Don't Bug Me: Failure to Comply with FIFRA Can Be Costly

By: Rachel King, Staff Member

In 2012, the U.S. Environmental Protection Agency issued legal complaints against companies that the agency felt had violated the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).[1] Upon its initial conception, FIFRA established protocols regarding the registration of pesticides;[2] however, the true focus of this Act seemed to be on monitoring the effectiveness of these products.[3] Following amendments in 1972 and 1996, FIFRA's scope has been greatly enlarged: "[The] EPA is specifically authorized to: (1) strengthen the registration process by shifting the burden of proof to the chemical manufacturer, (2) enforce compliance against banned and unregistered products, and (3) promulgate the regulatory framework missing from the original law."[4] These newer duties enable the EPA to control the sale and use of pesticides.[5] It is important to note, however, that FIFRA does not fully preempt state and local law.[6]

In order to be in compliance with FIFRA, several key processes must be performed.[7] First, a company must register the product with the EPA.[8] The registration requirements vary depending on whether the pesticide is one that has been approved for registration in the past or is one that is new or imported.[9] For those that are new or imported, the registration must specify its projected use and chemical components[10] as well as provide data to the EPA for testing.[11] Desired data includes the effect of the pesticide's residues on the environment and the toxicity and irritation risk to humans and non-target animals.[12] For imported pesticides, a "Notice of Arrival" must be filed prior to the arrival of the pesticide within the United States;[13] this form allows the EPA to preemptively determine whether the product is approved for use in the country.[14] If the pesticide is barred from admission, the company has 90 days to export the product or it will be destroyed at the company's expense.[15]

In light of FIFRA, an action was initiated against Daifuku Trading Corp. for the company's sale of unregistered pesticides in late 2012.[16] Additional fines may be imposed on the company for improper labeling and importation of the products as well; "Under federal law, products used to kill pests must be registered with the EPA and contain labels written in English with instructions on their proper use."[17] Earlier in 2012, Scotts Miracle-Gro agreed to pay the EPA $6 million in penalties and spend $2 million on environmental projects in addition to criminal fines and penalties for similar violations.[18] To-date, this is the largest civil settlement under FIFRA.[19]

Companies that seek to sell pesticides within the U.S. can avoid the ever-watchful eye of the EPA by ensuring that the products stocked on their shelves fall within the purview of FIFRA or can take steps to ensure that newer products meet the EPA's strict requirements.

_____________________

[1] John Martin,

EPA Takes Action Against Companies That Sell and Import Illegal Pesticides

, 

Environmental Protection Agency

 (Dec. 28, 2012), http://yosemite.epa/gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/2be923c665ce07fd85257ae200633725!OpenDocument.

[2]

Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)

, 

Environmental Protection Agency,

available at

 http://www.epa.gov/oecaagct/lfra.html#Summary%20of%20the%20Federal%20Insecticide,%20Fungicide,%20and%20Rodenticide%20Act (last visited Jan. 16, 2013).

[3]

Id.

[4]

Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), supra

 note 2;

See also

 7 U.S.C. § 136 et. seq. (2013).

[5]

Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), supra

 note 2.

[6]

Id.

[7]

Id.

[8]

Id.

[9]

Id.

[10]

Id.

[11] Martin,

supra

note 1.

[12] EPA,

supra

 note 2.

[13]

Id.

[14] Martin,

supra

 note 1.

[15] EPA,

supra

 note 2.

[16] Martin,

supra

 note 1.

[17]

Id.

[18] Ernesta Jones,

Scotts Miracle-Gro Will Pay $12.5 Million in Criminal Fines and Civil Penalties for Violations of Federal Pesticide Laws

, 

Environmental Protection Agency

 (Sept. 7, 2012), http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/38045218faa33abe85257a72006beflc!OpenDocument.

[19]

Id.

Following the Money: NEDC's Real Motivation Revealed

By: Greg Jackson, Staff Member

A. Overview of Litigation:

Litigation concerning stormwater runoff from the Sam Downs Road and Trask River Road began in September of 2006 when the Northwest Environmental Defense Center ("NEDC") filed a citizen suit, under Section 505 of the Clean Water Act ("CWA"), alleging various CWA violations by a number of private and public defendants.[1] The District Court dismissed the action for failure to state a claim, but was reversed on appeal by the Ninth Circuit.[2] According to the appeals court, sections of the Sam Downs Road and Trask River Road were subject to National Pollution Discharge Elimination Systems ("NPDES") permitting under Section 402 of the CWA.[3]

Following the Ninth Circuit decision, Doug Decker, who replaced Marvin Brown as the Oregon State Forester in 2011, and Georgia-Pacific West, Incorporate, one of the private defendants, appealed to the United States Supreme Court.[4] The Supreme Court granted both writs for certiorari, consolidating the cases and allotting one hour of oral argument.[5] Unfortunately, however, the Friday following oral arguments, the Environmental Protection Agency ("EPA") issued revisions to its stormwater regulations designed to clarify that NPDES permits were not required for stormwater discharges from logging roads.[6] Both the parties and the Supreme Court were aware of the impending revisions prior to oral arguments, and, as a result, arguments focused on the proper action the Supreme Court should now take rather than the merits of the case.[7]

Additionally, the NEDC filed a challenge to the new regulation on January 4th, pursuant to Section 509(b) of the Federal Water Pollution Control Act, the Administrative Procedure Act, and Federal Rule of Appellate Procedure 15(a).[8] While this appears to complicate things further, the petition is merely protective and expressly designed to preserve a challenge to the revision if the Supreme Court determines the final rule is subject to challenge in a court of appeals under 33 U.S.C. § 1369(b)(1).[9] Therefore, the challenge only serves to ensure NEDC an avenue to challenge the revised regulation and should not have a significant impact at this time.

B. Oral Argument: Jeffery L. Fisher, On Behalf of the Respondent (NEDC)

According to Fisher, "in light of recent events, ... the most appropriate course for [the Court was] ... to just simply dismiss [the] ... case as improvidently granted."[10] He argued that under the present circumstances there would be three strong reasons to deny any petition for writ of certiorari.[11] First, the EPA believes its revisions of the rule have undercut the Ninth Circuit's decision.[12] Second, "the case is interlocutory in posture ... we are just on a reversal of a motion to dismiss."[13] Finally, every argument left in the case, including mootness, can effectively be heard on remand and later appealed back to the Supreme Court.[14] Furthermore, Fisher wondered why the Court "would want to touch all this in the first instance, particularly without supplemental briefing" when dismissing and remanding the case would allow the Ninth Circuit to address all the arguments on the revision first.[15]

Perceptively, Chief Justice Roberts pointed out the potential for monetary relief upon dismissal and remand to the Ninth Circuit.[16]

C. Money Motivating NEDC's Action

While Fisher correctly identified the Supreme Court's best course as sending the current case back to the Ninth Circuit, Chief Justice Roberts' comment on the monetary relief is very revealing. It highlights NEDC's true motivation for continuing the current case.

When the EPA issued its revision, NEDC had three options. First, NEDC could view the new regulation as rendering any further action futile and completely drop the suit. Second, the group could solely pursue a challenge action, which it filed in January. Third, NEDC could continue to prosecute the current litigation in hopes of eventually realizing a favorable ruling on the merits.

Both option two and option three allow the NEDC to remain dedicated "to the protection of the environment and natural resources of the Pacific Northwest," its stated goal.[17] The main difference between each option is, however, NEDC's ability to preserve the potential realization of its requested relief, namely a monetary award. In its complaint, NEDC requested, along with equitable relief, civil penalties and costs.[18] Pursuant to the CWA, plaintiffs prosecuting citizen suits may be awarded litigation costs, including reasonable attorneys' fees, if they prevail or substantially prevail in the action.[19] Additionally, the CWA allows an award of civil penalties, not to exceed $25,000 per day per violation, payable to the United States Treasury.[20] Consequently, in order for NEDC to recoup any of its costs in this action from the private defendants, it must prevail in the current action. This seems to play a substantial role in NEDC's decision to pursue option three.[21]

1. Dropping All Legal Action

By dropping all legal action aimed at NPDES permitting for logging roads, NEDC would not long be working to protect the environment or the Pacific West's natural resources.[22] Instead, the private defendants would continue the alleged violations of the CWA and potential negative impacts on the environment.[23] Additionally, without any suit against the private defendants, the recovery litigation costs or assessment of civil penalties would be impossible.[24]

2. Solely Challenging the New Regulation

Here, NEDC would drop the litigation pending before the Supreme Court and only prosecute its filed challenge to the new EPA rule in the Ninth Circuit.[25] This would allow NEDC to continue fighting to protect the environment, but the only compensation available would be litigation costs of the challenge action.[26] Civil penalties could, however, still be assessed against the private defendants if a similar suit was refiled after a successful challenge. At first glance, this appears an unnecessary bifurcation of the issues, but the current action is an interlocutory appeal of a Rule 12(b)(6) motion to dismiss.[27] Thus, even if NEDC prevails in the current appeal and the logging roads are subject to NPDES permitting, a court would still need to determine and award the appropriate penalties and costs.[28] Therefore, two steps are required for NEDC to recover an award in the current litigation, and the litigation costs of the current action is the only real loss imposed by solely pursuing the challenge. Furthermore, considering the complexity of the current appeal, particularly with respect to jurisdiction, pursuing a challenge then refiling would likely be cleaner, if not simpler.[29]

3. Continuing the Current Action

NEDC has chosen to pursue the current action before the Supreme Court.[30] The action will either be dismissed and remanded, as NEDC requested at oral arguments, or ruled on the merits.[31] If the Supreme Court follows NEDC's recommendation and dismisses the suit as improvidently granted, remanding it to the Ninth Circuit, the private defendants will remain involved in the litigation.[32] Consequently, the potential for monetary recovery would also remain, and NEDC could recover its litigation costs and have civil penalties assessed, following a favorable merits ruling. Similarly, if the Supreme Court rules in NEDC's favor on the merits, the group should eventually realize its requested relief, including penalties and costs. If, however, the Court finds for Petitioners, no relief will be possible because NEDC would not have prevailed.[33] In any event, this option keeps potential litigation cost reimbursement alive, unlike the other two.

D. Conclusion

As demonstrated above, continuing to pursue the current litigation is NEDC's only avenue to recover its costs.[34] While completely dropping the suit will not promote any of NEDC's goals, solely pursuing the challenge before the Ninth Circuit would.[35] It allows the group to protect the environment and the Pacific West's natural resources, and, through another lawsuit, could result in receiving the requested relief.[36] Furthermore, given the current appeal's interlocutory nature, this bifurcated approach would not produce any greater litigation.[37] In fact, this option may clear up some complex issues, such as jurisdiction, and lead to cleaner litigation.[38] Instead, however, NEDC has chosen to continue the current appeal, notably the only option for recouping its litigation costs.[39] Thus, a substantial factor in NEDC's decision to continue litigating the action currently before the Supreme Court appears to be monetary. Instead of taking the simpler challenge routes, the group has chosen to unnecessarily prolong complex litigation in hopes of forcing its opponent to foot mounting legal bills. This clear evidence of greed is certainly an uncomfortable reality for an environmental group who would likely be quick to condemn the corporate defendants as malicious profiteers, selfishly subjecting the environment for their own personal gain.

____________________

[1] 33 U.S.C. §1365; First Amended Complaint, Northwest Environmental Defense Center v. Brown, 476 F.Supp.2d 1188 (2007) (No. 06-1270-KI), 2006 WL 3241715.

[2] Northwest Environmental Defense Center v. Brown, 640 F.3d 1063, 1068 (9th Cir. 2011),

cert

granted

, Decker v. Northwest Environmental Defense Center, 133 S.Ct. 22, 133 S.Ct. 23 (2012).

[3] 33 U.S.C. § 1342; Brown, 640 F.3d at 1070, 1087.

