With IRRC approval, RGGI clears final regulatory hurdle

Governor Tom Wolf’s unilateral push to join a multistate program limiting CO2 emissions from fossil fuel-powered electric generators cleared its last regulatory hurdle on September 1 when the Independent Regulatory Review Commission (IRRC) voted along party lines to approve a rulemaking enabling Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI).

Although the Republican-led legislature will attempt to block implementation via a concurrent resolution disapproving the rulemaking, it’s more likely that the courts will ultimately decide the fate of the regulations.

IRRC’s deliberation on the regulation lasted the entire day. The commission repeatedly made it clear what its authority is when reviewing regulations and specifically that IRRC does not rule on questions of a regulation’s constitutionality or the underlying policy. Before making its final decision, IRRC heard testimony from DEP regarding the specific proposal and why the Wolf administration is focused on reducing greenhouse gas emissions, and from members of the General Assembly, advocacy organizations and the general public advocating for and against the regulation. IRRC commissioners, in their questioning of DEP, sought clarification on the studies that were relied upon and how and when those studies were updated to account for the changes made to the regulation and how assumptions changed as the regulation progressed from a proposed regulation to a final regulation.

In the end, the regulation was approved by a vote of 3-2, with Commissioners Murray Ufberg (appointed by Governor Wolf), George Bedwick (appointed by the House Democratic Caucus) and Dennis Watson (appointed by the Senate Democratic Caucus) voting in favor of the proposal. Commissioners John Mizner (appointed by the Senate Republican Caucus) and John Soroko (appointed by the House Republican Caucus) voted to disapprove the regulation.

Prior to the final vote, a motion was made by Commissioner Soroko to disapprove the regulation. Soroko’s motion failed by a vote of 2-3. In support of the motion to disapprove the regulation, Commissioners Soroko and Mizner were concerned that DEP did not have the statutory authority to promulgate the regulation. Further, even if the department had the statutory authority, the commissioners expressed concern that the process by which the department developed the regulation was flawed and did not provide the public with an easy opportunity to participate in the public debate.

The vote allows Pennsylvania, through regulation, to join a multistate RGGI consortium, which sets a price and declining limits on carbon dioxide emissions from power plants. Under the cap-and-trade program, dozens of Pennsylvania power plants fueled by coal, oil and natural gas would be forced to buy hundreds of millions of dollars in credits in the coming years that the state could then spend on clean energy efforts.

PIOGA and other critics of Wolf’s RGGI push point out that Pennsylvania is the only state that has not sought legislative approval in order to join the 11-state consortium, that the fees imposed under the program amount to a tax that only the legislature has the power to levy and that with the use of more natural gas for generating electricity, Pennsylvania already met the governor’s stated goal of reducing CO2 levels by 26 percent between 2005 and 2016.

Reactions

PIOGA President and Executive Director Dan Weaver issued the following statement on the day of the IRRC vote:

“Today’s decision by the state Independent Regulatory Review Commission clearing the way for the Wolf Administration’s unilateral action to join the Regional Greenhouse Gas Initiative is disastrous for the hard-working people, families and communities in many Western Pennsylvania counties, as well as energy consumers throughout the Commonwealth. The administration has ignored months of calls from across the Commonwealth for legislative review and consideration of this program, which was the case in every state that has decided to join RGGI, which has to lead an objective observer to ask what Governor Wolf fears in allowing a review by an equal branch of government.

“PIOGA implores the General Assembly to continue to fight against this power grab and rejection of science and data by pursuing action through the third equal branch of government, our state court system.”

Republican legislative leaders had much the same reaction following the IRRC decision.

“For the first time in Pennsylvania’s history, a decision by the Independent Regulatory Review Commission has opened the door for Pennsylvania to join an interstate initiative without legislative approval,” said Senator Gene Yaw (R-Lycoming), who serves as chairman of the Senate Environmental Resources and Energy Committee. “Today’s decision by IRRC means Pennsylvania will lose control over our energy production, economic development, energy security and environmental protection. Instead of engaging with the General Assembly, the Wolf administration, with IRRC’s approval, will allow the decisions on these important matters to be determined by the likes of New York, New Jersey and other states who thumb their nose at Pennsylvania energy. To participate in RGGI is to ignore the positive environmental impacts that are taking place right here in Pennsylvania, which include a dramatic reduction in carbon emissions over the past two decades. Moreover, Pennsylvania will lose thousands of skilled and good paying jobs and untold millions of dollars in its tax base for CO2 emissions reductions stated to be less than 1 percent.”

