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Pennsylvania Bid to Join Climate Pact Now Faces Tougher Odds

July 11, 2022, 7:07 PM

A Pennsylvania judge’s ruling means supporters of outgoing Gov. Tom Wolf’s planned entry into an 11-state pact to address greenhouse gas emissions now face an uphill battle, legal analysts say.

Judge Michael H. Wojcik of Pennsylvania Commonwealth Court granted a preliminary injunction on July 8 to a coalition including state lawmakers, energy representatives, and labor groups. The injunction temporarily stops the state from implementing a final rulemaking that puts Pennsylvania in the Regional Greenhouse Gas Initiative.

Pennsylvania’s Department of Environmental Protection and Environmental Quality Board on Monday appealed the order to the state Supreme Court.

The same judge will next rule, likely in September and November, on two cases—one brought by Republicans in the state legislature, the other by energy and labor groups—that will turn on largely the same legal arguments that he considered in his July 8 decision.

For those reasons, Wojcik’s decision is “a big deal” that “imply better than even odds of success for the petitioners,” Timothy Fox, a vice president at energy analyst ClearView Energy Partners, told Bloomberg Law.

“The arguments are largely going to be the same, the opposition the same,” Fox said. “And it looks like this judge has reached a decision.”

‘Very Strong Indication’

Another bad sign for RGGI proponents is that, in imposing a preliminary injunction, a court generally must find some likelihood that the plaintiffs could prevail on the merits, said Cary Coglianese, a law professor at the University of Pennsylvania Law School and director of the Penn Program on Regulation.

Thus, a ruling like Wojcik’s is “never the outcome that a defendant wants,” Coglianese said, referring to litigation in general.

Wojcik made clear in his preliminary injunction that he wasn’t making a final determination on the merits.

But the emphatic language he offered on July 8 gives “a very strong indication of how the judge is likely to rule in the fall,” said Todd Aagaard, a law professor at Villanova University.

At the heart of Wojcik’s decision is the question of whether the state’s rule undermines the legislature’s exclusive right to impose taxes and enter interstate compacts. The judge found that RGGI’s opponents did raise substantial questions about whether the rulemaking constitutes an impermissible tax.

“This issue of, is it a tax is the same issue that’s going to come up at trial, so the judge saying it looks like a tax is a strong indication of what the conclusion will be in the fall,” Aagaard said.

Pennsylvania had been on track to begin participating in RGGI this year. Under the initiative, participating states set an enforceable regional limit on the amount of carbon pollution that power plants are allowed to emit and sell pollution permits up to the limit through quarterly auctions.

Environmentalists and members of Wolf’s (D) administration see Pennsylvania’s entry into RGGI as a top priority because the state ranks among the nation’s top producers of gas, coal, nuclear power, electrical generation, and electricity exports. But opponents say it amounts to a direct tax or fee on carbon emissions and that it will impose undue burdens on business.

Next Up: Supreme Court

Mark Szybist, senior attorney at the Natural Resources Defense Council’s climate and clean energy program, said he remains hopeful that the pro-RGGI forces will prevail, noting that the legal standard for granting an injunction is lower than the one for winning at trial.

He also said the Supreme Court may see matters differently than Wojcik.

“This one presents a pretty thorny issue that the Pennsylvania courts have not grappled with in this factual setting,” Szybist said. “That gives it an element of uncertainty, but it also gives us hope that the Supreme Court will see it differently.”

The seven-member Pennsylvania Supreme Court—which has five justices who ran as Democrats—tends to be slightly deferential to Commonwealth Court decisions, Aagaard said.

But that may matter less in this case because the RGGI matter turns on an interpretation of the law, rather than factual findings, he said.

In a best-case scenario for the Wolf forces, the Supreme Court would hold the Commonwealth Court’s decision in abeyance until it rules on the matter itself. It could, however, remand the decision back to the lower court. It could also decide not to take on the matter, opting instead to wait for the lower court to rule at trial, according to Aagaard.

Parallels With SCOTUS

To state Sen. Gene Yaw (R), chair of the Senate Environmental Resources and Energy Committee and a party to one of the cases, Wojcik’s injunction parallels the US Supreme Court’s recent finding that the Environmental Protection Agency doesn’t have Congress’ permission to regulate on a broad, sector-wide basis under the Clean Air Act.

“When the Supreme Court decision came out, that enhanced my feeling of strength in this,” Yaw said. “The governor is relying on supposed statutory language that’s broad enough to give him the authority. I think the argument is certainly persuasive that the governor is trying to do the same thing the Supreme Court rejected for the federal government.”

RGGI’s member states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.

Virginia Gov. Glenn Youngkin (R) signed an executive order upon taking office in January calling for a reevaluation of the state’s participation in the program.

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com