Preliminary Injunction Standard; CO2 Emission Allowances Rulemaking; Legislative Standing
Dep’t of Envtl. Prot. v. Pa. Legislative Reference Bureau, Order granting Preliminary Injunction, No. 41 MD 2022 (Pa. Cmwlth. July 8, 2022), direct appeal, appeal dockets 79, 85, and 87 MAP 2022
This case involves direct appeals from the Commonwealth Court’s July 8, 2022 grant of a preliminary injunction preventing promulgation and enforcement of regulations developed during Governor Wolf’s administration that would have provided for Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI). “The RGGI requires electric generation plants (covered sources) located in participating states to purchase one allowance for each ton of carbon dioxide (CO2) they emit. Each state participating in the RGGI establishes a declining CO2 budget that effectively limits the total CO2 that the covered sources are permitted to emit. The allowances are auctioned off quarterly by RGGI, Inc., and participating states receive the proceeds from the auction. The Rulemaking provides that Pennsylvania’s proceeds will be used in accordance with the Air Pollution Control Act (APCA) and the DEP’s regulations. In 2021, the participating states received $926 million from the allowance auctions.” Slip op. at 5-6.
Although the case commenced as the Department of Environmental Resources’ (DEP) action for peremptory mandamus to compel the Pennsylvania Legislative Reference Bureau (LRB) to publish the regulations, the preliminary injunction now at issue came at the request of the leaders of the Pennsylvania Senate who intervened and successfully requested the court to enjoin LRB from publishing the regulations and DEP from enforcing the regulations.
Remarking that the case “has morphed into an action pitting the actions of one branch of state government against what others characterize as the exclusive constitutional powers of another,” Commonwealth Court Judge Wojcik summarized the relevant procedural and factual history as follows:
On February 3, 2022, Secretary McDonnell filed his [PFR] against [LRB Respondents]. [PFR] ¶¶12-13; see also April 20, 2022, Joint Stipulation of Material Facts by All Parties (4/20/22 Stip.) ¶¶2, 3, 4. The Pennsylvania Code and the Pennsylvania Bulletin are located within the offices of the LRB. [PFR] ¶13. The [PFR] alleges that on November 29, 2021, the Department of Environmental Protection (DEP), acting on behalf of the Environmental Quality Board (EQB), submitted to the LRB for publication in the Pennsylvania Bulletin the “Trading Program Regulation” (Rulemaking). [PFR] ¶35. Ms. Mendelsohn, although acknowledging submission of the Rulemaking, refused to publish it because the period during which the House of Representatives had to disapprove of the Rulemaking had not yet expired. Id. ¶36. On December 10, 2021, Secretary McDonnell again submitted the Rulemaking for publication. Id. ¶37. Ms. Mendelsohn and Mr. DeLiberato responded that the Rulemaking could not be published because the House of Representatives adopted a December 15, 2021 resolution disapproving the Rulemaking. Id. ¶38.
The [PFR] avers that the Offices of General Counsel and of the Attorney General approved the Rulemaking as to form and legality under the Commonwealth Attorneys Act and the Commonwealth Documents Law, on July 26, 2021, and November 24, 2021, respectively. Id. ¶¶31, 34. Further, the Independent Regulatory Review Commission (IRRC) approved the Rulemaking on September 1, 2021, pursuant to the Regulatory Review Act (RRA). Id. ¶32. The [PFR] acknowledges that once the approvals were obtained, the General Assembly had time in which it could disapprove the Rulemaking. Id. ¶¶74, 75. Pursuant to Section 7(d) of the RRA, after review by the IRRC, the standing committee of either or both the House of Representatives and the Senate, within 14 days, may report to the House of Representatives or the Senate a concurrent resolution disapproving the regulation at issue. See generally id. ¶76. In this case, the Senate Environmental Resources and Energy Committee reported Senate Concurrent Regulatory Review Resolution 1 (SCRRR1) disapproving the Rulemaking on September 14, 2021. Id. ¶77. According to the [PFR], once SCRRR1 was reported from the Senate committee, the House of Representatives and the Senate had 10 legislative days or 30 calendar days, whichever is longer, to adopt SCRRR1. Id. ¶75. For its part, the Senate approved SCRRR1 on October 27, 2021, within the 10-legislative-day limitation. Id. ¶¶81-83. The House of Representatives, however, did not adopt SCRRR1 until December 15, 2021. Id. ¶89. Secretary McDonnell claims that the Rulemaking was approved by operation of law on October 14, 2021, because the House of Representatives failed to act on SCRRR1 within 10 legislative or 30 calendar days of September 14, 2021. Id. ¶88. In other words, the House of Representatives and the Senate must concurrently consider a standing committee’s resolution, regardless of which chamber reports the resolution. The House of Representatives’ failure to act within the statutory period resulted in the approval of the Rulemaking under Section 7(d) of the RRA by operation of law, and, therefore, the LRB Respondents improperly refused its publication. Id.
