Category: Entertainment Law

Celebrities And Snapchat Feuds: Are Recording Phonecalls Legal?

Snapchat Kim Kardashian Taylor SwiftAs most people know, there has been on-going feud between Taylor Swift and Kayne West. Last night, more fuel was added to the fire when Kayne’s wife, Kim Kardashian, went to Snapchat and posted recordings of a conversation between Ms. Swift and Mr. West which purport to show that Taylor was aware of off-colored lyrics in one of Mr. West’s songs, and gave her blessing to include before the album released. To date, Taylor denies giving such approval. Taylor went to her Instagram account soon after, writing: “That moment when Kanye West secretly records your phone call.”

Besides the tabloid juiciness of the story, there is an interesting and very serious issue regarding the legality of the recordings. In many states it is illegal to record a telephone conversation without the consent of both parties participating in the telephone conversation. California, where it is believed Mr. West and Ms. Kardashian reside, is one of these “two-party consent states.” In fact, California has some of the strictest laws when it comes to secretly recording telephone conversations. California provides criminal penalties for not gaining consent from all parties, and additional penalties for disseminating or publishing a recording. In addition, California allows for civil remedies for recording a communication without prior consent.

One of the biggest issues is which state Mr. West and Ms. Kardashian were located when they made the recording. For example, in New Jersey, we are a “one-party” consent state. The New Jersey Wiretapping and Electronic Surveillance Control Act N.J.S.A. 2A:156A-3 permits a party who is participating in the conversation to record the conversation. In my practice as a matrimonial attorney in New Jersey, the issue of recording telephone communications is very common, as estranged spouses often want to record communications of abuse and/or misconduct on the part of the spouse. In those cases, a spouse who is participating in a conversation with their spouse is legally permitted to record said conversation.

That all being said, even if the Mr. West was lucky enough to have initiated the telephone call from a “one-party consent” state, such as New Jersey, Ms. Kardashian may still not be in the clear. New Jersey law is clear in that the party recording the communication must be a party to a communication; in other words, they must participate in the conversation. In the recordings posted by Ms. Kardashian, it does not appear that she participated in the conversation and therefore was not a party to the conversation, making her recording illegal.

At this time, it is too soon to know what if any civil and/or criminal ramifications Mr. West and Ms. Kardashian might face, but I am sure we will all keep a close eye as the drama unfolds.

ARTICLE BY Kevin A. Falkenstein of Stark & Stark
COPYRIGHT © 2016, STARK & STARK

Short Samplings of Songs May Not Be Considered Copyright Infringement After All

song samplingThe Ninth Circuit Court of Appeals just decided that song sampling without permission does not necessarily infringe the copyright. Many artists have built careers by sampling an old song to create a new work. Until now, courts have told the artist to “get a license or do not sample.”

The Sixth Circuit Court of Appeals decided in 2005 that there is no de minimus exception to sampling. The de minimus exception, which applies to the copyright law generally, states that if an artist borrowed an insignificant portion of an existing work, the artist did not infringe. The Sixth Circuit held that this exception did not apply to sampling. This meant that if an artist sampled a portion of a song that lasted a fraction of a second, the artist nonetheless infringed.

Now, the Ninth Circuit in VMG Salsoul, LLC v Madonna Ciccone (“Salsoul”)took “the unusual step of creating a circuit split” and decided that thede minimus exception does apply to sampling. In Salsoul, Madonna sampled a 0.23-second “horn blast” from a disco song and incorporated the blast into her 1990 song “Vogue.” The Ninth Circuit explained that Madonna did not infringe because “a reasonable juror could not conclude that the average audience would recognize the appropriation of the horn sound.” Therefore, her sampling was de minimus and did not infringe.

This Ninth Circuit decision will impact the music world and likely lead to a U.S. Supreme Court decision that clarifies the legal limits of unauthorized sampling.

ARTICLE BY Todd A. Davidovits of Polsinelli PC
© Polsinelli PC, Polsinelli LLP in California

Artist Formerly Known as a Trademark: Prince

Prince logoI’m sure his name came immediately to mind when you read that title: Prince. That was, at least, before he changed it to the unpronounceable, androgynous “Love Symbol.” While many thought this was a marketing stunt, Prince’s “formerly known as” campaign was actually an attempt to skirt a heated legal battle with his record label, Warner Bros., by creating and producing music under a new trademark. Now that the regal record-breaking artist has passed, however, it will be interesting to see where the royalty chips will fall.

