Category Archives: Regulation

The Cooter Controversy as Window into the New Class/Culture War

cooters

Cooter’s in the Country store in Sperryville

by James A. Bacon

Ben Jones, the former actor and Georgia congressman, has built a small retail empire around the character Cooter he played in the “Dukes of Hazzard” television series. In addition to his Cooter’s store in Rappahannock County, Va., he has opened stores in Nashville and Gatlinburg, Tenn. But Jones has to contend with a force more formidable and arbitrary than old Boss Hogg in his home town of Sperryville: zoning laws.

Jones has announced that the Cooter’s store in Sperryville will close because, according to a Wall Street Journal account, Rappahannock County “snobs,” many of whom are refugees from the Washington metropolitan area, won’t let his customers park behind the store, an area zoned agricultural.

“It has become a cause celebre for people who don’t like us,” Jones told the Journal. “They don’t like our store. They don’t like our people. They don’t like our flags. They don’t like our culture.”

Jones, whose politics can best be described as Southern blue dog Democrat, was born poor in Portsmouth, Va. He got his big break playing Cooter, a mechanic who helped the Duke boys and cousin Daisy outwit Hazzard County’s Boss Hogg. He parlayed his celebrity into two terms in Congress in Georgia, then, after losing to Newt Gingrich, he moved to Virginia and built a business on “Dukes of Hazzard” nostalgia. He dabbled in politics here, too, running unsuccessfully against former Congressman Eric Cantor. Tens of thousands of fans attend his show reunions every year.

The owner of the Sperryville land that Jones leases asked the planning commission to recommend rezoning the fields behind the store to allow parking and an eating area, according to the Journal’s account. A few neighbors objected, wondering what might come next. In July the commission urged the county to order Cooter’s to stop using the lot on the grounds that it was an unpermitted extension of a commercial use.

Parking outside Cooter's Place. Image source: RappNews.

Parking outside Cooter’s Place. Image source: RappNews.

Jones frames the issue as a culture clash between local elites who “stare down their noses” at other rednecks like him, and as an example of unresponsive and arrogant government.

Bacon’s bottom line: I find Jones’ argument highly plausible. Educated elites in this country do look down upon white, working class culture — especially that of Southern whites, who are widely considered to be Bible thumpers, gunhuggers and closet Klansmen. Just watch any edition of the Bill Maher show, and you’ll get the idea. Overlay upon that prejudice the Rappahannock zoning controversy in which the right of affluent landowners to live in an unspoiled environment trumps the right of Jones to grow a business and provide employment opportunities for locals. Cultural/economic elites protect their property values at the expense of income opportunities for the working class. (Don’t even get me started on the class implications of conservation easements in which big landowners unload their property tax liabilities while small landowners continue to pay the standard rate.)

I might not have paid this controversy any mind had I not had the strange experience of being solicited twice this summer, a month apart, by different crews of tree cutters claiming to live in Rappahannock County. Both truckloads of mostly white, working class men (one individual was a woman) had traveled three hours to suburban Richmond to cruise neighborhoods and look for gigs. While the Rappahannock County unemployment rate is supposedly around 4%, I’m willing to bet from my singular anecdotal experiences that the rate of under-employment is much higher. I’m also willing to bet that a lot of working poor would jump at the chance to earn a few extra bucks helping Jones run his Dukes of Hazzard extravaganzas.

While it is unlikely that the economic fortunes of working-class Rappahannock residents will rise or fall upon Jones’s ability to expand his Sperryville activities, the symbolic value of the controversy is momentous. The white, rural working class is the bedrock of Donald Trump’s electoral support. Is there any doubt why they feel like the system is stacked against them? Whether their highly flawed candidate wins or loses the 2016 presidential election, is there any doubt that  cultural snobbery and class conflict will persist?

Consumer Group: Halt Spending on North Anna 3

Source: Dominion Virginia Power 2016 Integrated Resource Plan

Dominion Virginia Power capacity projections under Clean Power Plan E. Source: 2016 Integrated Resource Plan (Click for more legible image.)

by James A. Bacon

A Virginia consumer advocacy group has petitioned the State Corporation Commission to forbid Dominion Virginia Power from spending more money on its proposed $19 billion North Anna 3 nuclear unit without obtaining formal approval from the SCC.

Dominion has spent $600 million on the project, mainly for engineering and regulatory expenses, but also $58.6 million on site preparation, administrative buildings, and “craft and other service support buildings,” maintains the Virginia Citizens Consumer Council (VCCC) in the SCC filing. “As Dominion spends more money on North Anna 3, it may become more difficult for the expenditures to be disallowed without causing financial harm to the utility.”

