The Competitive Enterprise Institute announced today that it is acting as co-counsel in a recently filed lawsuit in the state of New York against the state’s participation in the Regional Greenhouse Gas Initiative (a state cap and trade program). The lawsuit has been filed on behalf of small business owners in New York State who have faced increased electricity costs, and can be read here (.pdf). The American Spectator has a short write up here. The basis for the suit relies on the fact that elected officials in New York enrolled in the RGGI without approval by the state legislature. New York is the only state involved with RGGI who entered the initiative without approval from its legislature. As RGGI has forced electricity generators to purchase annual carbon allowances, it has raised the price of electricity for New York residents, effectively acting as a tax on electricity producers (those who produce more than 25 megawatts annually) in New York.

As far as its success or failure, the RGGI has faced many of the same problems similar programs have faced around the world. A very low allowance price for carbon will result in very little actual emissions reductions. Much of the ‘on paper’ emissions reductions will be made up by increased emissions in bordering states, as energy intensive industries relocate and electricity producers import energy from out of state. State legislators have raided the funds raised by RGGI and used them for unrelated purposes (the stated goals of RGGI are to use the funds to spur development in energy efficiency measures and increased production of non carbon emitting energy sources). In New York alone,$90 million of the ~$320 million raised by RGGI has been redirected towards budget shortfalls.

New Jersey recently signaled its intention to end its participation. Similar efforts are underway in New Hampshire (though they face a threatened veto by the Governor).

In the worst Spitzerian tradition, New York Attorney General Eric Schneiderman (D) today announced that he is suing the federal government for failing to conduct an environmental analysis on the impacts to drinking water caused by ‘fracking,’ a.k.a. hydraulic fracturing, the American-made technological miracle in natural gas production that has roughly doubled known North American gas reserves in only the last 5 years.

New York could be a huge beneficiary of fracking, as much of the state is situated above the Marcellus Shale, an enormous gas deposit in the American Northeast that can be tapped only with this new technology. But environmentalist special interest groups oppose the practice, because it would expand America’s supply of hydrocarbon energy, and they have whipped up alarm among Manhattanites by making unfounded claims that fracking would pollute New York City’s water supply.

In fact, these allegations are bunk. Just ask the British Parliament, which recently concluded that fracking is safe for water supplies. Closer to home, AG Schneiderman could have sought counsel from New York State Geologist Dr. Taury Smith, a self-described liberal Democrat, who  told the Albany Times Union that the state’s natural gas deposits are “a huge gift.” Dr. Smith dismissed the environmentalists’ allegations about water contamination as being “exaggerated,” and “the worst spin.”

As I explained in a previous post,

“While there is some evidence that poorly built ‘fracking’ rigs could lead to the escape of methane into local groundwater wells, this isn’t as disturbing as it sounds. Methane (ie, natural gas) does not make water poisonous, and there is no evidence that the fluids used in the process, which could be toxic, have leaked into well water. Much more importantly, there is ZERO evidence that the process affects water tables used for utility scale water supply, although environmentalist special interests are quick to try to conflate well-water methane contamination with water table contamination. The upshot is that hydraulic fracturing has been used in this country for fifty years, without harming public health and environment.”

In any case, AG Schneiderman’s request ignores the fact that the Environmental Protection Agency already is conducting a high-profile, comprehensive study on fracking’s impact on water, due in 2012. As such, his demand is already being met, so there was no reason to litigate. Of course, he knows this, which is why it’s a safe bet that this silly lawsuit was launched just so the AG could have a press conference, à la Spitzer.

In an interview last week with the Albany Times Union, New York’s state geologist, Dr. Taury Smith, a self-described liberal Democrat, called the state’s natural gas deposits “a huge gift.” Over the last decade, the natural gas industry has been revolutionized by the rapid development of a drilling process known as hydraulic fracturing. In that time, economically recoverable reserves in the U.S. roughly doubled. New York could be among the biggest beneficiaries, as it sits upon huge deposits of gas, known as Marcellus Shale, that are now recoverable. Environmentalists, however, oppose hydraulic fracturing because they oppose all fossil fuels, and they have waged a misinformation campaign against the practice. They allege, without evidence, that it threatens to contaminate water supplies. On the basis of these unsubstantiated claims, environmentalists frightened New York lawmakers into enacting a moratorium on hydraulic fracturing. Dr. Smith dismisses the environmentalists’ allegations as being “exaggerated,” and “the worst spin.”

The New York State Assembly this week voted 93 – 43 to temporarily ban a natural gas drilling technique known as hydraulic fracturing. The moratorium lasts until May, 2011, but state regulators weren’t expected to start issuing drilling permits until summer, so the legislation is largely symbolic. New York State is home to huge natural gas deposits that only recently become economically recoverable, thanks to the emergence of hydraulic fracturing technology, which is also known as “fracking.” Environmentalists oppose the practice on the grounds that it could affect groundwater supplies, although there is no credible evidence to support these claims.