Sleepless in Seattle was in, Cheers was out and Haddaway asked the all-important question, “What is Love?” We were all a little Dazed and Confused. It was 1993 when the very public trademark battle began. “Why You Wanna Treat Me So Bad?” Prince asked Warner Bros. when they refused to release his extensive back-log of music. It seemed Warner was more focused on going “Round and Round” the promotion circuit than producing more Prince records, leaving a pile of his hand-crafted gems to sit and collect dust. Finding Warner “Delirious” in this regard and seeing their refusal as a “Sign o’ the Times,” Prince decided to “Kiss” his label goodbye and produce music under a new trademark, the unpronounceable Love Symbol, subsequently copyrighted as “Love Symbol #2.”

“The first step I have taken toward the ultimate goal of emancipation from the chains that bind me to Warner Bros. was to change my name from Prince to the Love Symbol. Prince is the name that my mother gave me at birth. Warner Bros. took the name, trademarked it, and used it as the main marketing tool to promote all of the music that I wrote. The company owns the name Prince and all related music marketed under Prince. I became merely a pawn used to produce more money for Warner Bros.”

Prince claimed in a public statement about the trademark dispute, boldly sporting the word “SLAVE” on his cheek.

While the Love Symbol album didn’t really earn him “Diamonds and Pearls,” it did garner some attention, selling millions of copies worldwide, and laid down some heavy “Purple Rain” on Warner’s Prince promo-party. Prince was waiting for the sun to set on “1999” when his contract with Warner Bros. would expire so he could begin producing music once again under his rightful, trademarked name—Prince—in 2000. Post-“Emancipation,” Prince embarked on a long and lustrous music-making career, earning world-wide critical acclaim and induction into the Rock Star Hall of Fame when he was first eligible in 2004.

With the royal Prince’s passing and his songs playing on every satellite station right now, we couldn’t help but mull over this old trademark tango and wonder what you thought? Was Prince’s bold Love Symbol move successful? Do you predict any royalty fall-out, now that he has passed, over royalties that were earned under the “Love Symbol” trademark as opposed to “Prince?”

Article By Annie Dike of IMS ExpertServices
© Copyright 2002-2016 IMS ExpertServices, All Rights Reserved.

When Quirk of Copyright Law Creates Christmas Classic: It’s Wonderful Life and Public Domain

Christmas treeGeorge Bailey stands on a bridge begging for another chance at life. Upon being granted a second chance, he joyously runs home to embrace his family. As the community of Bedford Falls rallies around him and raises funds to save the endangered Building and Loan and George Bailey personally from an unjustified failure, someone proclaims a toast to George Bailey, “the richest man in town.” It’s a powerful ending to a beloved holiday classic, and it would have been forgotten over time but for accidentally allowing a copyright to expire.

The 1909 Act is the copyright act that governs copyrightable works created before 1964. The Act created two, distinct copyright terms for each individual work: a 28-year initial term and a 28-year renewal term. The initial term applied automatically, but the copyright owner had to file a renewal application with the U.S. Copyright Office to get the second term. If the owner failed to file a renewal application before the first 28-year term expired, the work automatically entered the public domain.

Into this copyright framework, a movie called It’s a Wonderful Life was released in December 1946. It was directed by Frank Capra and starred James Stewart. Upon its release, it was not the booming success that one might imagine based on its reputation now. While it was not a complete box-office failure, it struggled financially and never came close to reaching its break-even point. Capra and Stewart would never work together again. In fact, it was a major blow to Capra’s reputation, and in the aftermath of the film, Capra’s production company went bankrupt.

More holiday movies were created over the years, and the film was largely forgotten. At the end of the initial 28-year copyright term in 1974, a clerical mistake prevented the copyright owner of It’s a Wonderful Life from filing a renewal application, and the movie went into the public domain. TV studios, eager for inexpensive content to show during the holidays, began showing the movie every year because they were not required to pay any royalties while the film was in the public domain. Over the next approximately 20 years, the film was shown repeatedly every holiday and claimed its current status as a holiday classic.

Everything changed in 1993. In response to a Supreme Court ruling in Stewart v. Abend, the current copyright owners of It’s a Wonderful Life were able to enforce a copyright claim to the movie. The Court in Steward v. Abend held that a current copyright owner has the exclusive right to exploit derivative works, even in light of potentially conflicting agreements by prior copyright holders. Coincidentally, the Steward v. Abend case involved another James Stewart movie, Rear Window.

