Coming soon...

KENTUCKY JOURNAL OF EQUINE, AGRICULTURE, &

NATURAL RESOURCES LAW

Volume 5, Number 1

ARTICLES

Botanical Gardens: Driving Plant Conservation Law                Amy Hackney Blackwell

Mending the Fracture: Bringing Parties Together on                Allison Rose

High Volume Hydraulic Fracturing through Alternative

Dispute Resolution

The New Fuel Frontier: Biomass Contracting                             L. Paul Goeringer,

                                                                                                             Dr. H.L. Goodwin, and

                                                                                                             Dr. Michael Popp

NOTES

Harvesting a Lawsuit: Challenging the Enforcement and         Kelly E. Calder

Validity of Monsanto's Transgenic Seed Patents

Naturally Confusing Consumers: Express Federal                    Taryn M. DeVeau

Preemption of State Claims Regarding False and

Misleading Food Product Labels

Racinos: The Last Hope for Kentucky Horse Racing                 William B. Norment III

Valuing Derivative Suits in Mergers of Food and                        Robert S. Proudfoot

Natural Resources Corporations through Analyzing

the Massey and Alpha Natural Resources Merger:

Methods of Ensuring Corporate Accountability and

Maximizing Shareholder Value

The Equine Tax Parity Act - An Improbable Improvement to the Tax Code

By: Amanda Stubblefield, Staff Member

In early March, freshman Congressman Andy Barr (R-KY) introduced H.R. 998, the Equine Tax Parity Act, in order to "amend the Internal Revenue Code of 1986 to reduce the holding period used to determine whether horses are § 1231 assets to twelve months."[1] Presently, owners must hold equine capital assets for twenty-four months in order to take advantage of the preferential tax treatment for capital gains.[2] Therefore, this proposed amendment would be a significant change - cutting the required holding period in half. The bill has been referred to the Committee on Ways and Means.

Barr claims the change would "bring parity to the tax code for the Commonwealth's signature industry" which would result in "helping put Kentuckians back to work."[3] The Congressman also suggests amending the tax code would "finally eliminate a 44-year-old tax provision that discourages investment in the equine industry, bringing much needed relief to an economic sector that supports 1.4 million full-time jobs."[4]

Although this proposal would undoubtedly help the equine industry, which has been struggling over the past several years, it seems unlikely the change will be adopted. Congress made an informed and careful decision when implementing the extended holding period requirement. Congress found the "purposes for which animals are held is ambiguous... because the taxpayer cannot immediately know, for example, which part of a livestock crop will be retained for breeding purposes and which part will be sold in the ordinary course of business."[5] Therefore, in order to address the uncertainty issue, Congress decided the typical one-year holding period "generally is not long enough to resolve the question of whether the taxpayer is holding the animal for one of the specified purposes or whether is holding it for sale."[6] Furthermore, Congress was also concerned that the usual one-year holding period "allows taxpayers to make short-term, tax-motivated investments in cattle and horses... and thus, the taxpayer is able to convert ordinary income into capital gains through a short-term investment."[7]

Despite the fact that most business assets need to be held for only twelve-months prior to receiving preferential capital gains treatment, there are several exceptions that were specifically placed into the tax code after careful consideration by Congress, and horses are only one part of the broad category of "livestock" subjected to the increased holding requirement in 26 U.S.C. § 1231(b)(3). Thus, although the amendment would likely benefit the equine industry, "Barr"ing any major changes it is unlikely the bill will make it past the Ways and Means Committee.

_____________________________

[1] 113th Congress, H.R. 998 (March 6, 2013),

available at

: http://thomas.loc.gov/home/gpoxmlc113/h998_ih.xml.

[2] 26 U.S.C. § 1231(b)(3) (1999).

[3] "Federal Bill Would Reduce Capital Gains Holding Period for Horses to One Year," 

National Thoroughbred Racing Association

(Mar. 7, 2013), http://www.ntra.com/en/news-media/press-releases/2013/3/7/federal-bill-would-reduce-capital-gains-holding-period-for-horses-to-one-year/.

[4]

Id.

[5] Tax Reform Act of 1969, Senate Report, 1969-3 C.B. 423 (I.R.S.), S. Rep. No. 91-552, 1959 WL 101215, Nov. 21, 1959.

[6]

Id.

[7]

Id.

[8] 

Student Comment: Nudging the Scale - Behavioral Economics and the Obesity Crisis 
by Raabia Wazir, Staff Member

Despite the fact that the obesity epidemic has shown no signs of slowing in recent decades, governmental tactics to combat obesity have remained limited to traditional economic models focused on individual consumer choices. Current efforts to enforce fat taxes and restaurant calorie postings provide uncertain benefits at best and may in fact be detrimental to consumers. The USDA and other federal agencies have recently turned to behavioral economics to buttress current anti-obesity legislation. While policy changes adopting findings from this new field is on the horizon, at present we can only speculate about the potential of "nudging" on our nation's health.

Continue Reading

---

Agricultural Donation Tax Credit Proposal Stalls in Kentucky General Assembly

By: Joe Schuler, Staff Member

Last year, more than 650,000 Kentuckians accessed one of the state's charitable food banks for assistance feeding their families.[1] This represents an increase of 84% from just four years ago.[2] The growth is attributed to the financial strain created by the economic recession and slow recovery period.[3]

Anytime a need increases so rapidly, it is sure to be a challenge for nonprofit organizations to keep up with the demand. Rising food prices has also caused a reduction of as much as 50% in the amount of commodities provided to the food banks by the U.S.D.A.[4] Intensifying the problem is a simultaneous decline in charitable giving to the food banks.[5]

Kentucky food banks have been hopeful that a proposed tax credit would help bring relief. Kentucky House Agricultural Committee Chairman Tom McKee introduced the measure in hopes of increasing the supply of fruits and vegetables available to needy families.[6] If passed, farmers would be entitled to a credit equal to 10% of the amount of eligible agricultural products donated to nonprofit food programs.[7] Eligible products include fruits and vegetables and beef, poultry, pork, fish and other edible products raised or grown in Kentucky.[8]

The bill passed the House unanimously on February 21, making many hopeful that it would ultimately be approved.[9] However, it was sent to the Senate Appropriations and Revenue Committee, where it stalled.[10] With the General Assembly's remaining days planned only for the consideration of vetoes, it appears that the proposal will not be adopted this year.[11] It is unclear why the bill stalled in committee.

Food banks believe the credit would result in more food being available to needy families in Kentucky by providing farmers with a financial incentive to donate their products.[12] The incentive may be particularly effective for the estimated 1/4 of vegetable crops that are ultimately wasted.[13] Given this waste and the unmet need, it seems likely that the food banks will continue to seek support among state legislators in hopes that the credit can be adopted in future sessions. Until then, they, and the 650,000 Kentucky families who rely on them, will have to continue to rely on other charitable donations.

______________________

[1] Dan Conti,

Bill Would Give Kentucky Farmers Tax Credit for Food Bank Donations

, 

WFPL News

(Feb. 20, 2013, 1:40 PM), http://www.wfpl.org/post/bill-would-give-kentucky-farmers-tax-credit-food-bank-donations.

[2]

House Bill 141

, 

God's Pantry Food Bank,

http://www.godspantry.org/content/house-bill-141 (last visited Mar. 11, 2013).

[3]

Id.

[4]

Id.

[5]

Id.

[6] Conti,

supra

 note 1.

[7] H.B. 141, 114th Gen. Assem., Reg. Sess. (Ky. 2013),

available at

 http://www.lrc.ky.gov/record/13rs/HB141.htm.

[8]

Id.

[9]

Id.

[10]

Id.

[11]

2013 Regular Session Calendar

, 

Kentucky Legislative Research Commission,

http://www.lrc.ky.gov/sch_vist/13RS_calendar.pdf (last updated Mar. 7, 2013).

[12]

House Bill 141

,

supra

 note 2.

[13]

Id.

Monsanto v. The American Farmer

By: Max Bridges, Staff Member

On February 19, 2013, oral arguments were heard before the Supreme Court in a classic David and Goliath case,

Bowman v. Monsanto

, No. 11-796.[1] On one side, there's Vernon Hugh Bowman, a 75 year old farmer from southwestern Indiana, and the other, the agricultural giant, Monsanto.

