KY Journal of Equine, Agriculture & Natural Resources Law

Implementing Stricter Exotic Pets Laws Will Avert Future Animal Tragedies

2012-01-20T19:43:00.001-05:00

By: Ena Viteskic, Senior StaffMember

Dozens of lions, tigers, bears andmonkeys roamed around the countryside on Tuesday, October 18, 2011.[1] Theimages of these exotic animals wandering among the general population almostdepicted a scene from the “Wild West,” however, Zanesville, Ohio is a far cryfrom the “Wild West.” When the owner of a private zoo, Terry Thompson, releasedthese animals by breaking the animals’ cages and fences, uproar ensued in theOhio community.[2] In order to avert public chaos, law enforcement had no otherchoice but to kill many of these exotic animals.³

Although this horrific incidenthas attracted nationwide media attention, the perplexing issue of exotic petsis nothing new. In fact, states have struggled for years in regards to theappropriate mechanism for regulating the private ownership of exotic pets. Manystates have established total or partial bans on private ownership of exoticpets while other states, including Ohio, do not have a direct ban on owing suchanimals.[4] Therefore, the question that emerges is whether a direct ban onprivate ownership could have saved these animals?

Ohio has always been consideredthe “Wild West” of exotic animals because of its lack of regulation on privateownership of such animals.[5] This tragedy stunned the national community,including Kentucky Wildlife officials. Steven Dobey, a wildlife biologist withthe Kentucky Department of Fish and Wildlife Resources stated: “[t]hat wasunbelievable, awful and an extremely dangerous situation.”[6] Theincident triggered lawmakers across the country to evaluate their existing lawsin regards to exotic pet ownership. Pacelle,CEO of the Humane Society of the United States, proclaimed that the “[states]will seek statutory authority. Changes must be made in the law.”[7] Thegovernor of Ohio has also publicly stated that such legal changes will beaddressed by the legislature in its next session.[8] In order to implementthese changes, states should look to the Kentucky regulation as a model for newlaws. According to 301 Ky. Admin. Regs.2:082, no person may possess inherently dangerous exotic animals.[9] Theregulation further explains that “inherently dangerous exotic animals include,but are not limited to tigers, lions, non-human primates, dangerous reptiles,bears, etc.”[10] Of course, the regulation carves out an exception forownership of exotic animals for educational and research purposes.[11] Based onthis regulation, it is clear that private ownership of exotic pets will not betolerated in Kentucky.

In exotic pet cases, thegovernment has a compelling interest to prohibit the private ownership of suchpets. The unregulated ownership of these animals poses a large risk to publicsafety. Not only are these animals dangerous because of their size and abilityto physically harm humans, they are also dangerous because of the potentialdiseases they carry. Besides protectingthe public at large, these laws will most importantly protect the exoticanimals. Such animals require more care and resources than one’s dog, cat, orhamster and it is difficult for states to control the treatment of theseanimals. As a result, every state in the United States should make it a missionto implement stricter laws in regards to private ownership of exotic pets. Banning private ownership will allow theseanimals to live in their natural habitat and not be subject to futuretragedies.

_____________________________________

[1] Andrew Welsh-Huggins and JohnSeewer, Zanesville, Ohio Animal OwnerReportedly Traded Guns for Tiger, Monkey, Huff Post Green (Oct. 21, 2011,09:47PM), http://www.huffingtonpost.com/2011/10/21/zanesville-ohio-exotic-animals-escape-killed_n_1026064.html.

[2] Id.

[3] Id.

[4] TommyGarret, Wildlife Massacre in Ohio, AnAnimal Tragedy, Canyon News (Oct 23, 2011, 09:55PM), http://www.canyon-news.com/artman2/publish/National_News_1182/Wildlife_Massacre_In_Ohio_An_Animal_Tragedy.php.

[5] Id.

[6] GaryGarth, Kentucky regs strict on exotics, Courier-Journal.com (Oct 23, 2011,12:33AM), http://www.courierjournal.com/article/20111022/SPORTS09/310220107/1002/Outdoors-Notebook-Kentucky-regs-strict-exotics?odyssey=mod%7Cnewswell%7Ctext%7CHome%7Cs.

[7] Ohio governor signs executive order on dangerous animals, CNN (Oct21, 2011), http://articles.cnn.com/2011-10-21/us/us_ohio-animals_1_dangerous-animals-john-kasich-wayne-pacelle?_s=PM:US.

[8] Id.

[9] See 301 Ky. Admin. Regs.2:082.

[10] Id.; see also Kentucky State Laws Governing PrivatePossession of Exotic Animals, Born Free USA, http://www.bornfreeusa.org/b4a2_exotic_animals_state.php?s=ky.

[11] See 301 Ky. Admin. Regs. 2:082

Could the threat of preemption herald a state crackdown on horse trainers who don't follow the rules?

2012-01-10T18:11:00.007-05:00

By: Peter Rottgers, Senior Staff Member

Thoroughbred racing is a lot like Ozzy Osbourne. They both did their best work before 1985, in their post prime years both have maintained small but loyal followings, and they both have a tendency to engender conversations about drug use (whether or not that ought to be the case). It’s the later similarity that has garnered the most attention lately. While criticism over performance enhancing drugs and race-day medication has been ongoing for decades, outrage from both the industry and the general public reached its zenith in the aftermath of the Eight Bells tragedy at the 2008 Kentucky Derby. [1] Everyone agreed that something must be done to clean up the sport, but because thoroughbred racing has no central authority to mandate industry wide change, progress has not been as swift enough for some.[2]

To be fair, the states, which promulgate and enforce their own drug and medication rules, have made some progress in reforming the industry.[3] The use of anabolic steroids, blood doping agents like EPO, and “milkshakes” (a mixture of baking soda, sugar and electrolytes usually force fed to a horse via feeding tube [4]) have been effectively eliminated through new regulations and stricter testing.[5] However, even though the states have made some headway on drug and medication reform, the hard issues to be resolved still loom large. While the states should be commended for banning a practice as reprehensible as “milkshaking”, the issue seems to be a relative softball when compared to medications like Lasix. Lasix, a diuretic used to prevent pulmonary bleeding caused by the extreme exertion of a race, is legal in every thoroughbred-racing jurisdiction in North America.[6] Lasix also has performance enhancing qualities and is reputed to mask the presence of other performance enhancing drugs.[7] Yet, swift and uniform change by the states on hard cases like Lasix is probably nothing more than wishful thinking.

The states have also failed to create an effective system of penalizing violators of banned substance rules. As of October 2010, only two of racing’s top 20 trainers by purses won had never committed a drug or medication violation.[8] At least five of those 20 trainers had in excess of 20 drug or medication violations, yet all were still actively training at the time.[9] When compared to the three strike rules in other major American sports [10], thoroughbred racing’s rule enforcement seems laughable.

Two individuals who are not chuckling are Kentucky Representative Edward Whitfield and New Mexico Senator Tom Udall. In May of 2011, Whitfield and Udall presented legislation that called for a federal cleanup of the horse racing industry.[11] The bill seeks to expand Congressional authority over horse racing through amendments to the Interstate Horse Wagering Act of 1978, which gave Congress the power to regulate interstate via phone or other electronic devise.[12] If the Whitfield-Udall bill is anything, it’s bold. It calls for zero tolerance policies for most drugs on race days, and institutes a nationwide three strikes program.[13] The program has received a fair amount of criticism,[14] but the prospect of federal preemption may be just the push the states need to get serious about rule enforcement.

The last thing states want is for the federal government to amend the Interstate Horse Wagering Act. If Congress adopts rules and enforcement procedures, it could also adopt new taxes on the interstate wagers they regulate to pay for rule enforcement, which could explain Rick Dutrow Jr.’s recent headlines. Dutrow, trainer of 2008 Kentucky Derby winner Big Brown, has racked up over 60 drug or medication violations in his career.[15] He is also one of the most successful trainers in the thoroughbred racing industry.[16] Earlier this year, the Kentucky Racing Commission finally revoked Dutrow’s trainer’s license.[17] Last week, the New York Racing and Wagering Board fined Dutrow $50,000 and revoked his trainer license for 10 years [18]. After years of rule breaking, Dutrow is now out of business in two of the country’s most prestigious thoroughbred racing states. This might become the trend with drug and medication rule violators. In order to show Congress that the states are capable of handling horse racing on their own, we could see a crack down on violators in the near future. Maybe federal preemption isn’t the answer, but the threat of federal preemption might prove to be catalyst that gets racing back on track.

[1] Posting of Steve Zorn to The Rail: The New York Times Horse Racing Blogg, http://therail.blogs.nytimes.com/2011/05/14/racings-drug-problem-more-complicated-than-it-looks/ (May 14, 2011, 9:23 EST).

[2] Id.

[3] Id.

[4] Joe Drape, At Breeders’ Cup, a Volatile Mix of Speed and Drugs, N.Y. Times, Nov. 3, 2010, at B16, available at http://www.nytimes.com/2010/11/04/sports/04racing.html.

