The 141st running of the Kentucky Derby is upon us. Although most taxpayers have filed their 2014 returns with the IRS, cashing a winning ticket on May 2nd could come with a price. Racetrack winnings, like other gambling income, are subject to federal income tax. Currently, the Internal Revenue Service permits taxpayers to deduct gambling losses against winnings. The tax-code’s treatment of racetrack gambling proceeds has not changed much over the years, but many handicappers were relieved to see that the exemption escaped the new limits on itemized deductions that Congress enacted in 2013.
The Grass isn’t Always Greener on the Other Side
For the first time in California’s history, Governor Jerry Brown has ordered a 25 percent cut in urban water usage. “People should realize we are in a new era. The idea of your nice little green lawn getting watered every day, those days are past,” Brown remarked. The restrictions consists of not washing down sidewalks or driveways, recirculating water in fountains, and only serving water to customers per request at restaurants, among many other things. The mandatory water restrictions are the consequence of a drought that has harangued the Southwest for four consecutive years.
Pipe Dream or Nightmare? Kentucky Residents Express Concerns over Gas Line Conversion Plans
The Tennessee Gas Pipeline has transported natural gas throughout eighteen Kentucky counties over the past seventy years. Recently, Kinder-Morgan Energy Partners submitted a proposal to the Federal Energy Regulatory Commission to repurpose the pipeline and enable it to carry natural gas liquids. While it is uncertain if the proposal will even be approved, much debate exists regarding the environmental impact if the gas line is converted.
Tapping Into Our Resources: Using Kentucky’s Abundant Wildlife Resources to the Advantage of the Disadvantaged
During the most recent session of Kentucky’s General Assembly, Kentucky Senators, Robin L. Webb and C.B. Embry Jr., introduced SB 55. This bipartisan bill will create a new section of KRS Chapter 217 that prohibits state and local governments from restricting, but not regulating, the donation of game meat to or from not-for-profit organizations for the purpose of free meal distribution.
A Promise of Protection: The Right of First Refusal for Recreational Horse Owners
One feature of many equine transactions is that the seller often conditions the sale of a horse on the buyer’s promise to notify the seller when the buyer wishes to sell the horses and give the original seller a chance to repurchase the horse. This is known as the Right of First Refusal (“RFR”). RFR provisions can often be found in sophisticated equine transactions involving race and show horses.
Murray Energy’s Creative Argument Against the Clean Power Plan
By: Eric Eaton, Staff Member
The Clean Power Plan, proposed by the EPA last summer, spawned much controversy. The proposed rule seeks to reduce carbon emissions from coal plants by promulgating guidelines for the creation of “state-specific rate-based goals for carbon dioxide emissions from the power sector, as well as guidelines for states to follow in developing plans to achieve the state-specific goals.”[i]
Though the EPA has not finalized the rule, Murray Energy Corporation filed a Petition for Extraordinary Wit soon after the EPA published the proposed rule in the Federal Register.[ii] Under the All Writs Act, federal courts may set aside agency action in accordance with “principles of the law.”[iii] Generally, judicial review of an agency is available only after the agency has undergone a final action.[iv] The All Writs Act, though, permits judicial review of a proposed rule, rather than the final rule, in “extraordinary circumstances.”[v]
Murray argues that the EPA is acting beyond the scope of its authority, which constitutes an “extraordinary circumstance.” The EPA, relying on Section 112 of the Clean Air Act (CAA), promulgated a rule in 2012 setting emission standards on existing power plants.[vi] Given the existing rule, Murray argues EPA’s Clean Power Plan, promulgated under Section 111, is an ultra vires action because Section 111 prohibits mandating standards for emissions that are not "from a source category which is regulated under Section 112.”[vii] Because, in Murray’s view, the 2012 rule regulates a source category, the Clean Power Plan is contrary to the CAA.
