Pennsylvania cannot join 11 other states in a program aimed at reducing emissions according to a court ruling handed down last week. 

The state attempted to join the Regional Greenhouse Gas Initiative, commonly referred to as RGGI, after a 2019 executive order by former Democratic Governor Tom Wolf. Now, the Commonwealth Court has ruled it unconstitutional in two separate cases. 

RGGI is a cap-and-trade program, which essentially means power plants would pay for the emissions they put out. The state would set a cap for the amount of carbon dioxide released by all power plants. Then, power plants would purchase emissions at an auction, buying the tonnage they need to operate. The ultimate goal in cap-and-trade programs like RGGI is to slowly lower the amount of emissions allowed each year. 

Both of the court cases center around the mandatory purchase of emissions by power plants. Critics argue that RGGI is a tax, a problem because taxes cannot be enacted by the executive branch in Pennsylvania, only by the General Assembly. Proponents of RGGI say the program is simply a fee. 

The difference may seem small, but for programs like RGGI, the fee versus tax argument is life or death. Anything that raises more money than needed to offset the costs is a tax, according to the Tax Foundation, a nonprofit, non-partisan tax policy group

Judge Michael H. Wojcik, the Commonwealth Court judge who wrote the majority opinion in one of the cases, noted that RGGI was expected to triple the Department of Environmental Protection’s annual state budget in just a year. 

In both of the cases brought, judges ruled RGGI as a tax and therefore unconstitutional. 

Critics of RGGI say the decision was obvious because cap-and-trade programs are a mandatory price businesses (power plants) must pay to operate. Proponents of RGGI say under the federal Clean Air Act, the state can regulate energy companies. They also say it’s a fee because it’s simply an emission limit on companies. 

The first case, brought by a group of legislators, said the Wolf administration overstepped its power by enacting RGGI because it’s a tax. The other case, brought by energy companies and others with energy interests, focuses specifically on the tax versus fee designation.

The court cases would become moot if the General Assembly decided to enact RGGI; however, in a session riddled with a separate court mandate to fix school funding in the state and a still-incomplete budget, a climate change initiative seems to have taken the back burner. RGGI would also have to be passed in both chambers, and the firmly Republican Senate has repeatedly stated its opposition to the bill—part of the reason Wolf decided to join through an executive order in 2019. Democrats only have a one-seat majority in the House and would need full-party support on RGGI. 

Democratic Governor Josh Shapiro has not taken a firm stance on RGGI. Shapiro’s only action towards the initiative thus far was to create a work group to examine RGGI’s effectiveness. The group could not come to a complete conclusion with full support of all members but said it would support a cap-and-trade program. 

The Shapiro administration has 30 days to appeal the Commonwealth Court’s decision to the state supreme court. An appeal would not guarantee certain victory. The only surefire way to enact RGGI would be to have the General Assembly pass it because the fee versus tax argument would become irrelevant. 

States already in RGGI include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia.