Will the Feds Take Over Local Zoning?

Posted on March 8, 2021 by Paul Trampe
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One of the Biden Administration’s first executive orders has revived the Department of Housing and Urban Development’s “Affirmatively Furthering Fair Housing Rule.” This rule was proposed by the Obama Administration, but time ran out before it could be fully implemented. The Trump Administration rescinded the rule.

The rule requires communities which receive grants from the Department of Housing and Urban Development (HUD) to evaluate the availability of affordable housing by a number of metrics including comparison to their neighbors. Actually, the rule is theoretically based on the racial composition of communities, not the economic class, because that is the only basis under the Fair Housing Act through which HUD is authorized to act. However, the true goal is the introduction of low-cost housing into what are currently high-cost suburbs.

Jurisdictions found to be lacking in fair housing must produce an action plan in order to be certified for whatever HUD funding they would otherwise receive. HUD has long been able to act under the Fair Housing Act if there are disparities within the same local jurisdiction. The new rule allows HUD to demand changes in local laws when wealthier jurisdictions if they are in geographic proximity to lower income jurisdictions. For example, if Stafford conducts the required evaluation and does not have as much low-income housing proportional to its population as does Prince William, even if Stafford has practiced fair housing practices among its own citizens, it will be required to produce an action plan.

One suggested mitigation strategy is to form a regional housing authority combining an urban jurisdiction with one or more of its suburbs. Whatever the action plan entails, it inevitably involves local government elected officials giving up autonomy on zoning and other traditionally local responsibilities. Advocacy groups can file lawsuits if they believe the action plan is inadequate or a jurisdiction’s self-evaluation is skewed – such as wealthy suburbs comparing themselves only to each other when there is an urban area nearby.

The Obama Administration, and now the Biden Administration, are not wrong in their diagnoses of a problem. When low-income families are concentrated in one area far from the economically vibrant areas of the region, they lack access to jobs, education and transportation. However, as usual, the federal government seeks to solve a problem caused by big government with more big government while trampling all over local governments’ role and the sovereignty of states.

While NIMBY sentiments with regard to residential development can be found on all points of the political spectrum, it is usually the left which claims there is not enough low-income housing while, in proffer states like Virginia, simultaneously demanding that developers pay more. Once excess proffers are added to the cost, affordable housing becomes no longer affordable. The most notorious cases of severe zoning restrictions which keep out low-income families are in the liberal cities of the Pacific northwest such as San Francisco, Seattle and Portland, in addition to the liberal city of Chicago. While the high cost of housing and homelessness in these areas have many causes, including overregulation by city and state governments, the opposition to the building of new low-cost housing is certainly a major part of the problem.

The flaw in the plan as far as its proponents are concerned is that local jurisdictions only come under its precepts if they accept direct grants from HUD. Many of the wealthy localities at which the regulation is aimed, do not receive such grants and therefore are not subject to its strictures. We can expect that HUD will try to entice jurisdictions such as my county of Spotsylvania with offers of grants which will then bring us under the new regulations. As we saw in the Medicaid expansion debate, there is great political pressure to accept any money the federal government makes available. But it is a fool’s bargain. Until the next Republican administration in Washington can cancel the regulation, the best defense for local governments who do not want to cede control of their city or county to unelected bureaucrats in Washington is to refuse such offers

In the meantime, we should challenge the contradictory demands of the left to add “affordable” housing while making it prohibitively expensive. If local governments will look past NIMBY attitudes: if they will allow a reasonable path to get low-income housing approved: if they will refrain from adding on exorbitant costs which makes low-income housing into middle-income housing, there will be no need for a federal takeover of zoning. The free market will fill the need for affordable housing if local governments merely will get out of the way.

Posted in Government Reform, Housing, Land Use | 1 Comment

Smithfield’s court loss may spell trouble for large-scale livestock farmers

Posted on March 8, 2021 by Gary Baise
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Murphy-Brown, a subsidiary of Smithfield Foods, lost a major case on November 19, 2020. With Thanksgiving activities and election allegations, little attention was paid to this loss other than a few environmental groups and farm publications (full case summary here).

