Pennsylvania Supreme Court Hears Tax-Versus-Fee Arguments About Whether RGGI Can Stand

Arguing before the Pennsylvania Supreme Court on Wednesday, one state agency alleged another improperly refused to publish an executive action implementing a de facto carbon tax, effectively halting the policy. 

At issue is a decision made by the Pennsylvania Legislative Reference Bureau (LRB) not to publicize a regulation decreed by then-Governor Tom Wolf (D) entering the state into the Regional Greenhouse Gas Initiative (RGGI). The LRB, which drafts all state legislation upon lawmakers’ requests and provides other policy reference services, declined to promulgate the rule enrolling the commonwealth in the multistate compact, citing a state House of Representatives resolution opposing it.

This administrative decision blocks the Keystone State from participating in the agreement, which would entail a CO2-emission pricing system imposing onerous costs on 66 fossil-fuel plants and, in turn, energy consumers. Wolf argued RGGI is a worthy step Pennsylvania can take to curb global warming. While his successor Josh Shapiro (D), displayed skepticism toward the initiative during last year’s gubernatorial campaign, he and his Acting Environmental Protection Secretary Richard Negrin continue to defend it in court. 

State lawmakers who did not want the LRB to publish the regulation argued Wolf defied the Pennsylvania General Assembly’s power to make tax-policy decisions. In January, Commonwealth Court Judge Michael Wojcik (D) issued an opinion siding with the bureau.

On Wednesday, Department of Environmental Protection attorney Matthew White asked the state Supreme Court to reverse Wojcik’s determination in Department of Environmental Protection, et al. v. Pennsylvania Legislative Reference Bureau, insisting RGGI involves a fee, not a tax. While the executive branch may levy the former to cover administrative costs, it cannot unilaterally impose the latter, per the state Constitution. 

“Nobody here seriously contends that the RGGI regulation was implemented for a purpose — much less a primary purpose — of raising revenues,” he told the justices. “It was implemented to regulate producers of the pollutant carbon dioxide and to allow the department to better address the harms resulting from those emissions. The department has a statutory power and duty [under the 1959 Air Pollution Control Act] to adopt rules and regulations “for the prevention, control, reduction and abatement of air pollution.” 

White said the revenues collected via RGGI would go only into the state’s Clean Air Fund to mitigate air pollution through carbon capture programs and energy-efficiency initiatives. He added, however, that DEP has yet to make detailed plans for implementation, an admission with which Justice Kevin Brobson (R) took issue. 

“Isn’t that a problem, though?” Brobson asked. “The [relevant] test requires you to show that the amount generated by the fee is necessary to reimburse for a regulatory scheme and there’s no existing regulation or statute that says how you’re going to spend this incredible amount of money that’s going to be generated by this. I wonder if it’s like the chicken-and-egg thing: You’re going to get the revenue first and then you’re going to figure out how to spend it; that doesn’t seem to be what the [precedent-based] test requires.” 

White conceded that the administration cannot precisely anticipate how RGGI revenues will be outlaid or the air-quality programs’ administrative costs. 

“I agree with Your Honor,” he said. “I can’t point to anything in the record that says, ‘Here is specifically how these proceeds are going to be spent.’”

Jessica O’Neill, an attorney for the environmental group Citizens for Pennsylvania’s Future and other appellants siding with DEP, backed White’s sentiment in her own remarks though she relied more emphatically on the state’s 1971 Environmental Rights Amendment. The provision recognizes Pennsylvanians’ “right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment.” 

“…[RGGI] proceeds cannot be considered a tax because they are subject to the strictures of the Environmental Rights Amendment,” O’Neill argued.

Brigid Khuri, representing the Republican-led state Senate, countered that the DEP needs to argue its carbon-discharge pricing scheme is a fee to bypass the legislature. However, she said the levy’s vague nature suggests it is a tax conceived for purposes beyond the program’s basic administration.  

“DEP would have us believe that it’s a fee, and they say it’s a fee because they have to,” she said. “They don’t have the authority to tax, and as Judge Wojcik properly recognized, the power to tax is vested exclusively in the General Assembly. And even if they wanted to delegate it to the department, they could not do so because we do not allow unelected officials in an administrative agency to impose taxes; so there’s no amount of interpretation of the Air Pollution Control Act that could authorize them to enact the tax.”

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Bradley Vasoli is managing editor of The Pennsylvania Daily Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Pennsylvania Supreme Court” by Ruhrfisch. CC BY-SA 2.0.



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