Tax Injunction Act Does Not Bar a Levy Imposed on a Single Entity


On June 20, 2011, the U.S. Court of Appeals for the Fourth Circuit ruled that the federal district court for the District of Maryland has jurisdiction to adjudicate a case involving the constitutionality and validity of a carbon dioxide emissions levy (Emissions Levy) enacted in 2010 by Montgomery County, Maryland (County). GenOn Mid-Atlantic, LLC v. Montgomery County, No. 10-1882 (Fourth Circuit, U.S. Court of Appeals) (June 20, 2011). The court’s opinion sends a clear message to local jurisdictions considering targeted and discriminatory fees—that the Tax Injunction Act may not be used to enjoin federal court review. (Click here for the opinion). As stated by the Fourth Circuit:

We cannot overlook the fact that the absence of federal jurisdiction in this case would turn what are truly interstate issues over to local authorities. Applying the Tax Injunction Act might encourage punitive financial strikes against single entities with national connections, for the federal courts would be unavailable to protect companies against local discrimination, preempted state laws, and other federal constitutional violations. The implications of allowing localities to impose financial extractions exclusively upon single entities of national reach with no accountability in federal court are profound, and we decline to foreclose these federal claims with a jurisdictional bar.


On May 19, 2010, Montgomery County Council passed Expedited Bill 29-10, which imposed a $5-per-ton levy on carbon dioxide emissions of major emitters. The County defined “major emitter” as “any person who owns or operates any stationary source of carbon dioxide located in the County that emits more than 1 million tons of carbon dioxide in any calendar year.” Montgomery County Code § 52-96(b). The County set the emissions threshold for major emitters such that GenOn was the only major emitter in Montgomery County, and thus the only entity subject to the Emissions Levy.

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