In 1999, Vernon Hugh Bowman began purchasing Monsanto's patented Roundup Ready soybeans which have been genetically altered to resist the herbicide Roundup. As a condition of use, farmers must sign Monsanto's Technology Agreement which states that growers may only use the seed for a single season and may not sell the seeds to any other grower.[2] Bowman followed the terms of the agreement by not selling any of the seed from his main crop. However, beginning in 1999, he purchased second-generation seed from a grain elevator for his second planting and saved seeds from that purchase.[3] In 2007, Monsanto sued Bowman for violating their patent protection by purchasing the second generation GM seeds from the grain elevator.[4]

The Supreme Court only has to decide the very narrow issue of whether a patent right for self-replicating technologies expires after an authorized sale.[5] Bowman's attorneys have argued the doctrine of patent exhaustion should shield Bowman from liability. This doctrine states that the unconditioned sale of a patented article ends the patentee's monopoly right to control its use.[6] In other words, if you buy something covered by a patent you own it outright and are allowed to use it for your "ordinary pursuits of life."[7]

But Monsanto's David Snively says this argument misses the point. According to Snively, we can buy an iPhone and do whatever we want with it, "but we're not going to go out and make copies of the iPhone and put Apple out of business."[8] If farmers are allowed to plant the patented seeds (which creates copies of the patent) without paying Monsanto, the patents would be worthless.

SCOTUS is likely to agree with Monsanto. At a freewheeling and almost one-sided oral argument, the justices "seemed alert to the consequences of their eventual ruling not only for Monsanto's very lucrative soybean patents but also for modern agriculture generally and for areas as varied as vaccines, cell lines and software."[9]

Monsanto also has the case law in its favor. In 1980, the Supreme Court ruled by a 5-4 margin that living organisms could be patented,[10] and in 2001 the Court upheld the patenting of plants.[11] Finally, when suing farmers who save their seeds, Monsanto has never lost in court. Since 1997, Monsanto has filed 145 lawsuits against seed-saving farmers. Only 9 cases have gone to full trial (most settle) and Monsanto has been victorious each time.[12]

While I thoroughly believe businesses should be paid for their product and that patents encourage innovation,

Bowman v. Monsanto

 offers the Court the perfect opportunity to determine a much broader issue: is Monsanto using patent enforcement to control their monopoly on a vital resource? The answer is yes. Monsanto's patented seeds account for 93% of the soybean industry and 80% of corn.[13] To no one's surprise, the cost of farming has drastically risen. Since the introduction of GM seed, "the average cost of soybean seed to plant one acre has risen by a dramatic 325 percent, from $13.32 to $56.58. Similar trends exist for corn and cotton seeds: cotton seeds spiked 516 percent from 1995 to 2011 and corn seed costs rose 259 percent over the same period."[14]

This monopoly stifles innovation and reduces seed diversity leaving our crops more vulnerable to "superweeds."[15] Twenty years ago it was common for dealers to sell inexpensive, "public" soybeans. Nowadays, almost all soybean seeds are patented. USDA economists have found that recent seed industry consolidation has reduced research and likely resulted in fewer crop varieties.[16]

Finally,

Bowman v. Monsanto

 raises a more fundamental problem: why are we defending Goliath against David? America was founded on the backs of hard-working farmers and yet today, we are more willing to protect the immortal corporation. Do you remember the touching Super Bowl advertisement by Dodge that brought many parties to a sudden and abrupt halt?[17] It was so moving because it elucidated the sacrifices that American

farmers

, not corporations, have made to feed our nation. As Paul Harvey so eloquently said, "And on the eighth day, God looked down on his planned paradise and said I need a caretaker - so God made a farmer." I pray we don't forget this.

______________________

[1]

Bowman v. Monsanto

, 

SCOTUS Blog

, http://www.scotusblog.com/case-files/cases/bowman-v-monsanto-co/ (last visited March 4, 2013).

[2]

Bowman v. Monsanto

, 

OYEZ

, http://www.oyez.org/cases/2010-2019/2012/2012_11_796#argument (last visited March 4, 2013).

[3]

Id.

