No Carbon Taxation Without Representation

By Kevin J. Mooney

After vetoing a bill that would have prohibited him from compelling state residents to pay hundreds of millions of dollars annually in carbon taxes without the approval of his state’s General Assembly, Pennsylvania Gov. Tom Wolf explained why he places a greater premium on climate change activism than he does on democracy.

The idea of allowing elected representatives to debate and then vote on proposed regulations that would raise electricity prices, shutdown power plants and redirect economic activity to other states is a little too 18th century for Wolf who described the legislation as “extremely harmful to public health and welfare,” in his veto message. Wolf also told elected officials that he has no time for the legislative process to play out because there is a certain urgency to the “climate crisis facing Pennsylvania,” and their bill calling for a straight up or down vote on new taxes prevents his regulatory agencies “from taking any measure or action to abate, control or limit carbon dioxide emissions, a greenhouse gas and major contributor to climate change impacts, without prior approval of the General Assembly.”

In response, those same elected officials who were lectured on the need for “immediate steps to reduce greenhouse gas emissions” and their “failure to address climate change,” are calling upon the earliest and proudest traditions of the Keystone State. The historical antecedents to the bill Wolf vetoed in the name of climate change can be found in letters and resolutions crafted by a Pennsylvania statesman, who more any other single figure, gave rise to the phrase “No Taxation without Representation.”

Since he declined to sign the Declaration of Independence, there’s a tendency for John Dickinson to be somewhat lost in history.  But in his time, he was aptly described as the “Penman of the Revolution” after gaining recognition for authoring 12 newspaper op-eds in 1767 and 1768 that became known as “The Letters from a Farmer in Pennsylvania.” American colonists, as British subjects, could not be taxed, Dickinson argued, without the consent of their elected representatives.

While channeling Dickinson, lawmakers in both parties who have sought to restore constitutional checks and balances in policymaking areas that impact the commonwealth’s energy sector make a compelling case that it is Wolf’s circumvention of the General Assembly, and his penchant for advancing burdensome regulations, that jeopardizes the public’s health, safety and economic well-being.

The House version of the bill attracted seven of Wolf’s own Democrats as co-sponsors while the Senate version fell just one vote shy of a veto proof majority last September with five Senate Democrats voting against their governor. In a bipartisan memo addressed to colleagues, the lead House sponsors describe Wolf’s planned regulatory scheme as a “major energy and fiscal policy decision, which must be made by the legislative branch of the government.”

Put simply: there shall be no carbon taxation without representation.

That’s the message elected officials, industry leaders, union members and legal analysts directed toward their recalcitrant executive in testimony and public statements all throughout last year. In just the past few days, it would seem their indefatigable efforts have gained traction.

On February 16, Pennsylvania’s Independent Regulatory Review Commission  called for a one-year moratorium on the implementation of Wolf’s climate change plan while also questioning the governor’s authority to act unilaterally. The commission was created by the General Assembly in 1982 to “review regulations to make certain that the agency has the statutory authority to enact the regulation and to determine whether the regulation is consistent with legislative intent.”

In a letter addressed to the commissioners earlier this month, state senators questioned the legality of Wolf’s regulatory actions in the absence of legislation. The senate correspondence also calls attention to the “economic and financial risks” associated with Wolf’s unilateral movements in the direction of joining the Regional Greenhouse Gas Initiative, a multi-state climate change compact built around “cap and trade” regulations.

Widely known as RGGI, the compact includes 10 New England and Mid-Atlantic states where regulators place an upper limit or “cap” on the amount of carbon dioxide emissions that power plants can emit. Energy companies then trade Co2 “allowances” back and forth during quarterly auctions. The rationale behind cap-and-trade is to provide energy companies with financial incentives to reduce emissions. Companies that meet or exceed emissions targets may sell any excess allowances back to companies that have not.

Wolf’s Department of Environmental Protection estimates that Pennsylvania’s annual RGGI revenue from auction proceeds will exceed $300 million annually and that the carbon tax will produce about $2.4 billion over the next decade.

Carbon allowances sold for $7.41 per metric ton in the 4th quarter of last year, an increase of about 8.7% from the prior quarter and a 30% increase from the prior year, according to RGGI figures . The latest auction raised about $120 million, which will be added to consumer electricity bills with the proceeds distributed among the participating states.

“The RGGI allowance is a tax,” senators explain in their letter to the regulatory review commissioners. That’s because state regulators indent to allocate only five percent of the allowance for administrative purposes and one percent to the RGGI corporation while the remaining 94% of the revenue is raised through a tax that only the legislature can approve, the letter says.

Since RGGI would impose additional costs on business owners and residents “who are still reeling from the impact of COVID-19,” Gordon Tomb, a senior fellow with the Commonwealth Foundation, anticipates that Wolf’s “green schemes” would undermine the economic and environmental progress Pennsylvania made thanks to the “natural gas revolution” and the “innovative drilling” techniques that have made it possible.

“As a life-long Pennsylvanian, I am enjoying the lowest energy prices – for both natural gas and electricity – ever,” Tomb said in an interview. “This is largely the result of abundant, cheap gas made available through hydrofracturing technology. This free-market innovation has added billions of dollars to Pennsylvania’s economy and made the state a leader in the reduction of air emissions.”