Federal judge J. Harvie Wilkinson III, appointed by President Reagan, indicted the entire industrialized hog industry, saying, “It is past time to acknowledge the full harms that the unreformed practices of hog farming are inflicting.”

Judge Stephanie Thacker, an Obama appointee, wrote the majority opinion. Judge Steven Agee, appointed by President George W. Bush, defended Smithfield and Murphy-Brown, indicating he would have ordered a new trial.

Judge Wilkinson “…commiserated with the neighbors, the majority of whom are Black, Latino or low-income. He empathized with the millions of hogs raised in the dark, crowded, filthy barns without ever touching grass or seeing the full glow of the sun.”

Clueless?

Obviously these judges have not a clue of how hogs were raised in the 1940s, 50s and 60s. These judges again have no clue nor do the lawyers apparently of how to present a case showing how the conditions have improved dramatically for the housing, feeding, and watering of hogs which America eats. Smithfield’s lawyers failed to present to the judges how really horrible conditions were for the raising of hogs outside in zero degree conditions in decades past.

The winning law firm from North Carolina claimed that the “Fourth Circuit Affirms Smithfield’s Subsidiary Willfully and Wantonly Interfered with neighbors’ property rights.” In quoting from the court opinion the winning law firm said, “The Court acknowledges that while there was ample evidence of Murphy-Brown’s willful misconduct justifying punitive damages, the district court should have limited the applicability of evidence regarding Smithfield’s financial status and remanded the case for new proceedings solely on the amount of punitive damages…”

The lead appellant counsel for the plaintiffs said “…Smithfield willfully and wantonly interfered with our clients’ ability to live comfortably in their homes.” The U.S. Court of Appeals saw briefs from the American Farm Bureau Federation (AFBF), National Pork Producers Council (NPPC), the National Association of Manufacturers, the U.S. Chamber of Commerce, National Turkey Federation, and many more heavy hitters.

Right-to-farm case

The case started out as a Right-to-Farm case. Virtually all nuisance cases have been won with the exception of this one. Smithfield lost at the district court level; the award was against Smithfield and Murphy-Brown, and compensatory and punitive damages were awarded in the millions of dollars to the plaintiffs.

The opinion written by Judge Thacker lists a litany of actions against Kinlaw Farms, a contract grower for Murphy-Brown. In a 67-page opinion, Judge Thacker eviscerates the lawyers’ argument for Smithfield. From the opinion it appears the judge believes and concludes that the concentrated feeding of hogs is terrible. Judge Thacker and her fellow judge agreed with the U.S. district court judge on all the legal issues.

The one-time nuisance damages and nuisance are mentioned on page 21 of the opinion. It is unclear what the defendant lawyers argued but one can conclude from the opinion there was little or no concern about North Carolina’s Right-to-Farm statute.

Once the nuisance and Right to Farm provision protection are removed by the judges, then there is no bar and defense for the contract farmer be it in hogs, broilers, poultry egg laying or any other concentrated animal feeding operation.

In fact Judge Thacker said “…it is beyond debate that North Carolina case law dating back over 100 years includes recognition of loss of use and enjoyment from “annoyance” and “discomfort”, (emphasis supplied) as well as other forms of damages…”

This judge does not recognize that starting in 1964 state legislators began passing Right-to-Farm statutes to shield farmers from alleged annoyance and discomfort.

Farming is by its very nature a nuisance because it creates dust, pesticide drift, smells and odors, and unsightly activities. This 4th Circuit opinion November 19, 2020 is a must read opinion for every farmer and integrator who operates a concentrated feeding operation. The agricultural world changed November 19 and few in the agricultural world noticed. Smithfield settled this case the very next day for an unspecified amount.

A version of this commentary originally appeared on February 16, 2021 in the online Farm Futures.  The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

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Virginia’s Progressive Assembly Turns to Tax Policy

Posted on March 3, 2021 by Stephen D. Haner
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The COVID-19 recession barely dented Virginia’s state budget. The massive spending growth adopted in the pre-COVID budget a year ago is largely back on track. Yet some legislators think the time is ripe to hunt for more revenue by re-writing the state’s tax code.