[5] Zorn, supra note 1.

[6] Id.

[7] Id.

[8] Drape, supra note 4.

[9] Id.

[10] Deborah Charles and Paul Grant, Factbook: Rules About Steroid Use in U.S. Sport, http://www.reuters.com/article/2008/01/11/us-steroids-rules-idUSN0433166620080111 (last visited Oct. 25, 2011).

[11] Zorn, supra note 1.

[12] Id.

[13] Id.

[14] Id.

[15] Joe Drape, 3 Years After Triple Crown Bid, Trainer Is Given a 10-Year Ban, N.Y. Times, Oct. 12 2011, at A1, available at http://www.nytimes.com/2011/10/13/sports/dutrow-barred-from-training-horses-in-new-york-for-10-years.html?pagewanted=all.

[16] Drape, supra note 4.

[17] Zorn, supra note 1.

[18] 2 Drape, supra note 15.

Interstate Racing and Wagering and Compact: Can 6 be Uniform?

2012-01-08T22:37:00.006-05:00

By: Ashley Payne, Senior Staff Member

Kentucky Governor, Steve Beshear, “ceremonially signed into law the Interstate Racing and Wagering Compact” on May 2, 2011.[1] The act purports to “enable member states to act jointly and cooperatively to create more uniform, effective, and efficient practices, programs, rules, and regulations, and to facilitate the health and growth of the industry by simplifying the process of participating in live horse and greyhound racing and pari-mutuel wagering.”[2] The compact was proposed in response to threats of federal intervention.[3] The goal of the Compact is to make the laws of racing and wagering in each individual state uniform, which, in turn, would make it much easier on persons racing horses in those states to comply with the law. As one proponent put it, “even most casual football fans know that holding is a 10-yard penalty. So imagine the confusion there would be if holding was penalized at 15 yards in a game played in one state, five yards in another state, and not a penalty at all if played in a third state.”[4] While this example is extreme, it is exactly the type of situation the Compact is intended to prevent.

The Compact will allow those member states to “act jointly and cooperatively to create a more equitable and uniform” regulatory framework and the rules adopted will “have the force and effect of state rules or regulations.”[5] Should a member State not comply with the provisions of the Compact, another member state “may initiate legal action, in any state or federal Court,”[6] or may bring a legal action in the United States District Court to enforce compliance with the compact.[7]

This sounds great, right? While such a Compact is great in theory, in practice it may not work so well. As the Kentucky adoption of the Compact indicates, “this compact shall come into force when enacted by any (6) eligible states.”[8] There are currently 38 states that offer pari-mutuel wagering and racing.[9] It is difficult to fathom how the compact will provide the necessary uniformity to remedy the current problems when only six of those 38 states have to ratify the Compact. Clearly more than six states may ratify the compact, but if the Compact does not receive the anticipated support, it will not meet its ultimate goal of uniform rulemaking.

[1] Kentucky Governor’s Message, (May 2, 2011), (Available at http://governor.ky.gov/pressrelease.htm?PostingGUID={1ECEE2F0-9296-4BFB-822E-7B6D39DAB83C})

[2] Ky. Rev. Stat. Ann. §230.3761(I)(A-B) (West 2011)

[3] Tom LaMarra, State Legislators Told Compact Viable Option, Bloodhorse.com (July 29, 2010 8:21 AM), http://www.bloodhorse.com/horse-racing/articles/58101/state-legislators-told-compact-viable-option

[4] Denis Blake, Efforts to Create an Interstate Racing and Wagering Compact Underway, The Horsemen’s Journal, (Spring 2010), http://www.hbpa.org/HorsemensJournalDisplay.asp?section=3&key1=12739.

[5] Ky. Rev. Stat. Ann. §230.3761

[6] Ky. Rev. Stat. Ann. §230.3761(XI)(B)

[7] Ky. Rev. Stat. Ann. §230.3761 (XI)(A)

[8] Ky. Rev. Stat. Ann. §230.3761 (III)(A)

[9] Beshear, Supra note 1

Modern-Day Slavery: Human Trafficking and the Agricultural Industry

2012-01-04T23:20:00.003-05:00

By: Hamida Labi, Senior Staff Member

Human trafficking[1] is often regarded as an international problem, yet it is increasingly becoming a domestic issue. In an effort to curtail the growth of this illegal industry, both houses of Congress have recently proposed bills to reauthorize the Trafficking Victims Protection Act of 2000.[2] This form of human trafficking has a direct impact on the U.S. agricultural industry.

While 46.4% of the human trafficking cases dealt with sexual exploitation, 10.4% of those trafficked were placed in the agricultural industry.[3] How reliable are these statistics? Sex trafficking is more likely to be detected and reported than labor-related involuntary servitude. One reason the impact of human trafficking on the agricultural industry remains undocumented is due to the isolation of the services. Sex trafficking is “inherently transactional” because they must interact with members of the public; however, agricultural workers primarily perform their work in isolation and are transient.[4]

Another major challenge in combating persons trafficked for agricultural production is the prevalence of limited English-speaking abilities among victims. This language barrier prevents authorities from conducting meaningful investigations and members of the public from discovering the work conditions of the agricultural laborers. [5] Finally, the employment parameters imposed on foreign nationals who hold H-2A visas also contribute to increased opportunity for human trafficking.[6] These visas are available for individuals to work temporarily in the U.S. An employer must file a petition on behalf of the intending temporary worker.[7] If the worker attempts to seek work elsewhere, the visa is invalidated.[8] This creates a need for a permanent relationship with one’s employer in order to retain the visa. Therefore, these visa holders are less likely to report incidents of forced labor and slave-like work conditions.

As mentioned previously, this is not solely a domestic issue. Organized criminal networks in the United Kingdom often traffic young men from countries such as Vietnam to work in cannabis farms.[9] Referred to as “gardeners”[10], they are found in destitute working conditions and, if caught, are subsequently treated as offenders rather than victims of human rights abuses. Gardeners and illegal immigrants should not be held criminally liable considering they are operating under a state of duress. It is imperative that legal authorities and communities are trained in how to recognize signs of human trafficking, and, if discovered, victims should be afforded proper legal remedies. Kentucky is a state with a major agricultural industry, and Kentucky legislators must increase their efforts to monitor and punish parties that engage in human trafficking.

[1] Under the Trafficking Victims Protection Act of 2000, one definition of severe forms of trafficking in persons involves “the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services through the use of force, fraud, coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.” Fact Sheet: Human Trafficking, U.S. Department of Human and Health Services: Administration for Children and Families, http://www.acf.hhs.gov/trafficking/about/fact_human.html (last updated June 28, 2011).; See also Labor Trafficking in Agriculture, Polaris Project, http://www.polarisproject.org/human-trafficking/labor-trafficking-in-the-us/agriculture-a-farms (last visited Oct. 17, 2011).

[2] The Trafficking Victim’s Protection Reauthorization Act of 2011, International Justice Mission, http://www.ijm.org/justice-campaigns/tvpra (last visited Oct. 17, 2011).

[3] Shelley Cavalieri, The Eyes that Blind Us: The Overlooked Phenomenon of Trafficking into the Agricultural Sector, 31 N. Ill. U. L. REV. 501, 507 (2011) available at http://niu.edu/law/organizations/law_review/pdfs/full_issues/31_3/Cavalieri%20final%202.pdf

[4] Id. at 514.

[5] Id.

[6] Id. at 515.

[7] Id.

[8] Id.

[9] Neil Puffett, Help for trafficked children caught in cannabis farms, Children and Young People Now (Sept. 14, 2010), http://www.cypnow.co.uk/news/1027921/News-Insight-Help-trafficked-children-caught-cannabis-farms/.

[10] Id.

Living on Peanuts: How the Drought in the South May Affect Lexington’s Economy

2011-12-31T15:19:00.004-05:00

By: Christopher Henderson, Senior Staff Member

The Jif factory in Lexington, Kentucky has been a source of employment for many lexitonians for a long while. However, should factory workers brace themselves for a pink slip? With Jif’s prices expected to rise more than 30 percent, peanut butter customers might skip their afternoon snacks, which should be expected to lower Jiff’s profits.[1] “The U.S. Department of Agriculture estimates the current spot price for a ton of unprocessed Runner peanuts, commonly used in peanut butter, at about $1,150 a ton, which is up from about $450 a year ago."[2] In New Jersey, this would increase the price of peanut butter by 94 cents at Target.[3]

What’s the cause of the increased cost? No, not labor contracts. No, not increased taxes. The weather is to blame. In Georgia, the leading U.S. peanut producing state, the planting season was the driest in memory for John Harrell, a sixth- generation peanut farmer in Whigham, Ga.”[4] In Texas, the record long drought destroyed many of the states peanuts that would have been turned into edible-quality crops during the season.[5] In fact, only 38% of the U.S. crop was rated good to excellent last month, down from 60% a year ago.[6]

If Jif runs into financial difficulty because of the decrease in peanut consumption, this may have a dramatic effect on Lexington’s already high unemployment rate, which is currently at 7.4%.[7] In Mayor Jim Gray’s economic address, he stated that the city was bracing for another year where the General Fund receipts would have either declined or remained flat.[8] Can the city afford more layoffs?