Because the current copyright owners of It’s a Wonderful Life still owned the movie rights of the original story on which the movie is based, the current copyright owners argued that their rights to the story told in It’s a Wonderful Life still existed and were enforceable to prevent unauthorized showing of the movie in its current form. The newly-returned owners were thus able to stop any unauthorized showings of the movie, but by then the movie was firmly entrenched as a holiday classic. It has been popular ever since. So the next time you sit down to watch George Bailey offer to lasso the moon for Mary or watch them dancing over an expanding swimming pool, just remember that we all might have missed this movie entirely if not for a clerical mistake causing a renewal application not to be filed.

Article By Lisa Adams & Derek E. Constantine of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2015 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

To Apple, Love Taylor: Apple Responds with Royalties

“To Apple, Love Taylor” has been the tweet heard ‘round the music world.  With more than 61 million followers, Taylor Swift has become the “loudest” voice for emerging and independent artists in the music-streaming realm.  As copyright lawsuits from record companies continue to crop up across the industry, music-streaming service providers have become far more sensitive to the demands of artists and the trend for higher royalty payments.  Case in point: when Taylor “streams” for royalties, Apple responds.

Taylor’s tweet to Apple explained, “with all due respect,” why she was planning to withhold her mega best-selling album 1989 from Apple’s new music-streaming service, Apple Music.  Apparently, Apple’s plan to withhold royalty payments from musicians during the service’s initial, free three-month trial period did not sit well with Swift.  Speaking primarily on behalf of emerging and independent artists, Swift deemed three months “a long time to go unpaid.”  Taylor’s stance followed a long line of objections from songwriters, artists, and labels over allegedly unfair payment by music-streaming services.  Recently, the Turtles and other performers brought suit against Sirius XM to collect royalty payments that had not been paid for songs produced before 1972.  Previously, big streamers like Sirius XM and Pandora were not paying royalties for songs launched before 1972 because they were not protected by federal copyright law.  In the wake of the Turtles suit, Apple was swift to respond to Swift’s plea.  Eddy Cue, Apple’s senior vice-president of internet software and services, tweeted “we hear you @taylorswift13 and indie artists” and called Taylor to deliver the news personally.  Apple had reconsidered its plan and will now be paying artists royalties at the outset of its Apple Music launch.

Clearly, Taylor’s attempt at flattery, saying that the initial decision to withhold royalty payments was surprising in light of Apple’s reputation as a “historically progressive and generous company,” got her everywhere.  Taylor claimed that her complaints were not the rantings of a “spoiled, petulant child,” but rather “echoed sentiments of every artist, writer, and producer in [her] social circles who [we]re afraid to speak up publicly because [they] admire and respect Apple so much.”  As she pointed out, Apple’s plan to offer royalty-free streaming during its initial start-up period could have had disastrous effects on artists planning to release new albums during that time.  While the cost of these royalties may not be relatively significant to Apple, the goodwill and favor fostered among artists, labels, and consumers is invaluable.  Apple’s move indicates that artists are finally succeeding in shifting royalty payments more toward their favor via lawsuits, negotiations, and now very public Twitter exchanges.  The power of public opinion is not only strong but, these days, instantaneously widespread, and Apple was smart to respond.

It seems that Sirius heard Apple too.  Just days after Eddy Cue’s public response to Taylor Swift, Sirius settled its lawsuit with the Turtles to the tune, no pun intended, of $210 million for its broadcast of songs produced before 1972.  Under the settlement, Sirius will continue to play the older songs until 2017, at which time it will strike new licensing deals with affected artists.  With this settlement in place and with the established prospect for older performers to collect royalties in the future, the Turtles and Sirius are once again “Happy Together.”

This public discourse over streamed music, copyrights, and royalty payments illustrates the fast-paced evolution of the industry since the introduction of digital music files in the Napster heyday.  Streaming services have been forced to anticipate and address the demands of artists, particularly that of the growing request for greater royalties.  While a voice as “loud” as that of Taylor Swift may warrant an immediate, calculated response, it is likely we will see more music royalties and other digital copyright litigation in the years to come.

ARTICLE BY

Annie Dike
IMS ExpertServices
© Copyright 2002-2015 IMS ExpertServices, All Rights Reserved.

