On July 8, 2022, the Commonwealth Court of Pennsylvania granted a request for a preliminary injunction pausing regulations that would allow Pennsylvania to join the Regional Greenhouse Gas Initiative.
Commonwealth Court Judge Michael H. Wojcik found that the petitioners, a group of coal-fired power plant owners, a coal industry group, and coal industry-related labor unions, demonstrated the elements required for obtaining a preliminary injunction. Critically, the Commonwealth Court wrestled with an issue we flagged in a previous post: whether the regulations amount to a tax, which only the legislature may impose. The Commonwealth Court ruled in favor of the petitioners, finding unpersuasive the Pennsylvania Department of Environmental Protection’s (PADEP) arguments that the proceeds of RGGI’s auctions do not amount to a tax. Instead, the Commonwealth Court concluded the following points weighed in favor of the RGGI regulations constituting a tax, thereby demonstrating a “substantial legal question” weighing in favor of an injunction:
- The auction proceeds are provided back to participating states, and PADEP receives a substantial benefit from the auction process, meaning that it does not matter that participants pay RGGI, Inc. and not PADEP directly;
- The rulemaking record includes estimates that only 6% of proceeds cover “programmatic costs,” with the remaining amounts deposited into the Clean Air Fund used to eliminate air pollution; and
- From 2016-2021, the Clean Air Fund annually maintained between $20 and $25 million in funds, however, the 2022-2023 budget estimated receipts at over $443 million after inclusion of the proceeds of the RGGI auction
The Court rejected two other arguments relating to the authority of PADEP to pass the regulations under the state’s Clean Air Act and to whether public notice requirements were satisfied during the rulemaking process.
PADEP filed an appeal of the Commonwealth Court’s order granting the temporary injunction to the Pennsylvania Supreme Court on July 11, 2022. The Pennsylvania Supreme Court has not yet issued a case schedule for the appeal