Minnesota Introduces World's First Carbon Tariff 303
hollywoodb writes "The first carbon tax to reduce the greenhouse gases from imports comes not between two nations, but between two states. Minnesota has passed a measure to stop carbon at its border with North Dakota. To encourage the switch to clean, renewable energy, Minnesota plans to add a carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, to begin in 2012 ... Minnesota has been generally pushing for cleaner power within its borders, but the utility companies that operate in MN have, over the past decades, sited a lot of coal power plants on the relatively cheap and open land of North Dakota, which is preparing a legal battle against Minnesota over the tariff."
culmination of quite a long attempt (Score:5, Informative)
Minnesota's attempt to do this dates back nearly 20 years, long before the current global-warming political debate, so interesting to see it finally passing. I believe the first bill was proposed in 1992, which would've imposed a $6 per ton tax; here's a 1994 report [ilsr.org] by a MN environmental group as well. Major attempts seemed to happen every 3-5 years.
Re:Minnesota Carbon Tariff is Illegal (Score:5, Informative)
It's not nearly that clear in this case. The tax is only applied to companies doing business in Minnesota, and is only assessed on the portion of their business considered to impact Minnesota (i.e. emissions actually generated in Minnesota, emissions imputed to electricity transmitted in Minnesota, etc.). It's at least arguable that that doesn't violate the dormant commerce clause: MN isn't specifically taxing only imports and exempting in-state MN electricity generators, which is the usual inter/intra-state disparity in treatment that caused constitutional problems; nor is the state attempting to tax companies that don't do business in MN.
Re:UNCONSTITUTIONAL (Score:5, Informative)
Interstate trade is regulated by Congress, according to the constitution. Courts have held that all taxes on trade between states are an unconstitutional restraint on trade. The only exception is alcohol, which is granted an exception by the 21st amendment.
It's even worse (Score:5, Informative)
Gonzales v. Raich [wikipedia.org] - A woman in California grew medical marijuana (legal in CA) and gave it away for free, solely within California. This was defined as interstate commerce in the decision.
US v. Stewart [wikipedia.org] - Stewart personally designed and built his own homebrew machine guns, not for sale. After he was busted by the feds, he lost the case but won on appeal. The government appealed the case to the Supreme Court. It was remanded by the Supreme Court back to the appellate court for reconsideration "in light of" Raich. This means that the Supreme Court considers Stewart's actions to be interstate commerce too.
In conclusion, "interstate commerce" is now de facto defined as "anything the Federal government wants to regulate, even if there is no commercial or interstate aspect". Naturally, I imagine that this flexible definition is reserved for the Feds use only--no doubt states will have to continue to use the actual definition (ie. what the Constitution actually means).
Re:It's even worse (Score:3, Informative)
As far as "what the Constitution actually means", it's not clear that there is actually a blanket ban on states regulating interstate commerce--- there is textually no such ban. It's been inferred from the commerce clause to form the so-called dormant commerce clause [wikipedia.org]. But yes, under existing precedent the dormant commerce clause prohibits a much narrower range of things than the positive commerce clause enables, so states are not automatically prohibited from doing anything that Raich would permit to the U.S. government.
Re:I guess the State of Minnesota... (Score:2, Informative)
Why do governments so often fail to consider the effects of disincentives?
Huh? That's exactly what this is all about. They're trying to get people to stop using coal. They're not failing to consider the disincentives, the whole point of this tax is to create a disincentive. If everyone stops using coal and they end up generating no revenue at all with this tax, they will consider the tax to have been wildly successful.
Different interpretations of the law (Score:3, Informative)
There are multiple interpretations of the Interstate Commerce Clause. By some interpretations, States do have limited rights to regulate commerce with other states. Also, there seem to be additional interpretations of the law for state-owned services (See the paragraph on "In United Haulers Assoc. v Oneida-Herkimer Solid Waste Management Authority (2007)".
See the following site a good summary of some of the debates.
http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/statecommerce.htm [umkc.edu]
"The Commerce Clause is a grant of power to Congress, not an express limitation on the power of the states to regulate the economy. At least four possible interpretations of the Commerce Clause have been proposed. First, it has been suggested that the Clause gives Congress the exclusive power to regulate commerce. Under this interpretation, states are divested of all power to regulate interstate commerce. Second, it has been suggested that the Clause gives Congress and the states concurrent power to regulate commerce. Under this view, state regulation of commerce is invalid only when it is preempted by federal law. Third, it has been suggested that the Clause assumes that Congress and the states each have their own mutually exclusive zones of regulatory power. Under this interpretation, it becomes the job of the courts to determine whether one sovereign has invaded the exclusive regulatory zone of the other. Finally, it has been suggested that the Clause by its own force divests states of the power to regulate commerce in certain ways, but the states and Congress retain concurrent power to regulate commerce in many other ways. This fourth interpretation, a complicated hybrid of two others, turns out to be the approach taken by the Court in its decisions interpreting the Commerce Clause."