BMI Wins Summary Judgment of Copyright Infringement After Restaurant Owner Fails to Respond to Requests for Admission

Plaintiff Broadcast Music, Inc. (“BMI”), a music rights management organization that offers licenses to a massive catalogue of popular songs on behalf of copyright owners, brought suit for copyright infringement against the owners of the La Roue Elayne restaurant for unlicensed performance of live cover versions of eight songs in a single evening. This suit was part of a series of suits brought by BMI for copyright infringement against restaurants in Connecticut. The Court granted summary judgment in favor of BMI for copyright infringement, permanently enjoining further copyright infringement and awarding $6,000 in statutory damages and an additional unspecified amount for attorneys’ fees.

Drew Friedman, the only defendant who appeared in the case, had opposed summary judgment on the grounds that a fact issue remained as to whether he had sufficient control over the restaurant and the cover band to support vicarious liability for copyright infringement. Mr. Friedman claimed to have been cut out of the management and control of La Roue Elayne before the night in question. Interestingly, his failure to object or respond to BMI’s Requests For Admission (RFAs) doomed his opposition. Mr. Friedman never responded to RFAs asking him to admit or deny that he hired the offending cover band and that he had the right to supervise persons employed by the restaurant.

In fact, Mr. Friedman’s opposition failed to address the issue of the ignored RFAs and he never moved for leave to provide untimely responses. On that basis, the Court held that the RFAs must be deemed admitted pursuant to Federal Rule of Civil Procedure 36. The Court appeared reluctant to deem the RFAs admitted, but indicated that after a diligent search it failed to find any precedent for a sua sponte withdrawal of a represented party’s response to RFAs where the party failed to even acknowledge the existence of the request.

The case is Broadcast Music, Inc. v. The Hub at Cobb’s Mill, LLC. A copy of the Court’s Order is available here.

ARTICLE BY Anthony Cataldo of Proskauer Rose LLP
© 2015 Proskauer Rose LLP.

EU Investigating Geo-Blocking of Online Video Games

On May 6, 2015, the European Competition Commission released a new Digital Single Market Plan, and simultaneously launched a broad antitrust investigation into e-commerce.  The DSM plan, consisting of sixteen proposals, seeks to create a single digital European market where access to digital goods and services is unfettered across all 28 member states.  The European Competition Commission will investigate whether firms’ restrictions on cross-border online trade violate the EU competition laws, and attempt to remedy them through enforcement mechanisms.  High on the list is the geo-blocking of online content, including video games.  The impending probe will likely target some large U.S. technology companies.

Geo-blocking is a technical barrier that allows online merchants to charge different prices or restrict users’ access based on physical location or credit card information.  For example, a German resident may have to pay more for a pair of shoes purchased online from an Italian retailer than someone living in Italy.  With respect to gaming, the investigation will focus on the geo-blocking of video games that are sold online for use on personal computers.  The Digital Single Market plan is highly critical of geo-blocking―which it describes as violating the EU’s goal of free movement of commerce within its borders―and proposes to eliminate the practice altogether.  But the Competition Commission cannot seek to change a firm’s business practice unless it violates EU antitrust law, necessitating a rigorous investigation.

To determine whether certain geo-restricting practices are anticompetitive, the Commission will analyze game publishers’ business practices, probing into their contractual limitations on the distribution of online video games.  EU Competition Chief Margrethe Vestager said that geo-restrictions “are often the result of arrangements that are included in contracts between manufacturers and content owners on one side and their distributors on the other.”  Accordingly, the Commission is willing to go as far as “examining the clauses in their contracts.”  But the Commission also recognizes that companies use geo-blocking for legitimate and procompetitive reasons, like restricting information to paying customers and protecting copyrighted material.

The probe will begin with comprehensive questionnaires sent to companies involved in e-commerce within the EU and could potentially lead to formal inquiries and enforcement actions.  Commissioner Vestager hopes to have preliminary findings by mid-2016.

The probe may target large U.S. technology companies, especially if they are suspected of abusing their dominant position to restrict trade.  EU competition law places certain duties on companies that are “dominant” in their markets (a fairly low bar compared to US standards), and abuse of a dominant position can be illegal.  American technology companies tend to be larger and more successful than their European counterparts, so they may trigger the Commission’s scrutiny.  Accoring to Vestager, “every company that sells products online, including their suppliers and their technology providers, will be affected. Potentially, the scope will be very wide.”  On the gaming front, the probe may affect large online game developers.