[1] Paul Ziobro, Peanut- Butter Makers Face Crunch. Wall Street Journal, Oct. 10, 2011, at B3.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Department of numbers.com, Lexington-Fayette, Kentucky Unemployment, http://www.deptofnumbers.com/unemployment/kentucky/lexington/ (last visited Oct. 16, 2011)

[8] Mayor’s 2012 Budget Address, http://www.lexingtonky.gov/index.aspx?page=2806 (last visited Oct. 16, 2011)

Boom & Bust: Oil and Economic Development in Rural America

2011-12-26T13:25:00.008-05:00

By: Bradley Harn, Senior Staff member

Residents in the Midwestern United States may feel that concerns over oil production are far removed from their everyday lives. However, residents in small towns throughout North Dakota have had their lives changed by oil in recent years.[1] “The oil is being drawn from a formation beneath the land here and parts of eastern Montana and Canada. Named the Bakken, after the owner of the land where oil was first found, it was identified more than 50 years ago, but no one figured out how to tap into it successfully until recently.”[2]

This transition from sleepy small town to rapidly expanding oil city has been documented in the Planet Green TV show “Boomtown,” which documents the 1,000 resident town of Parshall, North Dakota.[3] Perhaps most interestingly, the oil is allowing substantial sums of money to pour into the region. For example, there have been “payments of five, six and seven digits to town residents who might not earn money of that magnitude in a decade.”[4]

An outside observer must question how beneficial this oil money will be in the long run. There have been historical examples of how the oil boom actually harmed other communities in the region. “In places like Williston, a city of more than 12,000 about 70 miles west of Stanley, people have been through such a boom before and suffered through the bust that followed. When oil showed promise in the early 1980s, some thought Williston’s population would grow to 40,000. City officials took on more than $20 million in debt to build streets and sewers for subdivisions that never arrived after the price of oil collapsed in the mid-1980s.”[5]

And certainly there are problems the present oil boom has created immediately. “Roads and water systems are being used at levels unseen here. The number of workers switching to oil jobs — the oil industry in the state expects to need 12,000 new workers by 2010 — has left some restaurants shortening their hours, county and town officials leaving positions unfilled, and at least one desperate fast food place offering signing bonuses.”[6]

The citizens of the state are divided on how to invest the money, be it on infrastructure, education, or otherwise.[7] They regard it as a “homegrown stimulus package.”[8] The experience of Parshall, North Dakota could prove to be an interesting case study for economic development strategies in rural communities.

________________________________________________

[1] Jon Caramanica, A Little Place That Finds Itself Big Money, N.Y. TIMES, January 28, 2011, http://tv.nytimes.com/2011/01/29/arts/television/29boomtown.html.

[2] Id.

[3] Id.

[4] Id.

[5] Monica Davey, Oil in North Dakota Brings Job Boom and Burdens, N.Y. TIMES, January 1, 2008, http://www.nytimes.com/2008/01/01/us/01dakota.html?pagewanted=2.

[6] Id.

[7] Lauren Donovan, Looking Ahead: Where Will North Dakota’s Oil Money Go?, THE BISMARK TRIBUNE, May 5, 2010, http://bismarcktribune.com/news/the-changing-landscape/3fdad8d2-57f7-11df-970b-001cc4c002e0.html.

[8] Id.

Lower Yield Still Equals High Reward

2011-12-20T02:35:00.002-05:00

By: Stephen M. Frazier, Senior Staff Member

Corn prices are at an all time high and grain farmers are cashing in. Projections indicate that corn prices will remain high for the rest of the year, and potentially into the first part of 2012. As a result, farmers are skipping crop rotations and replanting corn in fields where corn was grown the previous growing season. This practice is known as corn-on-corn crops.

Crop rotation is a practice used by farmers where they rotate the planting of wheat, corn, and soybeans on farm land. This is often necessary because the continuous growing of corn, particularly in no tillage situations, leads to an increased incidence of crop disease.[1] This is especially true of diseases that are caused by pathogens that survive in crop residue or in the soil.[2] Additionally, crops rotation helps to decrease the growth of weeds, crop residue, and insects that would otherwise occur in fields that were continuously planted with the same crops. Finally, experts tend to agree that crop rotation is needed to maximize the yield on crops. Failure to do so normally results in a 10 to 20 percent harvest decline from prior year yields. [3]

Despite serious negative implications, corn-on-corn crops are becoming a worthwhile gamble for many grain farmers. The Chicago Board of Trade corn futures hit a record high of nearly eight dollars a bushel in June.[4] Farmer Brian Schaumburg of Illinois echoed the sentiment of many farmers regarding the planting of corn-on-corn crops. Schaumberg stated that, “[l]ast year and this year, we’re seeing a little drag but, even so, corn pays,” and “[c]orn on corn hurts in some places but there’s places it’s awful good.”[5] As a result of the increasing corn prices, experts tend to believe that farmers are and should be “willing to plant corn after corn as long as yields do not decrease much beyond 20 bushels [per acre] versus corn after soybeans.”[6]

Farmers have experienced turbulent times during the past half decade. The rising fuel costs, economy woes, and frequent droughts have left farmers struggling to make a profit. Therefore, many farmers see the high corn prices as a means to recover past losses. While failing to rotate crops may have some negative implications, the potential for large profit margins in many cases outweigh those risks. However, farmers need to consider the future costs of failing to rotate their crops.

_______________________________________

[1] Paul Vincelli, Corn & Soybean News, Cooperating Departments: Agricultural Economics, Biosystems and Agricultural Engineering, Entomology, Plant and Soil Sciences, Plant Pathology, Volume VII, Issue II (2007), available at http://www.uky.edu/Ag/CornSoy/cornsoy7_2.htm.

[2] Id.

[3] High Corn Prices Stall Midwest Crop Rotation, Earthweek (Sept. 30, 2011), http://www.earthweek.com/2011/ew110930/ew110930b.html.

[4] Michael Hirtzer, Insight: Chasing high corn prices, U.S. farmers skip rotations, Reuters (Sept. 25, 2011), http://www.reuters.com/article/2011/09/25/us-usa-corn-harvest-idUSTRE78O1ZY20110925.

[5] Id.

[6] Id.

FDA’s Authority to Regulate State-Licensed Pharmacist Medications for Horses

2011-12-16T11:00:00.003-05:00

By: Chris DeAgano, Senior Staff Member

The issue of whether the Food and Drug Administration (FDA) has the authority to regulate state-licensed pharmacies from compounding drugs for horses has been debated very recently in a Florida federal court in United States v. Franck's Lab, Inc.[1] This case originated because a Florida pharmacy produced a vitamin and mineral compound (through “compounding”) that was blamed for the deaths of 21 polo horses last year.[2] Drug compounding is a process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient.[3] Compounding is typically used to prepare medications that are not commercially available.[4]

In U.S. v. Franck’s Lab, Inc., the federal court ultimately sided with the Florida compounding laboratory and ruled that the FDA lacked the authority to prevent the laboratory from producing and distributing animal medications compounded from bulk ingredients without the agency's approval.[5] In its decision, the court noted that while the FDA has a difficult task in protecting the health of both humans and animals, the FDA's authority is not unlimited and courts have a role to play in determining whether the agency's actions exceed the statutory powers given to it by Congress.[6]

With the practice of drug compounding being widely-practiced by state-pharmacies, there is a significant interest in a federal agency, such as the FDA, being able to regulate this practice. Furthermore, it may be beneficial to have a uniform set of guidelines for all states, rather than each state having its own laws to regulate state-licensed pharmacies and their compounding practices. While U.S. v. Franck’s Lab, Inc. was decided against the FDA’s power to regulating drug compounding in Florida, there will likely be lawsuits in other states with similar dilemmas in the near future.
___________________________

[1] United States v. Franck's Lab, Inc., 2011 WL 4031102 (M.D. Fla. Sept. 12, 2011).

[2] Pat Raia, FDA Seeks Injunction Against Florida Pharmacy for Polo Pony Deaths, TheHorse.com, http://www.thehorse.com/ViewArticle.aspx?ID=16220 (last visited 10/10/2011).

[3] Thompson v. W. States Med. Ctr., 535 U.S. 357, 360-61, 122 S. Ct. 1497, 1500, 152 L. Ed. 2d 563 (2002).

[4] Id.

[5] Pat Raia, Judge Backs Pharmacy in Veterinary Drug Compounding Case, TheHorse.com (Sept. 20, 2011), http://www.thehorse.com/ViewArticle.aspx?ID=18853 (last visited 10/10/2011). [6] Franck's Lab, Inc., 2011 WL 4031102 at *35.

[6] Franck's Lab, Inc., 2011 WL 4031102 at *35.

