Court Opinion

ID: 9894355
Source: CourtListenerOpinion
Date Created: 2023-11-01 15:10:11.568459+00
Date Added: 2024-06-11T09:09:48.071647
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Bowfin KeyCon Holdings, LLC;               :
Chief Power Finance II, LLC;               :
Chief Power Transfer Parent, LLC;          :
KeyCon Power Holdings, LLC;                :
GenOn Holdings, Inc.; Pennsylvania         :
Coal Alliance; United Mine Workers         :
of America; International Brotherhood      :
of Electrical Workers; and International   :
Brotherhood of Boilermakers, Iron Ship     :
Builders, Blacksmiths, Forgers and         :
Helpers,                                   :
                                           :
                         Petitioners       :
                                           :
               v.                          : No. 247 M.D. 2022
                                           : Argued: November 16, 2022
Pennsylvania Department of                 :
Environmental Protection                   :
and Pennsylvania Environmental             :
Quality Board,                             :
                                           :
                         Respondents       :

BEFORE:     HONORABLE RENÉE COHN JUBELIRER, President Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE ELLEN CEISLER, Judge
            HONORABLE LORI A. DUMAS, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE WOJCIK                                    FILED: November 1, 2023

            Before the Court are the cross-applications for summary relief (cross-
ASRs) filed on behalf of Bowfin KeyCon Holdings, LLC, Chief Power Finance II,
LLC, Chief Power Transfer Parent, LLC, KeyCon Power Holdings, LLC, GenOn
Holdings, Inc., Pennsylvania Coal Alliance, United Mine Workers of America,
International Brotherhood of Electrical Workers, and International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers (collectively,
Petitioners), and the Pennsylvania Department of Environmental Protection (DEP)
and the Pennsylvania Environmental Quality Board (EQB), regarding the April 25,
2022 Petition for Review (PFR) filed in our original jurisdiction by Petitioners
seeking declaratory and injunctive relief.              The PFR relates to Pennsylvania’s
participation in the Regional Greenhouse Gas Initiative (RGGI) based on regulations
promulgated by DEP and EQB, referred to as the “Trading Program Regulation”
(Rulemaking). Following careful review, we grant in part, and dismiss in part, the
cross-ASRs,1 and grant the requested declaratory and injunctive relief in part.

       1
          In considering the cross-ASRs, it is appropriate for this Court to take judicial notice of
our prior memorandum opinions and orders in this matter in Bowfin KeyCon Holdings, LLC v.
Pennsylvania Department of Environmental Protection (Pa. Cmwlth., No. 247 M.D. 2022, filed
July 8, 2022) (Bowfin), and in the related matter in Ziadeh v. Pennsylvania Legislative Reference
Bureau (Pa. Cmwlth., No. 41 M.D. 2022, filed January 19, 2023) (Ziadeh), and the various filings
on the dockets of these cases. See, e.g., Pa.R.E. 201(b)(2) (permitting courts to take judicial notice
of facts that may be “determined from sources whose accuracy cannot reasonably be questioned”);
Moss v. Pennsylvania Board of Probation and Parole, 194 A.3d 1130, 1137 n.11 (Pa. Cmwlth.
2018) (“[T]his Court may take judicial notice of information contained in the publicly[ ]available
docket of [the underlying proceedings],” and “‘[i]t is well settled that this Court may take judicial
notice of pleadings and judgments in other proceedings . . . where, as here, the other proceedings
involve the same parties.’”) (citations omitted); Elkington v. Department of Corrections (Pa.
Cmwlth., No. 478 M.D. 2018, filed May 27, 2021), slip op. at 9 n.4 (“Although not introduced by
the parties, the underlying criminal proceedings are directly related to the claims made here and
are referenced throughout the pleadings, and this Court may take judicial notice of the dockets of
other courts of the Commonwealth.”) (citations omitted); see also Pa.R.A.P. 126(b)(1)-(2) (“As
used in this rule, ‘non-precedential decision’ refers to . . . an unreported memorandum opinion of
the Commonwealth Court filed after January 15, 2008. . . . Non-precedential decisions . . . may
be cited for their persuasive value.”).
                                                  2
               This Court has previously summarized the stipulated facts in this matter
as follows:

