Pennsylvania Gov. Tom Wolf’s (D) ploy to circumvent the Legislature and force the Keystone State to become a member of the Regional Greenhouse Gas Initiative (RGGI) suffered a setback July 8, when a judge issued a temporary injunction against the move.
In two cases brought against the Wolf administration, Judge Michael Wojcik of Pennsylvania’s Commonwealth Court granted a preliminary injunction preventing the state from moving ahead with joining RGGI pending a court ruling later this fall.
RGGI is a cooperative effort among 10 northeastern and mid-Atlantic states whose members agree to a scheme to reduce CO2 emissions from power plants. The group establishes a regional cap on the amount of CO2 emissions from power plants. It functions by selling CO2 allowances at quarterly auctions, with proceeds going to member states to spend on an assortment of green energy initiatives. Member states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and (for the time being) Virginia.
RGGI as a Tax.
In his decision, Judge Wojcik took aim at Department of Environmental Protection (DEP) Secretary McDonnell’s claim that the proceeds from the auctions of CO2 credits do not constitute a tax:
We cannot, at this time, agree with Secretary McDonnell’s argument that the allowance auction proceeds do not constitute a tax. First, it is undisputed that the allowance proceeds are remitted to the participating states. Senate Ex. 22 (52 Pa. B at 2482 (“The CO2 allowances purchased in the multistate auctions generate proceeds that are provided back to the participating states, including the Commonwealth, for investment in initiatives that will further reduce CO2 emissions.”)). Secretary McDonnell’s position is unpersuasive where it is undisputed that the auction proceeds are to be deposited into the Clean Air Fund, are generated as a direct result of the Rulemaking, and the DEP anticipates significant monetary benefits from participating in the auctions. In addition, and importantly, it is unclear under what authority the DEP may obtain the auction proceeds for Pennsylvania allowances purchased by non-Pennsylvania covered sources not subject to the DEP’s regulatory authority and which are not tethered to CO2 emissions in Pennsylvania. (Bold in the original).
If, as expected, Judge Wojcik’s decision is upheld in court this fall, the matter will then be sent to the highly politicized Pennsylvania Supreme Court. That court, packed with Democrats loyal to Gov. Wolf, may well overturn Judge Wojcik’s ruling and put Pennsylvania back on track to joining RGGI. But if Wolf fails to gain reelection in November, the new governor may scuttle the whole RGGI enterprise.
As one of the nation’s leading producers of natural gas, Pennsylvania could expect to derive no economic benefits from a scheme designed to phase out fossil fuels in favor of renewable energy (wind and solar). What’s more, residential and commercial electricity rates in RGGI states are among the highest in the U.S.
Virginia Heads for the Exit
RGGI may also be on the verge of losing one of its current members. On march 15, Virginia Gov. Glenn Youngkin issued a report on how Virginia’s membership in RGGI had affected everyday Virginians. The report’s findings don’t bode well for Virginia’s continued membership. “This report reveals that RGGI is in reality a carbon tax that is passed on to families, individuals, and businesses throughout the Commonwealth – it’s a bad deal for Virginians,” Youngkin said.