Analysis: Only Assembly Can Impose Carbon Tax

By Steve Haner

It is illegal in Virginia for a petroleum wholesaler to arbitrarily reduce the amount of product it provides to retailers. The General Assembly has intervened in that marketplace, probably for the reasonable public purpose of preventing price gouging. Regulating the sale of fuel for some other purpose should also require action by the General Assembly.

The “other purpose” under scrutiny at this time would be reducing carbon dioxide emissions into the atmosphere. David Schnare of the Thomas Jefferson Institute for Public Policy was researching whether the governor could impose the Transportation and Climate Initiative on Virginia without General Assembly action. He found and cites the existing state law against rationing gasoline and other legislative oversight of that market in an analysis published today.

Schnare holds both environmental and law doctorates and served 34 years with the federal Environmental Protection Agency. His conclusion is the Governor lacks the authority to act arbitrarily through an executive order or agency decision.  t was the same conclusion reached recently by the Supreme Court in Washington state in reviewing and rejecting a cap-and-trade effort from that state’s governor, Jay Inslee.

Here’s the take on that from the Wall Street Journal editorial board:

Good news: The political panic over climate change doesn’t justify one-man rule. That’s the message the Washington Supreme Court delivered this week to Governor Jay Inslee, who tried to impose his command-and-control agenda by fiat.

Perhaps you heard Mr. Inslee for a millisecond in the presidential race last year declaring that climate change is “the most urgent challenge of our time.” He failed to galvanize the masses, much as he failed to persuade the Washington Legislature in 2015 when it rejected his cap-and-trade proposal.

The Transportation and Climate Initiative is a pending interstate compact to reduce atmospheric CO2 by capping and then rationing the sale of gasoline and diesel, accompanied by a carbon tax in the form of “allowances” required for each gallon sold.

There is only one bill pending so far before the 2020 General Assembly on TCI, and that one – from Republican Charles Poindexter of Franklin County – would mandate a General Assembly vote before joining. It is House Bill 1629. He had a similar bill before the 2019 General Assembly, which passed on a party line vote, was vetoed, and the veto was sustained on party line votes.

Once again, we’ll find out if the Democrats in the General Assembly are willing to surrender their authority to the governor and avoid recorded votes on such an important and controversial issue. There are dozens of bills pending with long-term visionary goals of low-carbon or zero-carbon energy 20 or 30 years down the road, with the possible costs unclear and debatable. They are lining up for those. Why pass up a vote on this?

Because TCI would impose a very concrete tax-and-cap scheme in 2022, which is not 20 or 30 year away. For almost the first time, people, voters, business owners have hard numbers on what these Green New Deal ideas actually cost to implement. The TCI experts themselves have calculated the allowances would translate into high costs at the pump, perhaps 17 or more cents per gallon. Give them credit for honesty.

Virginia started the similar Regional Greenhouse Gas Initiative (RGGI) process, which applies only to electric power plants, with proposed regulations at the Department of Environmental Quality. But several of the clean energy bills pending at this General Assembly now include direct authorization for Virginia to join.

One reason is the RGGI bills also spend the RGGI tax revenue in various ways. Schnare’s analysis examines whether the allowance charge that TCI would impose on wholesalers is a tax or a fee, coming down on the side that it is a tax. It is tax revenue the General Assembly will want to spend. That further argues for General Assembly action before TCI goes any further.

The state’s lawyers have to be part of the quiet closed-door process looking at Virginia’s role in TCI, and absent a published opinion, that advice will remain confidential. Perhaps somebody will ask for that published opinion.