Elk Pose Problems for Kentucky Residents—and Lawmakers

2011-12-12T11:00:00.006-05:00

By: John Carter, Senior Staff Member

I recently asked a friend from southeastern Kentucky what he thought about the recent reintroduction of elk that has been occurring in his community. He said, “Well . . . let’s just say it could be better.” My friend is not alone in his opinion. Various residents of southeastern Kentucky have made similar assessments. The reintroduction began in 1997 to replenish the elk population, which was devastated in the late 19th century. [1] An Associated Press article highlights a number of problems that those living in Stoney Fork, KY have experienced in connection with the government’s efforts.[2] The residents cite car crashes and the destruction of fences and gardens as their chief complaints.[3] This criticism brings to the forefront an issue that often confronts those encouraging conservation aimed at restoring ecosystems to a former state: How does one accomplish these goals without negatively affecting the residents of impacted communities?

The reintroduction of an animal into any region will inevitably lead to increased interaction with humans. This is simply a matter of logic. However, that interaction does not necessarily lead to negative consequences. A great number of people in eastern Kentucky support the elk reintroduction program, and local governments, realizing the potential for revenue, are especially fond of the return. The homepage for Knott County, KY’s website proudly proclaims, “Knott County, Elk Capital of the East.”[4] A 2001 survey found that “[o]ver 1,081,000 individuals participate in wildlife viewing and bird watching in Kentucky creating 11,481 jobs and generating over $600,000,000 dollars for [the] economy” and “[t]he number of participants and jobs created . . . mak[e] it one of the fastest growing ‘industries’ in Kentucky.”[5] Though these stats may console government officials, they do little to quell the concerns of residents. Stoney Fork resident Lou Brock, who collided with two elk while driving his truck, probably has little patience for arguments about increased revenues; he is more worried about the $9,000 in repair bills he had to pay.[6]

Lawmakers have considered allowing elk introduction only with prior approval of community residents.[7] In 2010, the Department of Fish and Wildlife moved over 45 elk to an abandoned coalmine site.[8] Furthermore, an “extra hunting period was held for locals in January[, 2010] to help control the elk population in specific areas.”[9] Considering that the population is nearing the 10,000 elk target set by officials,[10] it is clear that problems will become more numerous and efforts to appease the communities affected by the reintroduction will continue.

___________________________

[1] Revived, Then Reviled, Elk Now Hunted in This Part of Kentucky, MSNBC.com (Feb. 11, 2011, 6:21:48 PM), http://www.msnbc.msn.com/id/41522427/ns/us_news-environment/t/revived-then-reviled-elk-now-hunted-part-kentucky/#.TpMcab-I0tg.

[2] Id.

[3] Id.

[4] Knott County, KY (Oct. 10, 2011), http://www.knottky.com.

[5] Elk and Wildlife Viewing – Economic Impact, TrailsRUs.com (2001), http://www.trailsrus.com/elk/economic-impact.html.

[6] Revived, Then Reviled, Elk Now Hunted in This Part of Kentucky, supra note 1.

[7] Bruce Schreiner, The Early Birds Catch a Look at Elk on State Parks’ Tours, Kentucky.com (Oct. 10, 2010 10:00 AM), http://www.kentucky.com/2011/10/10/1915062/the-early-birds-catch-a-look-at.html.

[8] Dori Hjalmarson, Kentucky’s Elk Population Close to 10,000 Target, Kentucky.com (Apr. 24, 2010 6:15 AM), http://www.kentucky.com/2010/04/24/1237904/kentuckys-elk-population-close.html.

[9] Id.

[10] Id.

Brazilian judge cites environmental concerns in halting Amazon dam construction.

2011-12-09T11:00:00.001-05:00

By Roger Battiston, Senior Staff Member

Recent construction on what is to be the world’s third largest hydroelectric dam has been halted by a Brazilian judge. The 17 billion dollar Belo Monte dam was planned to be built in the Amazon rain forest, along the Xingu River, and has been in the works for about 30 years.[1]

As a result of stiff opposition by indigenous tribes and environmental conservatives, the project was shelved until recently, when construction was approved in early 2010 by Brazil’s environment agency.[2] Opponents’ main opposition to the construction of the 11 gigawatt-producing dam was the amount of land that will flood by damming the Xingu River, roughly 500 square kilometers, which would displace thousands of indigenous people.[3] In addition, the dam would wreak environmental havoc on portions of the Amazon by partially drying up a 62 mile stretch of the Xingu River, thereby devastating local wildlife.[4] The Brazilian government argued that the massive dam is needed to meet the explosive demand in energy that has resulted from Brazil’s expansive economy and that the effect of the dam would be directly felt by indigenous people.[5] To counter opposition, the Brazilian government required the company slated to run the dam, Norte Energia, to spend about 800 million dollars off-setting environmental consequences from the project.[6]

Construction of the 3.75 mile long dam has faced legal hurtles since its approval.[7] Construction was first halted when a Brazilian judge found that a number of environmental conditions of the approval of construction had not been met.[8] That decision was subsequently overturned.[9]The most recent injunction halting the project was issued by Judge Carlos Eduardo Martins, who cited concerns that the dam would harm the fishing stocks of the Xingu River.[10]

Environmental concerns will always be an issue when infrastructure projects on the scale of the Belo Monte dam are implemented. However, the Brazilian government has recognized the potential for damage and laid out conditions to ameliorate the consequences. In order to provide for Brazil’s burgeoning economy, dam construction should be allowed to continue.

[1] Reuters, Brazil approves Belo Monte hydroelectric dam, The Guardian, June 1, 2011,http://www.guardian.co.uk/environment/2011/jun/01/brazil-belo-monte-dam.

[2] Id.

[3] Tom Phillips, Brazil to build controversial Belo Monte hydroelectric dam in Amazon rain forest, The Guardian, Feb. 2, 2010,http://www.guardian.co.uk/environment/2010/feb/02/brazil-amazon-rainforest-hydroelectric-dam.

[4] Reuters, supra note 1.

[5] Phillips, supra note 3.

[6] Id.

[7] Reuters, supra note 1.

[8] Associated Press, Judge suspends construction of huge dam in Brazil’s Amazon region, The Washington Post, Sept. 29, 2011, http://www.washingtonpost.com/world/americas/judge-suspends-construction-of-huge-dam-in-brazils-amazon-region/2011/09/29/gIQAbXnW7K_story.html.

[9] Id.

[10] Id.

Bureau of Land Management Comes Under Fire Over Efforts to Reign in Wild Horse Heards

2011-12-05T11:00:00.000-05:00

By Roy York, Staff Member

On June 13, 2011, the Federal Bureau of Land Management (BLM) announced a decision to capture all 800 wild horses in two designated preserves in Southern Wyoming, surgically sterilize them, and release only a small number back into the wild, effectively dooming the herd.[1] After significant public outrage, the BLM revised the plan on June 22, 2010, to gather only 90 percent of the horses, spay no mares, and return gelded wild horses to the preserves.[2] The BLM maintained that the number of wild horses in the area was “in excess and subject to gathering and removal.”[3]

After a year of frustration with Secretary of the Interior Ken Salazar,[4] the Western Watersheds Project, a leading environmental organization, and the American Wild Horse Preservation Campaign filed suit in the U.S. District Court for the District of Columbia seeking to block the BLM from carrying out the plan. In response, on August 5, 2011, the BLM changed its stance yet again and planned to remove 90 percent of the horses, skew the ratio in favor of stallions, and inject the mares with birth control to slow population growth.[5] The gathering was completed on August, 31, 2011.[6]

The actions of the BLM sparked a federal complaint in this instance, but gathering, relocation, and population control efforts have been a hot-button issue for years. In 2006, wild horse activists filed a complaint in federal court to enjoin the BLM from herd management citing the BLM’s track record of mistreating horses.[7] The BLM came under fire again in 2010 after horse population control efforts went awry in Nevada.[8] The resulting deaths, castrations, and abuse of captured wild horses led to protests from animal rights groups and other activists.[9] Currently the BLM is considering public input on a proposal to eliminate federal reserves for wild horses in favor of grazing land for livestock over the next 15 to 20 years.[10]

The BLM argues that the measures are essential to controlling the growing wild horse population and marinating the viability of herds and horse habitats. Salazar’s revised plan to deal with the overpopulation may end up costing the federal government more money than it is saving by controlling horse population on public land if the BLM continues to come under fire for its practices. Expect this to continue to be an issue in the future as the BLM continues to aggressively fight the overpopulation of wild horses.

[1] Lance C. Porter, White Mountain – Little Colorado Herd Management Areas Wild Horse Gather, Bureau of Land Management Rock Springs Field Office Decision Record (June 13, 2011), available at http://www.blm.gov/pgdata/etc/medialib/blm/wy/information/NEPA/rsfodocs/whitemtn-wind/rev-ea.Par.54148.File.dat/DR.pdf.