[4] Aviva Shen,

How One 75-Year-Old Farmer Could Deal a Blow to Monsanto's Empire

, 

Nation of Change

 (February 20, 2013), http://www.nationofchange.org/how-one-75-year-old-soybean-farmer-could-deal-blow-monsanto-s-empire-today-1361373405.

[5] 

OYEZ

,

supra

 note 2.

[6]

Black's Law Dictionary

, (9th ed. 2009).

[7] Dan Charles,

Farmer's Fight with Monsanto Reaches the Supreme Court

, 

NPR - The Salt

 (February 18, 2013), http://www.npr.org/blogs/thesalt/2013/02/18/171896311/farmers-fight-with-monsanto-reaches-the-supreme-court.

[8]

Id.

[9] Adam Liptak,

Supreme Court Appears to Defend Patent on Soybean

, 

The New York Times

 (February 19, 2013), http://www.nytimes.com/2013/02/20/business/justices-signal-a-monsanto-edge-in-patent-case.html?_r=0.

[10]

Diamond v. Chakrabarty

, 447 U.S. 303 (1980).

[11]

J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc.

, 534 U.S. 124 (2001).

[12]

Why Does Monsanto Sue Farmers Who Save Seeds

, 

Monsanto

, http://www.monsanto.com/newsviews/Pages/why-does-monsanto-sue-farmers-who-save-seeds.aspx (last visited March 4, 2013).

[13] Peter Whoriskey,

Monsanto's Dominance Draws Antitrust Inquiry

, 

The Washington Post

 (November 29, 2009), http://www.washingtonpost.com/wp-dyn/content/article/2009/11/28/AR2009112802471_pf.html.

[14]

Seed Giants vs. U.S. Farmers

,

Center for Food Safety and Save our Seeds (2013)

, http://www.centerforfoodsafety.org/wp-content/uploads/2013/02/Seed-Giants_final.pdf, at 8-9.

[15] Aviva Shen,

Superweed Lead to Heavier Pesticide Use on Crops

, 

Think Progress

 (October 3, 2012), http://thinkprogress.org/health/2012/10/03/946801/superweeds-pesticides/?mobile=nc.

[16]

Seed Giants vs. U.S. Farmers

,

supra

 note 14, at 9.

[17] Official Ram Trucks Super Bowl Commercial "Farmer," http://www.youtube.com/watch?v=AMpZ0TGjbWE (last visited March 4, 2013).

Red Dead Redemption: How the Use of Carbon Monoxide in Meat Packaging Benefits Consumers

By: Arthur Cook, Staff Member

In the United States, companies use carbon monoxide to enhance the color of meat.[1] This process keeps meat redder longer than it would otherwise. This process is banned in Japan,[2] Singapore,[3] and the European Union.[4] Such a practice has been deemed safe for human consumption in study[5] after study.[6]

The charge against such action is a concern that is masks spoilage; in other words, the product is so effective, it may hide the signs of decay.[7] However, the F.D.A. utilizes a system to detect spoilage based on

odor

, not color.[8] Still, fears linger about the process.

The flip side to this concern is an overall reduction in wasted meat. If meat, perfectly healthy to consumers, can remain on shelves longer, and the process by which this is achieved is harmless, there should be little incentive to challenge this. It is the most economically effective use of resources. This result could also be achieved through a massive public education campaign about why less-red meat is still fit for consumption, but here, such results may be achieved at no cost to the government and have a more environmentally-friendly impact.

______________________

[1] Julie Schmit,

Carbon monoxide keeps meat red longer; is that good?

, 

USA Today (

Oct. 30, 2007, 10:34 PM), http://usatoday30.usatoday.com/money/industries/food/2007-10-30-kalsec-meat-carbon-monoxide_N.htm.

[2]

Proof in the Pink? Meat Treated to Give It Fresh Look

, 

ABC News (

Nov. 14, 2007), http://abcnews.go.com/GMA/Consumer/Story?id=3863064&page=1.

[3]

Carbon Monoxide in Meat Packaging: Myths and Facts

, 

American Meat Institute (

March 2008), http://www.meatami.com/ht/a/GetDocumentAction/i/40141.

[4]

Proof in the Pink?

,

supra

 note 2.