                      The Rulemaking establishes a program to limit the
               emission of [carbon dioxide (CO2)] from fossil fuel-fired
               electric generating units (EGUs) located in the
               Commonwealth with a nameplate capacity equal to or
               greater than 25 [megawatts]. The Rulemaking requires the
               EGUs to obtain allowances for each ton of CO 2 emitted
               and imposes permitting, monitoring, reporting, and
               record-keeping requirements on them. It is the position of
               [the] DEP Secretary[], DEP, EQB, [and proposed
               intervenors] “that CO2 is a ‘pollutant’ that can be regulated
               under Pennsylvania’s [Air Pollution Control Act
               (APCA).2]

                      Under the Rulemaking, Pennsylvania will distribute
               CO2 allowances available to each EGU through quarterly
               regional allowance auctions. The Rulemaking contains a
               declining CO2 allowance trading budget that would
               incrementally reduce the number of CO2 allowances
               allocated by DEP to the air pollution reduction account for
               sale via an allowance auction. The Rulemaking would
               enable DEP to participate in a multistate CO2 allowance
               auction, such as [RGGI], provided that participation could
               provide benefits to the Commonwealth that meet or
               exceed the benefits conferred on Pennsylvania through its
               own Pennsylvania-run auction process. Eleven other
               states currently participate in RGGI, namely Connecticut,
               Delaware, Maine, Maryland, Massachusetts, New
               Hampshire, New Jersey, New York, Rhode Island,
               Vermont, and Virginia.

                     To become a “Participating State” in RGGI, a state
               is required to (1) develop a regulation sufficiently
               consistent with the RGGI Model Rule and (2) sign a
               contract between the state agency and RGGI, Inc., to
               engage RGGI, Inc.’s services. RGGI, Inc., is a [Section]
               501(c)(3) non-profit corporation created to facilitate

      2
          Act of January 8, 1960, P.L. (1959) 2119, as amended, 35 P.S. §§4001-4015.
                                               3
               administrative and technical support services to
               Participating States in RGGI. . . . In developing the
               Rulemaking, DEP performed certain modeling that was
               designed to forecast, among other things, the economic
               and environmental impacts that would result from the
               Rulemaking. . . . Any proceeds received by DEP from
               RGGI auctions and civil fines and penalties for excess
               emissions will be deposited into the Clean Air Fund.

                                               ***

                     On April 18, 2022, the Legislative Reference
               Bureau submitted the Rulemaking to its contractor for
               publication in the April 23, 2022 issue of the Pennsylvania
               Bulletin. On April 23, 2022, the Rulemaking was
               published in the Pennsylvania Bulletin. The Rulemaking
               will be codified in the Pennsylvania Code at Title 25,
               Chapter 145, Subchapter E, which will be entitled “CO2
               Budget Trading Program.”             Codification of the
               Rulemaking is anticipated in the July 2022 supplement to
               the Pennsylvania Code.
Bowfin, slip op. at 4-6, 8. The Rulemaking is codified at Sections 145.301 through
145.409 of DEP’s regulations, 25 Pa. Code §§145.301-145.409.
               In considering the instant cross-ASRs3 with respect to the merits of the
first claim in the PFR, in granting a preliminary injunction, we previously observed:

                     Petitioners assert that the Rulemaking is
               unconstitutional because it usurps the authority of the
               General Assembly to levy taxes under the Pennsylvania
               Constitution and is not otherwise statutorily authorized.

