Last Thursday, the Vermont Senate Natural Resources Committee continued its efforts to structure the Affordable Heating Act (“AHA”) so that it would meet legal requirements and be enforceable. Despite Ethan Allen Institute estimates of a surcharge on heating fuel of as much as $4.00 per gallon which will unravel implementation of the AHA, the Committee continues to seek advice on how to prevent the program from being opposed on legal grounds.

The Committee heard a presentation from Geoffrey Hand, Esq. of SRH Law which reviewed basic concepts of Federalism. Under review was Article VI, Clause 2 of the U.S. Constitution, known as the Preemption Doctrine. The Preemption Doctrine mandates that federal laws preempt state laws. Also under review was Article I, Section 8, Clause 3 of the U.S. Constitution which gives the federal government authority over commerce and restricts the regulatory authority of states.

Of interest to the Committee was the derivative legal doctrine known as the Dormant Commerce Clause which prohibits states from enacting tariffs and other economic barriers on goods from other states. Characterized by Chairman Chris Bray as “legal hygiene,” these legal lessons were meant to instruct the Committee to construct AHA not to focus on the origin of the fuel, apply only to jurisdictional transactions within the state, and push obligations as far up the chain of delivery as possible. If AHA was structured accordingly, attorney Hand believed it should avoid conflict with the Dormant Commerce Clause.

The Committee also heard from Ted Barnett of the Joint Fiscal Office who explained that Vermont collects around $10 million annually from fuel taxes.  However, his calculations showed only 235 million gallons of fuel were sold in 2022 instead of ANR Secretary Julie Moore’s prior estimate of 250 million gallons. That discrepancy may be a sign demand is declining, likely due to current high costs of fuel. Remember, under AHA, the smaller amount of fuel sold means the additional surcharge on each gallon will only be higher.

Secretary Julie Moore made a quick reappearance. She provided an update on the efforts currently undertaken to correctly measure Greenhouse Gases through available datasets. It appears that the basic data isn’t available; measurement methodology also seems to be unresolved. And it seems there isn’t a means to measure the GHG baseline and its reduction or increase. Secretary Moore indicated that her agency is developing a Measuring and Assessing Progress (MAP) tool which should measure emissions, resilience, adaptation, and community engagement.  This tool will not be available in the Spring of 2025. How can AHA proceed immediately when there is a lack of legitimate data, no tools to measure progress, and no agreement of methodology of measurement? And it will take two years to remedy these issues? No questions along those lines from the Committee.

Matt Cota, representing the fuel dealers, also testified. He warned the Committee about the impracticality of trying to control the transfer of fuels from out of state and mentioned the Dormant Commerce Clause as an impediment. He was quickly brushed back by Chairman Bray who referred him to the earlier legal analysis.

Lastly Senator Becca White admitted her family in the past has purchased diesel fuel from gas stations to use as heating fuel in order to avoid delivery charges and fuel taxes. She asked Mr. Cota how many people were non-compliant, avoiding taxes, like her family, in the current system at this time. He did not know.

Senator White’s admission of familial non-compliance only makes our point that AHA’s high prices will cause smuggling. When people smuggle fuel under AHA, there will be less money for the Vermont fuel dealers and less money to feed back to make the home improvements. That’s how the grand scheme of AHA will break down. Even the last individual to testify, Kyle Landis Marinello of the Vermont Public Utility Commission, warned about the Achilles heel of AHA: it is “prudent to assume less than full compliance.”

Myers Mermel is President of the Ethan Allen Institute.