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South Carolina is close to pulling off a dramatic end-run around the federal government.
If that state succeeds, the end result could have a serious impact on every U.S. manufacturing industry from cars to toilets.
It could even help balance state budgets.
Dueling Light-Bulb Laws
I'm talking about South Carolina's Incandescent Light Bulb Freedom Act – a trivial-sounding piece of state legislation that could open a significant loophole for states that are desperate to create jobs and drum up revenue.
The Energy Independence and Security Act of 2007 – a predating piece of federal legislation – decreed that all incandescent bulbs be phased out by 2012, and permanently replaced by their fluorescent and halogen counterparts.
That's where the loophole comes in. You see, South Carolina's light bulb legislation would let the state continue to manufacture and sell incandescent bulbs – so long as they were made and sold exclusively in South Carolina.
While South Carolina's attempt to nullify a federal law smacks of an antebellum crisis, the move may well work. That's because, according to the Supreme Court's 1935 decision in the case of Schechter Poultry vs. United States, the federal government does not have the power to regulate commerce that is entirely conducted within a state.
So if South Carolina attempted to buy incandescent light bulbs from one of the country's leading manufacturers, it would be in trouble – since none of the major light bulb manufacturers are South Carolina companies.
But if South Carolina makes the bulbs itself, and offers them for sale only within the state, the Schechter decision would seem to apply – though subsequent Supreme Court decisions in the opposite direction make the question a close one.
Chocolate Eggs, Toilets and '59 Caddies
Still, if successful, this would be a major coup for many U.S. manufacturers, as it would set a significant precedent. Soon, any unpopular federal product regulations could potentially be nullified by a state that's seeking popular support.
One trivial example: The state of Pennsylvania, perhaps using facilities leased to it by The Hershey Co. (NYSE: HSY), could start making Kinder Eggs – the popular chocolate egg treats that have been banned in the United States. Many children like my son, who became devotees of Kinder Eggs while living in Europe, would surely boost the Pennsylvania state economy if the treats were available there.
And there are bigger examples.
Since the late 1990s, U.S. consumers have been prevented from buying toilets that flush properly. That's because the 1992 Energy Policy Act mandated a maximum flush capacity of 1.6 gallons, which is inadequate for a truly proper flush job.
Nullifying this nonsense is the job of Wisconsin, home of Kohler Co.
Surely, Wisconsin Gov. Scott Walker would enjoy setting up a manufacturer of illegal, generously flushing toilets with the old 3.5-gallon capacity. In accordance with the law, those toilets would be sold only in Wisconsin. But that wouldn't stop desperate out-of-state customers from flooding into the Cheese State to acquire adequate sanitary facilities. The sales tax revenue alone would go a long way towards alleviating that state's budget woes.
Then there's the granddaddy of nullifications – the Corporate Average Fuel Economy (CAFE) standards. This legislation crippled the U.S. automobile industry and led to the rise of the sports utility vehicle (which initially was exempted) by mandating tight-fuel-economy standards – rather than simply using the price mechanism to reduce gasoline consumption.
Those CAFE standards will be tightened in 2016, making things even more difficult for U.S. auto manufacturers. However, citing the South Carolina precedent, the state of Michigan could pose a potential solution. All the state would have to do is set up a manufacturing facility in a disused General Motors Co. (NYSE: GM) plant and reproduce the big, gas-guzzling car U.S. consumers have always dreamed about – the 1959 Cadillac Eldorado.
The point is that, while South Carolina's initiative may have all the familiar signs of a boondoggle, it differs in one vitally important respect: It is being driven by intense consumer demand to be rid of costly product regulations.
Remember, Congress banned the sale of incandescent light bulbs, saying the new wave light bulbs would be more efficient. In reality, they are more expensive, give off an unpleasant light, and contain significant quantities of toxic mercury.
So the populist South Carolina legislature is responding by trying to liberate its residents from an unpopular federal mandate.
South Carolina Rep. Bill Sandifer, a Republican and bill co-sponsor, said the "rights to have the kind of light bulbs we want and need are our rights. They are not given to the federal government."
And if manufacturing efficiencies are even close to optimal, the "Made in South Carolina" light-bulb initiative should be a glowing commercial success.
The only problem for investors is that there is no South Carolina light bulb company in which to invest.
Similarly, Kinder Eggs would be too small a business to make much difference to Hershey. Kohler has been privately held with no non-family shareholders since 1998.And General Motors is still government controlled and has too many other inefficiencies to properly benefit from a 1959 Caddy revival.
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Indeed, in his "Permanent Wealth Investor" advisory service, Hutchinson has identified one particular global economy that meets all his requirements, and represents such a rich profit play, that we couldn't give it – or the investments he's recommending – away for free.
To find out more about these investments, and Hutchinson's service, check out this link.]
News and Related Story Links:
- BusinessWeek:
SC bill dimming federal light bulb law advances
- Money Morning:
Global Commodity Prices: Soaring Worldwide Population Growth and a Can't-Miss Profit Play
- Wikipedia:
Energy Independence and Security Act of 2007
- Wikipedia:
Energy Policy Act of 1992
- National Highway Traffic Safety Administration:
CAFE Overview – Frequently Asked Questions
- Bloomberg/BusinessWeek:
SC House debates keeping incandescent bulbs
I love my South Carolina… great crative thinking… sick of the federal government.
Yes, there is a light bulb manufacturer in South Carolina. American Light Bulb, a division of Aero-Tech Lighting of Shaumburg IL. They make 20,000 hr light bulbs in Mullins SC. My company, Bulb Daddy, distributes their products.