       3
          Pa.R.A.P. 1532(b) states, in relevant part: “At any time after the filing of a petition for
review in an . . . original jurisdiction matter, the court may on application enter judgment if the
right of the applicant thereto is clear.” Judgment may be entered “‘if a party’s right to judgment
is clear and no material issues of fact are in dispute.’ ‘In ruling on [ASRs], we must view the
evidence of record in the light most favorable to the non-moving party and enter judgment only if
there is no genuine issue as to any material facts and the right to judgment is clear as a matter of
law.’” Eleven Eleven Pennsylvania, LLC v. State Board of Cosmetology, 169 A.3d 141, 145 (Pa.
Cmwlth. 2017) (citations omitted).
                                                 4
                       The power to levy taxes is specifically reserved to
                the General Assembly. P[a]. C[onst]. art. II, §1;[4]
                Thompson v. City of Altoona Code Appeals Board, 934
                A.2d 130, 133 (Pa. Cmwlth. 2007) (“It is well[ ]settled that
                ‘[t]he power of taxation . . . lies solely in the General
                Assembly of the Commonwealth acting under the aegis of
                the Constitution.’”) (quoting Mastrangelo v. Buckley, 250
                A.2d 447, 452-53 (Pa. 1969)). While the General
                Assembly may delegate the power to tax, such as to a
                municipality or political subdivision, any such delegation
                must be “plainly and unmistakably conferred . . . and the
                grant of such right must be strictly construed and not
                extended by implication.” Mastrangelo, 250 A.2d at 453
                (emphasis in original); see also P[a]. C[onst]. art. III, §31
                (placing restrictions on General Assembly’s right to
                delegate its taxing authority). The Senate states that there
                has been no such delegation here under the APCA, the
                statutory authority relied upon by [] DEP in enacting the
                current Rulemaking.

                       The APCA specifically permits the imposition of
                fees to cover the costs of administering any air pollution
                control program authorized by the statute. Specifically,
                Section 6.3(a) of the APCA “authorizes the establishment
                of fees sufficient to cover the indirect and direct costs of
                administering the air pollution control plan approval
                process, operating permit program required by Title V of
                the [federal] Clean Air Act,[5] other requirements of the
                Clean Air Act and . . . to support the air pollution control
                program authorized by this act and not covered by fees
                required by [S]ection 502(b) of the Clean Air Act.[6]” 35

       4
          Article II, section 1 of the Pennsylvania Constitution, Pa. Const. art. II, §1, states: “The
legislative power of this Commonwealth shall be vested in a General Assembly, which shall
consist of a Senate and a House of Representatives.” See also article III, section 10, Pa. Const.
art. III, §10, which states: “All bills for raising revenue shall originate in the House of
Representatives, but the Senate may propose amendments as in other bills.”

       5
           42 U.S.C. §§7661-7661f.

       6
           42 U.S.C. §7661a(b).
                                                  5
         P.S. §4006.3(a).[7] Additionally, Section 9.2(a) of the
         APCA allows for the collection and deposit of “fines, civil
         penalties and fees into . . . the Clean Air Fund.” 35 P.S.
         §4009.2(a).[8]

               This Court has previously considered the question
         of what constitutes a proper regulatory fee as opposed to a
         tax. We have stated:

                 A licensing fee, of course, is a charge which
                 is imposed pursuant to a sovereign’s police
                 power for the privilege of performing certain
                 acts, and which is intended to defray the
                 expense of regulation.          It is to be
                 distinguished from a tax, or revenue
                 producing measure, which is characterized
                 by the production of large income and a high
                 proportion of income relative to the costs of
                 collection and supervision.

         Simpson v. City of New Castle, 740 A.2d 287, 292 (Pa.
         Cmwlth. 1999) (emphasis added) (quoting Greenacres
         Apartments, Inc. v. Bristol Township, 482 A.2d 1356,
         1359 (Pa. Cmwlth. 1984)).