The [PFR] seeks mandamus relief, that is, an order directing publication of the Rulemaking in the Pennsylvania Bulletin. In the claim for declaratory relief, Secretary McDonnell requests an order declaring that the LRB Respondents’ refusal to publish the Rulemaking is contrary to law, the Rulemaking must be published in the Pennsylvania Bulletin and the Pennsylvania Code, and the Rulemaking was deemed approved by the General Assembly. [PFR] at 24. Secretary McDonnell claims that the LRB Respondents’ interpretation of Section 7(d) of the RRA, that the House of Representatives and the Senate review committee resolutions consecutively rather than concurrently, is incorrect.
Simultaneously with the filing of the [PFR], Secretary McDonnell filed [the ASR] setting forth allegations supporting his claim of a clear right to relief and entitlement to judgment as a matter of law. The [ASR] explains that expedited review by the Court was required because the Rulemaking provides for Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI). The RGGI requires electric generation plants (covered sources) located in participating states to purchase one allowance for each ton of carbon dioxide (CO2) they emit. Each state participating in the RGGI establishes a declining CO2 budget that effectively limits the total CO2 that the covered sources are permitted to emit. The allowances are auctioned off quarterly by RGGI, Inc., and participating states receive the proceeds from the auction. The Rulemaking provides that Pennsylvania’s proceeds will be used in accordance with the Air Pollution Control Act (APCA) and the DEP’s regulations. In 2021, the participating states received $926 million from the allowance auctions. According to the [ASR], the LRB Respondents’ refusal to publish the Rulemaking has delayed Pennsylvania’s entry in the RGGI and resulted in a loss of approximately $162 million in auction proceeds and associated air pollution reduction.
The LRB Respondents filed an Answer opposing Secretary McDonnell’s [ASR]. Summarizing, they observe that the parties have a fundamental disagreement in the interpretation of Section 7(d) of the RRA and the timing/procedure for General Assembly review of resolutions. The interpretation of Section 7(d) is an issue of first impression for this Court, and the Court’s considered disposition of the issue is not amenable to expedited review. Secretary McDonnell does not have a clear right to relief regarding his interpretation of Section 7(d) of the RRA, so neither summary relief nor mandamus relief is appropriate.
The LRB Respondents filed [the POs] to the [PFR] asserting a demurrer. According to the [POs], Secretary McDonnell does not understand the legislative review process for resolutions because a committee may only report a resolution to its own chamber. If the committee’s chamber votes to approve the resolution, it is submitted to the other chamber for consideration. Thus, consideration of resolutions is consecutive rather than concurrent.
On February 24, 2022, [the House] filed an Application for Leave to Intervene. Consistent with the Pennsylvania Rules of Civil Procedure, the House attached to its Application for Leave to Intervene its [POs] to the [PFR] and an Answer to Secretary McDonnell’s [ASR]. In its [POs], the House objects to the [PFR] on the bases that (1) a controversy did not exist because Governor Tom Wolf vetoed SCRRR1, and the Senate had yet[, and ultimately failed,] to override the veto; (2) an adequate remedy in the form of a declaratory judgment exists, and, therefore, Secretary McDonnell has failed to state a claim for mandamus; (3) Secretary McDonnell fails to state a claim for declaratory relief because the plain language of Section 7(d) of the RRA grants each chamber the longer of 10 legislative days or 30 calendar days to adopt a concurrent resolution either in the first instance upon reporting from that chamber’s committee or upon referral from the other chamber; and (4) Secretary McDonnell’s claims are barred by laches or waiver. The House asserts that Secretary McDonnell waited over three months before filing his [PFR] in this Court despite alleging that the Rulemaking was approved by operation of law on October 14, 2021. The House’s Answer to Secretary McDonnell’s [ASR] refers the Court to its supporting brief.
