TCI Debate Rages in Comments on Proposed Rule

by Steve Haner

The political wannabes in both parties and the state’s media are continuing to ignore it, but the argument over the proposed motor fuel carbon tax called the Transportation and Climate Initiative rages in comments on the proposal flowing into its advocates.

The Thomas Jefferson Institute has also launched a short video (above), perhaps just the first, to alert the public through more populist means. It features owners of two regional fuel businesses, well known as major local employers and taxpayers. Without doubt, Virginia’s membership in TCI would shrink and perhaps severely damage those businesses.

The video was actually ready to use had the 2021 General Assembly taken up the issue, but Governor Ralph Northam did not ask for legislative permission to join the interstate compact involved. The state remains involved in the planning for the cap and tax and ration scheme, now set for 2023 in the states who agree to the compact.

If put in place, all fuel Virginia wholesalers would need to buy government-issued allowances to sell gasoline or diesel, in effect a carbon tax. The amount of allowances will be frozen to prevent the any growth in fuel sales, and then decline annually to force down consumption, in effect rationing. 

Perhaps the call for public comments published here on Bacon’s Rebellion added to the flood. You can review the more recent responses to the detailed model rule here, and there are hundreds from associations, businesses, and many individuals. There is as much focus on the financial benefits the new fuel tax revenues may provide to low-income Virginians as there is on the claimed health and environmental benefits.

A typical comment, repeated verbatim so often it was clearly a campaign, focuses on the money:

I call for the TCI-P Model Rule to include (1) a minimum investment amount to ensure overburdened and underserved communities in Virginia receive a greater-then-proportional share of investments from the program, (2) integration of air quality commitments across Virginia, and (3) robust empowerment of Virginia’s Equity Advisory Body.

The Sierra Club came out in opposition to TCI as envisioned in the model rule:

We feel the CO2 emissions reduction target of 26% by 2032 is too weak and falls far behind President Biden’s goal to cut the greenhouse gas emissions economy wide 50% by 2030. We appreciate that this is the strongest option that was modeled for. However, since the start of the TCI process, the landscape has changed. We believe the target should be in line with what current science by the IPCC recommends — a 45% reduction by 2030. That higher target reduction would be sufficient to ensure participating states reach their own adopted targets.

No question that a higher target would require higher allowance prices (carbon taxes) and tighter supply caps, also forcing up prices. And then Sierra Club subsumes the mission of reducing carbon dioxide emissions into labor union activism and income transfer.

The Draft Model Rule should contain assurances that investments create economic benefit for local communities in the creation and implementation of the program. There should be set requirements for Project Labor Agreements, prevailing wage requirements and benefits, an explicit neutrality policy on all collective bargaining issues, no mandatory arbitration, and a “ban the box” hiring policy to ensure people with criminal records can access employment opportunities.

The proposal is aimed at fossil fuels used in transportation, not directly at their use in manufacturing. But manufacturers are dependent on transportation, and it doesn’t take a crystal ball to predict all fossil fuels used for any purpose are likely to be targeted next. So the Virginia Manufacturers Association posted a strong dissent.

VMA noted that many of the other Northeastern states considering this are already high-cost energy states for manufacturers, but Virginia has not been, and imposing this will move Virginia into a less competitive position. It notes that transportation emissions are going down with or without TCI, and Virginia’s emissions are already lower than many of the other TCI states.

The Virginia League of Conservation Voters looks at the same proposal and says yea, but again requests that more of the billions of consumer dollars to be extracted at fuel pumps be targeted into specific favored neighborhoods:

The TCI-P also presents the opportunity to direct investments in a cleaner transportation system in the communities that have suffered the most from vehicle pollution. While the model rule calls for at least 35 percent of TCI proceeds to go toward frontline, impacted communities, here in Virginia I would hope we go above and beyond that benchmark to at least 50% of TCI revenue in programs and infrastructure that will lower this disproportionate pollution burden.

Quite a few comments show that to many in the public this is mainly a fuel tax increase, with all the political and economic baggage that creates. One major tax not being raised in President Joe Biden’s proposed infrastructure package is the most logical one, the federal gasoline tax. He didn’t touch that third rail.