Murray’s interpretation relies on the House’s 1990 amendment to the CAA, which competes with the Senate’s amendment.[viii] The House version includes the above quoted portion, while the Senate version simply cross-references Section 112.[ix]
The EPA couches its argument in this ambiguity. First, the EPA’s reply brief challenged Murray’s standing and the ripeness of the issue, while reiterating that the Clean Power Plan is not a final rule and that the All Writs Act is used in very special circumstances.[x] With regard to the merits of Murray’s claim, the EPA asserts the court should afford it Chevron deference based on the textual ambiguities within Section 111, drawing support from legislative history, structure, purpose, and context of the CAA.[xi] Though the House’s version gives Murray’s argument more credence, the EPA argues ambiguities create the need for agency deference.[xii] The EPA adds that, when faced with competing amendments, the need for agency deference grows.[xiii]
[i] Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 79 Fed.Reg. 34,830 (June 18, 2014). https://www.federalregister.gov/articles/2014/06/18/2014-13726/carbon-pollution-emission-guidelines-for-existing-stationary-sources-electric-utility-generating.
[ii] See generally, Petition for Extraordinary Wit, Murray Energy Co. v. E.P.A., No. 14-1112 (D.C. Cir. filed June 18, 2014).
[iii] All Writs Act, 28 U.S.C.A. § 1651 (2012).
[iv] Administrative Procedure Act, 5 U.S.C. § 704 (2012).
[v] Aluminum Co. of Am. v. United States, 790 F.2d 938, 942 (D.C. Cir. 1986).
[vi] Federal Register, supra, note 1.
[vii] Clean Air Act, 42 U.S.C. §112, §7412 (2012).
[viii] See EPA Reply Br., at 6, Murray Energy Co. v. E.P.A., No. 14-1112 (D.C. Cir. filed June 18, 2014).
[ix] Id.
[x] Id. at iv.
[xi] Id. at 41.
[xii] Id. at 45.
[xiii] See id. at 46.
Laws for Larry – Protecting Montana’s Police Horse
By: Rebecca Price, Staff Member
Larry, the only police horse in the state of Montana, may soon receive legal protection for serving the citizens of his Livingston, Montana community.[i] Representative Margie MacDonald of Billings introduced House Bill 106 to the Montana House Judiciary Committee on January 12, 2015.[ii]
If Montana enacts this piece of legislation, it will follow many states’ codified protection of police horses and dogs from intentional infliction of injury. The Georgia code punishes those who harm police horses or dogs by a felony and upon conviction with one to five years in prison and a fine of up to $10,000.[iii] Ohio’s legislature articulated harsh punishments for assaulting and harassing police horses and dogs.[iv] In line with other states’ legislation, the proposed Montana bill would cause someone who injured police or search or rescue horses to serve at most one year in prison and pay up to a $5000 fine.[v] According to Officer Jessika Kynett, a police officer and Larry the equine officer’s partner, the Montana statute would simply add police horse to the current police canine protection statute.[vi]
Representative MacDonald stated that the proposed bill would protect “highly trained, highly valuable animals”[vii] that serve the people of Montana. In 2002, Congress passed a law that mandated punishment for the intentional harming of a police animal to range from one year to ten years in prison based upon the degree of harm caused to the animal.[viii] In support of this bill, Senator Jon Kyl stated that law enforcement animals, dogs and horses, are not property and the penalty for harming one of these creatures should be “greater than the penalty for denting a car.”[ix]
Mounted patrol horses are animals that are purchased, or donated, to the police department. The Houston Police Department published its training regimen for police horses. In this department, the potential police horses must undergo an evaluation period to determine the horses’ health. Next, the horse must complete various obstacles and tasks to determine if the horse will work with the unit. If a horse is accepted to the mounted unit, the horse must continue training with its partner officer and the unit.[x] Proponents of the Montana legislation hope that protection for police and search and rescue horses will encourage the formation of mounted patrol units across the state.[xi]
No animal should be intentionally injured, even animals used in conjunction with police work. These animals are valuable police instrumentalities that completed extensive training. Taxpayer funds have been invested in the care and training of these animals. Trained police horses should receive legal protection to ensure the health and longevity of community funded investments.
[i] Lisa Baumann, Montana Bill to Protect Police Horses Introduced, Great Falls Tribune (Jan. 12, 2014, 2:55 PM), http://www.greatfallstribune.com/story/news/local/2015/01/12/montana-bill-protect-police-horses-introduced/21656007/.
[ii] Id.
[iii] Ga. Code Ann. § 16-11-107.
[iv] Ohio Rev. Code Ann. § 2921.321.
