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State-level "cap and trade" schemes that green groups have pushed onto compliant government officials are under pressure throughout the country and could be in the early stages of unraveling.

A lawsuit filed Tuesday in New York says the state's participation in the Regional Greenhouse Gas Initiative (RGGI) violates state law, since the legislature never approved that interstate compact.  The 2005 compact among 10 Northeastern and Mid-Atlantic states requires each participating state to reduce CO₂ emissions by putting restrictions on utilities and forcing them into a cap-and-trade scheme, a move that's both completely ineffective and needlessly tax-raising.

"This plan increases taxpayers' electric bill for the sake of an expensive, ineffective compact that, worst of all, is illegal under New York law," said Sam Kazman, CEI General Counsel.  "While there are 10 states in this compact, New York is distinct because the governor entered into the compact without any approval from his state legislature."

Here's how the regulatory regime works: RGGI's board sets a cap on emissions and determines the number of permits to be sold at each quarterly auction. Permits must be obtained through the auction process.  Without enough emissions allowances, electricity generators must cease to generate electricity, and must close.

Consumers and ratepayers bear the costs of the program, thanks to pass-through charges from electricity providers.  Without any impact on actual reduction of carbon emissions, the RGGI amounts to a flat-out tax-and-revenue raising measure to advance various legislatively-unapproved policy goals entirely unrelated to the administration of the RGGI program.  To date, at least $90 million has already been diverted from RGGI's stated goal of reducing greenhouse gas emissions to reducing New York's state budget deficit.

The plaintiffs in the case are Lisa Thrun and Ava Ashendorff, New York business women.  The case is being handled by Mark W. Smith of New York-based Smith Valliere PLLC, and CEI General Counsel Sam is co-counsel, with assistance from Americans for Prosperity. CEI attorney Hans Bader is a legal expert available for comment on the case.

Just a few weeks ago, Gov. Christie announced that he would withdraw N.J. from the RGGI. The program did not have any appreciable impact on the environment and only serves to burden N.J. residents with higher costs, Christie pointed out in his public comments. New Mexico Governor Susana Martinez, a Republican, has also moved to cut environmental regulations in her state and opposes entering into the into the Western Climate Change Initiative (WCCI). This does raise questions about who Gov. Jerry Brown in California expects to have as a trading partner.

There's some good news out there from the free market perspective.