As we transition from the dog days of summer and prepare for changes that are guaranteed to come this fall in our state and national political landscapes, we at McNees are considering what the upcoming elections and legislative sessions in Pennsylvania and Washington D.C. mean for our clients. As discussed this summer, the Pennsylvania budget that became law on July 13 2016, provided relief for those who use state funding and its programs. The Pennsylvania General Assembly and Governor initially faced a $1.3 billion shortfall in revenues when working on the FY 16-17 budget. However, the final budget package was $1.2 billion less in spending than what Governor Wolf initially proposed and 5% higher than last year’s budget. There are a number of new revenue sources for FY 16-17 including a $1 per pack tax increase on cigarettes with new taxes on e-cigarettes and smokeless tobacco products; expansion of the sales and use tax on digital downloads of videos, books, etc.; expansion of the income tax to include state lottery winnings, and a bank shares tax increase. While there was no across the board tax increases such as sales or income taxes or a tax on energy, it is expected and very likely that such tax increases will be necessary in the next budget cycle and is something we advise our large energy consumer clients to be mindful of as we approach this fall when elections and upcoming budget discussions will be front and center.
In addition to those relieved that a budget was passed somewhat timely in early July, there was also a sigh of relief for those who benefit from Senate Bill (SB) 1195 (Act 57 of 2016) that was signed into law on June 23, 2016 and amends the Pennsylvania Greenhouse Gas Regulation Implementation Act by imposing requirements on Pennsylvania state government regarding its submission of a Clean Power Plan (CPP) to the EPA. The CCP is intended to regulate states’ carbon emissions from existing electric power plants.
Act 57 reflects a compromise between the Pennsylvania General Assembly and Governor Wolf that allows the General Assembly the opportunity to review and approve the state’s proposed CPP before it is submitted to the EPA. If either chamber of the General Assembly disapproves the draft CPP, the Department of Environmental Protection (DEP) must review and consider the reasons for disapproval and modify the draft CPP. At that time, the DEP must resubmit a CPP to the General Assembly and open a public comment period for no less than 180 calendar days on the modified CPP during which time the department shall conduct at least four public hearings in geographically dispersed areas of the Commonwealth. The Act also includes other provisions that address a default approval or a situation where neither chamber approves the draft or resubmitted modified CPP. The amendment language further restricts the administration from submitting a CPP to the EPA until after the expiration of the stay issued by the United States Supreme Court on February 9, 2016.
While no one can truly predict how the U.S. Supreme Court will rule, Hillary Clinton’s campaign has boldly made its prediction. Recently during a panel discussion hosted during the Democratic National Convention in Philadelphia at the end of July 2016, Hillary Clinton’s campaign and energy adviser expressed the campaign’s expectation that the U.S. Supreme Court will uphold the CPP and the EPA’s authority to regulate greenhouse gases under the Clean Air Act. While Donald Trump has not predicted the high court’s position, he has made clear that he is against the CPP and would work to repeal it regardless of the high court’s ruling. Meanwhile, in Pennsylvania, the republican majority dominated General Assembly will be closely monitoring when the U.S. Supreme Court rules and monitor the state’s plan if and when it is submitted to the EPA. Until then, the political landscape and issues being debated by the presidential candidates are indicators that this Fall will be quite interesting in many respects with the status and future of the CPP being just one of them.
At McNees, our energy attorneys and government relations professionals will be closely monitoring the politics that will affect this and many subjects of interest to our clients. Please let us know if there is a specific issue or piece of legislation or subject you have interest in learning more about and we will help you. Please contact Pam Polacek or Kathy Bruder at 232-8000 should you have any questions or want to discuss.