[v] Madelyn Beck, Bill Aims to Protect Equine “Neigh-Sayers”, Great Falls Tribune (Jan. 12, 2015, 8:08 PM), http://www.greatfallstribune.com/story/news/politics/2015/01/12/bill-aims-protect-equine-neigh-sayers/21671753/.
[vi] Lisa Baumann, Montana Bill to Protect Police horses Introduced, The Washington Times (Jan. 12, 2015), http://www.washingtontimes.com/news/2015/jan/12/montana-bill-to-protect-police-horses-introduced/.
[vii] Beck, supra note v.
[viii] 18 U.S.C.A. § 1368.
[ix] Animal Law Committee, Report on Legislation: Approved with Recommendations (2013), available at http://www.nycbar.org/pdf/report/uploads/20072090-ReportregardingS.518reinjuryordeathtoapoliceanimal.pdf.
[x] Mounted Patrol – Our Horses, Houston Police Department, http://www.houstontx.gov/police/mounted/horses.htm.
[xi] Baumann, supra note vi.
SB 57: The Commonwealth’s Proposed “Right to Farm” Amendment
By: Olivia Snider, Staff Member
On January 6, 2015 an Act “. . . proposing to amend the Constitution of Kentucky relating to the right to farm”[i] was introduced in the Senate, although it did not make it out of committee. This Act, if enacted by the General Assembly, would have present the following question to Kentucky voters: “Are you in favor of amending the Kentucky Constitution to provide that a citizen of this state shall have a personal right to farm, subject only to any provision of common law or statutes relating to trespass or other criminal activity, eminent domain, existing or previously promulgated administrative regulations, or other property rights?”[ii] Simply put, the proposed amendment would essentially prohibit the legislature from passing any law that unreasonably infringes upon a citizen’s right to engage in farming and ranching practices.
While all 50 states have some form of right to farm law which seeks to protect farmers and ranchers from nuisance lawsuits[iii], Kentucky would only be the third state to amend its Constitution to include such a right. In 2012 North Dakota became the first state to pass such an amendment.[iv] The proposition passed with little opposition in the state.[v] The same cannot be said, however, for Missouri’s attempt to create a constitutional right to farm. In August of 2014, Missouri became the second state to pass a right to farm amendment, but it was not an easy feat.[vi] The proposition pitted farmer against farmer within the state and the initial vote was so close that a recount was required.[vii]
It is unclear at this point whether or not such a ballot measure would easily pass or instead spark heated debate amongst voters in the Commonwealth. One thing is certain, however, and that is that this particular proposed amendment is much more specific than the amendments made to North Dakota’s and Missouri’s state constitutions.[viii] This specificity, which serves to provide a description of the types of agriculture practices protected and which laws they remain subject to[ix], may very well be what enables Kentucky’s voters to pass the amendment with little hesitation – eliminating the fear of judicial interpretation issues. However, before this question can be put to a public vote, it will first have to pass the General Assembly and it failed to do so this past session. It will be interesting to see what the future holds for SB 57.
[i] S.B. 57, 2015 Gen. Assemb., Reg. Sess. (Ky. 2015).
[ii] Id.
[iii] Elizabeth R. Rumley, States’ Right-To-Farm Statutes, The National Agriculture Law Center, http://nationalaglawcenter.org/state-compilations/right-to-farm/ (last visited March 16, 2015).
[iv] Blake Nicholson, Voters Make North Dakota First State in Nation to Protect Right to Farm in Constitution, StarTribune, Nov. 8, 2012, available at www.startribune.com/politics.177921891.html.
[v] Id.
[vi] Ruth Ravve, Missouri Battles Over Amendment Granting ‘Right to Farm’, Fox News, Sept. 10, 2014, available at www.foxnews.com/politics/2014/09/10/missouri-battles-over-amendment-granting-right-to-farm/.
[vii] Kristofor Husted, Missouri Constitutional Amendment Pits Farmer Against Farmer, The Salt (Mar. 16, 2015, 7:31 PM), www.npr.org/blogs/thesalt/2014/08/06/338127707/missouri-s-right-to-farm-amendment-pits-farmer-against-farmer.
[viii] See S.B. 57, 2015 Gen. Assemb., Reg. Sess. (Ky. 2015); N.D. Const. art. XI, § 29; MO. Const. art. I, § 35.