[4] Petition for Writ of Certiorari, Decker v. Northwest Environmental Defense Center, 640 F.3 1063 (9th Cir. 2011) (No. 11-338), 2011 WL 4352279 (U.S.); Petition for Writ of Certiorari, Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, 640 F.3d 1063 (9th Cir. 2011) (No. 11-347), 2011 WL 4352287 (U.S.);

Doug Decker Selected as New Organ State Forester

, 

Oregon Department of Forestry, 

http://www.oregon.gov/ODF/Pages/newsroom/newsrelease/2011/NR1105.aspx (last visited Jan. 11, 2013).

[5] Decker v. Northwest Environmental Defense Center, 133 S.Ct. 22 (2012); Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, 133 S.Ct. 23 (2012).

[6] Revisions to Stormwater Regulations To Clarify That an NPDES Permit Is Not Required for Stormwater Discharges From Logging Roads, 77 F.R. 72970-01 (2012).

[7]

See

 Oral Argument Transcript, Decker v. Northwest Environmental Defense Center, (Nos. 11-338, 11-347),

available at

 http://www.supremecourt.gov/oral/_arguments/arguments_transcripts/11-338.pdf.

[8] 33 U.S.C. §1396(b); 5 U.S.C. §551; 

Fed. R. App. P. 

15(a); Petition for Review and Corporate Disclosure Statement, Northwest Environmental Defense Center v. Jackson, No. 13-70057, at 2 (9th Cir. 2013),

available at

 http://environblog.jenner.com/files/click-here-10.pdf.

[9] 33 U.S.C. § 1369(b)(1) (requiring challenges to regulations promulgated under the CWA to be challenged within 120 days of signing by the EPA Administrator);

Id.

 at 3.

[10] Oral Argument Transcript,

supra

 note 270 at 28:24-29:2.

[11] Oral Argument Transcript, Decker v. Northwest Environmental Defense Center, (Nos. 11-338, 11-347) at 29:3-7,

available at

http://www.supremecourt.gov/oral/_arguments/arguments_transcripts/11-338.pdf.

[12] Oral Argument Transcript,

supra

 note 11 at 29:7-10. 

[13] Oral Argument Transcript,

supra

 note 11 at 29:11-13.

[14] Oral Argument  Transcript,

supra

 note 11 at 29:13-21.

[15] Oral Argument Transcript,

supra

 note 11 at 39:22-40:1.

[16] Oral Argument Transcript,

supra

 note 11 at 29:22-30:2. 

[17] 

Lewis & Clark Law School: Northwest Environmental Defense Center, 

https://law.lclark.edu/centers/northwest_environmental_defense_center/about_nedc/ (last visited Jan. 20, 2013).

[18] First Amended Complaint at VII: A-H, Northwest Environmental Defense Center v. Brown, 476 F.Supp.3d 1188 (D. Or. 2007) (No. 06-1270-KI), 2006 WL 3241715.

[19] 33 U.S.C. §1365(d). 

[20] 33 U.S.C. 1319(d); Friends of the Earth v. Archer Daniels Miland Co., 780 F.Supp. 95, 101 (N.D. NY 1992).

[21]

See

 Discussion

infra

 Part B.

[22]

See

 Northwest Environmental Defense Center website,

supra

 note 17.

[23]

See

 First Amended Complaint,

supra

 note 1.

[24] 33 U.S.C. §§ 1319(d), 1365(d).

[25]

See

 Petition for Review and Corporate Disclosure Statement, Northwest Environmental Defense Center v. Jackson, No. 13-70057, (9th Cir. 2013),

available at

http://environblog.jenner.com/files/click-here-10.pdf.

[26] 33 U.S.C. § 1369(b)(3).

[27]

See

 Oral Argument Transcript,

supra

 note 11, at 30; Northwest Environmental Defense Center v. Brown, 640 F.3d 1063, 1068 (9th Cir. 2011),

cert granted

, Decker v. Northwest Environmental Defense Center, 133 S.Ct. 22, 133 S. Ct. 23 (2012).

[28] Oral Argument Transcript,

supra

 note 11 at 23:3-18.

[29]

See

 Northwest Environmental Defense Center v. Brown, 640 F.3d 1063, 1068 (9th Cir. 2011),

cert granted

, Decker v. Northwest Environmental Defense Center, 133 S.Ct. 22, 133 S.Ct. 23 (2012); Brief for Petitioners, Decker v. Northwest Environmental Defense Center, (No. 11-338), 2012 WL 3755626 (2012); Brief for Respondents, Decker v. Northwest Environmental Defense Center, (Nos. 11-338, 11-347), 2012 WL 4810210 (2012); Brief for the United States as Amicus Curiae Supporting Petitioners, Decker v. Northwest Environmental Defense Center, (Nos. 11-338, 11-347), 2012 WL 3864278 (2012).

[30]

See

 Discussion

infra

 Part B.

[31]

See

 Discussion

infra

 Part B;

also see

 Oral Argument Transcript,

supra

 note 11 at 18-28 (Arguments by Malcolm L. Stewart, arguing for the United States as amicus curiae in support of Petitioners, in favor of mootness was met with little enthusiasm by the Court, suggesting a dismissal for mootness is unlikely).

[32]

See

 Oral Argument Transcript,

supra

 note 11.

[33] 33 U.S.C. § 1365(d).

[34]

See

 Discussion

infra

 Part C:3.

[35]

See

 Discussion

infra

 Parts C:1 & C:2.

[36]

See

 Discussion

infra

 Part C:2. 

[37]

See

 Discussion

infra

 Part C:2.

[38]

See

 Discussion

infra

 Part C:2.

[39]

See

 Discussion

infra

 Part C:3.

