Fresh off a victory in New Jersey, libertarian critics of the Regional Greenhouse Gas Initiative are backing a new lawsuit that challenges how New York entered the nation's only up-and-running cap-and-trade program for greenhouse gases.

The lawsuit, filed today in state court in Albany, claims New York needed to get permission from the state Legislature before it started taxing carbon emissions from power plants.

Filed by private attorney Mark Smith, the citizen suit is backed by Americans for Prosperity and the Competitive Enterprise Institute, two free-market think tanks that have been pushing to scrap the program. Both are backed by energy moguls Charles and David Koch, who have become bêtes noires of the left because of their advocacy for limited government and funding for climate change skeptics.

"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, general counsel of CEI, in a statement today.

Ross Gould, director of the air and energy program at Environmental Advocates of New York, said he was surprised by the court challenge because RGGI is now three years old. The state program is working as a plan to tackle climate change, he said.

According to a report by RGGI in February, the program's fees are equal to 0.4 percent to 1 percent of home electricity bills, or an average of 73 cents per month for residential ratepayers. Carbon emissions across the region have fallen by about 30 percent over the past few years, in large part because of a move away from coal and the use of the program's proceeds for energy efficiency upgrades.

"We're not concerned as much with the issues in the lawsuit, but really, with the idea that this is a well-heeled, out-of-state special-interest lawsuit sponsored by the same people that denied the danger of tobacco and the harms of smoking," Gould said in an interview. "These organizations are trying to protect the Koch brothers' unlimited profits on the health and the backs of New Yorkers."

The emissions trading program also includes the six states in New England, Delaware and Maryland. It took a hit last month when New Jersey Gov. Chris Christie (R)announced that the state would exit the program, and while the state Senate voted yesterday to reinstate the program, it appears unlikely to have the votes to overturn a veto.

New York's participation in RGGI dates back to the end of 2005, when former Gov. George Pataki (R) joined several other governors in signing an agreement to create the program. Along with California's global warming law, which itself survived a challenge at the ballot box last fall, it was designed as a plan to start cutting carbon emissions in the absence of a policy from Capitol Hill.

Since then, the state Legislature has had a say in administering the program, which has collected a total of $321 million in revenue. In late 2009 it passed a law that directed $112 million from the RGGI auctions toward worker training and energy efficiency programs.

But the plaintiffs say the Legislature should have been involved sooner.

"The authority to raise massive tax revenues is confined to the legislature because it is well understood that the 'power to tax' is the 'power to destroy,'" the lawsuit says.

Click here to read the lawsuit.