May It Please The Court
Quote of the Day - A meltdown is the point a which a deteriorating nuclear reactor, society or postal worker poses an immediate threat to humanity.
Santa Fe Springs Superfund Site Cleanup BeginsThe Waste Disposal, Inc. Superfund site is slated to begin cleanup. Last year, 17 oil companies agreed to pay almost $8 million for the cleanup.
Here's the USEPA's fact sheet on the site. They've come a long way since discovering the site in 1996 in Santa Fe Springs.
Legislating Drunk DrivingHot off the presses from Court TV, is this story about drinking and driving (links added):
"In their effort to strengthen state drunk driving laws, New Mexico legislators indirectly nabbed one of their own.
Albuquerque police arrested state Rep. Joe Thompson less than 24 hours after the House minority whip attended a local ceremony celebrating the state's new drunk driving laws. The 37-year-old Republican was charged with driving while intoxicated and careless driving after twice failing a breathalyzer exam with blood alcohol levels of 0.11 and 0.12. New Mexico's legal limit is 0.08.
Thompson apologized to his family, his friends and the citizens of New Mexico in a written statement.
"While I am terribly embarrassed by this situation, I am thankful that no one else was involved," Thompson said. "I will follow the advice of my family and physician to obtain whatever treatment is necessary."
As a first-time offender, Thompson, who is scheduled to be arraigned April 8, is unlikely to face any jail time or even a high fine. The new measures that he helped guide through the legislature, which include longer sentences and mandatory screening and treatment programs, only apply to repeat offenders."
Such a deal.
Reverse Fishing Gone AwrySome readers are avid fishermen (persons? What is the gender-neutral term for that word?) They'll like this light-hearted, turn-the-tables story.
Ray Dushkin was getting ready to do some fishing from his grandfather's boat off Anchorage, Alaska when he got pulled off the boat and into the ocean by a 1,200 to 1,500 pound, 12-foot long sea lion who wanted to do some fishing of his own. The sea lion leapt about six feet out of the water to make its catch.
Apparently, the sea lion dragged Ray over the side and underwater, but threw Ray back. Although the sea lion dragged him underwater, Ray popped up a few seconds later.
Funny thing was, the boat was docked. Ray and his grandfather didn't even leave the marina to face the dangers of the sea.
Way Past the 20-pound TestMy criminal law lawyer friends often joke with me about my paper-intensive filings. I've handled a few environmental criminal cases, and inevitably, I file a motion that would pass the 20-pound test (not fish line). But, I've seen a new standard, and I'm in awe.
Sure, I've propounded discovery and delivered discovery responses that have filled a semi-tractor trailer nose to tail, top to bottom. But, I've more than met my match.
Read these lines from the Law.com website:
"Number of court orders issued to date in United States v. Philip Morris Inc., et al.: 509.
Number of pages of documents exchanged in discovery: 40 million.
Potential sum at stake: $289 billion."
To organize it all, there are 30 firms involved. Plus, the plaintiff wants to introduce 75,525 documents at trial. According to defense estimates, if the court only gave each page no more than 30 seconds of consideration, it would take approximately 833 10-hour working days to review the paper just once.
That's the US Department of Justice's case against Big Tobacco, including Philip Morris. Here's just one of those orders, and the Complaint.
Seems like the government wants all of the health costs back it had to pay to people who became ill as a result of smoking. Who knew? Here's a summary of the case.
It may be some time before I reach 40 million pages in all of my cases combined.
Taxing Environmental CostsI’m not a tax lawyer, and I don’t give tax advice. But, my clients sometimes need tax advice. So, this article was written by Glenn Ferencz, Jeffrey Friedman and Mark Latham of Gardner, Carton & Douglas, a Chicago law firm. I quote it here, with minor editing revisions.
In Revenue Ruling 2004-18, the IRS was asked whether environmental remediation costs associated with a taxpayer’s manufacturing facility were properly treated as an inventory cost. As an inventory cost, the taxpayer must capitalize the environmental remediation costs by including the costs among inventory costs rather than a deduction from gross income.
The specific example used by the IRS in its revenue ruling analysis involved a manufacturing facility where property became contaminated in the ordinary course of business operations during the manufacture of inventory. Remedial activities were undertaken in response to the contamination and costs were incurred to cleanup contaminated soil and groundwater.
The IRS found that the costs to remediate the property used in the taxpayer’s manufacturing operations were incurred as a result of production activities. Accordingly, the IRS concluded that the remediation costs must be capitalized and included in inventory costs under IRC Section 263A. Prior to this ruling, a taxpayer may have expensed the environmental remediation costs and deducted such amounts from gross income.
The recent ruling of the IRS makes it clear that expensing such costs in the current year is improper under the tax code. However, taxpayers who may not have been capitalizing remediation costs should be mindful that, under the “transition rule,” the IRS will not challenge the prior treatment of remediation costs as deductible expenses in a tax year ending before February 7, 2004. Taxpayers should also be aware that changing their method of accounting to conform with this revenue ruling results in a change in accounting method. As a result, a taxpayer would be required to file Form 3115, Application For Change In Accounting Method, with the IRS National Office and attach a copy to a timely filed federal income tax return. Rev. Rul. 2004-17
In a related revenue ruling, the IRS looked at two situations to determine whether remediation costs incurred in a current taxable year could be properly deducted as related to restoration or repayment of an item previously included in gross income. The first situation involved a taxpayer who used the accrual method of accounting and historically disposed of on-site hazardous wastes generated during production from 1950-1979. The taxpayer accounted for these waste disposal costs as a deductible business expense. With the advent of environmental statutes and regulations in the early 1980s, the taxpayer incurred remediation costs associated with the removal and proper disposal off-site of the hazardous wastes. The second situation was the same as the first with the exception that the taxpayer accounted for waste disposal costs as a production cost in calculating its inventory costs for all years.