                 We cannot . . . agree with [DEP] Secretary
         McDonnell’s argument that the allowance auction
         proceeds do not constitute a tax. First, it is undisputed that
         the auction proceeds are remitted to the [P]articipating
         [S]tates. Senate Ex[hibit] 22 (52 Pa.B. at 2482 (“The CO2
         allowances purchased in the multistate auctions generate
         proceeds that are provided back to the [P]articipating
         [S]tates, including the Commonwealth, for investment in
         initiatives that will further reduce CO2 emissions.”)).
         Secretary McDonnell’s position is unpersuasive where it
         is undisputed that the auction proceeds are to be deposited
         into the Clean Air Fund, are generated as a direct result of
         the Rulemaking, and [] DEP anticipates significant
         monetary benefits from participating in the auctions. In

7
    Added by the Act of July 9, 1992, P.L. 460.

8
    Added by the Act of October 26, 1972, P.L. 989.
                                          6
             addition, and importantly, it is unclear under what
             authority [] DEP may obtain the auction proceeds for
             Pennsylvania allowances purchased by non-Pennsylvania
             covered sources not subject to [] DEP’s regulatory
             authority and which are not tethered to CO2 emissions in
             Pennsylvania.

                     Second, the Rulemaking record, namely [] DEP’s
             2020 modeling, estimated that only 6% of the proceeds
             from the CO2 allowances auctions would be for
             “programmatic costs related to administration and
             oversight of the CO2 Budget Trading Program (5% for
             [DEP] and 1% for RGGI, Inc.).” 52 Pa.B. at 2508. The
             remaining proceeds from the CO2 allowance[s] auctions
             will be deposited into an air pollution reduction account
             within the Clean Air Fund maintained by [] DEP, with the
             use of such proceeds exclusively limited to the elimination
             of air pollution. See 52 Pa.B. at 25[2]5, 2545 (Rulemaking
             §§145.343 and 145.401).

                     Third, Secretary McDonnell acknowledged that
             from 2016 to 2021, the Clean Air Fund annually
             maintained between $20 million and $25 million in funds,
             the total expenditures exceeded the receipt of funds by $1
             million for the years 2016 to 2020, but with the inclusion
             of anticipated CO2 [allowance auction] proceeds, the
             estimated receipts for the 2022-23 budget year exceed
             $443 million. [Notes of Testimony] 5/10/2022, at 132-35.
             In fact, [] DEP’s total budget for the 2021-22 fiscal year,
             i.e., the total funds appropriated to [] DEP from the
             General Fund, was slightly in excess of $169 million. See
             Pennsylvania Treasury, General Fund Current Fiscal
             Year Enacted Budget: Appropriated Departments,
             https://www.patreasury.gov/transparency/budget.php
             (last visited June 23, 2022).
Bowfin, slip op. at 25-28 (emphasis in original and footnotes omitted).
             Upon further review and consideration, we reaffirm our determination
in this regard, and now hold that the Rulemaking constitutes a tax that has been

                                         7
imposed by DEP and EQB in violation of the Pennsylvania Constitution. Indeed, as
the Pennsylvania Supreme Court explained long ago:

                     No principle is more firmly established in the law
              of Pennsylvania than the principle that a revenue tax
              cannot be constitutionally imposed upon a business under
              the guise of a police regulation, and that if the amount of
              a “license fee” is grossly disproportionate to the sum
              required to pay the cost of the due regulation of the
              business the “license fee” act will be struck down. The
              courts interfere with the discretion of the legislature in
              such matters only “where the regulations adopted are
              arbitrary, oppressive, or unreasonable.” The regulations
              in question when tested by this standard require judicial
              interference with the legislative act creating them.
Flynn v. Horst, 51 A.2d 54, 60 (Pa. 1947) (citation omitted).9
              As outlined above, in this case, it is undisputed that: (1) DEP and EQB
anticipate significant monetary benefits from participating in the auctions, the
proceeds obtained thereby are to be deposited into the Clean Air Fund, and they are
generated as a direct result of the Rulemaking; (2) there is no cited authority under
which DEP and EQB may obtain or retain the auction proceeds for Pennsylvania
allowances that are purchased by non-Pennsylvania covered sources, which are not
subject to DEP’s and EQB’s regulatory authority, and which are not tethered to CO2
emissions in Pennsylvania; (3) only 6% of the proceeds from the auctions would be
attributable to “programmatic costs related to administration and oversight of” the
program, with a mere 5% going to DEP and EQB; and (4) the estimated moneys