[2] Lance C. Porter, White Mountain – Little Colorado Herd Management Areas Wild Horse Gather, Bureau of Land Management Rock Springs Field Office Decision Record (June 22, 2011), available at http://www.blm.gov/pgdata/etc/medialib/blm/wy/information/NEPA/rsfodocs/whitemtn_littlecolo.Par.28805.File.dat/2011_modifiedDR.pdf.

[3] Id. at 1.

[4] Alan Prendergast, Ken Salazar: Frustration riding high over his wild horse plan, Denver Westword (June 14, 2010, 4:45 PM), http://blogs.westword.com/latestword/2010/06/ken_salazar_frustration_riding.php.

[5] White Mountain/Little Colorado Wild Horse Gather Decision, Bureau of Land Management Rock Springs Field Office Decision Record (August 15, 2011), available at http://www.blm.gov/wy/st/en/info/news_room/2011/august/05rsfo-wmlc.html.

[6] Daily Gather Reports, Bureau of Land Management (September 1, 2011), http://www.blm.gov/wy/st/en/programs/Wild_Horses/2011wmlc-gather/gath-reports.html.

[7] George Knapp, Wild Horse Advocates File Injunction Against BLM, 8NewsNow.com, http://www.8newsnow.com/story/5860063/wild-horse-advocates-file-injunction-against-blm.

[8] Alan Prendergast, Wild Horse Debacle: BLM under fire over roundup deaths, castrations, Denver Westword (April 26, 2010, 3:56 PM), http://blogs.westword.com/latestword/2010/04/wild_horse_debacle_blm_under_f.php.

[9] Id.

[10] Alicia G., Days Left to Help Save Wyoming’s Wild Horses,Care2.com (September 4, 2011, 7:59 PM), http://www.care2.com/causes/days-left-to-help-save-wyomings-wild-horses.html.

Environmental Groups Score Victory in Selenium Lawsuit

2011-12-02T11:00:00.000-05:00

By: Raabia Wazir

On October 3, 2011, a coalition of conservation and environmental groups completed a two million dollar settlement with Arch Coal and its subsidiaries over continued and repeated selenium violations at six coal mining sites in southern West Virginia.[1] Selenium is a natural occurring element that poses no threat to humans when present in low levels, but when it exceeds Safe Drinking Water Act threshold levels of 0.05 parts per million, selenium exposure can cause damage to the liver, the kidneys, and to the nervous and circulatory systems.[2] In fish and other wildlife, ingestion of toxic amounts of selenium can cause total reproductive failure, birth defects and damage to gills and internal organs.[3]

The settlement is the most recent of a series of legal victories for groups trying to force the coal industry to clean up runoff pollution from mines into surrounding streams and ground water. The fight over selenium began in 2003, when the EPA released the Draft Programmatic Environmental Impact Statement on Mountaintop Mining/Valley Fills in Appalachia, a broad federal report that turned up repeated violations of selenium water quality standards. [4] In 2004, a U.S. Fish and Wildlife Service reported further selenium problems downstream from major mining operations.[5]

Most significantly, last year, U.S. District Judge Robert Chambers cracked down on the coal industry for failure to meet compliance deadlines for selenium cleanup in Ohio Valley Environmental Coalition, Inc. v. Hobet Min., LLC[6] and Ohio Valley Environmental Coalition, Inc. v. Apogee Coal Co., LLC[7] for violations of the Clean Water Act (CWA) and the Surface Mine Control and Reclamation Act (SMCRA). Judge Chambers ordered the Patriot Coal subsidiaries to install a “fluidized bed reactor" to biologically treat water discharge from the mine, the corporate-wide cost of which was disclosed by Patriot to be nearly 400 million dollars over 30 years.[8] Lawyers for the citizens groups involved in the suits argued that these costs indicate that selenium-contaminated sites should not be permitted at all because “treatment becomes a long-term responsibility that could outlive the coal companies and then fall on the public.”[9] However, despite continued legal victories by environmental activists, currently no such restrictions have been enforced.

_________________________

[1] Press Release, Ohio Valley Environmental Coalition, Groups Secure Agreement from Arch Coal to Treat Pollution from Coal Mines (October 3, 2011), http://www.ohvec.org/press_room/press_releases/2011/10_03.html.

[2] Sierra Club, Toxic Selenium: How Mountaintop Removal Coal Mining Threatens People & Streams (April 2009), available at http://www.sierraclub.org/coal/downloads/Seleniumfactsheet.pdf.

[3] Id.

[4] Ken Ward Jr., Selenium showdown: Key hearing over coal’s water pollution begins today before Judge Chambers, The Coal Tattoo (August 9, 2010), http://blogs.wvgazette.com/coaltattoo/2010/08/09/selenium-showdown-key-hearing-over-coals-water-pollution-begins-today-before-judge-chambers/

[5] Id.

[6] Ohio Valley Envtl. Coal., Inc. v. Hobet Min., LLC, 723 F. Supp. 2d 886 (S.D.W. Va. 2010).

[7] Ohio Valley Envtl. Coal., Inc. v. Apogee Coal Co., LLC, 744 F. Supp. 2d 561 (S.D.W. Va. 2010).

[8] Ken Ward Jr., Environmental groups hail selenium ruling as 'game changer', West Virginia Gazette. September 1, 2010, http://wvgazette.com/News/MiningtheMountains/201009010983.

[9] Id.

Oil and Gas Industry Resisting New Regulations

2011-11-28T22:26:00.002-05:00

By: Elizabeth Watson, Staff Member

There is ongoing disagreement between American oil companies and the federal government in regard to oil and natural gas exploration and production in the United States. But which side is more convincing? Are the oil industry’s hands unnecessarily tied by the federal government, or are increasing regulations justified?

The National Petroleum Council estimates that oil and natural gas production in North America has the capacity to double by 2035, if the federal government will untie the industry’s hands.[1] The industry looks to the new rules for onshore production, the de facto moratorium recently lifted in the Gulf of Mexico, and the postponing of scheduled lease sales on the outer continental shelf as examples of the federal government’s recent restrictions on operations.[2]

To support the assertion that untied hands leads to greater production, the industry cites the states’ experiences who, by loosening restrictions on the “hydraulic fracturing technique used in shale gas production,” to extract oil, saw much economic gain.[3] In considering production success, the pattern, according to oil companies, is clear—“[r]egulatory and environmental reviews were largely the responsibilities of state and local governments, and disagreements could often be resolved at the local level.”[4] Oil companies worry if the federal government does not lessen restrictions that foreign companies will avoid working here because it is too costly, time consuming, and often involves government challenges played out in administrative reviews and federal court.[5] This in turn will decrease American jobs, decrease the amount of revenue the federal government receives from oil leases, and increase American dependence on foreign energy.[6]

The Obama Administration opposes these claims and points to the “use it or lose it” policy of federal oil and gas leases and the industry practice of “lease squatting” as the reasoning behind oil industry complaints.[7] The Interior Department, the regulatory body that assigns federal leases, provides a five to ten year exploratory period for a company to find oil and natural gas.[8] The federal government claims this period fully allows oil companies to assess a lease and determine its viability. The oil industry itself acknowledges that the “use it or lose it” doctrine is not a new development, but argues the doctrine has always restrained the oil and gas industry because, from the time a lease is issued, “the clock starts ticking.”[9] Enforcing this policy provides no greater obstacle than it did in the past. Additionally, in an effort to discourage the practice of “lease squatting,” where oil companies hold onto large tracts of land for many years without development, the administration proposes to almost triple prices at this year’s offshore lease sale (December 14, 2011), to “ensure areas with the greatest resource potential are developed.”[10] And, to further appease those holding leases affected by the six-month moratorium following the BP oil spill, Obama has extended leases for another year. [11]

The problem with this debate is that both sides are persuasive according to where one sits and what one seeks to protect. Consider this fact: the Department of Energy’s Energy Information Administration found that from 2005 to 2010, 34 percent of all exploration wells drilled dry, and eight percent of all development wells drilled dry, with oil companies paying the federal government for leases regardless of success.[12] The argument supporting loosened regulations on oil companies looks to the amount of risk and money involved in the oil production process, and advocates freedom and time to make wise development choices. After all, the companies are the industry experts. Furthermore, the federal government receives great revenues from the oil industry. With more leases and production, the government makes more money.

However, looking at the same facts listed above, those supporting greater regulation of oil companies also look to the success rate and risk involved, but through a different lens. They argue that drilling, with such potential devastating effects, necessitates strict oversight from Congress and regulatory agencies. One need only recall the recent BP oil spill to find support for this argument. Furthermore, many reject that increased production in itself is a positive, as opposed to looking for alternative fuel sources.

So, what happens next, and who is right? We will have to watch the upcoming lease sales and pending court cases, such as ExxonMobil v. Salazar, to see. It is hard to believe that this debate will ever be fully resolved because it concerns deeply held political beliefs.

_______________________

[1] Lucian Pugliaresi, The Lessons of the Shale Gas Revolution, The Wall Street Journal, September 30, 2011, at A13.

