From Money Morning:
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 LawsI'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....MORE