Shirley v. Pennsylvania Legislative Reference Bureau

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The Pennsylvania Supreme Court reversed the denial of nonprofit organizations’ application to intervene in litigation challenging the Pennsylvania Department of Environmental Protection (PADEP) regulation implementing Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI), a multistate cap-and-trade program for carbon dioxide emissions from power plants. The organizations sought to defend the RGGI regulation under the Pennsylvania Constitution’s Environmental Rights Amendment (ERA). The Supreme Court first concluded that it had jurisdiction over the organizations’ appeal and that the appeal was not moot. On the merits, the Supreme Court agreed with the Commonwealth Court that the nonprofit organizations established “a substantial, direct and immediate interest in the outcome of the litigation” entitling them to intervention based on alleged harms to the interests of their members that would be addressed by the RGGI regulation. Unlike the Commonwealth Court, however, the Supreme Court further concluded that PADEP did not adequately represent the organizations’ interests. The Supreme Court found that the Commonwealth Court’s analysis of the adequate representation issue unreasonably omitted the fact that PADEP “never once invoked the ERA in support of the RGGI Regulation.” The Supreme Court found that, “whatever its ultimate merit,” the ERA defense “presents a salient and nonfrivolous argument regarding the central question in this litigation of whether the RGGI Regulation is an unconstitutional tax.” The Supreme Court dismissed the organizations’ separate appeal of the Commonwealth Court’s granting of a preliminary injunction of the RGGI regulation. The Supreme Court said the Commonwealth Court’s subsequent permanent injunction rendered the appeal moot.

The Pennsylvania Commonwealth Court declared that the Pennsylvania rulemaking that made Pennsylvania a RGGI participant was void because it constituted an unconstitutional tax imposed by the Pennsylvania Department of Environmental Protection and Environmental Quality Board. The court found that it was undisputed that “significant monetary benefits” were anticipated from participation in the RGGI carbon dioxide allowance auctions; that there was no cited authority for the agencies to obtain or retain auction proceeds for allowances purchased by non-Pennsylvania covered sources, which are not subject to the agencies’ regulatory authority and “not tethered to CO2 emissions in Pennsylvania”; that only 6% of proceeds would be attributable to the costs of administering the program; and that the auction proceeds would exceed total funds appropriated to the agencies “by nearly threefold.” The court found that participation in RGGI would thus generate moneys “grossly disproportionate” to oversight costs and annual regulatory needs and relate to activities beyond the agencies’ jurisdiction. The court held that the regulations therefore were invalid and unenforceable. The court said that RGGI participation “may only be achieved through legislation duly enacted by the Pennsylvania General Assembly.” Three judges did not participate in the case, and one judge dissented, writing that in her view there were genuine issues of material fact at this stage regarding whether the rulemaking established a fee or a tax.

The Pennsylvania Commonwealth Court dismissed as moot a petition filed by the Secretary of the Pennsylvania Department of Environmental Protection in February 2022 seeking to compel the Pennsylvania Legislative Reference Bureau respondents to publish a rulemaking concerning Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI). The court noted that it was undisputed that the questions of law raised by the petition were moot due to the subsequent publication of the rulemaking. The court further found that no exception to the mootness exception applied. The court said that the case raised “remarkable” legal questions of first impression but that any determination would be advisory. The court therefore dismissed the petition, as well as related preliminary objections and the Secretary’s application for expedited special and summary relief. The court said counterclaims by Pennsylvania Senators who intervened “remain extant.” Those claims challenged the validity of the RGGI regulation. In addition, separate challenges to the RGGI regulation are still pending.

Acting Secretary Ziadeh appealed to the Pennsylvania Supreme Court, which temporarily resulted in a automatic stay of the preliminary injunction, but the Commonwealth Court vacated the stay on July 25, 2022.