Slip op. at 2-8 (cleaned up).
The Senate leaders (collectively, the Senate) then sought leave to intervene, filed counterclaims, which, as characterized by Judge Wojcik, took the case “in a new direction,” and sought a preliminary injunction preventing DEP and LRB from taking any further action to promulgate, publish, codify or enforce the regulations. As Judge Wojcik summarized the Senate’s legal theories:
The Senate’s first Counterclaim is that Secretary McDonnell violated article II, section 1 and article III, section 912 of the Pennsylvania Constitution when he submitted the Rulemaking to the LRB for publication before the House of Representatives had time to consider SCRRR1. According to the Senate, Secretary McDonnell’s action was an attempt to sidestep article III, section 9 and usurp the General Assembly’s authority in violation of article II, section 1. The second Senate Counterclaim alleges that the Rulemaking is an ultra vires action in violation of the APCA. The APCA, although authorizing the DEP to promulgate regulations, sets forth bright-line limits on the DEP’s powers. By sending the Rulemaking for publication, the DEP took significant legal action despite clear statutory prohibitions to the contrary.
The Senate’s third Counterclaim asserts that the Rulemaking is an interstate compact or agreement, which is within the General Assembly’s exclusive constitutional authority to enter. In addition to this power being constitutionally reserved to the General Assembly, Section 4(24) of the APCA specially states that the DEP may formulate interstate air pollution control compacts or agreements for submission to the General Assembly. 35 P.S. § 4004(24). In its fourth Counterclaim, the Senate alleges that the Rulemaking is a tax and that the imposition of taxes is within the exclusive authority of the General Assembly. The Senate recognizes that the APCA allows for the collection of fines, penalties, and fees, including fees to cover the direct and indirect costs of administering the APCA. Here, however, the Rulemaking amounts to a tax. The courts have held that a fee may constitute a tax where the revenue generated exceeds the costs reasonably necessary to operate the program. The Senate references the 2021-22 budget for the DEP of $169 million and notes yearly participation in the RGGI could generate over $650 million. Finally, the Senate’s fifth Counterclaim is that the DEP failed to comply with the Commonwealth Documents Law and the APCA because it failed to hold “in-person” hearings. The DEP held 10 virtual hearings and the virtual hearings do not satisfy the statutory requirement of “in-person” hearings.
Slip op. at 8 (emphasis in original).
Following an evidentiary hearing and briefing, Judge Wojcik found that the Senate had met the standards for issuance of a preliminary injunction and granted the request.. First, Judge Wojcik found that the Senate proved that an injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages, reasoning that:
Our research failed to disclose any case law stating that a violation of the Pennsylvania Constitution is irreparable harm per se. Regardless, it is black letter law that one branch of the government may not intrude on the powers of other branches. See Renner v. Court of Common Pleas of Lehigh County, 234 A.3d 411, 419 (Pa. 2020) (“The rationale underlying this separation of powers is that it prevents one branch of the government from exercising, infringing upon, or usurping the powers of the other two branches” and “[t]hus, to ‘avert the danger inherent in the concentration of power in any single branch or body,’ no branch may exercise the functions delegated to another branch.”) (citations omitted). It seems obvious, therefore, that exercising the powers and duties of another branch of the government is irreparable harm to the offended branch. To that end, and as discussed in greater detail below, the Senate has raised a substantial legal question as to whether the Rulemaking constitutes a tax as opposed to, regulatory fee.
Slip op. at 16-17.
