Pennsylvania and RGGI – Decision and Resolution | Spilman Thomas & Battle, PLLC

On November 1, 2023, the Commonwealth Court of Pennsylvania, in a five-judge panel decision, issued a long-awaited ruling denying the authority of the executive branch, through the Pennsylvania Department of Environmental Protection, to bind Pennsylvania as a member of the Regional Greenhouse Gas Initiative (“RGGI”), colloquially a “carbon cap and trade” program, with current membership from 11 northeast and Mid-Atlantic states.  

This represents a critical development on the controversial effort initiated by former Governor Tom Wolf as a capstone environmental initiative of his administration, viewed by advocates and supporters as a potential means to significantly reduce the carbon emissions output of Pennsylvania’s electricity producers. Since Governor Wolf’s executive order in 2019, RGGI created a firestorm of both support and opposition from numerous stakeholders, with positions often atypically crossing the usual ideological lines. Substantively, critics of RGGI argued the program would result in massive increases in the cost of energy to Pennsylvania consumers and Pennsylvania potentially losing its favorable position as an energy exporter, all at the risk of Pennsylvania jobs and the state’s economy.   

The Court’s decision was based narrowly on the arguments of the litigants of two challenges before it, with plaintiffs represented, respectively, by the state’s Senate Republicans and a collection of energy companies, labor unions, and business and industry parties, on the question of whether the executive action to join RGGI appropriately equated to a legitimate fee under the DEP’s authority to regulate energy generators under the federal Clean Air Act or an unlawful tax enacted outside of the Governor’s constitutional authority. Ultimately, citing in part the excess revenues that would be generated through RGGI by collection from Pennsylvania power producers, the Court agreed with the plaintiffs that the executive action to join RGGI created a tax that, in order to pass constitutional requirements, can only be accomplished through legislation by the Pennsylvania General Assembly. 

Although current Governor Josh Shapiro retains the ability to appeal the decision to the Pennsylvania Supreme Court, present indications are that this course of action is unlikely. Rather, it appears that Governor Shapiro is intent on working with his legislative counterparts to pursue an alternative to RGGI, or various alternatives, that will achieve his administration’s environmental goals. If so, then the long-running RGGI question, at least in Pennsylvania, is likely resolved.  

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