Yaw added, “For a step of this magnitude, which affects consumers, business, industry and public policy, the state legislature should have been involved in the dialogue on joining RGGI. Instead, it was a unilateral action, and sadly, one that will have dire consequences.”

Representative Ryan Warner (R-Fayette/Westmoreland), a member of the House Environmental Resources and Energy Committee, commented: “There is no question if Pennsylvania is forced to join this multi-state compact, everyone will see higher energy bills and many of our friends and neighbors who make a living working in the energy industry will lose their jobs. The governor is once again ignoring the ramifications of his decisions and showing how out of touch he is with the people he is supposed to be serving.

“He is also showing–again–his disdain for our Constitution and the legislative process by trying to force membership in RGGI on his own and without the approval of the General Assembly. Every other state involved in RGGI is there because their legislatures approved it. This is imposing taxes without the consent of the people. Implementing a tax without the approval of this House and Senate is nothing short of a direct attack on democracy. In this Commonwealth and in the United States of America, laws are not created by bureaucrats and state departments. They are not created by governors. Laws are not created by courts. They are created by the democratically elected people of this Commonwealth.”

What’s next

The House Environmental Resources and Energy Committee met on September 2, the day after the IRRC vote, to adopt a concurrent resolution to disapprove the regulation, block its implementation and prohibit the DEP from further promulgating a regulation on RGGI. The proposed resolution will next be presented to the full House of Representatives for its consideration. The House and the Senate each have the greater of 30 calendar days or 10 legislative days to pass the concurrent resolution, which must be presented to Governor Wolf for his consideration. Legislative action is anticipated when the General Assembly returns to session later this month.

It is also expected that the governor will veto the resolution, thereby setting up a future legal challenge on the regulation and whether the Wolf administration has the legal authority to enter Pennsylvania into the Regional Greenhouse Gas Initiative.

Joint association comments focus on RGGI’s impact on conventional industry

An overlooked aspect of Governor Wolf’s push for Pennsylvania to join the Regional Greenhouse Gas Initiative (RGGI) is the impact the CO2 cap-and-trade program would have on the state’s conventional oil and gas operators. In anticipation of the September 1 vote on RGGI regulations by the Independent Regulatory Review Commission (RGGI), PIOGA along with the Pennsylvania Independent Petroleum Producers (PIPP) and the Pennsylvania Grade Crude Oil Coalition (PGCC) submitted comments expressing concerns not only about the rulemaking itself but also that the conventional industry was snubbed by the Department of Environmental Protection during the regulatory process.

PIOGA, PIPP and PCGG are the three trade associations represented on the Pennsylvania Grade Crude Development Advisory Council (CDAC), created by Act 52 of 2016 and tasked with, among other things, assisting DEP and providing input on “new departmental policy that will impact the conventional oil and gas industry…including economic consequences.”  At a recent CDAC meeting, a DEP representative said he did not believe RGGI would impact conventional operators and the department did not intend to involve the council in the process of written comments.

The associations’ comments to IRRC point out, however, that the RGGI CO2 emissions fees imposed on natural gas-powered electricity generators would discourage the continued operation of these facilities, as well as the development of new facilities.

“Such tipping of the scales by the rulemaking will have a direct ‘economic consequence’ upon the conventional oil and gas industry by diminishing the market for the sale of natural gas in Pennsylvania,” the joint comments stated. “Given that the rulemaking is intended to raise over $2 billion in the span of less than ten years the harmful economic consequence  wrought upon the conventional oil and gas industry will be both swift and severe.”

Because of such impacts, the associations pointed out, the rulemaking falls squarely under Act 52’s obligation for DEP to involve CDAC.

The PIOGA/PGCC/PIPP comments also emphasized the crucial role natural gas plays in the electricity generation mix and the role that the increased use of natural gas in generating electricity has played in reducing Pennsylvania’s greenhouse gas emissions. Between 2005 and 2018, the state’s CO2 emissions fell by 33 percent.

“For these reasons, it is the position of PGCC, PIOGA and PIPP that there is no demonstrated need to reduce the amount of CO2 emissions by imposing emission fees upon natural gas-powered electricity generation in Pennsylvania. Indeed, the preceding facts show that natural gas is a remarkable and reliable energy source. The rationale to discourage the use of such a remarkable and reliable energy source via the imposition of CO2 emissions fees has not been demonstrated,” the three associations concluded.

>> Return to the Latest News and Blog index page >>

---

Want to continue to get all the insider oil and gas news? Become a PIOGA member and you’ll get access to The PIOGA Press monthly newsletter, the PIOGA eWeekly e-newsletter and many other member benefits. Click here to learn more and join today!