House committee advances DEQ-run RGGI auction program; debate centers on costs and revenue uses

The House Committee on Agriculture, Chesapeake and Natural Resources advanced HB 397 on a subcommittee recommendation that appended a substitute to a bill directing the Department of Environmental Quality to establish an allowance auction program consistent with the Regional Greenhouse Gas Initiative and the Clean Energy and Community Flood Preparedness Act.

Delegate Herring, the bill’s patron, framed the measure as a way to reestablish a market-based program to reduce carbon emissions and to generate revenue for resilience projects. "This is something where hundreds of millions of dollars have come into the Commonwealth because of this program to deal with flood resilience, to make sure that communities that were hit hard by extreme weather…have been helped," Herring said, citing assistance for areas including Alexandria, Virginia Beach and Buchanan County.

Members pressed the patron on cost and governance details. Delegate Bloxham asked whether the bill’s language allows a roughly 5% deduction to cover expenses and whether that would be in addition to fees retained by auction service providers. Herring replied that the bill "says what it says" regarding percentages and that the statute’s written allocations govern administrative deductions.

Delegate Weber asked whether the costs borne by carbon‑producing generators would be passed along to utility ratepayers. Herring responded that "the utility is able to pass on costs if it so desires," noting the same market structure used previously.

The subcommittee recommended reporting HB 397 with a substitute (7–3). The committee moved to report the bill with the substitute and to send it on for further consideration; the committee record shows the bill was reported with a substitute and referred as appropriate.

Supporters and some members said the auction revenues fund weatherization and resilience projects that can reduce costs for low‑income consumers over time, while critics focused on transparency around percentages retained for administration and the potential for costs to be passed through to ratepayers.

Next steps: the bill, as reported with substitute, was advanced by the committee for further consideration and referral to appropriations or the relevant calendar depending on subsequent procedural action.