       9
         See also Sunrise Energy, LLC v. FirstEnergy Corp., 148 A.3d 894, 907 (Pa. Cmwlth.
2016), appeal denied, 169 A.3d 1025 (Pa. 2017) (“[A]n agency cannot confer authority upon itself
by regulation. Any power exercised by an agency must be conferred by the legislature in express
terms. Aetna Casualty and Surety Company v. [Insurance Department, 638 A.2d 194, 200 (Pa.
1994)] (stating that an agency can only exercise powers ‘conferred upon it by the Legislature in
clear and unmistakable language’) (citation omitted).”).
                                               8
received by DEP and EQB from the auctions in a single budget year will exceed the
total funds appropriated to DEP from the General Fund by nearly threefold. Where,
as here, the moneys generated and received by the Commonwealth’s participation in
the auctions are “grossly disproportionate” to the costs of overseeing participation
in the program or DEP’s and EQB’s annual regulatory needs, and relate to activities
beyond their regulatory authority, the regulations authorizing Pennsylvania’s
participation in RGGI are invalid and unenforceable.
               Stated simply, to pass constitutional muster, the Commonwealth’s
participation in RGGI may only be achieved through legislation duly enacted by the
Pennsylvania General Assembly, and not merely through the Rulemaking
promulgated by DEP and EQB. As a result, we will grant Petitioners’ ASR in part.10

       10
           Based on our disposition of the ASR on this PFR claim, all remaining ASRs and
applications filed by the parties are dismissed as moot. Moreover, any claims raised by amici that
are not raised by the parties will not be addressed by this Court in this matter. As the Pennsylvania
Supreme Court has explained:

               [A]micus briefs cannot raise issues not set forth by the parties.
               Hosp[ital] & Healthsystem Ass[ociatio]n of Pennsylvania v.
               Dep[artmen]t of Pub[lic] Welfare, [888 A.2d 601, 606 n.10 (Pa.
               2005)]; 4 Am.Jur.2d Amicus §7 (2005) (“[A]n amicus must accept
               the case before the court with the issues made by the parties.
               Accordingly, an amicus curiae ordinarily cannot inject new issues
               into a case which have not been presented by the parties.”).

Banfield v. Cortes, 110 A.3d 155, 172 n.14 (Pa. 2015).
                                                 9
            Accordingly, we grant Petitioners’ ASR asserting that the Rulemaking
is an invalid tax; we declare that the Rulemaking is void; and we enjoin DEP and
EQB from enforcing its provisions.

                                      MICHAEL H. WOJCIK, Judge

Judge Covey did not participate in the decision of this case.
Judge Fizzano Cannon did not participate in the decision of this case.
Judge Wallace did not participate in the decision of this case.

                                        10
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Bowfin KeyCon Holdings, LLC;               :
Chief Power Finance II, LLC;               :
Chief Power Transfer Parent, LLC;          :
KeyCon Power Holdings, LLC;                :
GenOn Holdings, Inc.; Pennsylvania         :
Coal Alliance; United Mine Workers         :
of America; International Brotherhood      :
of Electrical Workers; and International   :
Brotherhood of Boilermakers, Iron Ship     :
Builders, Blacksmiths, Forgers and         :
Helpers,                                   :
                                           :
                         Petitioners       :
                                           :
               v.                          : No. 247 M.D. 2022
                                           :
Pennsylvania Department of                 :
Environmental Protection                   :
and Pennsylvania Environmental             :
Quality Board,                             :
                                           :
                         Respondents       :

                                   ORDER

            AND NOW, this 1st day of November, 2023, the Application for
Summary Relief (ASR) filed by Petitioners in the above-captioned matter is
GRANTED in part, in accordance with the foregoing Memorandum Opinion. The
regulations promulgated by the Pennsylvania Department of Environmental
Protection (DEP) and the Pennsylvania Environmental Quality Board (EQB)
referred to as the “Trading Program Regulation” (Rulemaking), and found at 25
Pa. Code §§145.301-145.409, are DECLARED VOID.            DEP and EQB are
ENJOINED from enforcing the Rulemaking.            All outstanding ASRs and
applications filed in this case are DISMISSED as moot.