The Commission hopes that the creation of a single digital market will boost European startups by making it easier for them to launch and grow quickly across borders, similar to the advantage American companies have to rapidly gain a national user base in the U.S.  “We want companies in Europe to use the Digital Single Market to scale up, not move out,” said Andrus Ansip, the EC’s Vice President of Digital Single Market.  So it’s not surprising that the proposal and investigation come on the heels of the EU’s crackdown on American tech giants, the re-opening of the Google investigation being the most recent example.  Indeed, some commentators have characterized the move as protectionist, given Europe’s recent concerns over the increasing power of large U.S. web companies.

The ramifications of the DSM plan are not yet clear, but game companies that use geo-blocking may have to look for other solutions in the future.

ARTICLE BY

Nadezhda Nikonova of Sheppard, Mullin, Richter & Hampton LLP

Is ‘Loss of Value’ Insurance Worth The Price For Student-Athletes, Universities??

Disability insurance policies are frequently secured by college football players, especially those who expect to be selected in the early rounds of the NFL draft. These policies are typically secured by the player in one or two forms. One option allows players to secure coverage to protect against “total permanent disability”. Such coverage would only pay the athlete in the event of a catastrophic, career ending injury. Alternative policies can protect the athlete against the potential “loss of value” tied to the player’s projected draft position. This type of insurance coverage provides a player protection in the event his projected draft position drops because of injury. Typically, the policy would make up the difference the projected bonus money and the actual contract amount secured by the player. Unfortunately, ‘loss of value’ insurance policies, may not be as easy to collect on as initially thought.

High-profile players, including 2015 NFL Draft’s No. 1 pick Jameis Winston, have secured the insurance expecting that if an injury causes their draft stock to fall, thus resulting in a lesser contract, they can collect on the policy to recoup some of the lost earnings. Jameis Winston’s premium for “loss of value” insurance was reportedly paid out of the Florida State University’s Student Assistance Fund (SAF). The SAF allows schools to “assist student-athletes in meeting financial needs that arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement.”

In addition to schools using the NCAA authorized Student Assistance Fund to pay insurance premiums for star athletes, the NCAA issued a waiver after the start of the 2014 football season creating a new avenue for college football players to secure loss of value insurance. While student-athletes had previously been able to secure the loss of value insurance only with their own funds or the use of SAF, purchasing the insurance became easier in October, when the NCAA began granting waivers to student-athletes, allowing them to purchase the insurance by borrowing against their future earnings to secure a loan from an established, accredited commercial lending institution, for the purpose of purchasing loss-of-value insurance. However, despite the increasing popularity of the loss of value insurance, no collegiate student-athlete has been able to collect on a policy, according to ESPN’s Darren Rovell. Former University of Southern California wide receiver Marqise Lee is currently experiencing the challenges of trying to collect on his policy.

Lee, once projected as a first round pick, purchased loss of value insurance in August 2013. He paid a $94,600 premium for $9.6 million in coverage. Lee believed that the coverage protected him if his draft position dropped and he signed a rookie contract worth significantly less than that the projected $9.6 million amount. Lee injured his left knee just two games into the 2013 season. As a result of the injury, Lee’s draft position dropped to the 39th overall pick in the 2014 NFL draft. Ultimately, he signed a contract with the Jacksonville Jaguars for $5.17 million. Lee filed an insurance claim and attempted to collect on the policy, but was unable to do as the insurance company raised a defense that Lee had misled with regard to pertinent medical information. In March 2015, Lee, along with a former USC teammate facing a similar issue, sued the insurance company over their failure to honor the policy.

Lee’s lawsuit highlights the potential challenges of collecting on loss of value policies. While the securing of insurance policies for student-athletes has indeed become a tool for universities to help keep star players remain in school and to temporarily forego the NFL, the possible issues related to collection are apparent. The University of Oregon utilized its SAF to purchase policies for its players, including cornerback Ifo Ekpre-Olomu. Ekpre-Olomu, once projected as a first round pick, likely will attempt to collect on his policy after an ACL injury in December 2014 caused him to fall to the seventh round of the 2015 Draft. The cornerback’s policy, which cost the University of Oregon $40,000, calls for a $3 million payout since Ekpre-Olomu late round selection was well after the coverage threshold of the first picks of the third round of the 2015 Draft.

All athletes that utilize the NCAA waiver to purchase insurance or universities that allocate SAF to purchase loss of value insurance will need to monitor Lee’s lawsuit and Ekpre-Olomu’s attempt to collect on his policy. If student-athletes continue to face difficulties collecting on their policies, both student-athletes and their universities will need to reconsider whether such policies are worth the cost.