State by state, we could go back to the golden 50's, eh? BTW if you're looking for a good flush, try a Toto toilet.
This is a great article and of interest to any electricity consumer. My family and I were discussing this , however well meaning, law while shopping at a LOWES store six months ago.
I do not care for the light emitted from LED, etc. While everyone else is dreaming of ways to get their LED shares, I'm thinking of buying a warehouse full of incandescent. Could they be sold as antiques or auctioned at Sotheby's to the last of the Mohegans or as we're more commonly referred to, baby boomers.
I am astonished that you have no understanding of life cycle economics. The compact flourescent bulbis far MORE economic both in lifetime of the bulb and saving 70% of the electricity. And the color temperature is equivalent to incandescents. You must print a retraction of this error. Your credibility with me is now zero on all your info.
According to the U.S. Constitution the Feds are not permitted to dictate what products and services citizens have to purchase nor may they dictate what varieties of light bulb products a manufacturing plant may offer for sale. The States may dictate various restrictions however.
Laws are to be made are only to serve citizens, to protect the right to life, liberty and propety.
Ok, How would this effect the production of pot grown and sold in the same state or online gambling? or a cocaine processing center, Makes me wonder what could really happen next. More freedom? A new business opportunity? This just might be just crazy enough to work. The toliet and light bulb legistion went way too far, and opened a big can of worms. Martin Hutchinson Thank's for this story and I hope you are a lawyer.
No one has obviously made the point that these light bulbs are illegal. Yes, they have a high amount of mercury which makes them illegal for the homeowner to clean and remove. The mercury may not be thrown in the trash. More over, one would need to call the Feds to come to make the clean-up. Will we have to leave a marked space around the spill and contain it until they arrive.
The EPA will be needed to do that. Please tell me how!!!!!!!!
Martin… get a life. Couldn't you find anything important to write about?
Let's go back to the roaring twenties. How would that be for you?
Next you'll be writing about how fracking will help clean up our
groundwater.
The current progress being made by LED bulbs will make this whole incandescent/flouescent thing moot.
Montana has a law that all guns and ammo made in Montana and stays in Montana is not subjec to Federal law.
Americans love it complicated! No wonder the country is in such trouble. I live in Florida and cannot buy wine from California. Where is the free trade agreement? But I can buy 90% liquor from some other state. Go figure. Why is sending a casket with a deceased to another state considered "interstate commerce"? See sentence one. Mark got it right. These states are not united, they are crazy. The founding father's ideals have been defaced by generations of politicians. Now we are at a point where nothing works anymore. Still, I like the idea of pot. Legalise it, tax… Read more »
I have old style toilets in my home and I will NEVER give them up. They'll last forever. Unfortunately I live behind enemy lines held captive by a large metropolitan area that basically runs the entire state from up north. I'll leave you to guess which very liberal state I live in.
It'll never happen in this liberal state, unless We the People can vote these stupid liberals out of office first.
Confusing… Some places seem to imply this is about the state government owning the manufacturing company. Other places seem maybe no… We don't need state-owned buisinesses. And few companies can survive with only in-state sales. Few countries now accept US standards (110volts, etc) so exports are doubtful (Labor is expensive in US). Nice pipe dream, where can I buy some?
Your article shows an amazing lack of understanding. While the Interstate Commerce Clause does in fact act to limit federal regulation, it is limited to activities that have NO CONNECTION with interstate commerce. In other words, if the goods/services depend in any manner upon the functioning of interstate commerce, it is entirely possible for the federal government to regulate. A few examples. When hotels continued to refuse to allow blacks as overnight guests, the federal government (and the Supreme Court) found no problem prohibiting this conduct based on the fact that such activities adversely impacted interstate commerce because people on… Read more »
Way to go South Carolina!!! Get your excess real estate ready for those of us who can live any where we choose. I'm sick and tired of the Feds regulations and this light bulb thing is the last straw.
The light is NOT the same. I don't think the lumens are what they claim either. I've replaced all the floods in my kitchen with CFLs of supposedly equal lumens and the place looks like a cave. Dark, and an eeire color light. One of them didn't even work, but at least the manufacturer gave me a free replacement.
This article is based on a false premise — that goods made in a state and purportedly sold only in the state do not affect interstate commerce (or the environment). It is a good states' rights argument that has been thoroughly rejected in the context of minimum wage and hour laws and health and safety. Is this the direction that we want this country to go in — having 50 states each with its own set of laws in areas that need uniformity? That's why we have the UNITED STATES and not a confederation. But, on the other hand, that… Read more »
Those who claim that incandescent bulbs are inefficient are full of crap. The electricity consumed by the bulb is transferred with 100% efficiency to heat and light. In my neck of the woods, the heat is not necessarily a waste. Since I live in a cold environment and heat with electricity, it really doesn't matter if the heat is generated in a light bulb, or in my electric furnace.
What I find not at all surprising is the comments by a variety of liberal/progressive ELITES who believe that not only do they KNOW, but should be the DECISION-MAKERS in what's good for ALL of us! Their ideology & attitude are NOT based on reason, logic, or common sense. Rather, they're based on imagery and mob behaviour. Like lemmings, the follow some nutty enviro-tech philosophy, and FORGET that our nation was founded and is based on individual liberty, personal responsibility, and a Constitution & Bill of Rights which includes a 10th amendment. No, to them that's all nonsense. They're more… Read more »
SC has Hubbell lighting in Greenville SC, we can get our light bulbs from them. Problem Solved!