Councilors voted unanimously at their meeting Tuesday to appeal the state Environmental Improvement Board's decision last month approving a cap-and-trade program aimed at reducing greenhouse gas emissions.
The decision followed a private meeting during which councilors were expected to discuss legal strategy. The city's policy is to discuss litigation in private.
The city isn't only interested in the effects the regulations will have on its utility: The city owns a stake in the coal-fired power plant San Juan Generating Station, Mayor Tommy Roberts said.
In addition, "We have a duty and a responsibility to the people of San Juan County and more specifically to the citizens of Farmington to weigh in on these kinds of regulatory impacts that will have significant consequences to the city of Farmington," he said.
He explained that regulations could harm San Juan County's economy by causing a "huge loss of jobs."
The decision to appeal follows approval Monday by the environmental board of a separate plan developed by environmental group New Energy Economy to cap greenhouse gases. The plan calls for coal-fired power plants and refineries to reduce emissions by 3 percent annually from 2010 levels.
The cap-and-trade program, formed by the New Mexico Environment Department, calls for 2 percent reductions in emissions by facilities that discharge more than 25,000 metric tons of greenhouse gases per year.
Roberts criticized the regulations, calling them "symbolic."
"No one asserts that the implementation of these rules will have any significant impact on global warming," he said.
The environmental board says climate change has led to a declining water supply, snowpack and soil moisture and increased severity and frequency of wildfires.
The environment department contends the state won't lose jobs, though job roles may change as New Mexico switches to producing cleaner energy. The program also would spur development of industries that produce clean energy.
Under the new regulations, facilities that exceed the cap could buy allowances or offsets as part of a regional trade mechanism. Facilities below the cap could profit by selling their unneeded emission allowances.
Free allowances would lessen costs for Farmington's electric utility, according to the environment department. Electric utilities also can reduce emissions by managing energy demand, reducing electricity loss at generating stations, developing carbon capture and storage projects and using renewable energy.
The environmental board did not have legal authority to pass greenhouse gas emissions caps, said Tom Outler, an attorney with the Rodey Law Firm in Albuquerque. The city hired the firm to represent it during environmental board hearings and the appeal.
Outler explained that because an air quality standard doesn't exist, there cannot be a regulation that attempts to control greenhouse gases.
"Since there's no federal or state standard and because the regulations themselves do not attempt to create a standard, the board simply does not have the authority to adopt these regulations," Outler said.
The city first will file a legal notice with the New Mexico Court of Appeals stating its intent to appeal the regulations, he said. About a month later, it will file another statement that outlines issues and arguments.
If additional groups file appeals as expected, the court may combine the appeals, as well as challenges to both greenhouse gas cap programs, he said. Utilities could form one group appealing the decision while the energy industry could comprise another.
Litigation could cost the city from $10,000 to $50,000, depending on how many groups join the appeal, he said.
The appeals court could take at least a year to rule on the appeal and maybe as many as two years.
Meanwhile, attempts by lawmakers and Gov.-elect Susana Martinez to overturn regulations are likely to take place.
If those are successful before the appeals court rules, the city could withdraw its appeal, he said.
The city's electric utility contends cap and trade will lead to a rate hike of 1 percent annually until 2020 for residential customers and 2 to 2.5 percent for industrial customers.
Proponents say cap and trade will reduce greenhouse gas emissions blamed for global warming in New Mexico and won't lead to an electricity rate hike between now and 2020.
The environment department contends that climate change will cost New Mexico households $3,400 annually by 2020, or $3.2 billion, because of increased costs of wild fires, health, energy, lost recreation opportunities and storm and flood damage.