Climate Change Petition Calls for Cap-and-Trade Program in Pennsylvania

December 13, 2018
Thomas M. Duncan
MGKF News Flash

On November 27, 2018, a group of over sixty individuals and organizations, including environmental groups and academics, submitted a rulemaking petition requesting that the Pennsylvania Environmental Quality Board (“EQB”) establish a cap-and-trade program to reduce greenhouse gas (“GHG”) emissions in Pennsylvania.  The Associated Press reported last week that Governor Wolf is considering whether to support the petition.

The proposed Pennsylvania cap-and-trade program, which is modeled off of California’s existing program, would cap GHG emissions from certain categories of sources, with the cap declining each year by 3 percent of 2016 emission levels.  This 3 percent reduction would ultimately result in net zero GHG emissions by 2052.  The Pennsylvania Department of Environmental Protection (“PADEP”) would distribute allowances equal to the cap, with each allowance equal to one metric ton of CO2 equivalent (“CO2e”).  Most of the allowances would be distributed through an auction.  After an auction is held and allowances are distributed, those allowances could be freely traded in an open market.  The auction would be subject to a reserve price of $10 per ton in 2020, increasing 10 percent plus inflation each year.  Three categories of sources would be required to obtain and surrender their allowances each year and participate in the auction:

(1) Sources that are required to report their direct emissions under EPA’s Mandatory Greenhouse Gas Reporting Rule would be required annually to surrender a number of allowances equal to their total annual GHG emissions (in CO2e) attributable to Pennsylvania sources.  Covered sources could include operators of facilities in Pennsylvania that have one or more of the following processes or operations: cement production; cogeneration; glass production; hydrogen production; iron and steel production; lead production; lime manufacturing; nitric acid production; petroleum refining; pulp and paper manufacturing; self-generation of electricity; stationary combustion; coal mining; petroleum and natural gas production facilities; natural gas processing plants; natural gas transmissions compression facilities; underground natural gas storage facilities; liquefied natural gas storage, import and export facilities; and natural gas distribution facilities.

(2) Distributors of fossil fuels in Pennsylvania would be required annually to surrender a number of allowances equal to the total annual GHG emissions (in CO2e) that will be released into the ambient atmosphere from combustion of the fuels they distribute in Pennsylvania.

(3) Entities that deliver electricity to Pennsylvania generated with fossil fuels at facilities outside of Pennsylvania, and which are not subject to an equivalent program, would be required to surrender allowances equal to the emissions resulting from the generation of that electricity.

The program would provide some exemptions.  For example, sales of fossil fuels to entities required to surrender allowances based on their direct GHG emissions would be exempt from the requirement to surrender allowances.

The petitioners assert that the EQB has the authority and duty to promulgate the proposed regulation under Article I, Section 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment, as well as under the Pennsylvania Air Pollution Control Act (“APCA”).  The Environmental Rights Amendment states that the “people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment,” and further states that the Commonwealth is the trustee of Pennsylvania’s “public natural resources” and “shall conserve and maintain them for the benefit of all the people.”  The petitioners argue that a natural climate unaffected by human-caused climate disruption is protected under the amendment and that climate disruption further infringes upon other rights protected by the amendment, such as the right to clean air.  The petitioners seek to capitalize on a recent decision of the Pennsylvania Supreme Court in which the Court advanced an interpretation of the Environmental Rights Amendment that would expand its scope relative to prior case law.  See Pa. Envtl. Defense Found. v. Commonwealth, 161 A.3d 911 (Pa. 2017).  The petitioners also argue that the EQB has the authority to promulgate the proposed regulation under Section 5(a) of the APCA, which gives the EQB the power and duty to adopt “rules and regulations, for the prevention, control, reduction and abatement of air pollution.”  35 Pa. C.S. § 4005(a)(1).  The U.S. Supreme Court has in fact determined that GHGs qualify as air pollutants that must be regulated under the federal Clean Air Act, see Massachusetts v. Envtl. Prot. Agency, 549 U.S. 497 (2007), but the precise scope of the federal government’s authority under the Clean Air Act, and Pennsylvania’s authority under APCA, to regulate GHG emissions is still unclear.

This is the second petition submitted to the EQB in the past five years asking the EQB to establish a program to reduce GHG emissions.  The EQB, under the Corbett administration, rejected the prior petition, which had requested a 6 percent reduction in CO2 emissions per year until 2050, explaining that a plan to reduce GHG emissions requires a national solution and that PADEP is already taking some measures to reduce GHG emissions.  The Pennsylvania Commonwealth Court, in a decision that was ultimately affirmed by the Pennsylvania Supreme Court only three months before the Court’s decision PEDF, rejected a separate legal action brought by the prior petitioner and others against a number of Commonwealth agencies, including PADEP, which had sought mandamus and declaratory relief to compel the Commonwealth to establish a program to reduce GHG emissions.  The Commonwealth Court held that deciding whether to promulgate and implement comprehensive regulations addressing climate change is either a discretionary act of government officials or a task for the General Assembly, and therefore dismissed the action.  See Funk v. Wolf, 144 A.3d 228 (Pa. Cmwlth. 2016), aff’d, 158 A.3d 642 (Pa. 2017).

For more information, please contact Tom Duncan at or 484-430-2358.