Pennsylvania court rules former governor illegally joined carbon emissions trading alliance

A Pennsylvania court ruled Wednesday that former Gov. Tom Wolf (D) unlawfully joined an interstate carbon emissions payment program without legislative approval.

In an opinion written by Judge Michael Wojcik, a five-judge panel of Pennsylvania’s Commonwealth Court found that membership in the Regional Greenhouse Gas Initiative (RGGI) constitutes an illegal tax. Plaintiffs in the lawsuit included a coalition of energy companies and unions representing fossil fuel workers.

States participating in RGGI set regional caps for carbon pollution from fossil fuel power plants, with plants purchasing allowances for each ton of carbon dioxide over the limit that they emit. While lawyers representing the Pennsylvania Department of Environmental Protection (DEP) argued the cost of the allowances is a fee, the court ruled that it is a tax and thus requires legislative approval.

“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,” Wojcik wrote. 

In a dissent, Judge Ellen Ceisler wrote that it was ambiguous whether RGGI membership constitutes a tax or a fee.

“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,” she wrote.

Wolf, who left office in January, joined RGGI by executive order in 2019, and he vetoed a 2020 bill that would require legislative approval to join. Ongoing litigation, including the lawsuit ruled on Wednesday, has prevented the state from formally participating up to this point. 

The administration of Gov. Josh Shapiro (D) has 30 days to appeal the ruling to the state Supreme Court.

“The Shapiro Administration is carefully reviewing the Commonwealth Court’s decision as we evaluate next steps," Manuel Bonder, a spokesperson for Shapiro's office, told The Hill in a statement. "This decision is solely focused on the narrow question of whether this policy put in place by the prior administration constitutes a tax or a fee. Governor Shapiro remains focused on addressing climate change, reducing emissions, and protecting public health while creating jobs and protecting consumers.”    

“This is not the final word on Pennsylvania’s participation in RGGI or the vast benefits it confers on the people of this state. For nearly 20 years, Governor Shapiro has been a champion for clean air, climate action and a prosperous Pennsylvania,” Natural Resources Defense Council President and CEO Manish Bapna said in a statement. “He should appeal this misguided decision at once and make the case before the state Supreme Court for a program that’s already proven itself across the Northeast and Mid-Atlantic.”

The Hill has reached out to the Pennsylvania DEP.  

Eleven other states have joined RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Pennsylvania, Vermont and Virginia. North Carolina is currently considering membership. Virginia Gov. Glenn Youngkin (R) has repeatedly sought to exit RGGI through both legislation and the state air quality control board. The state General Assembly voted to enter RGGI under then-Gov. Ralph Northam (D) in 2021.

Virginia's Democratic-majority state Senate has repeatedly rejected Youngkin-backed bills to exit RGGI, but the board, on which Youngkin appointees are a majority, voted 4-3 to leave it in June.

— Updated at 4:57 p.m.