Re-evaluating the Agriculture Department's Federal Crop Insurance Program

By: Erin Murphy, Staff Member

President Obama has vowed to reduce the nation's deficit. However, one federal program had a record cost last year.[1] The 2012 bill for the Agriculture Department's federal crop insurance program could reach $16 billion, up from $9.4 billion in 2011.[2] The crop insurance program was established in the 1930s to aid farmers who experienced crop losses.[3] A discussion of the expansion of the program can be found

here

.[4] In addition to the cost of administering the program, a record $11.4 billion has been paid out in indemnities to farmers for crop losses in 2012.[5] Some officials believe this number could reach $20 billion.[6] In addition to these costs, the Agriculture Department also spends millions of dollars annually in grants to industry trade groups and universities to promote enrollment in the crop insurance program.[7]

Critics of the program claim the program only benefits insurance companies and large farmers.[8] The insurance companies that sell the policies receive approximately $1.3 billion annually for their services.[9] The government could also pay an additional $7 billion to cover losses and other costs by the insurance companies.[10] Thus, insurance companies greatly benefit because the government pays the companies a large amount to administer the program and the company incurs very little risk as the government covers their losses. Large farmers also benefit. The 2012 net income for farmers may reach $114 billion, the second highest in 30 years.[11] Thus, as farmers experience losses, the program insures the farmers against revenue losses, thereby protecting their net incomes.

As this program reaches a record cost, Congress must reevaluate the program's implementation approach in light of the nation's deficit. Congress must heed the words of critics and address the inequitable benefit the program grants to insurance companies and farmers. Agreements with the insurance companies administering the program should be renegotiated. The fees the government pays the insurance companies must be lowered. Further, the government must discontinue backing the companies against all losses. Rather, the insurance companies themselves must experience some risk. If the government continues to allow the insurance companies a windfall for merely administering the program, the program will no longer serve the purpose intended: to aid farmers who have experienced crop losses. In addition, the government must place some responsibility on the farmers themselves for the crop insurance they receive. If the government continues to pay 62 percent of the farmers' insurance premiums, the farmers themselves have little incentive to farm responsibly and prudently.[12] The farmers themselves must experience some personal financial incentive to farm in a manner that minimizes losses. Congress must address the record cost of the program by realigning the administration of the program with the goal of the program.

___________________

[1] Ron Nixon,

Record Taxpayer Cost is Seen for Crop Insurance

, 

The New York Times 

(January 15, 2013), http://www.nytimes.com/2013/01/16/us/politics/record-taxpayer-cost-is-seen-for-crop-insurance.html?_r=0.

[2]

Id.

[3]

Id.

[4] Jocelyn Arlinghaus,

Crop insurance: The agricultural equivalent of the mortgage crisis?

, 

Kentucky Journal of Equine, Agriculture, and Natural Resources 

(August 23, 2012), http://www.kjeanrl.com/search/label/crop%20insurance.

[5] Nixon,

supra

 note 1.

[6]

Id.

[7] John Soloman,

USDA agency's largesse grows crop insurance

, 

The Washington Times 

(December 30, 2012), http://www.washingtontimes/com/news/2012/dec/30/usda-agencys-largesse-grows-crop-insurance/.

[8]

Id.

[9]

Id.

[10]

Id.

[11]

Id.

[12] Nixon,

supra

note 1.

Wind Energy Tax Credits Given One-Year Extension

By: Colby Khoshreza, Staff Member

Who doesn't like clean energy? It appears as though at least a portion of the GOP congressional delegation feels as though the wind energy tax credit is an unnecessary form of corporate welfare. The GOP led a recent protest to end the tax credit that provides assistance for wind energy development. The GOP's primary concern remains the same: the credit, which costs approximately 1 billion dollars per year, assists private wind developers but not the public and is an unnecessary subsidy in an era of rising and abundant production of natural gas.[1] While in uncertain territory for at least a portion of December 2012, the "fiscal cliff" deal reached by Congress and the President at the end of 2012 will extend the tax credit through 2013.[2]

The topic brought considerable debate in the 2012 Presidential election as the GOP adopted ending the tax credit into their platform.[3] Despite this move, governors, both Republican and Democratic, have begun calling for a long-term extension of the credit and have formed a bi-partisan group of 28 governors who support the tax break.[4] The break, first signed in 1992 by President George H.W. Bush, supports developers of wind farms and companies that make turbines and parts that supply them.[5]

Argument by the GOP and coal/natural gas advocates that the credit doesn't benefit taxpayers seems to ignore the fact that power plants, the nation's top source of greenhouse gas emissions, continue to alter the climate and environment in dangerous and expensive ways. In addition, fossil fuel plants, including those that burn natural gas, add toxins to the air and oceans, prematurely killing thousands of people every year and boosting healthcare costs.[6] Even though natural gas is 35% cheaper than wind without subsidies, costs for wind energy have decreased 90% over the last two decades.[7] Clearly, more time is needed to develop this renewable energy source. The one-year extension keeps the subsidy alive but does not ensure that further wind energy development will be able to continue long-term. This short-term extension is likely to hinder long-term planning and project development. In reality, the credit needs a longer extension in order to provide the wind energy industry enough time to develop technology and efficiencies and compete subsidy free by 2018-2019.[8]

In the long run, the wind sector should be able to compete on their own; however, at the given time, this industry is too underdeveloped without having the advantages of the tax credit. Rather than ending the subsidy, a long-term assistance program that phases out the subsidy over time would be the ideal solution.[9] In fact, the American Wind Energy Association (AWEA) had proposed a six-year phase out credit, ending the subsidy at the end of 2019.[10] This would give the wind sector time to further develop and plan before the tax credit expires. Ending the credit prematurely is likely to stall advancements in wind as a renewable energy source and result in a loss of jobs.[11] In fact, AWEA estimated that 37,000 jobs would have been impacted if the tax credit had not been renewed at the end of 2012.[12] Given the one-year extension, jobs and wind advancement will be saved, at least temporarily. However, the debate will likely continue, as the wind sector will likely not be ready to compete without the credit as 2013 begins.

_____________________

[1]

A Breath of Stale Air from the GOP

, 

Los Angeles Times

 (Dec. 26, 2012), http://www.latimes.com/news/opinion/editorials/la-ed-wind-energy-tax-credit-20121226,0,364449.story.

[2] K. Kauffman,

Wind Energy Tax Credit Extension Part of "Cliff" Deal

, 

USA Today

 (Jan. 2, 2013), http://www.usatoday.com/story/news/nation/2013/01/02/fiscal-cliff-wind-energy-extension/1804447/.