The SCC has allowed Dominion to recover $310 million of the money spent so far, but the company has stated in its Integrated Resource Plan that it will not seek cost recovery for the rest until it receives a federal Combined Operating License (COL). The COL, the company says, will provide “an option to build a nuclear unit at the North Anna site at some point in the future,”which is “of great value given the uncertainty of the [Clean Power Plan] and the uncertainty of any other federal or state law or regulation that the Company and its customers may face in the future.”

While Dominion contends that ongoing construction costs are incurred solely at the risk of the company’s stockholders, says the VCCC filing, “the Company has made it clear that at some point in the future, it intends to seek recovery of those expenditures, whether or not the project is ever completed. … The Company is treating all ongoing expenditures as ‘recoverable’ for accounting purposes.”

Consumer and environmental groups have long contended that the proposed North Anna 3 plant would be far more expensive than non-nuclear alternatives such as energy conservation, electricity purchases from wholesale markets, and green energy sources such as wind and solar, backed by energy storage technologies such as batteries. Building North Anna 3, according to the Virginia attorney general, could boost electric rates by 26% in Dominion’s service territory.

In its Integrated Resource Plan (IRP), Dominion has described a third unit at the North Anna nuclear power station as its ace in the hole should Virginia adopt the most stringent alternative available to the states under the Clean Power Plan, which limits CO2 emissions from the nation’s power plants. The so-called Plan E, or “Mass-Based Emissions Cap” applying to both old and new generating units, would force Dominion to retire some of its fossil fuel generating plants and would leave nuclear and renewables as the only viable non-CO2 emitting alternatives for replacing that capacity and meeting increasing demand as the economy grows. In Virginia, environmentalist groups are urging the McAuliffe administration to adopt the strictest Mass-based option should the Clean Power Plan pass U.S. Supreme Court muster next year.

Dominion has characterized wind and solar as intermittent, thus “nondispatchable,” meaning that they generate power when the wind blows and the sun shines, not necessarily when people are consuming electricity. The electric grid can handle a significant amount of variable production, but at some point the system becomes unstable. In a Plan E regulatory environment, Dominion argues, building nuclear would be the only way to add stable base-line capacity. In essence, Dominion regards North Anna 3 as insurance, albeit very expensive insurance, should Virginia adopt the strictest approach to controlling carbon emissions.

Another Example of Good Intentions Gone Wrong

Jennifer Doleac

Jennifer Doleac

by James A. Bacon

Last year Governor Terry McAuliffe signed an executive order to “ban the box” prohibiting employers from asking job seekers about their criminal history at the initial job stage. The goal was to “remove unnecessary obstacles” to felons seeking employment after incarceration. How could one object? Once felons have paid their debt to society, we should ease their transition back into the workforce, right?

It turns out that things don’t always work the way we expect them to. From the Daily Progress:

Research published recently by Jennifer Doleac, an assistant professor of public policy and economics at the University of Virginia, found that ban the box policies actually lowered the probability of employment by 5.1 percent for young, low-skilled black men and 2.9 percent for young, low-skilled Hispanic men.

According to Doleac, who conducted the study with the University of Oregon’s Benjamin Hansen, the lowered chance for employment comes from the unwillingness by employers to take chances on hiring someone without knowledge of their potential criminal history.

“Simply taking away information about whether someone has a record doesn’t stop employers from caring about someone’s criminal background,” Doleac said. “It just leaves them to guess based on the remaining information they do have.”

All too often, that “remaining information” is age, race, ethnicity and socioeconomic background. (Hat tip: John Butcher)

Bacon’s bottom line: Society is extraordinarily complex. Political ideologies (both on the left and the right) provide simplified models for how society works. Often those simplified models overlook important linkages and feedback loops that lead to very different results than anticipated. Individuals and private entities can quickly alter their behavior to adjust to reality; government adjusts much more slowly, if at all.

Will McAuliffe rescind his “ban the box” order? I’m not betting on it. The social engineer’s response to problems created by a law or regulation is to “fix” the emergent problem by enacting more laws and regulations… thus creating new problems. 

It’s fine to try new ideas, but we have to pay attention to whether they work or not. If they don’t, we need to reconsider them. Good intentions are not enough.

Yeah, It’s Probably a Good Idea to Update Your Zoning Code Every Half Century or So

Pouring whale oil. At long last, Henrico zoning code will leave the 19th century behind.

Pouring whale oil. At long last, Henrico’s zoning code will leave the 19th century behind.

News flash: Henrico County officials see the need to bring the county zoning code into the 21st century.  Although the zoning code has been amended 240 times, it was adopted in 1960 and has never seen a systematic overhaul since.