[5] E.U. Health & Consumer Protectorate Directorate,

Opinion of the Scientific Committee on the Use of Carbon Monoxide as component of packaging gases in modified atmosphere packaging for fresh meat

, (Dec. 18, 2001),

PDF available at

http://ec.europa.eu/food/fs/sc/scf/out112_en.pdf.

[6] S.J. Eilert,

New Packaging Technologies for the 21st Century

, 

71 Meat Science 122 (

2005).

[7]

Id.

[8]

Id.

How Corn and Soy Are Clearing America's Grassland

Image Source

By: Raabia Wazir, Staff Member

As previously discussed on our blog, the drought of 2012 had devastating effects on the Midwest with more than 1,000 counties in 26 states declared natural-disaster areas.[1] And yet, farmers have seen business boom. Demand for food and biofuels have remained strong, pushing crop prices 20% higher in 2012 than in 2010.[2] For farmers unable to produce crops due to the drought, over $14.2 billion in crop-insurance payments have provided them a golden safety-net.[3] Overall, farm profits may rise by 14% to $128 billion, the highest numbers since 1973.[4]

Farmers are purchasing more farmland to meet this demand, leading to a 52% jump in prices of farmland in the Midwest between 2010 and 2012.[5] Additionally, many farmers are converting non-farmed land and putting it into cultivation. Typically, the federal Conservation Reserve Program pays farmers to protect wildlife by keeping land uncultivated, but funding for the program has been declining.[6] Farmers are pulling out of the program because they believe they can make more by farming than the $53 per acre average paid for conservation.[7] Unprotected by those government incentives, a recent study published in the Proceedings of the National Academy of Sciences showed that 1.3 million acres of grassland in North Dakota, South Dakota, Nebraska, Iowa and Minnesota have been converted to cropland between 2006 and 2011.[8] This grassland loss is occurring at a rate unsurpassed since the 1930s and is comparable to deforestation rates in Brazil, Malaysia and Indonesia.[9] As the author of the study, Christopher Wright, told NPR, "This is kind of the worst-kept secret in the Northern Plains."[10]

This news is problematic for a number of reasons. With respect to climate change, studies show that grassland holds carbon in their soil better than cropland.[11] This spells trouble for biofuel advocates. As one 2008 study in the journal Science explained, ethanol and soy biodiesel lose some of their carbon advantage over gasoline if the losses associated with farming on virgin grassland are accounted for.[12]

Secondly, grassland conversion causes wildlife and biodiversity to suffer. Corn and soybean fields are much less inviting for a wide range of animals, from ground-nesting birds to bees.[13] In recent years, these fields have been increasingly encroaching on the Prairie Pothole region across Minnesota and the Dakotas. The tall protective grasses in the region provide a key breeding habitat for waterfowl and other ground nesting birds in North America.[14] As grassland is converted, bird populations are dropping.[15]

Finally, Wright reports that much of this conversion is taking place on hillsides, where soil is much more likely to wash into streams and ponds, in areas that don't drain well and in areas of the region much more vulnerable to drought.[16] Some suggest that farmers are willing to take these risks because the federal government subsidizes crop insurance to such a degree that a moral hazard is created.[17] In other words, the public bears most of the burdens of crop insurance but the farmer realizes all of the benefits. In this way, farmers are incentivized to take risks and gamble on grassland.