[3] Riccardi Nicolas and Barnard Jeff,

Some Governors Call for Renewing Wind Energy Tax Credits

, 

The Seattle Times

 (Nov. 15, 2012, 4:46 P.M.), http://seattletimes.com/html/localnews/2019692110_windcredit16.html.

[4]

Id.

[5] 

A Breath of Stale Air from the GOP

, 

Los Angeles Times

 (Dec. 26, 2012), http://www.latimes.com/news/opinion/editorials/la-ed-wind-energy-tax-credit-20121226,0,364449.story.

[6]

Id.

[7] Steve Hargreaves,

Wind Industry OK with Giving Up Tax Credit

, 

CNN Money

 (Dec. 20, 2012, 11:18 A.M.), http://money.cnn.com/2012/12/20/news/economy/wind-tax-credit/.

[8]

Id.

[9] Ehren Goossens and Christopher Martin,

Wind turbine installations soar as tax credit deadline looms

, 

Tulsa World

 (Dec. 25, 2012, 5:57 A.M.), http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20121225_49_E4_ULNSit628138.

[10]

Id.

[11]

Id.

[12]

Id. 

Possible Energy Market Manipulation Leads to DOJ Probing

By: Samuel Jones, Staff Member

Last November, several U.S. Senators called upon the Department of Justice to investigate a possible case of market manipulation performed by several California oil refineries reporting false production information, causing gasoline prices to rise to all-time high levels.[1] Essentially, several oil refineries reported routine factory shutdowns for maintenance and safety protocols, but reviews of production output showed that production continued at regular levels, creating the illusion that supply was down when it really was not, leading to artificial spikes in fuel prices.[2]

Several other state senators, all Democrats, have joined the cause and petitioned the DOJ to investigate possible manipulations in their states, particularly Oregon and Washington.[3] The senators called for a "refinery-by-refinery" probe to analyze the public reports of some of the states' largest oil refineries, including the Valero Energy Corporation and Tesoro Corporation.[4] A letter was sent to Attorney General Eric Holder, and the DOJ responded by saying that they would respond accordingly.[5]

Not only is this the second time this year that some members of Congress have called for a market investigation of this like, but it is also yet again another profitable period for oil and fuel producers.[6] Remarkably, oil producers have seen their profits double since the beginning of 2011, even though refiners have used only 81.7% of their total capital capacity, 7% less capital used from 2010 numbers.[7] Oil companies have blamed the reductions in production and increase in prices on the weak economy and the greater ethanol use for lower demand for oil.[8] Nevertheless, the FTC has compelled oil refineries to turn over records detailing production levels.[9] The Federal Trade Commission (FTC) has legal authority to impose penalties on companies that manipulate their oil prices.[10]

Other Democratic senators have praised the FTC involvement. Sen. Blumenthal from Connecticut stated that such an investigation in possible illegal activity in the energy market "must be aggressive and hard-hitting."[11] "Federal officials are finally recognizing that where there's smoke, there may be fire."[12]

Although I cannot say that I have been personally affected by the alleged manipulation, I agree that a probe should be performed, whether by the Department of Justice or the Federal Trade Commission, if only to send a rippling message through the oil and gas market that such manipulative actions will not be tolerated and to flex some federal muscle control over market practices. Oil prices have risen to almost $115 per barrel this year, a 47% increase from oil prices in June of last year at $78 per barrel.[13] Considering the fact that the national average price for a gallon of gas rose to $3.60 in 2012, up 9 cents from the previous record high of $3.51 set in 2011, sneaky practices that drain revenues from the expanding middle class during a national economic recovery period should not be tolerated with the least degree of allowance.[14] Given these recent events, agency control over the oil and gas markets seems to be lacking; an assertion of more control and possible legal action will likely cause oil producers to think before resorting to unbecoming behavior. I only hope that such federal action will come with more effect and power than that of simply ringing a whistle or blowing a bell.

______________________

[1] Roberta Rampton,

Senators ask U.S. to probe California gasoline prices

, 

Chicago Tribune

 (Nov. 27, 2012) http://articles.chicagotribune.com/2012-11-27/news/sns-rt-us-california gasoline-senatorsbre8aq16h-20121127_1_california-gasoline-prices-los-angeles-area-refinery.

[2]

Id.

[3]

Id.

[4]

Id.

[5]

Id.

[6] Bonnie Kavoussi,

Oil Companies, Refiners Investigated for Possible Market Manipulation

, 

The Huffington Post

 (June 21, 2011) http://www.huffingtonpost.com/2011/06/21/federal-regulators-launch_n_881150.html.

[7]

Id.

[8]

Id.

[9]

Id.

[10]

Id. 

[11]

Id.

[12]

Id. 

[13]

Id.

[14] Steve Hargreaves,

Gas prices hit highest average ever in 2012

, 

CNN Money

 (Dec. 31, 2012) http://money.cnn.com/2012/12/31/news/economy/gas-prices/index.html?hpt=hp_t2. 

Horses are Pets - Not Sandwiches

By: Breck Norment, Staff Member

More than a year ago, Congress effectively lifted a ban on horse slaughtering in the United States.[1] Now, companies can apply to the USDA to obtain equine inspection services to cash in on the potentially profitable business of horse slaughtering for human consumption.[2] Valley Meat Company, one such business in New Mexico, claims the USDA is resisting its application by "dragging its feet" instead of providing the requested inspection services.[3] Valley Meat Co. sued the USDA, claiming the agency was politically motivated in its attempt to delay or stop the company's horse slaughtering business.[4]

As previously discussed on KJEANRL.com, Congress's latest attempts to ban the slaughter of American horses domestically and abroad have been unsuccessful thus far.[5] Meanwhile, some areas of the country have passed bans on the slaughter of horses for human consumption within their own jurisdiction.[6] On the western side of the United States, Snohomish County "voted unanimously... to ban the slaughter of horses[.]"[7]

Some argue that regulation of horse slaughtering in the United States allows for more humane treatment of animals during slaughter,[8] but my concern runs to the foundation of this entire concept. I believe we need to tread lightly down this path. In our culture, animals serve various purposes. Some help with our jobs, some help feed our nation, and some help keep us company. These lines need not be blurred.