Authored by Michael B. Ackerstein  and Gregg E. Clifton of Jackson Lewis P.C.

Jackson Lewis P.C. © 2015

The Texas Legislature Takes a “Texas Two Step” Approach to Indian Gaming

With new legislation introduced in Texas, it is an appropriate time to examine whether the Texas State Legislature is trying to do something for Indian Gaming or to Indian Gaming. The only certainty is that something is likely to happen! And, like the Texas Two Step, the legislative casino dance changes at the whim of the “leader” – which in this case is the Texas Legislature.

The overriding question is: What is happening here, and why?

For starters, it is important to understand two things: (1) the state’s three federally recognized Indian tribes do not share equal legal status and (2) the Legislature ostensibly has proposed to level the playing field so that all three enjoy an equal gaming opportunity. The three tribes are (1) the Texas Band of Kickapoo Indians in Eagle Pass, which is 143 miles southwest of San Antonio on the Rio Grande River and far from the Gulf Coast, (2) the Ysleta del Sur Pueblo Tribe – also known as the Texas Tigua Tribe, located near El Paso and far from the Gulf Coast, and (3) the Alabama-Coushatta Tribe of Livingston, 74 miles north of Houston and 76 miles northwest of Beaumont, and clearly much closer to the Gulf Coast and the hundreds of thousands of tourists annually traveling to the Gulf. Each of these tribes was recognized by a special Act of Congress.

Kickapoo was recognized by Congress through the Act of January 8, 1983, a federal law which imposed no restrictions on the Tribe’s right to conduct gaming. The Alabama-Coushatta and Texas Tigua Tribes were recognized through the Act of August 18, 1987, which restricted any tribal gaming to gaming activities that are lawful under Texas state law. The distinction between Kickapoo gaming opportunity and that available to the Alabama-Coushatta and Tigua becomes important under both the Texas state laws and, in turn, the federal Indian Gaming Regulatory Act of 1988.

It should be noted that the Alabama-Coushatta opened a casino in 2001 on its Livingston reservation that produced monthly revenues of an estimated $1 million for nine months. A federal court shut it down, and the facility has never reopened. Similarly, the Tigua Tribe operated a casino for a while, but it too was closed by court order. Since then, the Tigua gaming operation has been limited to a “sweepstakes” that the Tribe claims is legal under state law. In the meantime, the Kickapoo Tribe has been operating a Class II gaming facility on its reservation, but the State has refused to negotiate a Class III gaming compact.

The two “have not” tribes are the subject of state legislation that would remedy the situation. This would be accomplished by a bill introduced on March 12 by state representatives for districts in Houston and El Paso purporting to put all three Texas tribes on an equal footing. Indeed, the legislation has been touted in the press as “recognizing the gaming rights of all tribes in Texas.” It would do this by removing the restrictions of the 1987 federal law by extending the same rights to the two tribes recognized by that legislation to the level of rights enjoyed by the Kickapoo under the 1983 federal law. The bill sponsors’ stated intent is to amend the Texas Constitution to allow the Alabama-Coushatta and Tigua to engage in gaming on their tribal lands, and thus putting them on the same footing as the Kickapoo.

Within 24 hours of the introduction of the March 12 legislation, State Representative Joe Deshotel of Beaumont proposed to severely mitigate the pro-tribal benefits from the day-old legislation. The Beaumont politician introduced legislation proposing to authorize nine non-tribal “Las Vegas style” casinos to be located in counties on the Texas Gulf Coast. (As the reader will recognize, the sponsor’s hometown just happens to be in one of the counties that just happens to be on the Gulf Coast.)

The ostensible purpose of the new bill is far from the costs incurred by property owners in those designated counties during violent storms, such as hurricanes. However, its actual effect would be devastating to an Alabama-Coushatta gaming facility located far from the tourism mecca of the Gulf Coast. It is true that the Tigua and Kickapoo would benefit, but they almost certainly would lose destination casino traffic in light of the competing opportunity on the Gulf Coast.

The March 12 legislation looks great on paper. However, it looks much less so in light of the March 13 legislation. Moreover, current activity in the Legislature is even more troubling for tribal gaming. What initially seemed to be a fairly simple resolution is more complicated by recent statements by Texas legislators from Laredo, Houston, and Eagle Pass, as well as statements from anti-gaming lobbyists claiming a “clear majority” of lawmakers opposed to any expansion of gaming “even when times are hard.”