The two-year $48.2 billion General Fund revenue estimate endorsed by the General Assembly Saturday is less than $200 million lower than the comparable figure a year ago, a rounding error in a $143 billion overall budget.  There is every reason to believe the current tax estimates will prove too low as another round of federal stimulus revs the economy in coming months.

There is logic in examining tax policy without the pressure of a financial crunch.  There is also a new and very progressive Democratic majority in Richmond that will be applying its definitions of “fair and equitable” in these reviews.  The battle over whether and how much to tax Paycheck Protection Program grants to Virginia employers was a warning bell.

The centerpiece of the new effort will be the Joint Subcommittee on Tax Policy proposed by Virginia Senate Finance and Appropriations Chair Sen. Janet Howell, D-Fairfax, and included in the final budget conference report.  Six senators, six delegates, their staff and “any other stakeholders deemed appropriate” will gather to face a broad list of issues, including:

evaluating the fiscal impact of amendments to tax brackets, tax rates, credits, deductions, and exemptions, as well as any other factors it deems relevant to making Virginia’s individual income tax system more fair and equitable; (ii) giving consideration to the fairness, certainty, convenience of payment, economy in collection, simplicity, neutrality, and economic efficiency of the Commonwealth’s tax policies and any changes thereto…

There is no deadline for any report or recommendations from the panel. This November voters will be refreshing the House of Delegates and electing a new Governor.  A list of tax recommendations from the majority party would be of great value to that process, so don’t expect one until after the voters have gone home.

House Finance Committee Chairwoman Vivian Watts offered her own successful study resolution, this one directing the Joint Legislative Audit and Review Commission to zero in on the Virginia’s income tax to increase its progressivity (higher taxes on higher incomes).  Her initial request was for a report in November, after the election but in time for the 2022 General Assembly.  The one major change in her proposal was to delay that to a November 2023 report.

Watts’ text mentions several issues that have come up in recent sessions. Progressives want to make the Earned Income Tax Credit into a refundable credit on Virginia taxes, meaning some who benefit might actually get checks from the state.  The Thomas Jefferson Institute for Public Policy, among others, has pushed for major increases in the state’s standard deduction, now ridiculously lower than for federal taxes and most other states.

The resolution also points to another perennial issue, efforts to tie the state’s income tax brackets and deductions to inflation.  Absent such adjustments, inflation can slowly raise taxes as incomes rise.  The state has a few examples of “indexing” in the tax code, but only when it means more revenue for the state, not less.

Assigning this income tax review to JLARC might not be benign.  JLARC is beginning to reflect the priorities of the new Democratic majority it works for.  A study on various economic incentives released in September claimed its first casualty this session, justifying the elimination of tax credits supporting the state’s ailing coal industry.  This was a minor skirmish in Virginia’s growing war on fossil fuels.

The corporate income tax is not cited in Watt’s JLARC study, but she does note that not all businesses are incorporated.  Those that are not incorporated use the individual tax rules, “and almost all of the more than 25 individual income tax credits available to taxpayers focus on economic incentives, rather than progressivity,” her resolution states.

There is one effort focused on corporations, however, hitting mainly the largest of them.  Watts introduced a successful resolution asking state staff to prepare for unitary combined reporting by related business entities.  And to figure out whether that would increase state tax revenue, and by how much, there is a directive in the state budget ordering such companies to provide key information.

The companies are directed to file information on the 2019 tax results in a unitary combined reporting format “prescribed by the Tax Commissioner,” and a failure to provide that report by this June 1 risks a $10,000 fine.  The Tax Commissioner will then report to the legislature by December (again, after the election) on the impact of a change in state law mandating combined returns from related business entities.

Finally, local taxes are not exempt from review.  Budget language directs the Commission on Local Government to compile data on the revenue localities lose from property tax exemptions mandated by the Assembly and any “fiscal stress” they create (on the government, not the taxpayers.) Some of those benefit individuals but business-related exemptions exist, too.  For once, the report is due pre-election, November 1 of this year.