Re:It's Even More Complicated Than that (Score:5, Informative)
Au contraire, mon frere. This issue has been proved already in federal court, relating to federal lawsuits brought by NJ under the Clean Air Act to stop dirty coal-fired plants in upwind states (PA, OH, WV, maybe more).
Re:Constitutional? (Score:2, Informative)
Except that it is a case of an interstate tariff. My prediction is that it will be overturned by the courts.
I'm sure it won't be, precisely because it's not an interstate tariff, no matter how badly the Dakotas wish it was. The motives may be ultimately the same as a protectionist tariff, but the action itself is perfectly normal case of taxation. You can't overturn a cheese tax just because a lot of cheese gets imported from Wisconsin, you can't overturn a wine tax just because a lot of wine comes from California, and they won't overturn a carbon-tax just because a lot of coal-generated electricity comes from the Dakotas.
Re:UNCONSTITUTIONAL (Score:2, Informative)
because they are taxing people within their state, for consuming things within their state?
Re:I happen to favor this (Score:1, Informative)
This is, of course, predicated on you believing AGW. Which appears to be up for debate. Significantly.
Burning coal harms people and earth in way more ways than climate change. http://en.wikipedia.org/wiki/Environmental_effects_of_coal
Re:I happen to favor this (Score:3, Informative)
Re:Different interpretations of the law (Score:5, Informative)
Yes, but Article I Section 10 specifically forbids the States from using Tariffs to regulate commerce.
Re:Its about time (Score:1, Informative)
Taxing energy raises all costs - do you really thing the people of Minnesota can afford to pay more for heat, fuel for cars, food, lighting, clothing, and everything else right now? That's what taxing energy does - it raises the price of everything.
Do you know what else taxes do? Pay for roads, schools, police, etc. Things which the people of Minnesota use. This money needs to come from somewhere.
That's the fallacy with the knee jerk reaction to taxes. The money isn't being put in a hole, or being shipped elsewhere. It's spent on Minnesota.
All taxes effectively raise prices, either directly (making things more expensive) or indirectly (reducing the amount of income you have to spend on them). Sane tax policy is picking taxes that do the least harm to the economy.
Further, consider the status quo where production/jobs are effectively being exported to ND from MN due to (commendable) environmental standards. Now, obviously ND thinks this tax is against their interests (otherwise they wouldn't be preparing a lawsuit). It's clear that at last ND thinks that MN will be — on aggregate — better off under this deal.
Re:Its about time (Score:3, Informative)
All taxes effectively raise prices, either directly (making things more expensive) or indirectly (reducing the amount of income you have to spend on them). Sane tax policy is picking taxes that do the least harm to the economy.
First, I never argued against taxes, I argued against taxing energy. Secondly, taxing energy makes EVERYTHING cost more. At every step of production, transportation, and sales, prices go up. It is the worst kind of tax because EVERYTHING relies on energy at some point in the production / sales chain. Even a book requires energy to get the lumber, transport the lumber, turn the lumber into paper, get the paper to the printing facility, run the printing facility, print the book, transport the book to the book store, and provide electricity at the book store. Then there's also the increased cost of paying employees more to deal with increased energy, as well as the increased cost of driving to the store to buy the book.
Those who support taxing energy may try to claim that it only raises the cost of fuel or running your computer, but in reality it raises the cost of everything you do and everything you buy.
Re:It's even worse (Score:3, Informative)
Well, despite your assertion, that's exactly what they did in the Stewart case. Anyway, your arguments seem to be summarized by your final statement:
You beg the question... under which Constitutionally-enumerated power does the Federal government have the ability to designate machine guns or even drugs as illegal? Oh, right, the original theory they used was the interstate commerce clause--thus making your argument circularly referential.
Case in point: back in the beginning of the 20th century, the Powers That Be decided that drugs are bad (mm'kay?). They hadn't invented twisting the commerce clause beyond belief, so they attempted to tax it out of existence [wikipedia.org]. That wasn't very effective as a total ban, so they decided to escalate.
Think of Prohibition. When it was imposed, Constitutional interpretation indicated that an entire amendment was necessary to ban alcohol. In today's world, this could be accomplished by a simple law under the twisted commerce clause theory.
Actually, I misspoke: in today's world, all it would take is a bureaucrat making a decision, much less a law or (god forbid) an amendment. Look what happened with MDMA -- the DEA criminalized its possession (ie. Schedule I) by regulatory fiat [erowid.org] in 1985. No law, not even a Congressional debate.
We have certainly come a long way in Constitutional interpretation, and not necessarily in an intellectually honest fashion.
The original, Wickard v. Filburn (Score:4, Informative)