[2] House Natural Resources Committee, Democrats Attempt to Resurrect Old “Use It or Lose It” Myth (March 24, 2011), http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=230630.

[3] Lucian Pugliaresi, The Lessons of the Shale Gas Revolution, The Wall Street Journal, September 30, 2011, at A13.

[4] Id.

[5] Id.

[6] House Natural Resources Committee, Democrats Attempt to Resurrect Old “Use It or Lose It” Myth (March 24, 2011), http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=230630.

[7] Deborah Solomon, U.S . News: U.S. to Resume Lease Sales For Oil Drilling in the Gulf, The Wall Street Journal, August 20, 2011, at A3.

[8] House Natural Resources Committee, Democrats Attempt to Resurrect Old “Use It or Lose It” Myth (March 24, 2011), http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=230630.

[9] Id.

[10] Deborah Solomon, U.S. News: U.S. to Resume Lease Sales For Oil Drilling in the Gulf, The Wall Street Journal, August 20, 2011, at A3.

[11] Id.

[12] House Natural Resources Committee, Democrats Attempt to Resurrect Old “Use It or Lose It” Myth (March 24, 2011), http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=230630

ExxonMobil, Russia, and the “Reset” of Relations

2011-11-25T11:00:00.001-05:00

By: John Wathen, Staff member

In late August, American oil giant Exxon-Mobil announced an agreement with Russia’s state-owned oil company, Rosneft.[1] The deal grants Exxon, America’s largest corporation, access to the oil fields underneath the Arctic Ocean, which the United States Geological Survey estimates holds one-fifth of the world’s undiscovered oil and natural gas.[2] In exchange, Rosneft, who has long wished to break into the international oil market, will acquire oil fields in Texas and the Gulf of Mexico.[3] Russian Prime Minister Vladimir Putin, who exhibited his enthusiasm for the deal by personally presiding, has stated that the eventual total combined investment could be as large 500 billion dollars, a boon to the Russian oil industry.[4] This deal comes on the heels of an announcement in March by the Obama administration that US/Russian relations must undergo “reset”, as tensions between the two nominal allies have become increasingly strained in the last few years.[5]

The Obama administration should do all it can to facilitate this deal, including easing restrictions on offshore drilling in Alaska and the Gulf of Mexico. Demonstrating a willingness to allow American private companies to partner with Russian business interests will prove America’s commitment to the “reset” of relations. Additionally, long term agreements such as this will ensure a steady supply of oil to the United States. The energy potential of the Arctic Circle, which up until now has been largely untapped, is enormous.[6] The United States cannot afford to hesitate in developing these fields to ensure an adequate share in the benefits. As the partnership is presented to American regulators for approval, long term energy security considerations coupled with a new urgency in US/Russian relations should supersede environmental concerns. A healthy political and economic relationship with Russia, which currently produces more oil than Saudi Arabia,[7] is important to American security and prosperity. This partnership, which is hopefully indicative of future Russo-American business agreements, will go a long way in developing that relationship.

___________________

[1] Andrew E. Kramer, Exxon Wins Arctic Oil Deal with Russians, N.Y. Times, Aug. 30, 2011, http://www.nytimes.com/2011/08/31/business/global/exxon-and-rosneft-partner-in-russian-oil-deal.html?pagewanted=1

[2] Id.

[3] Id.

[4] Id.

[5] Desmond Butler, Obama: US has ‘Reset’ Relations with Russia, Associated Press, June 24, 2010, http://www.msnbc.msn.com/id/37892671/ns/politics-white_house/t/obama-us-has-reset-relations-russia/#.ToptO-yTNPw

[6] Steve Levine, Horse Trading with Russia Wins Exxon the Arctic Goal, Foreign Policy (Aug. 30, 2011, 11:19 AM), http://oilandglory.foreignpolicy.com/posts/2011/08/30/horse_trading_with_russia_wins_exxon_the_arctic_gold

[7] Id.

China’s New Restrictions on Rare Earth Metals and the Implications for US Policy

2011-11-21T11:00:00.002-05:00

By: Travis Van Ort

China’s Ministry of Land and Resources announced last week that it would be tightening controls on rare earth metals by cracking down on unauthorized exploration and production of these elements.[1] China has also indicated that “it is restricting exports of [these metals] to conserve scarce supplies and curb environmental damage caused by mining,” but foreign governments have complained that similar limits have not been placed on domestic consumers of rare earths.[2]

Rare earth metals are a group of 17 elements that are key components for high tech and clean tech goods. These elements are used in flat screen TVs, cell phones, wind turbines, electric car batteries,[3] and even military technology, such as missiles.[1][4] China currently produces approximately 97 percent of the world’s supply of these metals, but has only around 30 percent of the world’s reserves.[5] The U.S., Australia, Canada,[6] and Russia[7] also have varying amounts of reserves of these metals. These elements are vital to the modern high tech economy, and China’s actions during its reign as essentially a monopoly producer require quick policy responses from the U.S. government. China’s largest rare earths producing company has indicated that the short supply of rare earths is an irreversible trend, that China does not want to remain the world’s major supplier of rare earths, and will slowly shift its focus to supplying domestic demand.[8] China has reduced exports in recent years, cutting the export quota significantly last year,[9] as it has tried to build up its own industry, which has caused the U.S. and Europe to pressure China to treat all buyers equally.[10]

There are three possible policies the U.S. can pursue to address Chinese actions on rare earths: bring a case in the World Trade Organization, direct government assistance, such as loan guarantees and subsidies, to growing domestic production capacity for rare earths, and encourage research into alternative technologies or materials that lessen the need for rare earths. Action in the WTO is probably the least desirable option. While the U.S. may be able to make out a case under certain provisions of the WTO agreements, depending on the specifics of the regulations and how they are implemented, China would likely have an arguable defense.[11] Since a WTO case takes time to resolve and would not change China’s status of monopoly producer of rare earths, U.S. government action to encourage rare earth production or the creation of alternatives is preferable. The U.S. could encourage domestic production by offering subsidies or loan guarantees to assist in financing mining projects and in implementing the necessary environmental protections, and could also help expedite the licensing process, since it takes seven to ten years to get a permit to open a new mine.[12] Congress introduced bills in both houses last year to help on some of these issues,[13] but more can and should be done. Investment in new mines is needed sooner rather than later because it can take three to five years for a mine to reach full production.[14] The government can also encourage research into alternatives to rare earths for their high tech and clean tech applications. The Department of Energy has encouraged this by offering $30 million to fund such research,[15] but as the demand for both clean tech and high tech increases, more research will be necessary to provide alternatives for all of the current and future applications that use rare earths. These alternatives could be even more necessary since some estimates indicate that there may be shortages of at least two of the rare earth metals in the next five to ten years.[16]

A U.S. policy response that both incentivizes domestic production and encourages research into rare earth alternatives is necessary to allow the high tech and clean tech uses of rare earths to expand without facing shortages or even greater price increases with these materials.

_____________________

[1] Elaine Kurtenbach, China Orders Tighter Controls on Rare Earths, Associated Press, Sept. 26, 2011, http://news.yahoo.com/china-orders-tighter-controls-rare-earths-030235815.html.

[2] Id.

[3] Id.

[4] China Steps Up Regulation of Rare Earth Industry, China Daily, Sept. 27, 2011, http://www.chinadaily.com.cn/usa/business/2011-09/27/content_13801484.htm.

[5] Kurtenbach, supra note 1.

[6] Id.

[7] Maria Gallucci, $30 Million in DOE Grants for Green Technologies Free of Rare Earth Elements, Reuters, April 29, 2011, http://www.reuters.com/article/2011/04/29/idUS86627191420110429.

[8] Zhou Yan, Limited Rare Earths the New Norm, China Daily, Sept. 16, 2011, http://www.chinadaily.com.cn/usa/2011-09/16/content_13716809.htm.

[9] Keith Bradsher, China Said to Widen Its Embargo of Minerals, N.Y. Times, Oct. 19, 2010, http://www.nytimes.com/2010/10/20/business/global/20rare.html?src=mv&ref=homepage.

[10] Kurtenbach, supra note 1.

[11] General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194 (Articles III and X I are provisions under which the action could be brought and Article XX offers general exceptions to GATT’s applicability).

[12] Gallucci, supra note 7.

[13] James T. Areddy, U.S. Congress Spurs Rare Earth Race, Wall St. J., Oct. 1, 2010, http://blogs.wsj.com/chinarealtime/2010/10/01/us-congress-spurs-rare-earth-race.

[14] Bradsher, supra note 9.

[15] Gallucci, supra note 7.

[16] Id.

What New USDA Regulations Mean for the Hops Industry

2011-11-18T11:00:00.003-05:00

By: Joe Schuler, Staff Member

Under a regulation finalized in late 2010 and set to take effect in 2013, brewers who label beer as organic must use organic hops.[1] The requirement is a result of an amendment adopted by the USDA.[2] The National List of Allowed and Prohibited Substances details substances that may be used in products marketed as organic.[3] The National Organic Standards Board recommends changes to the list, with the USDA giving final approval.[4] Currently, inorganic hops may be used because it consists of less than five percent of the product, but that will no longer be the case once the regulation takes effect in 2013.

