Pa.’s RGGI Participation Halted by Commonwealth Court

Pennsylvania’s entry into the Regional Greenhouse Gas Initiative (RGGI) is now halted after the Commonwealth Court ruled that the process used to join was unconstitutional. RGGI is a regional carbon emissions cap-and-trade program with 11 member states in the Northeast. In RGGI’s system, power plants would be required to purchase credits per ton of carbon dioxide emitted from their processes. Funds from credit purchases would be collected by RGGI and later transferred to participating states. The state’s admittance into RGGI has been on hold since legal battles over the state’s participation ensued following the final rule being published by the state Department of Environmental Protection (DEP) in the Pennsylvania Bulletin in April 2022. RGGI was a priority of the previous Wolf administration, and the governor used a regulatory process through DEP to win approval because the plan was not supported by the Legislature. At the heart of the legal debate was the final rule's constitutionality and the nature of the fees that would be collected from power plants to be disbursed to member states. If Pennsylvania were to join, those funds would be deposited into the state’s Clean Air Fund. In a 12-page ruling, the Commonwealth Court ruled that the fees paid by power plants would be considered an “invalid tax”, and that the DEP did not have the authority to levy such a tax without legislative approval. Judge Michael H. Wojcik, who penned the majority opinion, noted in his opinion that “to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly”. Furthermore, Wojcik noted the imbalance between the costs of “annual regulatory needs” of the DEP and Environmental Quality Board (EQB), stating that the money that would be received from the carbon credit auctions would be “grossly disproportionate” to those regulatory needs. Proponents of RGGI argue that the benefits of participation outweigh the potential negatives. According to DEP estimates, Pennsylvania’s participation could abate 227 million tons of carbon emissions by 2030, and raise approximately $200 million annually from auction funds for environmental improvement projects. Opponents argue that aside from the process used, joining RGGI would dramatically raise consumer energy prices and put jobs at stake. This decision is not likely to be the final determination on RGGI, as the Shapiro administration can appeal the decision. While Gov. Josh Shapiro has previously been critical of Pennsylvania joining the Initiative, it is likely an appeal is forthcoming.