Previous efforts at comprehensive tax reform have failed in recent years, including a Joint Subcommittee to Evaluate Tax Preferences, which accomplished nothing over several years. The historical pattern has been it takes the active attention of a Governor to move this usually immovable object. This would be a good topic to raise with the applicants for the job.

Posted in Taxes | Comments Off on Virginia’s Progressive Assembly Turns to Tax Policy

The War on Fossil Fuels

Posted on February 25, 2021 by Stephen D. Haner
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The lesson of the Texas grid collapse is not just about electricity.  Imagine the week Texans would have had if once the power went out and stayed out, they had no gasoline, diesel, propane, or natural gas to fall back on.  How much worse would their plight have been without natural gas heating homes and businesses, propane space heaters and grills, and gasoline or diesel-powered cars and trucks to get where they needed to go?

You might think it alarmist to imagine that, but it is not.  An all-electric economy, with the electricity itself reliant on unreliable wind and solar generation, is exactly the future envisioned for Virginia and being put into place by Governor Ralph Northam and the majority in the General Assembly.

The 2020 Virginia Clean Economy Act already requires the retirement of coal and natural gas electricity generation in the state in less than 30 years.  That’s what zero carbon means, although fortunately Virginia’s main electricity provider maintains a fleet of aging nuclear plants not mandated to close.  Yet.

Electricity is just the start. There is not one aspect of our economic lives where the debate is not being driven by the assumption – unproved and hotly contested – that our very existence is threatened by carbon dioxide emissions.  The constant drumbeat of such claims have evolved into conventional wisdom.  The lesson of Texas is we must slow down and think before we find ourselves over this cliff.

The proposed carbon tax and rationing scheme known as the Transportation and Climate Initiative is just a first step, with advocates admitting the ultimate goal is to eliminate gasoline and diesel as transportation fuels and make us totally dependent on electric vehicles.

This General Assembly was not asked to impose TCI with its taxes on Virginians.  Yet.  Once the 2021 election is past, the state is likely to join the interstate transportation fuel compact it has been negotiating for a decade.  This year’s General Assembly, however, did authorize joining with California and other states in a regulatory structure intended to ultimately end the sale of new internal combustion engines.  Virginia is ceding control over that process to California and other states.

A serious effort was made this year to impose a tax on your electric bill to finance, among other things, converting the homes of lower income Virginians from natural gas or oil heat to electric heat pumps.  Nothing would make the power companies happier, but that just makes us even more dependent on a single energy source.  Another bill tax would have financed a fleet of electric school buses, destined to grow.

The Atlantic Coast Pipeline to bring a huge new natural gas supply into the state was crushed by environmental opposition, as was a modest expansion of an existing Virginia Natural Gas line into Hampton Roads.  The Mountain Valley Pipeline is fighting for its life in the western part of the state.  One of the first actions of President Joe Biden was to kill a major Canada-to-Gulf Coast oil pipeline.

People see the threads, but not the whole cloth.  The war on coal is now a war on every fossil fuel.  Coal miners will be joined in fighting for their livelihoods by the entire oil and gas industry, from auto mechanics to the service station industry.

It took probably fifteen minutes into the Texas crisis for the climate change warriors to begin to claim that the cold snap was caused by global warming.  But the cold weather there was not out of line with past experience, and one day could do the same to parts of our electric grid.  All of the extreme weather claims tied to global warming collapse when compared to historical records.  But extremes will happen and will threaten the grid.

When those dark days come, we will not want an all-electricity economy, especially if dependent on intermittent sources.  We will need – as Texas just proved – gasoline, diesel, propane and natural gas for at least some of our homes, stores, and workplaces.

A version of this commentary originally appeared in the February 26, 2021 edition of The Fredericksburg Free Lance-Star.  

Posted in Energy | 1 Comment

Legislators Shift Green Energy Costs By Taxing All Other Customers, Employers

Posted on February 16, 2021 by Stephen D. Haner
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Lower income Virginians who are customers of the two largest electricity providers may begin to receive subsidies on their residential bills in March 2022 under legislation moving forward in the General Assembly.  The money for the Percentage of Income Payment Plan (PIPP) subsidies will come from their fellow customers.

