On July 8, Commonwealth Court granted a preliminary injunction to opponents of  Pennsylvania’s RGGI Carbon Pollution Reduction Program covering power plants pausing the program.

The challenge was brought by the PA Coal Alliance, United Mine Workers, International Brotherhood of Electrical Works, Boilermakers and several power generation companies.

Various Senate Republicans also challenged the publication of the regulation in other court action. Read more here.

Unless appealed, the preliminary injunction will remain in place until the full case against the RGGI regulation can be heard this Fall.

Late Friday, Laura Legere, Pittsburgh Post-Gazette, reported DEP is appealing the decision to the PA Supreme Court.  Read more here.

Legere also reported the Court required the power plants and labor unions to file a $100 million bond with the Court within 14 days to compensate the Commonwealth for any damages it may sustain if the injunction is later found to be improper and dissolved.  Read more here.

The Court rejected two of the three major arguments made by the petitioners as significant legal questions in granting the injunction.

Tax Or Fee?

In the context of a preliminary injunction, the Court said the petitioners did raise a significant legal question related to whether the fees paid by power plants for allowance credits are, in fact, a tax.

“We reject Secretary McDonnell’s argument that the allowance auction proceeds do not constitute a tax because covered sources pay RGGI, Inc., for the allowances purchased and not the Commonwealth.

“Second, the Rulemaking record, namely DEP’s 2020 modeling, estimated that only 6% of the proceeds from the CO2 allowances auctions would be for “programmatic costs related to administration and oversight of the CO2 Budget Trading Program (5% for [DEP] and 1% for RGGI, Inc.).”

“Third, Secretary McDonnell acknowledged, during testimony as on cross by Senate Intervenors in the Ziadeh matter, that from 2016 to 2021, the Clean Air Fund annually maintained between $20 million and $25 million in funds, the total expenditures exceeded the receipt of funds by $1 million for the years 2016 to 2020, but with the inclusion of anticipated CO2 auction allowance proceeds, the estimated receipts for the 2022-2023 budget year exceed $443 million.”

Existing Statutory Authority

With respect to whether the Environmental Quality Board had authority under state law to promulgate the regulation--

‘The Court cannot conclude that Petitioners’ argument in this regard presents a substantial legal question, let alone establishes a clear right to relief or a likelihood of prevailing on the merits.’

‘Section 3 of the APCA defines “AIR CONTAMINANT” to include a “gas.” 35 P.S. §4003. There is no dispute herein that CO2 constitutes a “gas.”

“Section 3 defines “AIR CONTAMINATION SOURCE” as “[a]ny place, facility or equipment, stationary or mobile, at, from or by reason of which there is emitted into the outdoor atmosphere any air contaminant.”

‘Section 5(a)(1) of the APCA specifically empowers EQB to “[a]dopt rules and regulations, for the prevention, control, reduction and abatement of air pollution . . . throughout the Commonwealth . . . which shall be applicable to all air contamination sources,” including the establishment of “maximum allowable emission rates of air contaminants from such sources . . .”

‘Given EQB’s specific authority to promulgate regulations for DEP under Section 1920-A(b) of the Administrative Code, and the broad authority granted to DEP under Sections 4(27) and 5(a)(1) of the APCA, promulgation of the Rulemaking appears to within the authority of DEP and/or EQB.”

In-Person Public Hearings

“Finally, Petitioners contend that the Rulemaking was void ab initio because the proper procedural requirements for developing regulations under the Commonwealth Documents Law  and the APCA were not followed.”

“Again, the Court cannot conclude that Petitioners’ argument in this regard presents a substantial legal question, let alone establishes a clear right to relief or a likelihood of prevailing on the merits.”

“There can be no dispute that EQB complied with the requirement of Section 202 of the Commonwealth Documents Law in this case.”

“The parties also stipulated to the fact that during the public comment period, DEP held 10 virtual meetings on the Rulemaking, but it did not hold any in-person hearings.”

“While Section 7(e) of the APCA could be read to imply that the hearings should be in-person by virtue of its reference to all persons “in attendance,” 35 P.S. § 4007(e), the Court is also cognizant that the public hearings were held in the midst of the COVID-19 pandemic.”

“For these reasons, the written comment period and virtual public hearings conducted by DEP do not appear to run afoul of the Commonwealth Documents Law or the APCA.”

Click Here for a copy of the opinion.

Some Interveners Denied

On June 28, the Commonwealth Court denied the environmental groups’ request to intervene in the lawsuits on the merits of the case, but were allowed to participate in the preliminary injunction hearings, according to PennFuture Senior Attorney Jessica O’Neill, lead attorney for PennFuture, Clean Air Council, Sierra Club, Environmental Defense Fund, and Natural Resources Defense Council

Ms. O’Neill, on behalf of the organizations, issued the following statement regarding the denial of their intervention in these critical cases:

“By denying our organizations the ability to participate in RGGI litigation, our important environmental interests have been improperly ignored by the Commonwealth Court. We have been working for years to advance necessary regulations to reduce carbon emissions in Pennsylvania, and RGGI is a critical component to reach our goal of net-zero carbon emissions by 2050. We are exploring all options in relation to the denial of our right to participate in these matters and will continue to fight for Pennsylvania’s carbon budget and trade rule and for our constitutional right to clean air.”

Reaction

PennFuture Senior Attorney Jessica O’Neill, lead attorney for PennFuture, Clean Air Council, Sierra Club, Environmental Defense Fund, and Natural Resources Defense Council issued this statement about the ruling--

“While only temporary, the court’s decision is yet another roadblock and stalling tactic from RGGI opponents.The impact that RGGI will have on the health, safety, and welfare of our members, our climate, and our environment cannot be overstated.

‘Simply put, RGGI will save lives, create jobs, and lower Pennsylvania’s carbon footprint at a time when we need it most.

“We expect the Department of Environmental Protection to appeal today’s ruling, which means the Supreme Court will have the opportunity to reinstate the RGGI rule. It doesn’t stop here – we will continue to fight.

“We eagerly anticipate our next opportunity to defend this rule, which will unquestionably save lives by improving air quality and is necessary to cut Pennsylvania’s significant carbon footprint from the power sector.”

NewsClips:

-- Post-Gazette - Laura Legere: State Judge Halts PA Power Plant Carbon Dioxide Rule

-- StateImpactPA - Rachel McDevitt: Pennsylvania’s RGGI Climate Rule Paused Until Trial This Fall

[Posted: July 8, 2022]

7/11/2022