GenOn Mid-Atlantic, LLC v. Montgomery County, Maryland

The Fourth Circuit held that the federal Tax Injunction Act does not prevent the owner of a power plant from challenging a county excise tax on carbon dioxide emissions which is only levied on the plant. The court, overturning a district court decision which held that the county fee was a tax and the power plant was thus barred from challenging it in federal court by the Tax Injunction Act, held that the fee was actually a “punitive regulatory matter” and that single entities subject to such punitive financial strikes should be able to challenge them in federal court.

An electric utility filed a lawsuit against Montgomery County, Maryland, challenging its tax on local carbon dioxide emitters that effectively applied only to the utility’s coal-fired power plant. In May 2010, the county enacted a law that imposed a $5-per-ton tax on carbon dioxide emissions from stationary sources emitting more than one million tons of carbon dioxide annually. The lawsuit contended that the tax constituted a bill of attainder and that it violated the Fourteenth Amendment’s guarantee of equal protection and the Eighth Amendment’s ban on excessive fines.