Genon Mid-Atlantic, LLC v. Montgomery County, Md.
650 F.3d 1021
4th Cir.2011Background
- Montgomery County enacted Expedited Bill 29-10 to impose a $5/ton CO2 excise tax on large emitters (>1 million tons/year).
- The levy applies only to GenOn Mid-Atlantic's Montgomery County electricity plant, which is expected to be the sole subject.
- Bill 29-10 designates revenue for greenhouse gas reduction programs (50%) and general county use (50%).
- GenOn sought a federal injunction arguing the charge violates federal and state constitutions; district court dismissed for lack of jurisdiction under the Tax Injunction Act (TIA).
- The district court treated the charge as some regulatory-fee indicia but ultimately deemed it a tax under the TIA, prompting appeal.
- The Fourth Circuit reverses, holding the charge is a punitive, regulatory fee targeting a single entity and falls outside the TIA’s tax bar.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the CO2 charge a tax or a fee for TIA purposes? | GenOn argues it is a tax and thus barred from federal court by the TIA. | Montgomery County treats it as a tax (excise tax) and collects via the tax system. | Not a tax; the exaction is a punitive regulatory fee. |
| Does the TIA deprive federal jurisdiction over GenOn's challenge? | TIA bars federal relief for tax assessments; GenOn seeks federal review. | The charge is a tax, thus TIA applies to bar the suit. | TIA does not deprive jurisdiction; federal claims may proceed. |
| Does the charge’s targeting of a single emitter affect its tax/fee character? | A tax typically imposes broad burdens; GenOn is singled out. | The process and revenue-raising aspects support a tax characterization. | Single-emitter targeting supports a punitive regulatory fee, not a tax. |
| Is the charge within or outside the regulatory-fee exception to the TI Act due to its regulatory purpose? | No regulatory purpose beyond revenue collection. | The bill advances greenhouse-gas regulatory objectives and program funding. | Outside the TI Act; regulatory purpose supports jurisdiction in federal court. |
Key Cases Cited
- Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130 (4th Cir. 2000) (factors for distinguishing tax vs. fee; breadth of tax base)
- Collins Holding Corp. v. Jasper County, 123 F.3d 797 (4th Cir. 1997) (tax-injunction Act framework; regulatory vs revenue purpose)
- Bidart Bros. v. Cal. Apple Comm'n, 73 F.3d 925 (9th Cir. 1996) (regulatory program significance in fee vs tax analysis)
- Retail Indus. Leaders Ass'n v. Fielder, 475 F.3d 180 (4th Cir. 2007) (distinguishing tax-like revenue measures from regulatory fees)
- Evans v. B.F. Perkins Co., 166 F.3d 642 (4th Cir. 1999) (jurisdiction questions and standards for TI Act review)
- San Juan Cellular Tel. Co. v. Pub. Serv. Comm'n of Puerto Rico, 967 F.2d 683 (1st Cir. 1992) (classic regulatory fee framework and pass-through concerns)