The code, Randy Silber, deputy county manager for community development, tells the Richmond Times-Dispatch, is “over 55 years old. It’s antiquated. … There’s disconnect in the uses in the zoning ordinance and the economic development that is being put before us.”

Regulations governing sperm whale oil and poison manufacturing remain on the books, notes Silber. The code also refers to bone distilleries. “I don’t even know what that is,” he says.

The 1960 zoning code shaped the “suburban sprawl” model that propelled Henrico County growth in the 56 years since. But the model has run its course, having saddled the county with vast expanses of low-density land use patterns that are costly to maintain and are beset by intractable road congestion issues. Moreover, businesses are reversing a decades-long migration from the central city to the suburbs as Millennials and Empty Nesters seek walkable, mixed-use communities found in the urban core, along with easy access to the city’s museums, festivals and cultural events. To avoid the same kind of hollowing out that central cities experienced a half century ago, Henrico must create walkable, urban places as well.

While Henrico has permitted a few such places, growth continues to be dominated by old-fashioned sprawl. An outdated zoning code is, in effect, mandating the county’s premature obsolescence.

The fact that county professionals see the need for change is encouraging — although the examples cited in the Times-Dispatch article suggest that they may be in more of a mind to tinker with the code than to embrace an alternative paradigm for development and re-development. It’s also unclear whether the citizenry, which is terrified of any change that might affect their homes’ property values, sees the need for change. But at least it’s a start.

The Land of the Semi-Free and Home of the Brave

Image credit: Cato Institute

Image credit: Cato Institute

The Cato Institute, a libertarian think tank, has compiled a basket of some 200 metrics of fiscal, regulatory and personal freedom policies to produce an index of “Freedom in the Fifty States.”

If you lean libertarian, as I do, then a Virginia score of 21 is not terribly impressive. Could be worse, but not nothing to brag about. The state fares best by fiscal measures, 12th in the country, and worst on personal measures, 34th. Our regulatory score, 23rd, is in the middle of the pack.

If there’s any consolation, the overall score has improved three notches since 2012. Fascinating: In the four years between Republican Governor Bob McDonnell and Democratic Governor Terry McAuliffe, Virginia has become more libertarian…. at least by Cato’s reckoning.

If you don’t like Cato’s scoring methodology, a customization feature allows you to personalize your own.

Hat tip: Tim Wise

— JAB

With Health Care Premiums Up 14%, Virginia Should Act

Lasik eye surgery . Eww, it looks gross. But it's cheap, it's safe and it's unregulated and unsubsidized.

Lasik eye surgery . Eww, it looks gross. But it’s cheap, it’s safe and it’s unregulated and unsubsidized.

by James A. Bacon

Insurance companies participating in Virginia’s Affordable Care Act health exchanges are asking to increase rates by an average of 14% next year. In making presentations to the State Corporation Commission yesterday, they said the increases reflect (1) general health care inflation that affects everyone, and (2) and an imbalance in sick versus healthy participants in the plans.

Under state law, the SCC is required to review and approve premium rates for all types of health plans, reports Katie Demeria with the Richmond Times-Dispatch. If an insurance company’s rate filing has met the state’s minimum loss ratio requirements and all assumptions are defensible from an actuarial perspective, it is virtually impossible to turn down the rate-hike request.

“Some of these rate increases are more than what people would want and, in some cases, could be more than what some people would bear,” said Commissioner Mark Christie. “But we also have an obligation to ensure that these companies remain in business so that the can pay the claims they’re obligated to pay by the people who pay their premiums.”

Bacon’s bottom line: There is not much that the Commonwealth can do about the imbalance between sick and healthy participants. The Affordable Care Act (widely known as Obamacare) anticipated the problem by taxing people who fail to enroll. The incentive, as stiff as it is, is not sufficient to induce as many healthy people to enroll as are needed. This design flaw in the federal legislation is beyond the power of Virginia lawmakers to fix.

But the General Assembly does influence how health care markets operate in Virginia, and lawmakers can affect the general cost of delivering health care. Not only do legislators have a political responsibility, they have a moral responsibility to create the conditions for Virginia health care markets to become more affordable and accessible.

Existing state-level laws and regulations muck up the efficient functioning of health care in many ways. First and foremost is the Certificate of Public Need (COPN) law that thwarts competition from newcomers and ossifies the existing delivery system in place. Legislators are on top of that one, and they’re not letting go.