Tomb, who also testified against RGGI, views the proposed regulations as a direct threat to the Keystone State’s most vital industry and its most economically vulnerable citizens.

“RGGI would destroy thousands of Pennsylvania jobs in fossil-fuel and electric-generation businesses that are lynchpins of the state’s economy,” he observed.  “To impose a regressive carbon tax that would most hurt those who can least afford it in return for no environmental benefit and higher energy costs would be government malpractice of the first order.”

Dickinson’s letters, which were written under the pseudonym of “A Farmer” and published in pamphlet form and reprinted in colonial newspapers, made the case against the Townend Acts the British Parliament passed beginning in 1767.

The acts were illegal in Dickinson’s view because they imposed an indirect tax on American colonists by levying duties on British goods like tea, paper, paint, and glass. This power to raise revenue could only be wielded through the colonial assemblies, Dickinson told his countrymen while urging them to reassert their constitutional rights. It was his purpose “…to convince the people of these colonies that they are at this moment exposed to the most imminent dangers; and to persuade them immediately, vigorously, and unanimously, to exert themselves in the most firm, but peaceable manner, for obtaining relief,” he explained in the letters.

Just as Dickinson laid waste to sly pretensions that the Townsend Acts were indirect duties, and not taxes, Anthony Holtzman, a Harrisburg attorney with expertise in constitutional and environmental law, eviscerates any notion that the revenue generated from RGGI’s auctions are merely administrative costs.

“Through 2017, in fact, the RGGI signatory states had directed less than 6% of the proceeds toward the program’s administration,” Holtzman said in testimony before the Pennsylvania House last July.  “RGGI’s auction mechanism is designed to raise substantial sums of revenue – in fact, it has raised more than $3 billion to date – and the signatory states have used the vast majority of this revenue to either support policy initiatives (such as energy efficiency and renewable energy initiatives) or bolster state coffers through transfers to general funds. The auction program therefore imposes a tax that only the General Assembly can impose.”

In his testimony, Holtzman explained why the state constitution does not provide executive agencies with the authority to join RGGI.

“Because the Pennsylvania Constitution does not provide the Governor or any other Executive Department official or entity with the power to enter into interstate compacts or agreements, the General Assembly alone possesses that power,” Holtzman said. “The General Assembly, in this regard, has plenary power, and therefore, unless the Constitution says otherwise, it has authority over and may enact legislation regarding any subject.”

Out of all the states in RGGI, Pennsylvania would be the only one to join through executive action without legislative approval. But for what purpose and to what end?

During the public comment period, the Commonwealth Foundation drew attention to figures that show Co2 emissions in Pennsylvania dropped by 40% between 2007 and 2017 after switching from coal to natural gas. The free market did its magic without burdening Pennsylvania residents and businesses with more taxes and regulation. The Harrisburg think tank also made the point that there is no consensus on the question of man-made global warming while citing a petition signed by 31,000 scientists debunking climate alarmism.

Gregory Wrightstone, executive director of the Co2 Coalition and a geologist, was one of several witnesses who dismantled Wolf’s “climate crisis” histrionics.

“Co2 is not a pollutant,” Wrightstone said during his House testimony. “It’s miracle molecule that we should appreciate.”

By intermixing his climate change commitments with his COVID-19 mitigation efforts, Bonner Cohen, a senior fellow with the National Center for Public Policy Research, finds that the governor has unwittingly opened himself to scientific scrutiny.

“In claiming to be working ‘to mitigate the spread of COVID-19,’ while combatting climate change, Gov. Wolf inadvertently draws attention to the deadly consequences of his handling of the pandemic,” Cohen said in an email.  “Wolf, along with the Democratic governors of New York, New Jersey, and Michigan, mandated placing COVID-19 patients in nursing homes, where their presence led to the death of many of the homes’ most at-risk elderly residents.  The same poor judgement is on display in trying to force Pennsylvania to join RGGI. Just as Wolf’s steps helped spread the pandemic, his rejection of Pennsylvania’s abundant natural gas in favor of intermittent wind and solar power will return the state to its Rustbelt past fracking has enabled it to overcome.”

Just a few days before Wolf vetoed the bills reasserting the General Assembly’s taxation authority, District Court Judge William Stickman IV overturned the governor’s  COVID-19 stay-at-home orders, congregation limits, and business closures ruling them unconstitutional. Meanwhile, the Pennsylvania House and Senate have just a passed a proposed constitutional amendment embodied in Senate Bill 2 that limits the governor’s power to renew an emergency proclamation without the approval of the General Assembly. The proposed amendment will appear on the ballot for voters to approve during the May 18th primaries.

As the public’s appetite for regulatory measures based on specious emergency declarations continues to wane, it’s encouraging from the standpoint of constitutional limited government to see Dickinson’s letters finding renewed expression.

Kevin Mooney is an investigative reporter with the Commonwealth Foundation in Harrisburg, Pa., and with the Heritage Foundation in Washington D.C.