The Regional Cap-and-Trade Collapse

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Cap and trade, a favorite of statists and even many economists who otherwise are not statists, continues to be touted as a great scheme to combat climate change/global warming. Governor Chris Christie has attempted to pull Bruce Springsteen’s home state out of the Regional Greenhouse Gas Initiative (RGGI). That compact of ten Northeastern states uses a cap-and-trade auction for carbon emissions. The good governor appears to comprehend that things such as RGGI contribute to the dreadful rankings New Jersey gets for its tax and regulatory structure.

Christie stated that “RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernable or measurable impact upon our environment.” As such, RGGI was “a failure.”

When Christie pulled the plug, the RGGI auction was suspended due to a lack of bidders to keep the price above the official price floor. The majority of carbon-spewing permits were unsold.

The New Jersey legislature, ever vigilant against any move to make the state a more attractive place for business, passed a bill to revoke the governor’s revocation. It is presumed he will veto the bill that revokes his revocation of New Jersey’s participation. So the matter is unresolved.

Now, the law firm Smith Valliere and the Competitive Enterprise Institute have filed suit in New York court contesting the authority of the state’s governor (now Andrew Cuomo) to put New York into the RGGI without legislative approval. The scheme has generated over $320 million in revenue for the state in three years. That revenue is supposed to go for “green initiatives,” ha ha.

The suit alleges that a disguised tax has been unconstitutionally imposed on the citizens of New York without approval of the legislature. Shockingly, even in New York, which constantly challenges California to lead the nation in taxes, the governor cannot enact taxes by fiat. Hence, RGGI’s cap-and-trade is “taxation without representation.”

As New York continues to make itself ever-less friendly to live in, let alone run a business in, it remains to be seen if the legislature will hope the courts uphold the tax so it does not have to vote directly on the matter. Better to pontificate about being “green” without attaching a specific price tag to alleged green policies.

  An economist and lawyer, Roger Meiners defends the superiority of the common law--legal traditions developed through the courts--over federal regulation. In his view, the success of markets is intertwined with the common laws strong protection for property rights. Common law protects the environment by allowing individuals to take action...
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