                                     __________________________________
                                     MICHAEL H. WOJCIK, Judge
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Bowfin KeyCon Holdings, LLC;       :
Chief Power Finance II, LLC;       :
Chief Power Transfer Parent, LLC; :
KeyCon Power Holdings, LLC;        :
GenOn Holdings, Inc.; Pennsylvania :
Coal Alliance; United Mine Workers :
of America; International          :
Brotherhood of Electrical Workers; :
and International Brotherhood of   :
Boilermakers, Iron Ship Builders,  :
Blacksmiths, Forgers and Helpers,  :
                   Petitioners     :
                                   :
      v.                           :    No. 247 M.D. 2022
                                   :
Pennsylvania Department of         :
Environmental Protection           :
and Pennsylvania Environmental     :
Quality Board,                     :
                   Respondents     :    Argued: November 16, 2022

BEFORE:     HONORABLE RENÉE COHN JUBELIRER, President Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE ELLEN CEISLER, Judge
            HONORABLE LORI A. DUMAS, Judge

OPINION NOT REPORTED

DISSENTING OPINION
BY JUDGE CEISLER                                   FILED: November 1, 2023

      I must respectfully dissent from the majority’s conclusion that Petitioners
Bowfin KeyCon Holdings, LLC; Chief Power Finance II, LLC; Chief Power
Transfer Parent, LLC; KeyCon Power Holdings, LLC; GenOn Holdings, Inc.;
Pennsylvania Coal Alliance; United Mine Workers of America; International
Brotherhood of Electrical Workers; and International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers (collectively Petitioners), are
entitled to summary relief regarding whether the Regional Greenhouse Gas Initiative
(RGGI) administrative rule (Rulemaking) is a tax as opposed to a fee. I do so because
there are genuine issues of material fact at this stage regarding whether the
Rulemaking establishes a tax or a fee, which deprives all of the parties to this matter
of the ability to obtain summary relief on this point.

       Section 6.3(a) of the Air Pollution Control Act
                 authorizes the establishment of fees sufficient to cover the
                 indirect and direct costs of administering the air pollution
                 control plan approval process, operating permit program
                 required by Title V of the Clean Air Act, [42 U.S.C. Ch.
                 85, Subch. V,] other requirements of the Clean Air Act[,
                 id. §§ 7401-7675,] and the indirect and direct costs of
                 administering the Small Business Stationary Source
                 Technical and Environmental Compliance Assistance
                 Program, Compliance Advisory Committee and Office of
                 Small Business Ombudsman. This section also authorizes
                 the [Environmental Quality Board] by regulation to
                 establish fees to support the air pollution control program
                 authorized by this act and not covered by fees required by
                 [S]ection 502(b) of the Clean Air Act[, id. § 7661a(b)].
35 P.S. § 4006.3(a).1 Respondents Pennsylvania Department of Environmental
Protection (DEP) and Pennsylvania Environmental Quality Board (collectively
Respondents) argue, in relevant part, that this language authorizes the establishment
of the emissions allowance auction process and creates a fee, whereas Petitioners
assert that this auction process produces nothing more than a tax in fee’s clothing.
                 The question of whether an enactment is a tax or
                 regulatory measure is determined by the purposes for
                 which it is enacted and not by its title. City of Wilkes-Barre
                 v. Ebert, . . . 349 A.2d 520 ([Pa. Cmwlth.] 1975).