Our culture has well-defined categories of meat that we consider acceptable. If you ask the average American, I would guess he or she would not recognize horse meat as a favorite cuisine. Overall, my main concern is the nature of this slippery slope. Which pet will we consider a meal next?

_____________________

[1] Dan Flynn,

Valley Meat Goes to Court to Get Equine Inspection Services

, 

Food Safety News 

(Dec. 22, 2012), http://www.foodsafetynews.com/2012/12/valley-meat-goes-to-court-to-get-equine-inspection-services/#.UOCFYKzhesB.

[2]

Id.

[3]

Id.

[4] Jeri Clausing,

New Mexico meat company sues feds, claiming inaction is delaying horse slaughterhouse opening

, 

FoxNews.com 

(Dec. 20, 2012), http://www.foxnews.com/us/2012/12/20/new-mexico-meat-company-sues-feds-claiming-inaction-is-delaying-horse/.

[5] H.R. 2966:

American Horse Slaughter Prevention Act

, 

GovTrack.us, 

http://www.govtrack.us/congress/bills/112/hr2966/text (last visited Dec. 31, 2012).

[6] Lornet Turnbull,

Snohomish County Council bans slaughter of horses for food

, 

The Seattle Times 

(Dec. 19, 2012), http://seattletimes.com/html/localnews/2019939777_slaughter20.html.

[7]

Id.

[8]

See

 Clausing,

supra

 note 4.

Using Road Salt During Snow and Ice Conditions: Environmental Impact Versus Road Safety

By: Robert Proudfoot, Staff Member

In what may have been obvious decades earlier, states and municipalities throughout the United States are struggling with whether they should use rock salt or other chemical de-icing agents to prevent snow and ice build up on roadways. Environmental groups have pushed state and federal agencies to limit salt use during winter months because studies have shown that salt can pollute water systems.[1] This policy debate has raised legal questions about whether a state has an obligation to provide safe and clear roadways during the winter and also whether the environmental contamination caused by rock salt should be avoided by public authorities.[2]

Environmental activists have pushed to ban or seriously limit salt use on roadways for years.[3] Studies have shown that the road salt can leave pollutants in the surrounding ground and water supply.[4] Road salt, usually comprised of sodium (Na) and Chlorine (Cl), can easily pollute surrounding watersheds, vegetation, animals, and human drinking water.[5] States and municipalities are very concerned about the high toxicity of chlorine, which easily separates from sodium once it is introduced into the environment. The United States Environmental Protection Agency has also set limits for sodium and chlorine content in water supplies.[6] Recent studies have also argued that other more expensive deicers are usually cheaper to use when all the hidden environmental and secondary effects of road salt are taken into consideration.[7] Road salt is highly corrosive and, if it is not removed, can cause long-term damage to automobiles.

Currently, environmental groups have pushed to ban salt use completely while trade associations for the salt industry[8] are still advocating for salt use on roadways. Most academics agree that road salt should be used more sparingly to limit the environmental and corrosive impact but it should still be included in a state or municipality's deicing regimen because of its cheap cost and effectiveness.[9]

By not using salt to clear roadways, this can create disconnect for travelers from out of state that have different expectations for how roads should be cleared. For example, the state of Oregon has started using salt as part of two pilot programs on federal interstates because the driving conditions between western states can vary greatly.[10] Dave Thompson, a spokesperson for Oregon's Transportation Department explains: "The effects can be stark... clear driving in California, Nevada and Idaho, only to hit packed snow and be forced to chain up in Oregon. That leads to traffic delays and, in some cases, crashes..."[11] It is unclear whether states like Oregon will eventually increase their salt use or whether other states will ban salt use in favor of other deicers; only time will tell which approach will eventually win out.

If a state or municipality has an official policy of not salting roadways, then what is the duty for property owners or a state agency to prevent injuries and accidents on publicly accessible roadways? The city of Portland, Oregon is a great example of how environmental and public safety concerns can directly conflict. The municipal government does not use rock salt to clear snow and ice from roadways because of its highly corrosive nature and environmental concerns.[12] However, the city's municipal code states that "property owner(s) and/or occupant(s) shall be liable for any and all damages to any person who is injured or otherwise suffers damage resulting from failure to remove snow and/or ice accumulations."[13] So, do property owners have a duty to use salt even though the city does not? The answer to this question has varied greatly through each state's tort law.[14] Maine and Massachusetts are moving to a "normal premises liability" model which requires that the property owner use reasonable care to maintain the property in a reasonably safe condition.[15]

The generally accepted standard of applying road salt to clear roads and sidewalks is changing because of environmental concerns and less corrosive deicers. This will impact state and municipal approaches to deicing roads. At the same time, states such as Oregon which previously banned road salt are finding that other alternatives are not as safe or effective. The policy of using road salt during the winter is in flux and these changes to government policy could modify the duty of care for property owners.

_______________________

[1] V.R. Kelly, et al.

, Road Salt: Moving Toward the Solution

, 

Cary Institute for Ecosystem Studies 

(Dec. 2010), http://www.caryinstitute.org/sites/default/files/public/reprints/report_road_salt_2010.pdf.

[2]

Id.

;

See

 Brian Lessels & Dave Owens,

Potential Legal Liabilities for Salt Use Reduction

(Nov. 2012), http://lawprofessors.typepad.com/files/salt-reduction-liabilities-white-paper.pdf.

[3] Kristine Bradof,

The Deicing Debate: Will It Ever Be Put On Ice?

, 

The Center for Science & Environmental Outreach 

(Jan. 1994), http://cseo.mtu.edu/community/publications/wellspring/deicingdebate.html.

[4]

Environmental, Health, and Economic Impacts of Road Salt

, 

New Hampshire Department of Environmental Services, 

http://des.nh.gov/organization/divisions/water/wmb/was/salt-reduction-initiative/impacts.htm (last visited Dec.31, 2012).

[5]

Id.

