Pennsylvania cannot participate in the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program intended to cut carbon emissions from the power sector, according to a new ruling issued by a state appellate court.
In the 18-page ruling posted today, the Commonwealth Court of Pennsylvania determined that the multi-state initiative to limit carbon emissions violates the state Constitution and that money raised through RGGI is an invalid tax.
Judge Michael Wojcik wrote the majority opinion declaring that the RGGI rulemaking was void and prohibits the state Department of Environmental Protection (DEP) from enforcing the rule. Judge Ellen Ceisler wrote a dissenting opinion.
“Stated simply, to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly, and not merely through the rulemaking promulgated by DEP and EQB [Environmental Quality Board],” according to the ruling.
State Republican lawmakers applauded the ruling.
“Today’s ruling by the Commonwealth Court affirming the RGGI Electricity Tax violates our state Constitution is a victory for Pennsylvanians,” said State Senate Majority Leader Joe Pittman (R-41). “The Senate Republican Caucus has been unwavering in our commitment to advocate for communities across our commonwealth who would be harmed by the RGGI Electricity Tax.
“At a time when families continue to feel the strain of inflationary pressure,” Pittman said, “we must look for ways to decrease, not increase, the cost of electricity.”
“The House Republican Caucus remains ready, willing and able to work with all interested parties to find a sound path forward for Pennsylvania’s energy development in a way that respects the pocketbook issues of our families who are already facing increasing energy prices and the overall economic health of our Commonwealth,” said Pennsylvania House Republican Leader Bryan Cutler (R-100).
RGGI is a cooperative, market-based effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia to cap and reduce CO2 emissions from the power sector. It represents the first cap-and-invest regional initiative implemented in the United States.
Pennsylvania entered RGGI under former Democratic Gov. Tom Wolf’s administration after the DEP issued its final regulation on April 23, 2022, establishing the Commonwealth’s participation in the regional CO2 Budget Trading Program.
Opponents on both sides of the aisle deemed Wolf’s RGGI decision executive overreach and when the DEP’s regulation was published in the Pennsylvania Bulletin, per law, it immediately garnered legal challenges.
In July 2022, for instance, the Commonwealth Court issued an order blocking Pennsylvania from continuing its efforts to join RGGI until the court ruled on its constitutionality — which is the decision released today.
Cutler called the state’s entrance into RGGI by the Wolf administration “a slap in the face to Pennsylvanians who continue to deal with rising energy prices and increasing inflation.”
But today’s decision, the lawmaker said, “is a positive development in ensuring that RGGI will not add to increasing energy costs on Pennsylvania families.”
Likewise, Pittman called Wolf’s decision to unilaterally force Pennsylvania to join RGGI “a failed, harmful, and unconstitutional policy.”
“With this decision we have the opportunity to finally close a tumultuous chapter and move forward to determine the best legislative solution to foster greater energy independence, while ensuring the responsible development of our God-given natural resources,” he added in a statement.
Other groups also commended the court’s ruling while bashing Wolf’s previous order.
“The Commonwealth Court decision confirms our argument from the very beginning: RGGI is an unconstitutional tax,” said Pennsylvania Manufacturers’ Association President & CEO David N. Taylor. “The disgraceful RGGI farce should shame Tom Wolf, whose illegal actions destroyed the Homer City Generation Station, unemployed hundreds of workers, and hollowed out the tax base of a rural community for no reason. We hope Governor Shapiro shows better judgment and ends the RGGI crisis by not appealing the court’s ruling.”
Pennsylvania Coal Alliance (PCA) Executive Director Rachel Gleason, said, “Former Gov. Tom Wolf unilaterally initiated Pennsylvania’s participation in RGGI by ignoring and simply bypassing Pennsylvania’s legislature. Pennsylvania’s residents, consumers, and businesses have something to cheer about today after the court’s decision to halt Pennsylvania participation in RGGI.”
Gleason pointed out that today’s decision will ensure Pennsylvanians will not be burdened by “a multi-billion-dollar compliance scheme that had no meaningful reduction in CO2 emissions.” And she noted that Pennsylvania’s coal industry has generated thousands of high-paying jobs and tax revenue, but also has provided residents with affordable, reliable, and resilient electricity.
“The implementation of RGGI would have had a devastating impact on Pennsylvania’s economy and would have required the import of electricity from out-of-state, further driving up electricity costs in the Commonwealth and threatening grid reliability,” Gleason said in a statement.
In fact, according to the Pennsylvania House Republican Policy Committee, the Commonwealth Court’s ruling invalidates a $2.8 billion energy tax.
“This is a win for PA consumers as we head into the winter months. Gov. Shapiro must do the right thing and refuse to appeal this ruling. If this tax goes into effect, our electricity bills will quadruple,” the committee said.
However, Commonwealth Court Judge Ellen Ceisler, who dissented from the majority opinion, wrote that “there is still a persuasive argument to be made that the emissions allowance auction process does not establish a tax,” according to her opinion.
“Based upon the record before us, it does not seem that the emissions allowance auction process would impose what could be deemed fees in the traditional sense, but, by the same token, it is not entirely clear that the proceeds raised thereby would constitute a tax,” wrote Ceisler. “Given this, there is a genuine issue of material fact regarding the question of whether the rulemaking establishes a tax or a fee.”
Nevertheless, supporters of the new ruling called on the state’s current Democratic Gov. Josh Shapiro to uphold it.
“We urge Gov. Shapiro to move beyond the unconstitutional, anti-worker, anti-family carbon tax, which would have cost Pennsylvania workers thousands of jobs and Pennsylvania families and businesses nearly $3 billion in higher electricity rates,” said the Power PA Jobs Alliance, which represents numerous state labor and business groups.
“Instead, Gov. Shapiro can clean the slate and move forward as his RGGI Working Group urged and engage the General Assembly on energy policies that ‘retain Pennsylvania’s status as the nation’s number one exporter of electricity and protect existing energy jobs,’” the alliance said.
The PCA and its members also implored Shapiro to accept the court’s invalidation of the RGGI rulemaking and follow his working group’s recommendation, “which urged policymakers to ‘ensure that its energy customers do not unreasonably or disproportionately shoulder the cost and potential reliability burdens,’” Gleason said.