This is a welcome change for growers of organic hops. Many lobbied for the change because they had difficulty selling their product.[5] Brewers were more likely to use the inorganic variety simply because it tends to be cheaper to produce.[6] Of course, the new regulation should mean increased demand for the organic variety.

According to the American Organic Hop Growers Association, there are approximately 100 acres of organic hops currently grown in the U.S., with a capacity to double in one year.[7] It seems likely that this will become a reality. In fact, it seems that organic farmers will see a complete reversal of fortunes – going from struggling to find a market to struggling to meet demand. This in part stems from the fact that it usually takes two years to produce a full hops crop, and because of uncertainty about the varieties of organic hops that brewers will desire.[8]

It is however a clear win for organic growers. For consumers, it may be a mixed bag. Organic beer prices may rise, at least in the short term. However, for consumers who choose to buy beer labeled as organic, they will now get a product that better fits that label. It is hard to see that as anything other than a win.
__________________

[1] Rule Change May Prompt Increase in Organic Hops, More Variety of Organic Beers to Choose From, Wash Post Sep. 30, 2011, http://www.washingtonpost.com/business/technology/rule-change-may-prompt-increase-in-organic-hops-more-variety-of-organic-beers-to-choose-from/2011/09/30/gIQA4WP98K_story.html

[2] Id.

[3] National Organic Program, http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateJ&navID=NationalListLinkNOPNationalOrganicProgramHome&rightNav1=NationalListLinkNOPNationalOrganicProgramHome&topNav=&leftNav=NationalOrganicProgram&page=NOPNationalList&resultType=&acct=nopgeninfo (last visited October 3, 2011)

[4] Id.

[5] Abram Goldman-Armstrong, New Rules for Organic Hops, THE NEW BREWER, March/April 2011, 67, 68.

[6] Id.

[7] Id.

[8] Id.

The Politics of Hemp Production in Kentucky

2011-11-14T11:00:00.000-05:00

By: Vanessa Rogers, Staff Member

Much controversy has steamed from the production and cultivation of hemp in Kentucky. Proponents support hemp production by turning to Kentucky’s successful past in the industrial production of hemp. In the 1800s, when the production of hemp was legal, Kentucky accounted for half of the industrial hemp production in the United States.[1] Critics advocate against hemp production because hemp contains THC and could be used as a recreational drug.[2] The issue of hemp has been introduced on several occasions to the Kentucky Legislature.[3]

Just this year Senate Bill 30 was introduced in Kentucky. The bill proposed to define industrial hemp and THC in a way so as to exclude industrial hemp production from the definition of marijuana, thereby making its industrial production legal. In addition, the bill gave the Department of Agriculture the authority to regulate and oversee hemp production. Such provisions would have required the Department of Agriculture to license industrial hemp producers. The Sheriff would have been required to monitor and randomly test industrial hemp fields. Licensees were to provide the Department of Agriculture with names and addresses of any grower or buyer of industrial hemp, and copies of any contracts the licensee may have entered into relating to industrial hemp.[4] Senate Bill 30, like many other similar bills introduced in the Kentucky Legislature, did not become law. It was introduced to the Senate and then referred to the Agriculture committee where it died.[5]

The question then becomes, why do bills like Senate Bill 30 die before becoming law? One of the reasons may be due to federal efforts to reduce the cultivation of marijuana.[6] Hemp and marijuana physically look similar[7]thereby making it harder for law enforcement to distinguish between the cultivation of hemp and the cultivation of marijuana. It is not an easy political move for a representative to open the door to hemp as long as the issue of marijuana exists in society.[8] In fact, the United States Congress “has displayed much more interest in eradicating anything that resembles drugs than in drawing lines between legitimate and illegitimate substances.”[9] Thus it may be a political faux pas to challenge the federal government’s strong belief in this. For now, any production of hemp is illegal in the state. If another hemp bill is introduced in the Kentucky Legislature, it is likely that it too will fail like numerous other Kentucky bills.

[1] Economic Impact of Industrial Hemp in Kentucky, By Dr. Eric C. Thompson, Dr. Mark C. Berger & Steven N. Allen, Center for Business and Economic Research at the University of Kentucky, (July 1998), http://www.votehemp.com/PDF/hempstudy.pdf.

[2] Susan D. Dwyer, The Hemp Controversy: Can Industrial Hemp Save Kentucky?, 86 Ky. L.J. 1143,1168-69 (1998).

[3] S.B. 30, 2011 Leg., Reg. Sess. (Ky. 2011); S.B. 14, 2010 Leg., Reg. Sess. (Ky. 2010); S.B. 131, 2009 Leg., Reg. Sess. (Ky. 2009); H.B. 100, 2001 Leg., Reg. Sess. (Ky. 2001); H.B. 855, 2000 Leg., Reg. Sess. (Ky. 2000).

[4] S.B. 30, 2011 Leg., Reg. Sess. (Ky. 2011).

[5] Id.

[6] Thompson, supra note 1,

[7] Syzygyastro, Hemp and Marijuana, Hubs.com, http://syzygyastro.hubpages.com/hub/hemp-and-marijuana, (Last visited Oct. 2, 2011).

[8] Dwyer, supra note 2, at 1169.

[9] Id.

Measurement Extension May Skew Greenhouse Gas Emission Data

2011-11-11T11:00:00.000-05:00

By: Phillip Robinette, Staff Member

In an attempt to better understand the quantity and origin of our country's greenhouse gas emissions, Congress enacted a mandatory reporting requirement for the oil and natural gas industry.[1] Oil and gas facilities emitting at least 25,000 metric tons are required to report their yearly Methane and Carbon Dioxide emissions from equipment leaks and venting and several other types of previously unreported emissions.[2] This reporting seemed crucial because the data on greenhouse gas emissions from the natural gas industry has been called into question in recent years. While some statistics show that natural gas only produces about half as much emissions as coal fired plants, that number may be significantly reduced if emissions were measured during the entire process of gas production.[3] Because natural gas is seen by many as a possibility in cleaner burning energy, largely due to the new extraction method known as fracturing, this data collection seemed critical. The accuracy of this data could help determine the future of America's energy production and its effect on American's health. However, the implementation by the Environmental Protection Agency (EPA) has been criticized by the industry and generated a lawsuit.

The dispute arose in large part due to the fact the industry claimed it needed more time “in order to complete initial equipment inventories and to secure internal resources to report data to EPA in accordance with the rule requirements.”[4] In response to the exhortations of the oil and natural gas industry, the EPA has altered the rules of its reporting and will grant an extension for the industry to use what is currently used in the industry, the “best available monitoring methods” (BAMM) until June 20, 2012.[5] The BAMM allows calculations from supplier data, engineering calculations, and even company records.[6]

The Environmental Defense Fund (EDF) has criticized the BAMM as a less reliable methodology that may hamper and skew data collection.[7] The EDF and the Sierra Club have also challenged the assertion that the oil and gas industry were not capable of complying with the new reporting methods in the time required.[8] They base this challenge on the fact that the EPA was largely relying on three industry letters which they allege provide no empirical data for why implementation would not be possible in the time required. There was also concern over the possibility of indefinite extension of the BAMM because of a change in the language of the regulation from allowing extensions only under “extreme circumstances”, typically classified as safety threats or technical impossibilities, to “unique or unusual circumstances”.[9] The criticism of the quality of the BAMM data may be apt but due to the brevity of the extension it seems that the concern of bad data will largely be circumvented when the more accurate method is implemented. However, this concern does seem more worrisome when compared to the lax standards used by the EPA to grant the current extensions and is only exacerbated by the change to looser language in the regulation.

_____________

[1] See generally 40 C.F.R. 98.

[2] Id.

[3] Natural gas, electronics groups sue EPA over emission-reporting rules, EENEWS (February 1, 2011), htttp://www.eenews.net/public/Greenwire/2011/02/01/2.

[4] 76 Fed. Reg. 37303.

[5] 76 Fed. Reg. 37300.

[6] Mandatory Reporting of Greenhouse Gases ‐ Petroleum and Natural Gas Systems, Revisions to Best Available Monitoring Method Provisions: EPA’s Response to Public Comments, EPA.gov, http://www.epa.gov/climatechange/emissions/downloads11/documents/Subpart-W-response-to-comments.pdf.

[7] Id.

[8] Id.

[9] Id.

The Right Track: Should Kentucky Mandate Synthetic Thoroughbred Racetrack Surfaces?

2011-11-07T11:00:00.000-05:00

Kate Remias, Staff Member

Headlines of a Thoroughbred’s career or life ending injuries have long prompted questions of causation and fault, but a new variable is being brought to the forefront of this blame game: track surfaces. Synthetic track surfaces are being hailed as the safety savior to a troubled sport, and California has gone so far as to require the state’s major tracks have synthetic surfaces.[1] This begs the question of whether Kentucky should follow suit.