[6]

See

 William Wegner & Marc Yaggi,

Environmental Impacts of Road Salt and Alternatives in the New York City Watershed

, 

Stormwater: The Journal for Surface Water Quality Professionals, 

http://www.newyorkwater.org/downloadedarticles/environmentalimpact.cfm (last visited Jan. 1, 2013). (250mg of chlorine per liter and 20mg of sodium per liter)

[7] Daniel Kelting & Corey Laxson,

Review of Effects and Costs of Road De-icing with Recommendations for Winter Road Management in the Adirondack Park

, 

Adirondack Watershed Institute 

(Feb. 2010), http://www.adkaction.org/files/public/Full_Study_Salt.pdf.

[8]

Road Salt & Our Environment

, 

Salt Institute, 

http://www.saltinstitute.org/Issues-in-focus/Road-salt/Road-salt-our-environment (last visited Dec. 31, 2012).

[9] Jonathan Rubin, et al

., Maine Winter Roads: Salt, Safety, Environment, and Cost

, 

Margaret Chase Smith Policy Center, The University of Maine 

(Feb. 2010), http://mcspolicycenter.umaine.edu/files/pdf/Winter%20Road%20Maine%20Final.pdf.

[10] Harry Esteve,

ODOT plans to use salt for first time to clear snow from two Oregon highways

, 

The Oregonian 

(Oct. 26, 2012), http://www.oregonlive.com/politics/index.ssf/2012/10/odot_plans_to_use_salt_for_fir.html.

[11]

Id.

[12]

Snow and Ice Plan: Why Not Salt?

, 

City of Portland: Bureau of Transportation, 

http://www.portlandoregon.gov/transportation/article/376538 (last visited Dec. 31, 2012).

[13]

Property Owner Responsible for Snow and Ice on Sidewalks

, Title 17, §28.025(B), Portland City Code,

available at

 http://www.portlandonline.com/auditor/index.cfm?&a=19574&c=28857.

[14]

See

 Gregory Sarno,

Liability for Injuries in Connection with Ice and Snow on Nonresidential Premises

, 95 A.L.R.3d 15 (Fifty states survey of property owner liability for snow and ice accidents); Lessels,

supra

 note 2, at 6.

[15] Lessels,

supra

 note 2, at 7. 

Keystone XL Permit Decision, Take Two: Will "National Interest" Prevail in 2013?

By: Megan Pigman, Staff Member

Important concerns of energy independence, environmental impact, and economic growth fuel the debate surrounding the "Keystone XL Project" - a proposal by TransCanada Corp. to construct a 36" underground pipeline that would transport crude oil from Canada, across the border into Montana, and then down to the oil refineries on the Gulf Coast.[1] However, it was not a conclusion based on the merits of balancing such important concerns that led to the project's original permit application being denied in January 2012.

Pursuant to Executive Order 13337, it is the Department of State's (DOS) responsibility to determine whether granting a permit for a proposed pipeline is in the "national interest."[2] It is generally based on this recommendation that the President will decide whether to grant or deny the presidential permit needed to build across the U.S. border. In order to make its national interest determination, the DOS must consider many factors, including: energy security, health, environmental, cultural, economic, and foreign policy concerns.[3] After receiving the initial permit application from TransCanada Corp. in September 2008, the DOS spent three years looking into these concerns as they related to the Keystone XL proposal before issuing its Final Environmental Impact Statement (FEIS) on the project in August 2011.[4]

Despite a finding in the FEIS that Keystone XL would have "no significant impact" on the environment, the DOS announced in November 2011 that it needed more information in order to make its "national interest" determination.[5] A little over a month later, Congress passed the "Temporary Payroll Tax Cut Continuation Act of 2011" which included a provision requiring the President to determine within

60 days

 whether the Keystone XL pipeline is in the national interest.[6]

Even though it had been reviewing the project for three years, on January 18, 2012 the DOS stated that because of Congress' 60 day limit, it had not had adequate time to gather information sufficient to make the national interest determination and, therefore, would be recommending to the President that he deny the Keystone XL permit.[7] The President accepted their recommendation and denied TransCanada Corp.'s permit.[8]

Since the denial of the permit did not preclude subsequent permit applications, TransCanada Corp. submitted a new application May 4, 2012 which offered alternate routing in Nebraska to avoid the "Sandhills" region - an area which was of great concern to environmentalists due to its fragile ecosystem.[9] TransCanada Corp. submitted its own environmental report in September 2012 for the DOS to review in making its new determination.[10] According to the Department of State's "Keystone XL Pipeline Project" website, review of the new application is estimated to be completed in the first quarter of 2013.[11]

While those who strongly oppose or support the construction of the pipeline continue to debate its potential impact on the country, there is one notion that both sides should be able to agree on: for better of worse, the Keystone XL Project is significant and, thus, its application for a presidential permit warrants an outcome based on the factors that the DOS is required to consider when making a "national interest" determination. The DOS's 2011 recommendation being based on lack of sufficient information - whether accurate or not - simply didn't offer enough "closure" on the issue for those across the country who feel much is at stake when it comes to this project. Hopefully, a decision based on the merits as to whether construction of the Keystone XL is in the "national interest" of the country will finally be delivered in 2013.

_______________________

[1] Application of TransCanada Keystone Pipeline, L.P. for a Presidential Permit,

U.S. Department of State Keystone XL Pipeline Project, 

(May 4, 2012),

available at

 http://keystonepipeline-xl.state.gov/proj_docs/permitapplication/index.htm. 

[2]

New Keystone XL Pipeline Application

, 

U.S. Department of State Keystone XL Pipeline Project, 

http://www.keystonepipeline-xl.state.gov/ (last visited Nov. 26, 2012).

[3]

Id.

[4]

Proposed Keystone XL Project Final Environmental Impact Statement: Special Briefing

, U.S. Department of State, Aug. 26, 2011, http://www.state.gov/e/oes/rls/remarks/2011/171117.htm (last visited Nov. 26, 2012).

[5]

Briefing on the XL Pipeline

, 

U.S. Department of State: Diplomacy in Action, 

(Jan. 18, 2012), http://www.state.gov/r/pa/prs/ps/2012/01/181492.htm.

[6]

Id.

[7]

Id.

[8]

Id.