The Environmental Work Group has suggested that the federal government should reduce crop insurance for farmers who convert grasslands and wetlands to avoid rewarding farmers for their destructive behavior.[18] Farmers are obviously opposed to this move and suggest instead that Congress expand funding for conservation programs and provide larger payment incentives to allow the land to remain uncultivated.[19] This argument is unpersuasive and unrealistic considering current federal budget cuts, the massive subsidies that the industry already receives, and the record profits that farmers have secured in recent years. In contrast, reducing crop insurance would be a no-cost and effective solution to protect the wildlife and biodiversity of the grasslands, fight climate change, and minimize unnecessarily risky behavior of Midwestern farmers.
_________________________
[1] Raabia Wazir, Drought Impacts Passage of the Farm Bill, KJEANRL (August 20, 2012), http://www.kjeanrl.com/2012/08/the-2012-drought-and-its-political.html.
[2] Fields of Gold, The Economist (Feb. 23, 2013), http://www.economist.com/news/united-states/21572212-farmers-bask-soaring-prices-fields-gold.
[3] Id.
[4] Id.
[5] Id.
[6] Bryan Walsh, As Crop Prices Rise, Farmland Expands - and the Environment Suffers, Time Magazine (Feb. 20, 2013), http://science.time.com/2013/02/20/as-crop-prices-rise-farmland-expands-and-the-environment-suffers/; The Farm Bill is a Climate Bill, AgMag Blog (Jan. 9, 2012), http://www.ewg.org/agmag/2012/01/farm-bill-climate-bill.
[7] A.G. Sulzberger, As Crop Prices Soar, Iowa Farms Add Acreage, New York Times (Dec. 30, 2011), http://www.nytimes.com/2011/12/31/us/in-iowa-farmland-expands-as-crop-prices-soar.html.
[8] Christopher K. Wright and Michael C. Wimberly, Recent land use change in the Western Corn Belt threatens grasslands and wetlands, Proceedings of the National Academy of Sciences (Feb. 19, 2013), http://www.pnas.org/content/early/2013/02/13/1215404110.abstract.
[9] Id.
[10] Dan Charles, Pictures Don't Lie: Corn And Soybeans Are Conquering U.S. Grasslands, National Public Radio (Feb. 19, 2013), http://www.npr.org/blogs/thesalt/2013/02/14/172021095/pictures-dont-lie-corn-and-soybeans-are-conquering-u-s-grasslands.
[11] Brad Plumer, Corn and soy wiping out America's grasslands at fastest pace since the 1930s, Washington Post Wonkblog (Feb. 20, 2013), http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/20/biofuel-craze-wiping-out-americas-grasslands-at-fastest-rate-since-the-dust-bowl/.
[12] Joseph Fargione et. al., Land Clearing and the Biofuel Carbon Debt, 319 Science 1235 (February 29, 2008), available at http://www.sciencemag.org/content/319/5867/1235.abstract.
[13] Walsh, supra note 6.
[14] Id.
[15] Plumer, supra note 11.
[16] Wright and Wimberly, supra note 8.
[17] Dan Charles, The CRP: Paying Farmers Not to Farm, National Public Radio (July 11, 2005), http://www.npr.org/templates/story/story.php?storyId=4736044.
[18] Scott Faber, Soren Rundquist, and Tim Male, Plowed Under: How Crop Subsidies Contribute to Massive Habitat Losses, Environmental Working Group 11 (Feb. 2012), http://static.ewg.org/pdf/plowed_under.pdf.
[19] Plumer, supra note 11; Alyssa A. Botelho, Drought puts federal crop insurance under scrutiny, Washington Post 2 (August 13, 2012), http://articles.washingtonpost.com/2012-08-13/national/35493461_1_crop-insurance-insurance-program-corn-and-soybean/2.

Instant Racing Now Before Kentucky Supreme Court

By: Ted Walter, Staff Member

In October 2011,

KJEANRL

 staff member Taryn Deveau first blogged about Kentucky Downs being the first racetrack in Kentucky to offer instant racing.[1] That post also included the Franklin Circuit Court's ruling that "instant racing is within the Commission's regulatory authority so long as it involves pari-mutuel wagering on horse races."[2] Furthermore, that same post made it clear that the opponents of instant racing, The Family Foundation of Kentucky, were going to appeal.[3] Then, in September 2012,

KJEANRL

 staff member Matt Hassen blogged that the Kentucky Court of Appeals had remanded the case to the Franklin Circuit Court in order to allow discovery for the Family Foundation, discovery which had been denied before.[4] "Because of the lack of evidentiary support for its decision, the appellate court found review of the circuit court's decision impossible and ordered further proceedings in order to determine such factual issues as the precise manner in which wagers are pooled and how the odds are calculated for instant race wagering."[5]