Second, the court found that “because the Senate has shown irreparable harm per se, we do not need to balance the harms where there is a statutory, or in this case, an alleged constitutional, violation,” but further reasoned that:
Even accepting for preliminary injunction purposes that implementation of the Rulemaking would result in an immediate reduction in CO2 emissions from Pennsylvania’s covered sources, we conclude that implementation and enforcement of an invalid rulemaking would cause greater harm if the Rulemaking is determined to violate the Constitution. A violation of the law cannot benefit the public interest. Pennsylvania Public Utility Commission v. Israel, 52 A.2d 317, 321 (Pa. 1947) (“The argument that a violation of the law [or Constitution] can be a benefit to the public is without merit.”). We further conclude that an injunction is reasonably suited to abate the effects of the Rulemaking should it be deemed invalid. It would not be prudent to enforce the Rulemaking, with its attendant duties on the DEP and financial and administrative impacts on covered sources while the challenges to the Rulemaking raise substantial legal issues.
Slip op. at 19-20 (footnotes omitted).
Third, the court found that a preliminary injunction would restore the parties to the status quo, reasoning that:
…the Senate’s requested relief is broad enough to encompass implementation and enforcement of the Rulemaking post-publication. In its prayer for relief, the Senate requests the Court to “preliminary enjoin all government officials employed by [the DEP], the LRB, and the [Pennsylvania Code], including [Secretary McDonnell] and [the LRB Respondents,] from taking any further action to promulgate, publish, or otherwise codify the [Regulation].”
Slip op. at 20-21.
Fourth, the court found that the Senate satisfied the clear right to relief and likelihood of prevailing on the merits factor because two of the legal theories advanced raise “substantial legal questions.” Specifically, the court found that the Senate’s claim that DEP’s act of sending the Rulemaking to the LRB for publication while a concurrent resolution disapproving the Rulemaking remained pending was unlawful has merit, and that the claim that the regulations usurp the authority of the General Assembly to levy taxes under the Pennsylvania Constitution has merit. The court did not view the Senate’s other legal theories as raising substantial legal questions.
Judge Wojcik also noted that although DEP had challenged the Senate’s standing, he would not consider the issue, explaining:
Secretary McDonnell raised the issue of the Senate’s standing to pursue its Counterclaims and Preliminary Injunction Application after the April 23, 2022, publication of the Rulemaking. Although Secretary McDonnell filed his Reply to the Senate’s New Matter and Answer to the Senate’s Counterclaims on March 30, 2022, and his Answer to the House’s Preliminary Objections on April 4, 2022, before publication of the Rulemaking, he has not sought leave of court to amend his responsive pleadings to challenge the standing of the House or the Senate post-publication. See Pa. R.Civ.P. 1028(a)(5) (“Preliminary objections may be filed to any pleading and are limited to the following grounds: …. (5) lack of capacity to sue ….”) (emphasis added); Pa. R.Civ.P. 1017 (identifying pleadings as a complaint and answer thereto, a reply to new matter, counterclaim, or cross-claim; a counter-reply if the reply to a counterclaim or cross-claim contains new matter, and preliminary objections). Thus, we will not consider Secretary McDonnell’s argument on standing.
Slip op. at 14 n.20. Accordingly, the court entered an order enjoining the LRB from proceeding to codification of the CO2 Budget Trading Program regulations in the Pennsylvania Code, and enjoining DEP from implementing and enforcing them.
The case is now before the Supreme Court on direct appeal, and the Supreme Court has granted oral argument, Docket Sheet at 15, limited to the following issues as phrased by the appellant:
1. Did Commonwealth Court err in determining that Senators raised a substantial legal question with respect to whether RGGI Rulemaking’s CO2 emission allowances are taxes, not fees?
2. Did Commonwealth Court err in determining that Senators demonstrated irreparable harm?
3. Did Commonwealth Court err in failing to properly balance the harms alleged by Senators with the harms the Commonwealth demonstrated would occur if the RGGI Regulation were enjoined?
4. Did Commonwealth Court err in failing to properly assess the public interest in implementing and enforcing the RGGI Regulation?
5. Did Commonwealth Court err in determining that enjoining the RGGI Regulation would abate the harms alleged by Senate Intervenors?
The Supreme Court deferred consideration of jurisdiction and the remaining issues, and will not entertain them at oral argument. The court also approved the Senate Intervenors’ Application for Order Confirming Substitution of Parties and Amending Caption in the appeal docketed at 79 MAP 2022 “without prejudice to any party’s ability to challenge legislative standing, which will be decided on the briefs. See Pa.R.A.P. 502(c).”