Luther Strange, Katherine G. Robertson call federal energy plan “overreach”
In the torrent of overreaching directives coming from Washington to the states, Alabamians may not be aware of the ongoing effort by the Environmental Protection Agency to sidestep Congress and stage a takeover of American energy. Not only are their regulations likely unconstitutional, but they would have a particularly negative effect on Alabama’s economy and our most vulnerable residents. Late last year, the Obama Administration announced a sweeping new regulatory scheme, the Clean Power Plan, aimed at reducing carbon emissions. The plan would force electricity suppliers to: Spend money on so-called efficiency projects that produce less energy at higher costs; Invest in unproven renewable energy projects that produce less energy than less-expensive, conventional methods; Artificially limit the amount of electricity customers can use; Operate gas-fired power plants even if other, less expensive energy sources are available, and; Unjustifiably deny consumers access to existing, lower-cost coal-fired plants that were paid for through current low rates. If a state does not comply, a “federal plan” will be imposed. As Attorney General Luther Strange recently testified before the U.S. Senate, the plan ignores well-established limits of its executive authority under the Clean Air Act and aims to fundamentally alter the way America produces and uses energy. The latest executive overreach, it will lead to enormous uncertainty about the way many states, including Alabama, produce and use energy and will give rise to harmful economic effects. Not only will the cost of energy go up, unduly harming those on fixed incomes, but it will directly increase the cost of many goods and services. There are even concerns of threats to energy grids during peak months. Nevertheless, the Obama Administration has largely ignored those likely consequences and has gone to great lengths to disguise the negative economic, social, and reliability effects that its new regulations will have. For Alabama, the EPA ruling requires the state’s power plants to cut carbon emissions by 27 percent by 2030. To put that in perspective, consider this: More than half of all the electricity Alabama Power generates in the state comes from coal-fired plants and more than 16,000 Alabama jobs are dependent upon the coal industry, which has an estimated $1.3 billion economic benefit to the state. The story gets worse for the individual family. A November 2014 study by Energy Venture Analysis indicates the EPA’s proposed rule would increase the average annual Alabama household energy bills by more than $800 (or 36 percent) in 2020. In Alabama, EPA’s plan would increase the total annual cost of energy to almost $15 billion in 2020. That’s a $5.2 billion annual cost increase for energy in Alabama. Such costs will deal an especially heavy blow to households earning less than $10,000 per year. Nationally, those families already spend an astounding 60-80 percent of their income on energy. Even households earning between $10,000 and $30,000 per year still spend more than 20 percent of their income on energy. In short, the EPA is attempting to make fundamental and irreversible changes to American energy production that will jeopardize Alabama families’ economic well-being by making states do what the EPA cannot. Although environmental stewardship is vital, ceding more power to the federal government rarely produces the desired results. Economic growth, environmental stability, and energy reform are best achieved through open markets and innovation. Attorney General Strange joined 11 other state attorneys general in August to sue the EPA to block implementation of its costly and controversial carbon emission rule that will force Alabamians to live in the dark in order to satisfy the Obama Administration’s political agenda. As was noted in The Wall Street Journal this week, “the more states that refuse to give in to the EPA’s demands, the more likely it is that the agency will be forced to hold back the most burdensome elements of its Clean Power Plan.” The Alabama Attorney General’s Office and the Alabama Policy Institute are united in the fight against this most recent, brazen attempt by the federal government to coerce state action while dismissing the very real threats that these regulations pose to our economy and citizens. Luther Strange is Alabama’s attorney general. Katherine Robertson is vice president of the Alabama Policy Institute, an conservative nonprofit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the authors, please email communications@alabamapolicy.org or call (205) 870-9900.
Alabama should reject Medicaid expansion
In 2013, Arkansas’s then-Gov. Mike Beebe, Democrat, pushed a non-traditional Medicaid expansion program that gives low-income individuals subsidies to use toward private coverage, rather than enrolling them into Medicaid. The initiative was marketed as a “state-based” plan for reform and one that inserts flexibility and innovation into expansion as outlined under the Affordable Care Act (ACA). Nearly all Republican governors took a firm stand against traditional expansion, but some now perceive Arkansas’s model as a means to receive federal money while distancing themselves from the ACA. Unfortunately, as Arkansas can now attest, Medicaid expansion remains a bad deal for states and cannot truthfully be sold as a fiscally prudent or free market idea. When you get beyond the rhetoric, Arkansas’s expansion has been a disaster. There are (at least) five lessons from Arkansas that Alabama’s leaders should bear in mind as they consider expansion: Describing expansion through waivers as state-based, flexible, or innovative is misleading. Arkansas’s model is a far cry from a block grant and the few concessions offered from Washington are mere window dressing. No state has been granted the work requirements that were promised ad nauseam by governors. No state has been able to assign any meaningful cost-sharing requirements to beneficiaries. And no state has successfully negotiated any eligibility threshold that is more limited than that of the ACA. Additionally, any state-initiated waiver agreed to by the federal government is time-limited, whereas expansion itself goes on forever. Expansion provides a disincentive to work. The population of newly eligible Medicaid recipients is largely made up of those who ought to be in the workforce and states can’t do anything to change that. Estimates for Alabama show that more than 75 percent of the newly eligible would be able-bodied adults with no dependents. Furthermore, states that have expanded Medicaid inevitably create a welfare cliff for these individuals. For those on the cusp of the 138 percent poverty threshold, earning only a few more dollars a year in income kicks them out of Medicaid and into the ACA’s exchange plans that subject them to potentially thousands of dollars more in out of pocket costs. States that expand Medicaid allow thousands of nondisabled, childless adults into the program