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Recently, my colleagues Micah Miller, Melinda Barker, Jennifer Jordan McCall, Kim Schoknecht and Elizabeth Fry published an alert titled Proposed Section 2704 Regulations that discusses proposed regulations that, if adopted, would affect the valuation of family-owned businesses interests transferred among family members by eliminating certain discounts currently recognized under the law. The U.S. Treasury Department released the proposed regulations on August 2, 2016. They will be subject to public comment for the next 90 days and a public hearing will be held on December 1, 2016.

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On August 17, 2016, the Fourth District Court of Appeals sitting in San Antonio held, in a 2 to 1 decision, that a City of Plastic bagsLaredo ordinance prohibiting the distribution of “single use” plastic bags at check-out counters in order to reduce litter was preempted by state law, namely, Section 361.0961 of the Texas Solid Waste Disposal Act (SWDA). The case is Laredo Merchants Association v. City of Laredo, and it could be important for many Texas cities coping with solid waste management issues.

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Lockheed Martin Corporation, one of the largest defense contractors in the United States, operated three California facilities that manufactured solid-propellant rockets for the United States Department of Defense pursuant to contracts subject to the Federal Acquisition Regulations. Substantial quantities of hazardous substances were released by the facilities over the years which resulted in extensive environmental contamination, especially groundwater pollution. In 2008, Lockheed filed a CERCLA Section 107 cost recovery lawsuit against the United States, seeking the recovery of its past and future costs to remediate these sites. The lawsuit was filed several years after the company began remediation activities at these sites. Both Lockheed and the United States have conceded that they are potentially responsible parties at these sites. The United States in turn, filed a CERCLA contribution action against Lockheed, and this long and costly litigation resulted, which the U.S. Court of Appeals for the DC Circuit may have brought to an end. The case is Lockheed Martin Corporation v. U.S., decided August 19, 2016. Continue reading

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In Third Circuit defends challenge to its authority to rule in pipeline expansion project, I was provided with an opportunity to make the point that the states and the federal government are equal sovereigns under the Constitution, which often requires some careful balancing of interests.

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In Center for Biological Diversity, et al., v. Bureau of Land Management, the U.S. Court of Appeals for the Ninth Circuit held that the Bureau of Land Management (BLM) did not violate the Endangered Species Act (ESA) when its analysis of plans to expand access for off-road vehicles in the Imperial Sand Dunes Special Recreation Area (located in California) did not include a Biological Opinion with an “Incidental Take Statement” for the species of plant known as the Peirson’s milkvetch that is categorized as a “threatened species” under the ESA. Construing Sections 7 and 9 of the ESA, the Ninth Circuit agreed with BLM’s argument that Incidental Take Statements are reserved solely for fish and wildlife, and not plant species. When these sections of the law are read together, the Ninth Circuit concluded the ESA prohibits the taking of fish and wildlife only; therefore, the law does not require that the Biological Opinion contain an Incidental Take Statement for endangered plants. The remaining challenges were analyzed by the Ninth Circuit under the “arbitrary and capricious” rubric of the Administrative Procedures Act (APA), and were similarly rejected.

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An earlier case, decided by the U.S. Court of Appeals for the Sixth Circuit on June 3, 2016, is noteworthy because it resulted in an opinion affirming the government’s use of the criminal restitution laws to require a defendant to pay EPA $10.4 million in restitution for EPA’s cleanup efforts. The case is U.S. v. Sawyer.

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On August 11, the U.S. Court of Appeals for the Fifth Circuit issued an opinion rejecting the ExxonMobil Pipeline Company’s request for a stay pending appeal of a Compliance Order issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA) of the Department of Transportation. The case is ExxonMobil Pipeline Company v. U.S. Department of Transportation, et al. The Court of Appeals, applying its standard criteria for evaluating such stays requests, held that the pipeline has not established that it can prevail on the merits, and otherwise seems to express serious misgivings about ExxonMobil’s line of defense at this time. In any case, the parties have been ordered to follow an expedited briefing schedule.

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The U.S. Court of Appeals for the Sixth Circuit has decided a new federalism case. stopIn State of Tennessee, et al., v. Federal Communications Commission, decided on August 10, 2016, the Court of Appeals held that Section 706 of the Telecommunications Act of  1996 does not authorize the Federal Communications Commission (FCC), acting as a federal agency, to preempt laws enacted by the legislatures of Tennessee and North Carolina to confine municipalities engaged in telecommunications services (by providing internet service) to their current territorial boundaries. This decision is important because it helps to define federal agencies’ authority to act.

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Can the federal government at times and, in all places, commandeer the states to act in a certain way? “Commandeering” refers to a federal requirement that state officials enact, administer, or enforce a federal regulatory program. There are limits to the federal government’s constitutional authority to do so, which are discussed in a recent decision by the U.S. Court of Appeals for the Third Circuit. On August 9, the Court of Appeals held that a 2014 New Jersey law, which partially repealed the state’s prohibitions on sports betting, was preempted by the federal Professional and Amateur Sports Protection Act.  Consequently, the federal law prohibiting sports betting will prevail in New Jersey, where the Legislature was hoping to find a way to generate more revenues for its casinos and racetracks. The en banc Court of Appeals rejected New Jersey’s arguments that the federal law was unconstitutional because it “commandeered” the states to act in a way that violates the Constitution. This case is NCAA v. Governor of New Jersey. Of interest, the U.S. Supreme Court has held that, under the commandeering doctrine, the federal government cannot compel or coerce the states, as separate sovereigns, to enact legislation demanded by the federal government.

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On August 8, the U.S. Court of Appeals for the Seventh Circuit, in a decision affirming the final energy efficiency regulations issued by the Department of Energy (DOE) for commercial refrigeration equipment, held that DOE’s use of a measure of carbon emissions known as the “Social Cost of Carbon” was proper under the law; that the Department was authorized to consider such environmental factors in its standards. The case is Zero Zone, Inc., et al., v. US Department of Energy.

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