Supporters of synthetic surfaces offer impressive numbers backing superior safety claims, but critics posit that data is incomplete. Supporters point to improved safety statistics, such as 2010 data indicating synthetic tracks had fewer career ending incidents than dirt and turf tracks,[2] or a two-year study revealing synthetic tracks had fewer fatalities per start than natural surfaces.[3] Critics, however, say the tracks do not reduce injuries, they create different ones; reducing fatal or career ending fractures and chips but increasing soft-tissue damage.[4] Some veterinarians noted synthetics decrease injuries to the front-end of the horse but increase hind-end injuries. [5] Synthetic surfaces have potential, but there is still a legitimate fear of the unknown weighing heavily against mandating these surfaces.

The need for mandating track surface standards is mitigated by market forces already protecting safety standards. When horses are injured physically, the industry is injured fiscally. After Barbaro’s breakdown, officials noted the injury would cause decreases in fans and ticket sales. [6] Eight Belles’ breakdown induced headlines calling for the end of Thoroughbred racing.[7] Market forces incentivize safety, and the Kentucky Thoroughbred racing industry responds to those forces. Absent regulation, Kentucky’s Turfway Park was the first United States success story of a synthetic main track.[8] Keeneland used a synthetic training track the year prior, and was an integral force in introducing synthetics to the American market.[9] Market forces already guiding Kentucky’s industry safety standards mitigate the need for outside regulation, especially where there are still questions regarding long term safety consequences.

While synthetic surfaces certainly have potential, currently insufficient data coupled with market forces already protecting safety indicate mandating synthetics is not yet necessary.

[1] Press Release, Cal. Horse Racing Bd., Board Mandates Synthetic Surfaces (May 25, 2006), available at http://chrb.ca.gov/press_releases/2006_05_25_press_release.pdf.

[2] Career-Ending Did Not Finish Stats by Track, Keeneland, http://www.keeneland.com/lists/copy/copy.aspx?Page=Career%20Ending (last visited Sept. 26, 2011).

[3] The Jockey Club Releases Updates Statistics from the Equine Injury Database, The Jockey Club (Dec. 15, 2010), http://www.jockeyclub.com/mediaCenter.asp?story=470.

[4] Andrew Wolfson, Horse Deaths Drop on Synthetic Tracks: Quality Varies and Cost, Upkeep High, Courier-Journal.com (Aug. 18, 2008, 4:21 AM),http://www.courier-journal.com/article/20080818/EXTRAS03/808180406/Horse-deaths-drop-synthetic-tracks.

[5] Amanda H. Duckworth, Right Direction: Racetrack Vets See Fewer Catastrophic Injuries, But More Hind-End Problems, The Blood-Horse, Dec. 8, 2007, at 6988, available at http://www.bloodhorse.com/pdf/synthetic_surfaces_special_report_120807.pdf.

[6] Matt Hegarty, Barbaro’s Injury Could be Bad for Business: Would-be Racing Fans Turned off to Sport by Witnessing Mishap, NBC Sports (May 24, 2006, 2:35 PM), http://nbcsports.msnbc.com/id/12935222/.

[7] See Andrew Beyer, For Whom Is Eight Belles’s Toll?, Wash. Post, (May 12, 2008), http://www.washingtonpost.com/wp-dyn/content/story/2008/05/11/ST2008051102458.html; Ed Berliner, Death at The Kentucky Derby: Eight Belles Tolls for Thoroughbred Racing, Bleacher Report (May 3, 2008) http://bleacherreport.com/articles/21227-death-at-the-kentucky-derby-eight-belles-tolls-for-thoroughbred-racing.

[8] Hegarty, supra note 6.

[9] Id.

Can a take-over protect directors and officers from personal liability resulting from pending shareholder derivative actions?

2011-11-04T11:00:00.006-04:00

By: Robert Proudfoot, Staff Member

On April 5, 2010, 29 Massey Energy employees were killed in the Upper Big Branch coal mine disaster in West Virginia.[1] Accusations of negligence and criminal wrong doing led to federal and state regulatory scrutiny, wrongful death tort claims on behalf of the victims, and derivative shareholder suits against directors and officers.[2] In reaction to this disaster and its fallout, Massey’s stock price plummeted and Alpha Natural Resources opportunistically offered to take over the beleaguered company.[3] Shareholders, concerned that the merger would stop their derivative action suits for lack of standing under Delaware General Corporation Law §259(a), sued for injunctive relief in the Delaware Court of Chancery to block the merger.[4]

Derivative actions are lawsuits by shareholders against directors and officers on behalf of the corporation to recoup losses caused by the breach of fiduciary duties of the directors and officers.[5] Successful suits make the directors and officers personally liable to the corporation for their actions.[6] As was the case for Massey directors and officers, such liability is usually covered by directors and officers insurance.[7]

The Delaware Court of Chancery ruled in In re Massey Energy Co. that shareholder suits against the Massey board of directors could not stop a merger between Massey and Alpha even though such a merger would render any shareholder action effectively moot for lack of standing.[8] While the Delaware court recognized the potential conflict of interest and inequity, it permitted the merger to continue on the grounds that Alpha could sue the Massey Board of Directors as the new owner of the shareholder claim under Del. C. §259(a).[9]

The court cited Lewis v. Anderson when it listed the two exceptions to this strict standing requirement for shareholder actions after a merger: “(1) where the merger itself is the subject of a claim of fraud; and (2) where the merger is in reality a reorganization which does not affect plaintiff's ownership of the business enterprise.”[10] Had Massey attempted the merger solely to circumvent the shareholder action, the derivative action would have been able to continue under the first exception listed in Lewis v. Anderson.[11] To prove such an allegation is a tall order indeed and the court declined to find such a fraudulent abuse of corporate power for the purposes of granting the injunction against the merger.[12]

This theory of standing during mergers has broad implications for the corporate governance for publicly traded natural resource companies, food producers, and energy utilities – especially during disasters or scandals with ongoing shareholder derivative actions. Shareholders should be aware that they will lose standing for any derivative actions after a merger and such actions will be transferred as a property right to the new corporation.[13] It is up to the newly merged corporation to bring its own suit against the very old board of directors that negotiated the merger deal in the first place, a situation ripe for potential conflicts of interest.[14] The court also suggested that the Massey shareholders, as new Alpha shareholders after the merger, demand Alpha bring a suit against Massey directors and officers. If Alpha declined to take action, then the shareholders could sue the Massey board of directors in what is called a double derivative suit.[15] In its opinion, the court recognized the improbability of a double derivative action as a realistic option against the Massey board of directors.[16] The court also pointed out that value of the director and officer liability insurance should have been priced into the deal because of the realistic chance of Alpha later recovering it in a suit.[17] With Massey’s director and officer liability insurance valued at $95 million, this would have represented “no trifle sum” to Massey shareholders during the $8.5 billion merger.[18]

[1] Ian Urbina, No Survivors Found After West Virginia Mine Disaster, The New York Times (April 9, 2010), http://www.nytimes.com/2010/04/10/us/10westvirginia.html

[2] Kevin LaCroix, In a Must Read Opinion, Delaware Court Rejects Bid to Block Massey Merger, The D & O Diary (June 2, 2011), http://www.dandodiary.com/2011/06/articles/shareholders-derivative-litiga/in-a-mustread-opinion-delaware-court-rejects-bid-to-block-massey-merger/

[3] Alpha Natural Resources Acquires Massey Energy Company, Creating A Global Leader In Metallurgical Coal Supply, Alpha Natural Resources, http://alnr.client.shareholder.com/releasedetail.cfm?ReleaseID=582243 (last visit September 25, 2011)

[4] LaCroix, supra note 2

[5] Seth Aronson et al, Practicing Law Institute, Shareholder Derivative Actions: From Cradle to Grave 325 (2011)

[6] Id.

[7] Id. at 424.

[8] In Re Massey Energy, Co., 2011 WL 2176479 (Del. Ch. 2011), available at http://amlawdaily.typepad.com/massey%20decision.pdf

[9] Id.

[10] Lewis v. Anderson, 477 A.2d 1040, 1044 (Del. 1984) (citing 8 Del. C. § 259(a)); Id. at 1047 (citing Heit v. Tenneco, 319 F. Supp. 884 (D. Del. 1970)); see also Lewis v. Ward, 852 A.2d 896, 902 (Del. 2004) (reaffirming Lewis).

[11] In Re Massey Energy Co., 2011 WL 2176479 at *3.

[12] Id. at 76.

[13] Id.

[14] Id. at 75-6.

[15] Id. at 74-5.

[16] In Re Massey Energy, Co., 2011 WL 2176479 at 74-5 (Del. Ch. 2011), available at http://amlawdaily.typepad.com/massey%20decision.pdf

[17] Id. at 65.

[18] Id.