Ziadeh v. Pennsylvania Legislative Reference Bureau

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.

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The court denied applications to intervene by Constellation Energy Corporation and Constellation Energy Generation, LLC and by environmental groups.

The Pennsylvania Commonwealth Court granted Pennsylvania State Senators’ (Senate) request for a preliminary injunction blocking the Pennsylvania Department of Environmental Protection from implementing and enforcing regulations providing for Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI). RGGI participating states establish carbon dioxide budgets for power plants, and covered sources must acquire allowances to cover their emissions. RGGI, Inc. conducts quarterly auctions for the allowances, and proceeds go to participating states. The court found that the Senate had demonstrated irreparable harm per se by raising a substantial legal question as to whether the regulations constituted a tax requiring legislative approval as opposed to a regulatory fee. The court further found that implementation and enforcement of invalid regulations would cause greater harm even if implementation of the regulations would result in “immediate reduction” of carbon dioxide emissions from covered sources. In addition, the court found that the preliminary injunction would restore the status quo and that the Senate had showed a clear right to relief by raising substantial legal questions about separation of powers issues related to the Regulatory Review Act, as well as concerning whether the allowance auction proceeds were an unconstitutional tax. The court found, however, that the Senate did not raise substantial legal questions regarding whether the regulations exceeded authority granted by the Air Pollution Control Act, whether the regulations constituted an interstate compact or agreement in violation of the Pennsylvania Constitution, or whether the administrative process through which the regulations were adopted was lawful.