Now, the Kentucky Supreme Court has agreed to review the Court of Appeals ruling.[6] There is a lot of money at stake pending the outcome. Through September 2012, "almost $169 million had been wagered using instant racing machines in Kentucky."[7] And through the end of 2012, the combined handle of instant racing in Kentucky since its inception is $228.2 million.[8] Apparently due to the success, it was recently reported that the Keeneland Association has intentions of bringing instant racing to the Lexington and Corbin areas.[9] According to the article, Keeneland is interested in teaming with Full House Resorts to buy harness track Thunder Ridge and move it near Corbin.[10] The track would be for Quarter Horses "with top-level purses boosted by multibreed simulcasting and instant racing."[11] Additionally, "[i]f the legislation passes, or if the court case is decided in the racetrack's favor, Keeneland anticipates announcing plans for a Lexington instant racing facility in conjunction with the Red Mile."[12]

Instant Racing is not only a Kentucky issue. Recently the horse racing and breeding industry has been making a push for instant racing in Oregon.[13] In April 2012, the Nebraska Governor vetoed a bill that would have allowed instant racing at Nebraska racetracks.[14] In December 2012, the Michigan legislature passed a bill allowing instant racing and sent the bill to the Michigan Governor for his signature.[15] Arkansas first allowed instant racing in 2000 and makes "in excess of $100 per machine per day."[16]

With state budgets and pensions facing deficits and with little money to fix them, some are viewing instant racing as a large source of taxable income. "Expanding instant racing to more Kentucky horse racetracks should provide additional tax money to help fund the state's ailing pension system," according to House Speaker Greg Stumbo in a recent

Lexington Herald-Leader

 article.[17] In that same article, it was report that "[o]f the $247 million wagered on instant racing in Kentucky, $226.7 million was returned to the public." Should the courts come down against instant racing in Kentucky, it seems hard to believe the legislature will still say no.

___________________

[1] Taryn Deveau,

Instant Racing: A Possible Trifecta for Kentucky

, 

Ky. J. Eq. Ag. & Nat'l. Res. L. Blog

 (Oct. 21, 2011),

 http://www.kjeanrl.com/2011/10/instant-racing-possible-trifecta-for.html.

[2]

Id.

[3]

Id.

[4] Matt Hassen,

Update on Instant Racing

, 

Ky. J. Eq. Ag. & Nat'l. Res. L. Blog

 (Sept. 27, 2012),

 http://www.kjeanrl.com/2012/09/update-on-instant-racing.html.

[5]

Id.

[6] Jack Brammer,

Kentucky Supreme Court agrees to review instant racing appeal

, 

Lexington Herald-Leader

 (Jan. 11, 2013), http://www.kentucky.com/2013/01/11/2472531/kentucky-supreme-court-agrees.html.

[7]

Id.

[8] Tom LaMarra,

KY Historical Race Wagering Now at $228

, 

BloodHorse.com

 (Jan. 24, 2013), http://www.bloodhorse.com/horse-racing/articles/75770/ky-historical-race-wagering-now-at-228m.

[9] Janet Patton,

Exclusive: Keeneland aims to build prime Quarter Horse racetrack near Corbin

, 

Lexington Herald-Leader

 (Feb. 14, 2013), http://www.kentucky.com/2013/02/14/2517437/exclusive-keeneland-to-build-prime.html.

[10]

Id.

[11]

Id.

[12]

Id.

[13] Tom LaMarra,

Portland Meadows Seeking Historical Racing

, 

BloodHorse.com

 (Feb. 15, 2013), http://www.bloodhorse.com/horse-racing/articles/76238/portland-meadows-seeking-historical-racing.

[14]

Nebraska governor vetoes Instant Racing bill

, 

ThoroughbredTimes.com 

(April 10, 2012), http://www.thoroughbredtimes.com/national-news/2012/04/10/nebraska-governor-vetoes-instant-racing-bill.aspx.

[15] BloodHorse Staff,

Michigan Instant Racing Bill Goes to Governor

, 

BloodHorse.com

 (Dec. 15, 2012), http://www.bloodhorse.com/horse-racing/articles/75055/michigan-instant-racing-bill-goes-to-governor.

[16] Associated Press,

Kentucky Downs Says Instant Racing Play Good

, 

BloodHorse.com

 (Sept. 9, 2011), http://www.bloodhorse.com/horse-racing/articles/75055/michigan-instant-racing-bill-goes-to-governor.