       1
           Act of January 8, 1960, P.L. (1959) 2119, as amended, added by Act of July 9, 1992, P.L.
460.

                                              EC - 2
             Taxes have been defined as “burdens or charges imposed
             by the legislative power upon persons or property to raise
             money for public purposes, and to defray the necessary
             expenses of government.” Woodward v. City of Phila[.], .
             . . 3 A.2d 167, 170 (1938). This Court has previously noted
             that:
                     The common distinction is that taxes are revenue-
                     producing measures authorized under the taxing
                     power of government; while license fees are
                     regulatory measures intended to cover the cost of
                     administering a regulatory scheme authorized under
                     the police power of government.
             [City of] Phila[.] v. [Se. Pa. Transp. Auth.], 303 A.2d 247,
             251 ([Pa. Cmwlth.] 1973). In National Biscuit Co. v. [City
             of] Philadelphia, . . . 98 A.2d 182 ([Pa.] 1953), the
             Supreme Court identified the features of a license fee:
                     The distinguishing features of a license fee are (1)
                     that it is applicable only to a type of business or
                     occupation which is subject to supervision and
                     regulation by the licensing authority under its police
                     power; (2) that such supervision and regulation are
                     in fact conducted by the licensing authority; (3) that
                     the payment of the fee is a condition upon which the
                     licensee is permitted to transact his business or
                     pursue his occupation; and (4) that the legislative
                     purpose in exacting the charge is to reimburse the
                     licensing authority for the expense of the
                     supervision and regulation conducted by it.
             Id. at 615, 98 A.2d at 188.
White v. Med. Pro. Liab. Catastrophe Loss Fund, 571 A.2d 9, 11 (Pa. Cmwlth.
1990). “A license fee is a sum assessed for a privilege, and to be valid the fee must
be proportionate to the cost of administering the licensing ordinance. If the fee
exceeds the reasonable cost of administration, it becomes an illegal tax which the
law will not allow.” Martin Media v. Hempfield Twp. Zoning Hearing Bd., 651 A.2d
1171, 1173 (Pa. Cmwlth. 1994); accord Costa v. City of Allentown, 153 A.3d 1159,
1165 (Pa. Cmwlth. 2017) (“A municipality cannot impose a tax upon a business

                                        EC - 3
under the guise of exercising its police power, and, therefore, a license fee will be
struck down if its amount is ‘grossly disproportionate to the sum required to pay the
cost of the due regulation of the business.’ Flynn v. Horst, . . . 51 A.2d 54, 60 ([Pa.]
1947).”).
      This Court, at the preliminary injunction stage, concluded that there is a
reasonable likelihood that Rulemaking creates a tax for a number of reasons,
including because “the auction proceeds are remitted to the participating states[;]”
the proceeds of the Rulemaking will far exceed the cost of administering the CO2
budget trading program; and those proceeds will swell the coffers of DEP’s Clean
Air Fund to more than twice the General Assembly’s total budget appropriations to
DEP for the 2021-2022 fiscal year. See Bowfin KeyCon Holdings, LLC v. Pa. Dep’t
of Env’t. Prot. (Pa. Cmwlth., No. 247 M.D. 2022, filed July 8, 2022), slip op. at 25-
28 (Wojcik, J., single judge op.). Petitioners now echo that reasoning, arguing that
the emissions allowance auction creates a tax, rather than a fee, because the proceeds
from the auctions will grossly exceed the cost to the DEP of administering the
underlying regulatory scheme, may not actually return funds in some instances to
the DEP, and does not actually provide licenses to affected emitters. See Petitioners’
Br. at 21-22.
      Even so, there is still a persuasive argument to be made that the emissions
allowance auction process does not establish a tax. Respondents assert in their brief
that the Rulemaking creates fees, because the auction proceeds will be put towards
both administering and supporting DEP’s air pollution control programs; the auction
process creates emissions allowance credits, the value of which is set by the market,
not the government; the allowance credits pertain to a voluntary act (i.e., emission
of CO2); and the Rulemaking allows for CO2 emitters to purchase such credits from

                                        EC - 4
other states and apply them to emissions made in this Commonwealth. See
Respondents’ Br. at 13-21.
      Based upon the record before us, it does not seem that the emissions allowance
auction process would impose what could be deemed fees in the traditional sense,
but, by the same token, it is not entirely clear that the proceeds raised thereby would
constitute a tax. Given this, there is a genuine issue of material fact regarding the
question of whether the Rulemaking establishes a tax or a fee. Accordingly, I would
deny summary relief regarding this issue to both Petitioners and Respondents, and
dissent from the majority’s decision to the contrary.

                                        __________________________________
                                        ELLEN CEISLER, Judge

                                        EC - 5