OPINION/COMMENTARY

Cap And Trade: A System Made For Fraudsters Ever since Enron decided that carbon trading would "do more to promote Enron's business than almost any other regulatory initiative," informed observers have been wary of the idea. Yet the idea of creating a new commodity by capping emissions of greenhouse gases and issuing tradable permits to produce the emissions has gained ground as hysteria over effects of global warming has grown. Now, two separate investigations have demonstrated why carbon caps and trading are bad ideas, and why they were so attractive to Enron. In the first, the Congressional Budget Office analyzed the effects of cap and trade on American households. In the European version of the scheme that has been in operation since 2005, the permits are given away to firms. Some businesses are very much in favor of this, because it gives them an opportunity to reap windfall profits, as has happened in Europe. As the CBO found, "Because most of the cost of the cap would ultimately be borne by consumers, giving away nearly all of the allowances to affected energy producers would mean that the value of the allowances they received would far exceed the cost that they bear." So while energy companies benefit, the consumer suffers higher costs. If the allowances are sold, individual companies benefit less, as they have to pay for the allowances in the first place. But even if there is some compensation in the form of a reduction in payroll or corporate taxes, most of the population still suffers reduction in household income. The poorest fifth of the population suffers worst, losing about 3% of its take-home household income. The richest fifth, on the other hand, increase its take-home pay. Only if there is some carbon welfare bureaucracy to administer rebate payments do lower-income families benefit, but that almost triples the cost to the economy as a whole....

Congress on the Constitution: "Tell it to the Judge" he Constitution provides, "The Senators and Representatives… shall be bound by oath or affirmation, to support this Constitution…." Apparently there is a difference between taking this oath and taking it seriously. Last January, the House of Representatives passed H.R. 6, the “CLEAN (Creating Long-term Energy Alternatives for the Nation) Energy Act of 2007,” which includes: the “Ending Subsidies for Big Oil Act of 2007,” the “Royalty Relief for American Consumers Act of 2007,” and an untitled section, under which revenues generated by Sections I and II will be spent on yet-to-be-determined “alternative” energy sources. This is typical: in the 1980s, after creation of a commission to recover “$1 million a day” purportedly lost in “unpaid oil and gas royalties,” Congress promptly spent an additional $365 million. In 1995, Congress, to encourage exploration in the Gulf of Mexico’s deep water, granted some royalty relief for operators brave enough to go where none had gone before. Last summer that bore fruit with the discovery, 175 miles offshore in 7,000 feet of water, of 3 billion to 15 billion barrels of oil. Congress also gave the Department of the Interior (DOI) discretionary authority, but not a mandate, to limit the relief depending on oil and gas prices. The Clinton Administration adopted limits for most years; however, in 1998 and 1999, it did not. No skullduggery was involved; in fact, the DOI’s Inspector General wrote that industry officials reported the “mistake.” Now Congress plans a “gun to the head” of anyone with an interest in the 1,032 deep- water leases from 1998 and 1999, demanding they “renegotiate”—an ironic term given the “take it or leave it” nature of federal contracts—those leases: 20 producing leases must pay between $158 million and $788 million each; 526 leases being explored or developed owe $9,375 to $21,600 each. If they refuse, they will be barred from new Gulf of Mexico leases. Congress’s H.R. 6 could be a final Constitutional Law examination so replete is it with infirmities such as breach of contract, takings without “just compensation,” denial of equal protection and due process, and a bill of attainder....

Junk Science: Green Gas-Lighting? We will continue this column’s look at the unintended consequences and knee-slapping irony of our society’s mindless lurch toward becoming “green” by considering two new studies on alternative fuels. From hybrid cars costing far more than they save in the way of fuel economy to Northern latitude forests causing global warming, to mercury-containing compact fluorescent light bulbs potentially turning homes into toxic waste sites, it’s becoming more apparent every day that green-ness is not necessarily what it’s cracked up to be. Perhaps you have fallen (as did President Bush and the Congress in the Energy Policy Act of 2005) for the ethanol lobby’s line that ethanol is a “cleaner-burning fuel.” You may then be quite chagrinned to learn about a new study in the journal Environmental Science & Technology (April 18) from Stanford University atmospheric scientist Mark Z. Jacobson concluding that ethanol poses substantial health risks. “If every vehicle in the United States ran on fuel made primarily from ethanol instead of pure gasoline, the number of respiratory-related deaths and hospitalizations would likely increase,” states the media release for Jacobson’s study. "Ethanol is being promoted as a clean and renewable fuel that will reduce global warming and air pollution,” said Jacobson, “but our results show that a high blend of ethanol poses an equal or greater risk to public health than gasoline, which already causes significant health damage.”....

Post-Kelo America: An Optimist's View Given the ever-increasing size and scope of government, it’s understandable for those of us who care about liberty to view the legislative process with cynicism. But sometimes that cynicism can blind us to real successes when lawmakers try to initiate reform. Such is the case with the legislative response to the Supreme Court’s terrible 2005 decision in Kelo v. City of New London, in which the Court declared that local governments can use eminent domain to transfer property from to someone who promises to make more money with the land. The backlash against that decision has been, and continues to be, amazingly successful. To date, it has produced 38 laws addressing the abuse of eminent domain for private development. Most of those laws provide significant and substantial limits on that abuse. Most Kelo reforms (both from state legislatures and from citizen-driven initiatives) have been strong. For example, the vast majority of cases where eminent domain is used for private development involve dubious "blight" designations—i.e., labeling perfectly fine homes and businesses as “blighted” as a pretext for condemnation. Twenty state laws have either eliminated private-use condemnations for "blight" or defined the term so narrowly that it can’t be a vehicle for abuse. Five of those states—Pennsylvania, Kansas, Michigan, Florida, and Virginia—were, according to data collected by the Institute for Justice, among the top eight abusers of eminent domain pre-Kelo. (The other states with blight reforms are Alabama, Arizona, Georgia, Indiana, Louisiana, Minnesota, New Hampshire, New Mexico, North Dakota, Oregon, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming.) In addition, 19 laws require blight designations to be on a property-by-property basis, rather than an area-wide one, thus preventing "blight gerrymandering." And several new laws shift the burden of proving "public use" in condemnation actions from property owners to the government. For litigators, these changes represent dramatic improvements....

Light Bulb Lunacy How much money does it take to screw in a compact fluorescent lightbulb? About $4.28 for the bulb and labor — unless you break the bulb. Then you, like Brandy Bridges of Ellsworth, Maine, could be looking at a cost of about $2,004.28, which doesn’t include the costs of frayed nerves and risks to health. Sound crazy? Perhaps no more than the stampede to ban the incandescent light bulb in favor of compact fluorescent lightbulbs (CFLs) — a move already either adopted or being considered in California, Canada, the European Union and Australia. According to an April 12 article in The Ellsworth American, Bridges had the misfortune of breaking a CFL during installation in her daughter’s bedroom: It dropped and shattered on the carpeted floor. Aware that CFLs contain potentially hazardous substances, Bridges called her local Home Depot for advice. The store told her that the CFL contained mercury and that she should call the Poison Control hotline, which in turn directed her to the Maine Department of Environmental Protection. The DEP sent a specialist to Bridges’ house to test for mercury contamination. The specialist found mercury levels in the bedroom in excess of six times the state’s “safe” level for mercury contamination of 300 billionths of a gram per cubic meter. The DEP specialist recommended that Bridges call an environmental cleanup firm, which reportedly gave her a “low-ball” estimate of $2,000 to clean up the room. The room then was sealed off with plastic and Bridges began “gathering finances” to pay for the $2,000 cleaning....