[9] Application of TransCanada Keystone Pipeline, L.P. for a Presidential Permit, 

U.S. Department of State Keystone XL Pipeline Project, 

(May 4, 2012), 

available at

 http://keystonepipeline-xl.state.gov/proj_docs/permitaplication/index.htm.

[10]

New Keystone XL Pipeline Application

, 

U.S. Department of State Keystone XL Pipeline Project, 

http://www.keystonepipeline-xl.state.gov/ (last visited Nov. 26, 2012).

[11]

Id.

Kentucky Contemplates Increased Cigarette Taxes: Symbolic Efforts to Put Out Tobacco Use and Industry

By: Michael Erena, Staff Member

In February of this year, Kentucky Governor Steve Beshear charged the Blue Ribbon Commission on Tax Reform to review and revise the Kentucky tax code.[1] A recent proposal approved by the Commission would increase state cigarette taxes from $0.60 to $1.00 per pack.[2] While the cigarette tax is one of many proposals under consideration by the Commission,[3] it nevertheless raises the question of whether such a tax would serve as a viable and effective option for Kentucky. Furthermore, what does this proposal mean for the tobacco industry in general?

In recent years, hiking cigarette taxes has become a popular strategy employed by state legislatures.[4] The politically appealing cigarette taxes provide monetary incentives to reduce smoking and its negative public health by-products while also bolstering state revenues. Most recently, Illinois lawmakers approved a tax increase from $1.00 to $1.98 per pack, which took effect in July of this year.[5] Despite the overall national trend toward increasing state cigarette taxes, a great disparity remains among the individual states' taxation rates: New York imposes the nation's highest rate of $4.35 while the nation's lowest rate in Missouri is a paltry $0.17 per pack.[6] In November, Missouri voters maintained the national low by rejecting Proposition B, which would have imposed a state increase of $0.73 per pack.[7] This disparity in state cigarette tax rates has led to a booming industry for cigarette smuggling and resale - known as "smurfing" - exacting an estimated governmental cost of $10 billion annually, according to the Bureau of Alcohol, Tobacco, Firearms, and Explosives.[8]

While Kentucky's tax rate would remain relatively low even with the proposed increase and thus not create the sort of high profit margins to incentivize large scale cigarette smuggling operations in Kentucky, it could very well drive Kentucky smokers to take their business across state lines to one of the five border states offering lower prices. Kentucky remains the second highest adult smoking market in the nation,[9] a market that hopefully could be choked down by tax pressures, but one that nonetheless could be outsourced in part to more cigarette-friendly neighbors. This potential for lost cigarette revenues from ubiquitous Kentucky border towns has given pause to some skeptics of the proposal.[10]

Setting aside the potential revenue shifting across Kentucky's borders, it remains to be seen what impact the tax increase would impose on Kentucky's tobacco industry. Although tobacco is not the dominant commodity it once was for Kentucky, it nonetheless produced $325.2 million in cash receipts for 2011.[11] Despite its declining sales, tobacco remains relevant to Kentucky and Kentuckians, and policy decisions such as imposing an increased cigarette tax may very well bring economic and agricultural ramifications.

The steady decline of tobacco sales in Kentucky, and nationwide, is certainly not attributable to any one state's individual tax increases, but rather the result of various and complex factors - chief among them the recognition of the devastating health consequences of tobacco consumption.[12] The fact that Kentucky, one of the principal tobacco-producing states left in the nation, contemplates further increases to its state cigarette tax, arguably decreasing tobacco usage, likely says more about the symbolic decline of the tobacco industry than anything else. Despite stalwart holdouts like Missouri, it seems Kentucky's contemplation of a higher tax falls in line with the national trend that signifies a slow push towards snuffing out an industry.

_____________________

[1] Press Release, Governor Steve Beshear's Communications Office, Gov. Beshear Authorizes Tax Reform Commission (Feb. 9, 2012),

available at

http://migration.kentucky.gov/Newsroom/governor/20120209taxcommission.htm.

[2] Scott Wartman,

Cigarette tax hike among proposed changes by tax commission,

(Nov. 19, 2012, 6:00 PM), http://cincinnati.com/blogs/nkypolitics/2012/11/19/cigarette-tax-hike-among-proposed-changes-by-tax-commission/.

[3]

Id.

[4]

The urge to smurf: When government gets greedy, some people turn to crime

, 

The Economist, 

http://www.economist.com/news/united-states/21567111-when-government-gets-greedy-some-people-turn-crime-urge-smurf (Nov. 24, 2012) ("Since 2007 at least 27 states have raised their cigarette taxes, often to erase deficits or to cover sharp increases in health-care costs.").

[5] Rick Pearson & Ray Long,

Lawmakers OK $1-a-pack cigarette tax hike

, 

Chicago Tribune, 

(May 30, 2012), http://articles.chicagotribune.com/2012-05-30/news/ct-met-illinois-legislature-0530-20120530_1_cigarette-tax-tobacco-tax-measure-tax-hike. 

[6] Map of Cigarette Tax Rates, 

Tobacco Free Kids, 

(July 6, 2012),

available at

www.tobaccofreekids.org/research/factsheets/pdf/0097.pdf.

[7] Michelle Pekarsky,

Missouri Voters Reject Cigarette Tax Hike, 

Fox4kc.com, 

(Nov. 6, 2012, 10:44 PM), http://fox4kc.com/2012/11/06/prop-b-cigarette-tax-in-missouri/.

[8] 

The Economist, 

supra

 note 4.

[9]

Tobacco Use in Kentucky 2012, 

Kentucky Cabinet for Health and Family Services, 

available at

http://chfs.ky.gov/dph/mch/hp/tobaccodata.htm.

[10] Wartman,

supra

note 2.

[11] Lorie Hailey,

Cash Receipts for Kentucky Farm Commodities Nearly $5 Billion in 2011, 

The Lane Report, 

(Nov. 13, 2012), http://www.lanereport.com/15231/2012/11/kentucky-farm-cash-receipts/.

[12]

Vital Signs: Current Cigarette Smoking Among Adults Aged 

≥ 18 Years - United States, 2005-2010, 

Centers for Disease Control and Prevention, 

(Sept. 9, 2011),

available at

http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5745a3.htm.