But there are many other areas that need reform. The most glaring is state-mandated benefits for small-group insurance policies. Employers big enough to self-insure can structure their policies packages any way they want. Small employers who have to band together to create a viable risk pool don’t have that option. Insurers must package some 30 state-mandated benefits into their policies, whether those benefits are desired or not. These include everything from “newborn children” to “reconstructive breast surgery” and “colorectal cancer screenings.”

While any one of these benefits may not seem unreasonable in itself, the collective package severely limits the ability of insurers to offer affordable, trimmed-down plans. For example, one plan that I think would sell well (because I would buy it) would have two main features: (1) negotiated rates so I don’t have to pay the outrageous nominal fees that hospitals and doctors charge, and (2) catastrophic coverage if medical bills exceed, say, $20,000 in a year. In other words, I would pay all bills out of pocket up to $20,000 but at negotiated, discounted rates, and I would be protected from catastrophic loss. Such a plan, as I understand it, is illegal. That’s why you cannot find it in the Virginia marketplace.

A third way the state could help is increase price transparency so patients can exert consumer pressure on health providers for discretionary procedures. Consumer pressure has kept down the cost of Lasik eye surgery and cosmetic surgery, which are not regulated or funded by government. Consumers could exert downward pressure on many other procedures as well if they had easy access to the price data.

There’s much more, but those are the big three. As a nation and a state, we can continue to fixate on the zero-sum question of “who pays?” — transferring wealth from Peter to Paul — or the win-win question of how we make the system function better for everyone. The wealth-redistribution approach has not worked well for anyone. It’s time to try win-win.

Republicans and Leftists Are Outraged, Outraged, I Tell You

Nishizaki Sakurako and Bando Kotji in "Yoshino Mountain"by James A. Bacon

Here’s what I missed in yesterday’s quickie post about Governor Terry McAuliffe’s plan to convene a clean energy task force: Both Republicans and leftist environmental groups are attacking the move, though for opposite reasons.

Republican legislators see the initiative as an end run around the state budget, which specifically prohibits any spending on the federal Clean Power Plan for reducing CO2 emissions from electric power plants while it is being challenged in the U.S. Supreme Court. Normally, such accusations strike me as political blather, but Brian Coy, a spokesman for the governor’s office, confirmed that that was precisely the motive. Here’s how the Washington Post summed up his statement: “The governor did not create the work group to assuage environmental groups but rather as a way to dodge the Republican-controlled General Assembly.”

House Speaker William J. Howell, R-Stafford, was not pleased: As quoted by the Richmond Times-Dispatch, he said: “This order is another deliberate attempt to circumvent the legislature and the will of Virginia voters.  The governor is developing a troubling tendency to prefer Washington-style executive action instead of the dialogue and collaboration that Virginians expect and deserve.”

Meanwhile, McAuliffe’s initiative was belittled from the left, who cited his support for the Atlantic Coast Pipeline and Mountain Valley Pipeline, which would supply natural gas to Virginia and other Southeastern markets, as evidence that he is not serious about combating climate change. A joint statement by the Virginia Student Environmental Coalition, the Chesapeake Climate Action Network, and Virginia Organizing called McAuliffe’s initiative “a minor environmental policy” dwarfed by the harm of natural gas transportation and combustion.

The kinds words came from mainstream environmental groups who have been working through the administration to implement the strictest of the Clean Power Plan alternatives available to the state.

The governor is trying to reconcile his desire to combat climate change with his priority of creating jobs. Thus, he defends construction of two natural gas pipelines through the state on the grounds that they will create economic opportunity for the Tidewater region of the state, which is effectively precluded from competing for important categories of industrial expansion due to an insufficient supply of natural gas. At the same time, he has supported the federal Clean Power Plan (CPP), which seeks to curtail CO2 emissions from Virginia power plants. If the CPP passes legal muster, the Department of Environmental Quality (DEQ) will be charged from choosing from one of four broad approaches for the state to implement the plan. Environmentalists favor the option that would curtail CO2 emissions the most, although industry consumer groups worry the approach would drive up electric rates. McAuliffe has not yet endorsed an option.

Bacon’s bottom line: I’m still not sure what the fuss is all about. McAuliffe has already enacted a series of measures driving state government to pursue energy efficiency goals and to purchase solar energy. There is not much else that he can legally do. This new working group can recommend anything it wants, but it won’t have power to spend a dime. Meanwhile, the big action revolves around the Clean Power Plan. If the Supreme Court upholds its constitutionality, the focus turns to the already-instated DEQ working group to recommend how to implement it. If the Supremes nix the CPP, regulatory decision-making effectively reverts to the State Corporation Commission, which responds to legislative guidance enacted into law, not to gubernatorial directives.

I regard this whole hoo-ha as political theater — a kabuki production in which the actors rigidly play out their assigned roles.