Monthly Archives: May 2009

Is cap-and-trade a tax increase?

smoke-from-stacks_0001-2I came upon a blog on cap-and-trade posted by Harvard economic professor Greg Mankiw this evenign.  The heading of his blog was “Is cap-and-trade a tax increase?”. There isn’t a link on his blog for me to post a comment. So I sent him the following email:
Dear Professor Mankiw:
Of course cap-and-trade is a tax!! What is your point?
When Congress enacted the Resource Conservation and Recovery Act (RCRA) in 1986 requiring industries to properly dispose of their hazardous and toxic wastes, that TOO was a tax on industry and consumers. The costs of disposal are passed on to the consumers. So are we to do away with RCRA in order to keep tax on industry low? How would the population react when they find toxic wastes dumped on their front yard because that will happen when you repeal RCRA.
The same thing can be said about the federal regulations on seat belts, catalytic converters and air bags. They are all “taxes” on the consumers. Should we do away with them too?
So what is wrong with imposing a pollution tax on industry? The cap-and-trade is designed to provide a disincentive for industry to continue to spew out greenhouse gas. California has had a cap-and-trade on nitrogen oxides and sulphur oxides for some time now. Whether greenhouse gas is a danger to public health under the Clean Air Act is a separate issue. EPA seems to think it is. And if it is found to be a danger to public health, the Supreme Court has pretty much told EPA to regulate it.
Do you know of any regulatory scheme that will reduce pollution from industries that does not increase their cost of doing business (aka a “tax” on business)?
Update: Professor Greg Mankiw sent me an article in response to my email. A very interesting article on taxes and I highly recommend it.

Energy conservation at a Hilton Hotel?

dishwasher2I was staying at a Hilton hotel in Medford Oregon one weekend. It was one of those suite hotels that has a full kitchen, dishes and utensils, stove, microwave and a dishwasher. I drank out of one of the many glasses in the evening and went downstairs for breakfast the next morning.

When I went back to my hotel room, I found the maid had made my room and the dishwasher was running. I was very curious why the dishwasher was running since I only used one glass the night before.

I opened up the dishwasher and there was this ONE glass being washed.

Is there a wonder that we are in an energy crisis?

House Committee passed the Greenhouse Gas bill

On May 21, 2009, the House Energy and Commerce Committee (chaired by Henry Waxman) passed the Greenhouse Gas Bill by a vote ocapitolf 33 to 25. He needed 30 votes to pass it. Thirty-two Democrats and one Republican voted for it with 4 Democrats and 21 Republicans voted against it. The bill now goes to the floor of the House for debate and vote.

It is pretty certain that the bill will pass the full House given the large Democratic majority. However, it is not all certain that the Senate will have the votes necessary to pass it.

Stay tuned.

There it is……

waxmanChairman Henry A. Waxman and Subcommittee Chairman Edward J. Markey introduced “H.R. 2454, The American Clean Energy and Security Act.”  The Energy and Commerce Committee will begin markup of the bill on Monday, May 18, 2009, at 1:00 p.m., and will complete consideration before the Memorial Day recess.

“The legislation will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, promote America’s energy independence and security, and cut global warming pollution,” said Chairman Waxman.  “In support of these goals, this legislation ensures that consumers and industries in all regions of the country are protected.  I look forward to working with all members of the Committee to approve this legislation to make America the world leader in new clean energy and energy efficiency technologies.”

For some of you who have time on your hand, the proposed bill is over 900 pages long.

There have been a lot of complaints – mostly from the Republican side – that the greenhouse gas cap-and-trade bill is a “tax” on Americans.  These same people fail to understand that the purpose of the bill is to provide a disincentive for industries (primarily the coal-fired power plants) to continue to emit carbon dioxide into the atmosphere. That’s the whole idea of cap-and-trade. If you cannot meet the emission limit, you have to go to the open market and purchase emission credits. For those companies that choose to install emission control equipment, they would not have to pay millions to purchase emission credits. The bill would create jobs in the pollution control industry.

If cap-and-trade is to be considered a “tax”, then the regulations that control the disposal of  hazardous and toxic wastes would also be a “tax” because companies that generate hazardous wastes will have to pay more to have them disposed of properly. Are we against the regulation of toxic wastes?

So are those people who are against cap-and-trade also against regulating the disposal of toxic wastes? How would these people feel if some company dumps a load of toxic wastes on their front lawn where their children play?

Anyone cares to comment?