House Bill 2330 passed the House of Delegates on a 54-46 vote and is pending in the Senate Commerce and Labor Committee.  It was due for a hearing Monday but was delayed a week for further discussion and possible amendments.  As the program adds details, it also adds costs that will be added to Dominion Energy Virginia and Appalachian Power Company bills with a stand-alone rate adjustment clause.

The universal service fee that feeds the PIPP fund will be a flat per kilowatt hour charge, the same for residential, commercial, government, and industrial users.  In preliminary reviews that concluded in December, the State Corporation Commission estimated the coming charges at $1.13 per 1,000 kWh for Dominion customers, and $1.80 per 1,000 kWh for APCo customers.  This is a tax, pure and simple.

Those estimates are probably out the window because the new legislation makes substantial changes, as predicted.

PIPP was first approved in the 2020 Virginia Clean Economy Act, and frankly was an admission by that law’s advocates that it is going to explode Virginia electricity bills for decades to come.  With PIPP, the burden is shifted off lower income ratepayers and more heavily onto everybody else, especially commercial and industrial users.

PIPP participants will not have to pay more than 10% of their monthly income for electricity if they use it for heat and no more than 6% of their monthly income if they heat with something else.

The 2020 legislation offered PIPP bill caps to individuals or households enrolled in certain specific benefit programs, such as Supplemental Nutrition (formerly Food Stamps) or Temporary Assistance for Needy Families (TANF.)  The new bill sets a simpler and far broader qualification and offers benefits to individuals or households with income up to 200 percent of the federal poverty level.  Of course, the higher the income the higher the monthly electric bill they will have to cover themselves.

The 2020 bill required PIPP recipients to participate in existing energy efficiency programs designed to lower their bills, but again, this legislation goes further. It seems to mandate such energy reductions, by whatever means necessary. The PIPP revenue extracted from all APCo and Dominion ratepayers can be used to create additional efficiency programs, including:

“weatherization or energy efficiency programs and energy conservation education programs including whole home retrofits or other strategies as determined by the Department of Social Services in accordance with this section.”

What is a whole home retrofit?

“Whole home retrofit” means significant improvements to a building’s shell and operations that include any necessary health and safety repairs, weatherization, efficiency, and electrification.

Wait!  It gets better.

“Electrification” means converting building systems that use coal, gas, oil, or propane to high-efficiency equipment powered by electricity supplied by an electric utility.

So, you will be forced to pay for homes to be converted from fossil fuels (i.e., natural gas) to electric heat, through a tax on your bill.  You may also pay for others’ “necessary health and safety repairs.” As broad and expensive as that job might turn out to be, do not ignore “or other strategies as determined by the Department of Social Services.”

This has morphed from a bill subsidy into a blank check. The SCC has no discretion over how much is spent on programs, or how high the universal service fee might go in annual adjustments. While the goal is to reduce demand, human behavior might point to a different outcome if a family is told their monthly bill will be capped no matter how much electricity they use.

During the earlier reviews, when the SCC basically concluded it and the utilities had too little information to really project costs, it did have an estimate of $3 million for administrative costs. This newly expanded universe of recipients and goals will blow past that as well and add to the size of the PIPP fee (again, it is really just a tax.)

During those 2020 hearings, the SCC was pressed to make one decision where it has discretion under the law.  Advocates complained that the caps of 10% of income (with electric heat) and 6% (without) needed to be lower, but in its opinions the SCC declined to consider lower levels.  Yet.

As noted, this bill keeps changing and may change again.  If March 2022 is the final target start date (at one point it was December 2021), the universal fee will have to be imposed at some point in advance and begin to fill the new fund.  According to a final enactment clause, as soon as the first dollars are extracted from ratepayers and deposited, the Department of Social Services can begin to spend it.

Do not be confused.  The PIPP tax coming to your electric bill is separate from and in addition to the extra charge coming for the Regional Greenhouse Gas Initiative and its carbon tax. It is separate from and in addition to bill charges Dominion is seeking to cover a fleet of electric school buses.

Hiding the bill for major government programs on your electric bills has become a standard operating ploy for Virginia’s legislators, with the utilities fully supportive.

Posted in Energy, Taxes | 1 Comment