States Can Save Taxpayers Millions On Obama’s Carbon Rule, Simply By Doing Nothing

Justin Sykes Analyst, Americans for Tax Reform
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In a recently unprecedented and historic move last month, the Supreme Court of the United States issued a stay on President Obama’s signature Clean Power Plan. Such a move means the Clean Power Plan, or as often referred the “Carbon Rule,” is halted until all legal challenges have been resolved. As unprecedented a move by the nation’s highest Court was, what’s even more astounding is some states are still planning to waste taxpayer dollars complying with a law that will likely be overruled.

Given the Supreme Court has issued a stay on the Carbon Rule, the EPA is prohibited from forcing States to take action to comply with the rule until all legal challenges have been resolved. States are now faced with mounting reasons why preemptively complying with the Carbon Rule prior to legal resolution would be a massive and unnecessary self-inflicted wound.

The most obvious argument against compliance is states could waste millions in taxpayer dollars and revenue preparing to implement the Carbon Rule. For the Court to issue a stay there must be a determination that legal challenges could likely be successful on the merits. SCOTUS’s decision to issue the stay indicates it is more likely than not that the Carbon Rule will be defeated. Thus states that choose to comply prior to legal resolution will leave state taxpayers holding the bag for Obama’s failed policy.

Additionally, EPA Administrator Gina McCarthy has admitted “nothing is going to be implemented while the stay is in place,” and the Carbon Rule “is clearly on hold until it resolves itself through the courts.” Experts predict the Supreme Court will not likely act on the Carbon Rule until mid-2018. At that time, if the Court was to uphold the rule, deadlines will likely be tolled, and compliance would not likely begin until 2024.

Even with a likely defeat of the Rule on the merits, and uncertainty surrounding compliance deadlines, a number of states are illogically moving forward on the Carbon Rule. In doing so, such states are voluntarily committing to wasting the time of state agencies, harming state businesses, and worst of all wasting millions in taxpayer dollars.

States such as Iowa, Colorado, and Minnesota, among others, have illogically issued statements of commitment to developing compliance plans. Given the legal uncertainty, states committing taxpayer dollars to complying with the Carbon Rule can be likened to an investor knowingly buying stock in a company that is on the verge of bankruptcy … it makes no sense. Thus you have the potential for millions in state revenue being gambled away on a bet, that more than likely will be lost.

Yet wasted state revenue isn’t the only impact of preemptively complying with the Carbon Rule, as the long term costs to state low-and middle-income residents will be just as disastrous. For instance, low-to-middle-income families represent over roughly 40 percent of the households in Iowa, Colorado, and Minnesota. On average in each of these states, these families spend around 16 percent of their budgets on energy. Given these states are projected to see peak electricity price increases at and above 30 percent as a result of the Carbon Rule, such voluntary compliance is especially troubling.

Sadly Iowa, Colorado, and Minnesota are not the exceptions, as over 40 states would see double-digit rate increases if the Carbon Rule is implemented. Such massive increases will put energy costs for millions of low-to-middle income families on par with other necessities such as food, housing and healthcare.

While some states such as Wisconsin, where Governor Scott Walker has signed an executive order prohibiting state resources from being used to comply with the Carbon Rule, are pushing back, many states are still on the fence. States trying to determine their position on President’s Obama’s onerous and costly Carbon Rule should be reminded that they can save taxpayers millions while preserving future economic growth, all by simply doing nothing.