The Future of Pennsylvania’s RGGI Rule Remains Uncertain
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Mining
As previously reported in Vol. 39, No. 2 (2022) of this Newsletter, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule, or RGGI Rule, which links the commonwealth’s cap-and-trade program to RGGI, was published in the Pennsylvania Bulletin in April 2022. See 52 Pa. Bull. 2471 (Apr. 23, 2022). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid.
Three legal challenges were filed in response to the publication of the final rule. On April 25, 2022, owners of coal-fired power plants and other stakeholders filed a petition for review and an application for special relief in the form of a temporary injunction, which was granted. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022); Vol. 39, No. 3 (2022) of this Newsletter. Briefing has been filed and the court heard 30 minutes of oral argument in the case on November 16, 2022. On March 24, 2023, the Supreme Court of Pennsylvania granted requests to dismiss the preliminary injunction because the petitioners had failed to pay the bond required to secure the preliminary injunction. Petitioner Bowfin KeyCon Holdings, LLC, which has an interest in some of the subject coal-fired power plants, filed an appeal of the bond amount in summer 2022, claiming that the bond was infeasible or impossible to pay and asked the court to reduce it to a negligible amount. Despite the end of the preliminary injunction, the court may still make a decision on the merits in the coming months.
The acting Secretary of PADEP filed suit in the Pennsylvania Commonwealth Court against the Pennsylvania Legislative Reference Bureau (Bureau) in February 2022, seeking to compel the Bureau to publish the Environmental Quality Board’s final-form rulemaking for the CO2 Budget Trading Program in the Pennsylvania Bulletin. See McDonnell v. Pa. Legis. Reference Bureau, No. 41 MD 2022 (Pa. Commw. Ct. filed Feb. 3, 2022). By law, the House and Senate each have 30 calendar days or 10 legislative days—whichever is longer—to vote on a disapproval resolution to stop a new rule from taking effect. PADEP argued that the periods should have run simultaneously for the House and Senate, rather than one after the other, and the Bureau’s improper interpretation delayed issuance of the rule. On January 19, 2023, the commonwealth court dismissed the case as moot, as the rule was published in April 2022, without ruling on the merits. See Vol. 40, No. 1 (2023) of this Newsletter.
Additionally, on July 13, 2022, natural gas companies Calpine Corp., Tenaska Westmoreland Management LLC, and Fairless Energy LLC filed a third legal challenge to the rule with arguments similar to those brought in the other two cases. See Calpine Corp. v. PADEP, No. 357 MD 2022 (Pa. Commw. Ct. filed July 12, 2022). Constellation Energy Corporation and Constellation Energy Generation LLC petitioned to intervene in the case, but later filed a joint motion to stay intervention proceedings on October 31, 2022, which the court granted. The stay on the application for intervention remains in place. Briefing in this case has been filed and oral argument was heard on February 8, 2023. This case is still pending.
The state’s future plans for its RGGI regulation remain unclear, but it is unlikely to take action prior to a decision on the merits in the two remaining pending cases. Further information regarding the rule and the history of the rulemaking can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.
PADEP Holds Public Meetings Regarding Climate Action for Environmental Justice Communities
In April 2023, the Pennsylvania Department of Environmental Protection’s (PADEP) Energy Programs Office, local partners, and its contractor, Preservation Design Partnership, hosted meetings with leaders and residents of environmental justice (EJ) communities around the state. The meetings were intended as listening sessions to learn how PADEP can assist Pennsylvania’s EJ communities become more sustainable and prepare for the effects of climate change. The meetings also provided information on the Energy Programs Office’s Climate Action for Environmental Justice Communities Program and provided information on additional available resources. Sessions were held in Meadville, Pittsburgh, Scranton, Reading, Harrisburg, Norristown, and Philadelphia, and also provided for virtual attendance. Discussions covered a wide range of topics including fuel source strategies, land use regulations and building codes, infrastructure, and public health.
During its Philadelphia session, the Energy Programs Office representative indicated that PADEP plans to be more intentional about the inclusion of EJ in the Pennsylvania Climate Action Plan, which is updated every three years (the last update was released in 2021). In addition, what they learn from the meetings will inform other program development, such as grants. Lastly, the Energy Programs Office plans to incorporate community feedback from the meetings in the Guide to Climate Action for Environmental Justice Communities that is currently under development. The guide is intended to inform PADEP’s climate action planning to ensure that strategies produce meaningful benefits in EJ communities and adequately prioritize state and federal funding. PADEP anticipates releasing the guide in summer 2023.
Pennsylvania Supreme Court Remands EHB Fees Case
On February 22, 2023, the Pennsylvania Supreme Court vacated and remanded a Pennsylvania Commonwealth Court decision affirming the Environmental Hearing Board’s (EHB) denial of legal fees to parties challenging environmental permits issued by the Pennsylvania Department of Environmental Protection (PADEP). Clean Air Council v. PADEP, Nos. 73 MAP 2021, 74 MAP 2021, slip op. (Pa. Feb. 22, 2023). In separate suits, environmental groups and landowners challenged permits issued to Sunoco Pipeline, L.P., for the Mariner East 2 pipeline and later sued for legal fees. The EHB ruled that the environmental groups and landowners could not compel reimbursement of their legal fees because such reimbursement is allowed only in cases in which a party’s bad faith in challenging or defending a PADEP permit is established and no such bad faith occurred. The commonwealth court affirmed. The supreme court disagreed, concluding that the bad-faith standard was incompatible with the Pennsylvania Clean Streams Law and that the EHB has taken an overbroad reading of applicable case law to support its position.
Section 307(b) of the Clean Streams Law, 35 Pa. Stat. § 691.307(b), provides that upon the request of any party, the EHB “may in its discretion order the payment of costs and attorney’s fees it determines to have been reasonably incurred by such party in proceedings pursuant to this act.” The supreme court concluded that the Clean Streams Law “neither limits nor guides the [EHB’s] discretion,” but that the EHB has “opted on its own to cabin that discretion.” Clean Air Council, slip op. at 2. It is possible that the supreme court’s decision could result in permittees not only paying to defend legal challenges to their permits, but also paying the legal expenses incurred by the parties challenging their permits. It is yet to be seen, however, how the EHB will apply the supreme court’s decision.
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