It is interesting to note that many major utilities are FOR the cap-and-trade law. Duke Energy is one of them.

The latest on the Climate Change Bill in Congree

capitolAccording to Roll Call – the newspaper that tracks legislative activities in Congress, the Democrats on the House Energy and Commerce Committee have reached a deal on some of the more contentious issues in the Climate Change Bill. Instead of the original proposed 20% cut in greenhouse gas emission by 2020, they have settled on a 17% reduction.

Waxman plans to unveil the revised Bill on Thursday (May 14) and feels he has enough votes on the committee to pass it. He needs 30 or more votes.

The latest on the Greenhouse Gas (GHG) bill in Congress

air-pollutionAs many of you know, the Obama Administration is pushing for legislature in Congress that will regulate GHG. In fact, President Obama told 34 Democratic members of the House Energy and Commerce Committee on May 5 that he would like to see cap-and-trade legislation before the end of this year.

One of the targets in the original proposal from the White House was to reduce GHG to 14% below 2005 emission levels by 2020. The powerful Chairman of the House Energy and Commerce Committee Henry Waxman set the target at 20% below 2005 emission levels by 2020 in his own original draft cap-and-trade bill. This was a much more ambitious target than the White House’s. It has been reported that Waxman will be softening his target to 17% as a compromise to attract more Democrats in his committee to vote for it.

There are 59 members (36 Democrats and 23 Republicans) on Waxman’s committee. He needs 30 votes to get any legislation out of the committee. At last count, Waxman has 18 yes votes (all Democrats), 19 maybes (all Democrats plus one Republican) and 22 no votes (all Republicans). He needs to get 12 votes out of the 19 maybes to pass his legislation.

In case you are wondering who is that lone Republican in the “maybe” column. That is Mary Bono Mack – who was married to the late Sony Bono (of Sony and Cher fame).

The firm of Cantor Fitzerald has a website that does an excellent job in tracking the cap-and-trade legislation. This post is based on the report from that website.

Company officials sentenced to a total of 147 months in jail

The following is an excerpt from a recent EPA press release. Note the nature and extent of the numerous environmental violations

violation-mcwane-truckOne of The World’s Largest Makers of Cast Iron Pipes and Four Company Officials Sentenced to a Total of 147 Months Incarceration and $8 million in Fines for Flagrant Abuses of Environmental and Worker Safety Laws.

 Atlantic States Cast Iron Pipe Company Yard

  Atlantic States Cast Iron Pipe Company (“Atlantic States”), a division of McWane Industries was sentenced to pay an $8 million fine, serve 48 months “monitored” probation and pay a Special Assessment of $12,000.00.

  Plant manager, John Prisque was sentenced to 70 months in prison and a Special Assessment of $525.00.

  Maintenance supervisor, Jeffrey Maury was sentenced to 30 months in prison.

  Finishing supervisor, Craig Davidson was sentenced to 6 months in prison and a Special Assessment of $575.00.

  Former human resource manager, Scott Faubert was sentenced to 41 months in prison and a Special Assessment of $400.00.

The trial beginning in September 2005 is the longest federal trial (defined in length, from jury selection to verdict) in environmental crimes history.

This is the fourth in a series of cases against McWane: three other McWane divisions (Pacific States Cast Iron Pipe Company in Provo, UT; McWane Union Foundry in Anniston, AL; and Tyler Pipe Company in Tyler, TX), along with individual defendants, have been convicted following trials, or pled guilty, for committing environmental crimes. The investigation of a fifth McWane division, McWane Cast Iron Pipe Company, is ongoing.

During the trial, the government presented evidence that the defendants routinely violated Clean Water Act permits by discharging petroleum-contaminated water and paint into storm drains that led to the Delaware River; repeatedly violated Clean Air Act permits by, among other things, burning tires and excessive amounts of hazardous waste paint in the furnace; systematically altered accident scenes and concealed serious worker injuries from health and safety inspectors; routinely lied to federal, state, and local officials who were investigating environmental and worker safety violations; and maintained a dangerous workplace that contributed to multiple severe injuries and the death of one employee at the plant.

The company and each of the defendants were convicted of the main conspiracy count in a 34-count Indictment. Atlantic States was convicted of a total of 32 of 34 counts, which also included five counts of making materially false statements to state and federal environmental agencies and the federal Occupational Safety & Health Administration; four counts of obstructing OSHA investigations; and 22 counts of violating the federal Clean Water Act and one count of violating the Clean Air Act.