By Dennis J. Whittlesey of Dickinson Wright PLLC

© Copyright 2015 Dickinson Wright PLLC

Colorado’s Cutting Edge Legislation Fosters Clean Fuel Truck Adoption

Lewis Roca Rothgerber

 

The State of Colorado recently passed HB 14-1326, the “Clean Trucks Bill,” catapulting itself into the group of cutting edge states that are on the forefront of the clean fuel issue. Recognizing that trucks represent a huge opportunity for emissions reductions by replacing diesel engine trucks with trucks reliant on clean fuels, the Clean Trucks Bill paves the way for improved air quality, reduction in greenhouse gases, promotion ofdomestic energy sources and ultimately, cost savings for industry and for consumers. The bill, which passed the Colorado Senate unamended from the version previously passed by the House, was sent to Governor Hickenlooper on May 12, 2014. The Governor is expected to sign the bill and pass it into law soon.

The Clean Trucks Bill employs several components to promote clean fuels. The bill recognizes that the expense of clean fuel trucks over their traditional fuel counterparts leaves clean fuel trucks at a competitive disadvantage, with clean fuel trucks costing between 25 and 75 percent more. As such, the bill expands the alternative fuel tax credit targeting trucks. While existing tax credits provided incentives for compressed natural gas and propane trucks, the bill broadens the category of eligible fuels by incorporating hydrogen and liquefied natural gas into the credit-eligible fuels. Electric or hybrid-electric vehicles greater than 8,500 pounds in gross vehicle weight ratio (GVWR) also become eligible for the tax credit. Additionally, the bill introduces tax credits for heavy duty trucks (greater than 26,000 GVWR) and expands tax credit eligibility to light and medium-duty trucks.

By promoting broader adoption of clean fuel trucks, eventually market development and economies of scale will cause clean fuel trucks to become more cost competitive. The bill provides an 8-year period to achieve those economies of scale, paring down the percentage of a clean fuel truck purchase or conversion that is eligible for the tax credit over that time period. However, the maximum amount of the credit remains constant over the life of the legislation; heavy-duty trucks are eligible for up to $20,000 in tax credits per income tax year, medium-duty trucks up to $15,000 per income tax year, and light-duty trucks up to $7,500 per income tax year.

But the Clean Trucks Bill didn’t stop at a package of clean fuel truck purchase or conversion tax credits. Aerodynamic technologies proven to improve fuel efficiency and clean fuel refrigerated trailers also gained eligibility for tax credits. (Previously, tax credits were only available for idling reduction technologies.) The importance of the inclusion of clean fuel trailers cannot be understated, as fleets prefer to use the same fuel for the truck as the trailer, and the tax credit provides an incentive for the purchase or conversion of the clean fuel trailer in companion with the clean fuel truck.

The Clean Trucks Bill also updates the sales tax exemption for low-emitting vehicles over 10,000 GVWR. Today, virtually every vehicle over 10,000 GVWR meets the eligibility requirements for the sales tax exemption. The Clean Trucks Bill limits that sales tax exemption to trucks meeting more stringent standards.

The final element of the Clean Trucks Bill eliminates the specific ownership tax penalty for purchasing a clean fuel truck. Because the specific ownership tax is based on the purchase price of a vehicle, clean fuel trucks with their higher purchase price stand at a disadvantage to traditional fuel trucks with a lower purchase price. The Clean Trucks Bill abrogates that penalty by reducing the price at which clean trucks are valued for purposes of the specific ownership tax to an amount comparable to traditional fuel vehicles. By equalizing the tax value of a clean fuel truck with a traditional fuel truck, local government recipients of specific ownership tax revenues are unaffected from a revenue standpoint.

The benefits of the Clean Trucks Bill are many. First, the bill stimulates Colorado’s economy by promoting trucks using clean fuels, of which Colorado is a major producer. The bill also supports reduced emissions and improved air quality by providing an incentive for cleaner fuel trucks. Finally, the bill encourages energy independence through the promotion of domestically-produced clean fuels like natural gas and propane, as well as hydrogen and liquefied natural gas. It’s not often legislation of this magnitude can be widely perceived as a win-win, but Colorado is on the eve of becoming one of few states to accomplish such a feat.

Article By:

Dave McGimpsey
Of:
Lewis Roca Rothgerber LLP