[ix] S.B. 57, 2015 Gen. Assemb., Reg. Sess. (Ky. 2015).
Surface Mine Shielded from CWA Liability, Permit Shield Defense Extended to General Permits in Sierra Club v. ICG Hazard
By: Cari Martin, Staff Member
Under the National Pollution Discharge Elimination System (NPDES) of the Clean Water Act (CWA), the federal government—and by delegation, state governments—can issue permits allowing the discharge of certain pollutants into the waters of the United States.[i] The permitting authority may issue individual permits, which apply to single dischargers,[ii] and general permits, which apply to a category of dischargers within a geographic area.[iii] Concurrently, the CWA provides that NPDES permit holders may be “shielded” from liability for CWA violations, even if those violations involve discharges of pollutants not explicitly mentioned in the permit.[iv]
While the permit shield has been used as a defense for individual permit holders,[v] a recent Sixth Circuit case, Sierra Club v. ICG Hazard, marks the first time a court has had to decide whether the permit shield extends to a general permit holder.[vi] ICG Hazard, LLC, a surface coal mine operator in Kentucky, had a Coal General Permit under Kentucky’s NPDES program. This permit included effluent limitations for several specific pollutants, but did not include selenium—a potentially toxic metal, harmful to aquatic wildlife at certain levels.[vii] Recognizing that ICG was in fact discharging selenium above the levels allowed under Kentucky’s water quality standards, the court nonetheless allowed the permit shield to prevent liability.[viii] The court further held that the scope of the permit shield could extend to general permits. It could find no way to distinguish them from individual permits, and reasoned that “absent the permit shield, the permitting authority would not only need to identify the many pollutants that a single polluter could discharge, but all of the pollutants and combinations of pollutants that could be discharged by all polluters that may later fall under the general permit.”[ix]
Permit shields can be seen as a hindrance to the protection of water quality because they allow industry to discharge certain pollutants without facing liability. While environmental groups are unhappy with the Sixth Circuit’s decision, given that ICG Hazard’s discharge of selenium will go on unpunished,[x] state permitting agencies may now be faced with a potentially heavy burden when issuing general permits. In looking at the difference between an individual permit and a general permit, the Sixth Circuit found that “‘a larger share of the responsibility for the information gathering process leading up to the development of a general permit falls on the permitting authority rather than on the permit applicants.’”[xi] Essentially, for general permits, the permitting authority must contemplate all the pollutants that “may be discharged generally from polluters that may later be covered by the general permit.”[xii] Then, the permitting authority can set effluent limitations necessary to protect water quality.[xiii] State permitting agencies will need to be sure they are thorough in researching and identifying potential pollutants to include in general permits, so as to avoid any questions over whether or not the pollutant was contemplated and thus, the polluter shielded.
[i] 33 U.S.C. § 1342 (2002).
[ii] 40 C.F.R. § 122.21 (2003).
[iii] 40 C.F.R. § 122.28 (2003).
[iv] 33 U.S.C. § 1342(k).
[v] See Piney Run Preservation Ass’n v. Cnty Comm’rs of Carroll Cnty, Md., 268 F.3d 255 (4th Cir. 2001).
[vi] Sierra Club v. ICG Hazard, LLC, No. 13-5086, slip op. (6th Cir. Jan. 27, 2015), available at www.ca6.uscourts.gov/opinions.pdf/15a0014p-06.pdf.
[vii] Aquatic Life Criterion – Selenium, EPA, http://water.epa.gov/scitech/swguidance/standards/criteria/aqlife/selenium/ (last updated, Aug. 5, 2014).
[viii] ICG Hazard, slip op. at 2-3.
[ix] ICG Hazard, slip op. at 9-10.
[x] See Court of Appeals Decision Highlights Kentucky Water Pollution, Permitting Loopholes, Sierra Club, (Jan. 27, 2015) http://content.sierraclub.org/press-releases/2015/01/court-appeals-decision-highlights-kentucky-water-pollution-permitting.
[xi] ICG Hazard, slip op. at 12 (quoting Sierra Club v. ICG Hazard, LLC, No. 11–148–GFVT, 2012 WL 4601012, at *7 (E.D. Ky. Sept. 28, 2012)).
[xii] ICG Hazard, slip op. at 12.
[xiii] Id.