[16] Associated Press,

Kentucky Downs Says Instant Racing Play Good

, 

BloodHorse.com

 (Sept. 9, 2011), http://www.bloodhorse.com/horse-racing/articles/64927/kentucky-downs-says-instant-racing-play-good.

[17] Beth Musgrave and Jack Brammer,

Stumbo says expansion of instant racing could help fix pension system

, 

Lexington Herald-Leader

 (Feb. 15, 2013), http://www.kentucky/com/2013/02/15/2518425/stumbo-says-expansion-of-instant.html.

UPDATE: D.C. Circuit Continues to Adjudicate E15 Case, Hurting Domestic Industries and Consumers

By: Tyler Brewer, Staff Member

My post last October concerned how the D.C. Circuit refused to adjudicate a suit where the EPA illegally authorized E15 (15% ethanol, 85% gasoline) into our domestic fuel supply (

click for link

).[1] The decision by the D.C. Circuit to dismiss the case for lack of standing led Petitioners to appeal. Unfortunately, on January 15, 2013, the D.C. Circuit in

Grocery Mfrs. Ass'n v. EPA

 denied petitions for a rehearing en banc.[2]

In his dissenting opinion, Judge Kavanaugh reiterated the fundamental flaws in denying the rehearing. Particularly, he discusses how the holding handed down last August "is problematic not only because of the erroneous standing law that it creates, but also because it is outcome-determinative in a case with significant economic ramifications for the American food and petroleum industries, as well as for American consumers who will ultimately bear some of the costs."[3] Judge Kavanaugh frames the decision as outcome-determinative because the "EPA will lose if [the case] reach[es] the merits."[4] This argument is quite persuasive when considering the E15 partial waivers' effects on the national economy, both at the industrial and consumer levels.[5]

The D.C. Circuit's denial for rehearing sparked initiative in U.S. Senators Roger Wicker (R-Miss.) and David Vitter (R-La.) to repeal the E15 partial waivers via legislation.[6] Yet, the most promising path to reign in the EPA's exercise of power is the Supreme Court. The Petitioners in

Grocery Mfrs. Ass'n

 have until April 15, 2013 (ninety days from being denied a rehearing) to seek the Supreme Court's review.[7] According to one of the Petitioners, there is anticipation for at least one of the groups affiliated with the suit to file by April 15.[8]

Until the E15 is repealed through legislation or struck down by the courts, we are at the mercy of the EPA and the ramifications E15 will have on our economy. While this may seem like an over-exaggerated statement, merely consider one of the many effects E15 imposes; many automotive manufacturers will void your vehicle's warranty if E15 is used.[9]

_____________________

[1] Tyler Brewer,

EPA Approved E15 Gasoline Does More Harm Than Good

,

Ky. J. Eq. Ag. & Nat'l Res. L. 

(Oct. 16, 2012, 8:50 PM), http://www.kjeanrl.com/2012/10/epa-approved-e15-gasoline-does-more.html.

[2] Grocery Mfrs. Ass'n v. EPA, No. 10-1380, 2013 WL 163744, at *1 (D.C. Cir. 2013).

[3]

Id.

 at *3 (Kavanaugh, J., dissenting) (footnote omitted).

[4]

Id.

at *3 (Kavanaugh, J., dissenting).

[5] 

See

 Brewer,

supra

 note 1.

[6]

Wicker, Vitter to Introduce Bill to Roll Back Ethanol Requirement for Gasoline

, 

www.wicker.senate.gov

 (Feb. 14, 2013), http://www.wicker.senate.gov/public/index.cfm?FuseAction=NewsRoom.PressReleases&ContentRecord_id=daf97f2b-c16c-053c-f435-581ca633c2fb.

[7] Reagan Haynes, 

Push to Stop E15 Could Head to Supreme Court

, 

Trade Only Today

 (February 11, 2013), http://www.tradeonlytoday.com/home/523811-push-to-stop-e15-could-head-to-supreme-court.

[8]

Id.

[9] Gary Strauss, 

AAA Warns E15 Could Cause Car Damage

, 

USA Today

 (Nov. 30, 2012, 11:40 AM), http://www.usatoday.com/story/news/nation/2012/11/30/aaa-e15-gas-harm-cars/1735793/.