The IRS concluded that the remediation costs the taxpayer incurred did not qualify as deductible expenses for the year in which the environmental contamination occurred. The IRS found that the payment of environmental remediation costs did not restore or repay to a later taxable year any portion of the proceeds received from the sale of products produced by the taxpayer’s manufacturing operations from 1950 through 1979. Therefore, the IRS determined that, under the two scenarios described in Revenue Ruling 2004-17, environmental remediation costs incurred in a current taxable year did not qualify as a deduction but should be capitalized as part of inventory costs for the current year.
What This Means to You
For manufacturing businesses involved in the remediation of soil and groundwater contamination resulting from prior or ongoing operations, these revenue rulings mean:
Any costs incurred to clean up land that a manufacturer contaminated with hazardous waste must be capitalized and included in inventory costs under IRC Section 263A.
Example: Company X manufactures products that it sells to wholesalers and, in the process, creates hazardous waste. On February8, 2004, Company X incurred a cost of $100,000 for remediation of the hazardous waste. Pursuant to the recently issued rulings, Company X is no longer entitled to deduct the $100,000 as a business expense. Instead, the $100,000 is included in its inventory costs (e.g., costs of goods sold). As a result, Company X will effectively be entitled to deduct the costs from its income only when the inventory is sold.
Any costs incurred in the current year to remediate past environmental contamination must be capitalized in the taxpayer’s inventory costs in the current year.
Example: When Company X began its business in 1980, Company X buried the hazardous waste generated by the manufacturing activities in its own landfill in accordance with then applicable environmental laws. Since that time, the laws have changed and on February10, 2004, Company X incurred $200,000 remediation costs which included removing the hazardous waste. Under the recently issued rulings, Company X may not deduct the $200,000 as a business expense from its 1980 gross income under the “claim-of-right” doctrine. Instead, since the expense was incurred in the 2004 tax year, Company X is required to capitalize the $200,000 in the cost of inventory for the 2004 tax year. (Note: Had the expense been incurred before February7, 2004, Company X would qualify for transition relief and would be entitled to deduct the $200,000 from its 2004 tax year income)
There you have it. Plain as day.
Good Ole Boys Down Here in MississippiNow I like a John Grisham novel as much as the next lawyer. But when life imitates art, it interests me even more.
Take, for example, Mississippi lawyers, of which Grisham is one. According to that New York Times article, there's a federal indictment pending in Mississippi against a sitting State Supreme Court justice, his former wife, two former judges and one of the state's most prominent lawyers.
Supreme Court Justice Olivar Diaz, Jr. is accused of living rent free in a condo in Biloxi, owned by a lawyer who's father's libel case was the subject of some influence by the Justice. As a thank you beyond the condo, the lawyer also guaranteed a loan for the Justice's ex-wife. Peyton Place wasn't that convoluted.
But the best part is yet to come. Want to know the Justice and lawyer's defense? It's something my mother would see right through and tell you if everyone else jumps off the bridge..., well, you know the rest. Here it is, big as day: "what the defendants are accused of doing, everybody does."
Not to be outdone, the prosecution's response is: "the defense was based on speculation, innuendo and, most incredibly, news articles which can best be described as gossip and scuttlebutt."
Wow. I don't know how to phrase that comeback in legal terms, but I know if I look around a sandbox long enough, I'll probably hear it again. Apparently not satisfied with their legal prowess, the prosecutors have heaped on more charges. The Picayune is in on the act. Don't you just love that newspaper's name?
My favorites, though, are the lawyer and justice's other defenses, ringing right out of a yet-to-be-written Grisham novel, "Mississippi is a lightly populated state in which people know and help one another, a fact that should be applauded rather than prosecuted."
In other words, jump off the bridge with me. It'll be fun.
Winning Doesn't PayYou've fantasized about it. Winning the lottery. Well, some people do. Win, that is.
Take our hero, Jack Whittaker, who hit the $314.9 million Powerball jackpot on Christmas 2002. You figure, "sweet!" No worries. Lifestyles of the Rich and Famous. Easy street.
Since he won the lottery, Jack's been robbed four times and sued once. Bummer.
Now, which would you choose?
Walden or a life of wealth?
Water Figures are All WetThe agency we have come to rely on (just kidding) to determine what to clean up and how much of it to clean up apparently can't get its data straight.
USEPA told us that 91% of our nation's drinking water is pure. And some of us believed them.
Turns out that it's not true. What a surprise.
Turns out they're way off, but nobody really knows by how much. According to the Associated Press, "the 'agency reported meeting its annual performance goal for drinking water quality even though it concurrently reported that the data used to draw those conclusions were flawed and incomplete,' the USEPA's Inspector General office said in a report this week. '[US]EPA's own analysis, supported by our review, indicated the correct number was unknown but less than what was reported.'"
The USEPA's water office says, "We are aware of the data's shortcomings and have been diligent in flagging those to key audiences as well as to the general public."
I think they're all wet.