which puts at risk the Medicaid safety net for truly vulnerable patients and families. States like Arkansas and Alabama already struggle to serve their Medicaid populations. With expansion, the poor and disabled who truly need this healthcare — those who Medicaid was created to serve — will be competing with those who are able-bodied and without dependent children for the time and attention of the state’s limited number of providers. Much like traditional expansion, the private option is driven neither by fiscal responsibility nor free markets. The Government Accountability Office reported that Arkansas’s private option expansion will cost nearly $1 billion more than traditional expansion. Following implementation, Arkansas’s spending was over budget every month for the whole first year until the federal reimbursement cap was raised. That affirms that the Obama administration will recklessly agree to spend whatever it takes to pressure states into expansion. Again, that’s because the federal government — not the state — maintains the real control, and the strict parameters agreed to leave very little room for free market competition. Furthermore, there is zero cost-sharing required for enrollees below the poverty line. While the state is now implementing an optional cost-sharing program for some enrollees, the federal government will not allow non-payers to be disenrolled from the program. Expansion imposes a substantial cost to the state, despite the federal government’s guarantee. Medicaid spending already consumes 35 percent of Alabama’s General Fund. Medicaid costs continue to increase year after year, inevitably siphoning resources away from other budget priorities (the same is true for federal budget priorities like defense spending). Expansion is not a solution to this problem. While the federal government agrees to pay 100 percent of the cost of expansion for the first few years, this reimbursement tapers off to 90 percent in 2020. The 10 percent price tag alone represents millions of dollars, but does not even include the added administrative costs that the state will immediately incur if Medicaid is expanded. To further complicate matters, Congress is already moving to cut the enhanced match for expansion so, in reality, the total cost to the state is immeasurable. Medicaid expansion was bad for Arkansas and there is no reason to believe that Alabama’s experience would be any different. Alabama’s conservative legislators should learn from Arkansas’s mistake and commit to saving their state from a similar disaster. Bryan King is a member of the Arkansas state Senate representing the 5th District. Katherine Robertson is nice president for the Alabama Policy Institute, an independent nonpartisan, nonprofit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the authors, please email info@alabamapolicy.org or call (205) 870-9900. Reprinted with permission from Alabama Policy Institute.
Climate change plan faces high-profile legal test
The centerpiece of the Obama administration’s effort to tackle climate change is facing a high-profile legal test as a federal appeals court considers a plan that has triggered furious opposition from Republicans, industry figures and coal-reliant states. The U.S. Court of Appeals for the D.C. Circuit hears arguments Thursday in two cases challenging the Environmental Protection Agency’s ambitious proposal to slash carbon pollution from the nation’s coal-fired power plants that is blamed for global warming. The lawsuits — one from a coalition of 15 states and another brought by Murray Energy Corp., the nation’s largest privately held coal mining company — are part of a growing political attack from opponents who say the move is illegal and will kill jobs, cripple demand for coal and drive up electricity prices. The rule proposed by the Environmental Protection Agency last year requires states to cut carbon emissions by 30 percent by 2030. It gives customized targets to each state, leaving it up to them to draw up plans to meet the targets. EPA officials say the rule would protect public health, fight climate change and lower electricity costs by 8 percent by 2030. But a backlash has been building. Last month, Senate Majority Leader Mitch McConnell, R-Ky., sent a letter urging the governors of all 50 states to defy the EPA by refusing to submit the compliance plans. Opponents also are getting support from an unlikely ally, Harvard Law professor Laurence Tribe, an Obama mentor who has infuriated liberals by denouncing the EPA rule as unconstitutional. “Burning the Constitution should not become part of our national energy policy,” Tribe told a House committee last month, representing Peabody Energy Corp., the world’s largest private-sector coal company. At issue before the court is whether the EPA has legal authority for its plan under the Clean Air Act. The agency and environmental advocacy groups have urged the court to throw the cases out as premature, since the agency won’t issue a final rule until this summer. David Doniger, director of the Natural Resources Defense Council’s climate and clean air program, called the lawsuits a ploy “to dress up the political attacks being led by Mitch McConnell in the Senate and others in the House.” But Murray Energy and the states say the court should issue a rare “extraordinary writ” to stop the EPA from taking action beyond its power even before the rule becomes final. “The stakes are so high, and delay will waste enormous amounts of industry, state, and federal resources and result in increased coal-fired power plant retirements that cannot be later remedied,” the company said in court documents. West Virginia and other states argue that the plan is illegal because coal-fired power plants already are regulated under a separate section of the Clean Air Act. They say the law prohibits “double regulation.” The legal debate focuses on dueling provisions added by the House and Senate to the Clean Air Act in 1990. Instead of trying to reach a compromise, Congress included both. The rule’s opponents want EPA to abide by the House language, which says if an industry is already regulated under one section of the law, it can’t be regulated under a different part. The EPA prefers the Senate version, arguing that the agency is only barred from regulating pollutants covered by another section. In this case, the agency says, the law allows it to regulate carbon dioxide, which is not already regulated under a different part of the law. Courts typically defer to an agency’s interpretation when the law is ambiguous. Tribe, the Harvard professor, also is getting a few minutes of time before the court Thursday to argue that the proposal also infringes on the right of states and the role of Congress in violation of the Constitution. All three judges on the panel hearing the case were appointed by Republican presidents. The states challenging the EPA’s proposed rule are Alabama, Alaska, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, West Virginia, Wyoming and Wisconsin. Republished with permission of The Associated Press.
