing a laundry list of would-be exemptions – including “attorney-client privilege,” “trade secrets” and “potential harm to the performance of the auctions.”

In his suit, Lagerkvist argues the charges are unreasonable – and that NJDEP has failed to provide evidence that any bona fide statutory exemption exists.  In OPRA cases, the burden of proof falls on the state.

The secrecy surrounding RGGI is a sharp contrast to the transparent approach of the U.S. Environmental Protection Agency in similar auctions. 

For the past 18 years, the EPA has been selling allowances for acid rain, also known as sulfur dioxide or SO-2.  After each annual auction, the EPA releases the particulars on its Internet site – without charge.  Going back to 1994, the agency has disclosed all buyers, their bids and the number of SO-2 permits each purchased.  Starting with 2003, those reports were expanded to include information on unsuccessful bidders and their bids.

The EPA’s experience contradicts NJDEP’s claim that disclosure of the so-called trade secrets could somehow harm the auctions. In fact, the EPA credits transparency as a key to its acid rain program’s success.

RGGI is a prototype for two other mandatory regional systems scheduled to start in 2012. The Midwestern Greenhouse Gas Reduction Accord would bring cap-and-trade to Illinois, Michigan, Wisconsin, Minnesota, Iowa and Kansas.  The Western Climate Initiative adds California, Oregon, Washington, Arizona, Mexico, Utah and Montana – plus British Columbia, Ontario and Quebec.  Manitoba is a member of both cooperatives.  Together, the three systems would encompass 23 states with roughly half of population in the U.S. – plus four Canadian provinces with more than three-quarters of that nation’s populace.

The suit by Lagerkvist may provide a rare glimpse inside a secretive cap-and-trade system that could become de facto law of the land, even without an act of Congress

Posted under Big Stories, New Jersey, New Jersey Watchdog, Quick Bites.
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