It’s Time for the Lobster Monopoly to End: Maine Needs to Grow Up Like Its Lobsters

Article By: Leslie M. MacRae, JNREL Vol. 18, No. 2

Abstract By: Brandon Wells, Staff Member

Want to go to Maine and catch your own lobster? Well you may find yourself in a lot of trouble. Along with other types of regulation such as limiting quotas, equipment regulation, and seasonal restrictions, Maine has a system of regulation based on state citizenship. In effect, this means that unless you have been a resident of Maine for at least a couple years or so, and in some cases have participated in a type of lobster apprenticeship, you can forget about commercially fishing for lobster legally. While many of the types of regulations used by Maine on its lobster industry are legal and in many cases promote economic well being, regulations based on durational residency requirements are arguably unconstitutional.

Some earlier cases with facts very similar to the issue in Maine have been decided based on the Privileges and Immunities Clause of the United States Constitution. In the earlier case, Hicklin v. Orbeck, 437 U.S. 518 (1978), the court fashioned a two-part test to determine unconstitutionality. The first part of the test was that the state had to demonstrate that non-residents constituted a particular "source of evil." The second part of the test stated that the discrimination had to have a "substantial relationship" to the problem. Being able to prove that non-residents are sources of evil will be hard for Maine, or any other state to do, although it has happened in some cases. See State v. Kemp, 44 N.W. 2d 214 (S.D. 1950).

Over thirty years ago, Maine had implemented a durational residency requirement much like the one they have today. In 1974, the case of Massey v. Appolonio held that the residency requirement violated the Equal Protection Clause. Massey v. Appolonio, 387 F. Supp. 373, (D. Me. 1974). The only problem with the court's decision was that it made clear that it was only discussing the constitutionality of the residency requirement (which was three years at the time) and not whether Maine was able to limit fishing to Maine residents only. In a future suit based on these unresolved matters, it seems likely that Maine will be in a very precarious position, and may very well lose again.

It is anticipated that Maine will argue that nonresidents are a "source of evil" when it comes to protecting their local commercial lobster industry. Maine may say that they are protecting their culture, but it is extremely hard to see how the residency requirements would solve this problem. Even so, there are many other ways to protect this perceived harm, such as regulations based on the type and size of boat.

Maine may additionally argue that non- residential lobstermen will destroy the state's conservation efforts. However, non-residents will be subject to the same regulations and laws as Maine lobstermen. Another potential argument is that lobster is the state's own unique resource. Nevertheless, there are a number of facts to rebut Maine's argument, as lobsters are mobile and are found in many spots far south of Maine on the east coast. Also, the Court has all but out right rejected the idea of ownership over living natural resources.

Along with this shift in thinking by the Court, along with the rigid tests of the Privileges and Immunities Clause and the case law that follows it, Maine will have a very difficult time holding its durational residency requirement up to constitutional muster. Maine has the ability and the knowledge to maintain its beautiful industry and resources without resorting to such illegal statutes and manners. Putting to work its legal and constitutional controls over lobster fishing will see to it that Maine's foothold in the commercial lobster industry continues for many years to come.

Statutory Interpretation and the Chevron Test in Citizens Coal Council v. Norton: A Problem of Administrative Law in the Context of Environmental Policy

Article By: Erin G. McKenzie; JNREL Vol. 18, No. 2

Abstract By: Bryan Henley, Staff Member

Passed in 1977, the Surface Mining Control and Reclamation Act (SMCRA) set forth a new federal regulation system on coal mining. As evidenced by its name, the SMCRA is designed to regulate surface mining, which it does by creating a federal agency, the Office of Surface Mining (OSM). This agency's role is to oversee state regulation of mining by assuring compliance with federal standards. These federal standards, also laid out in the SMCRA, proscribe "surface coal mining operations" in national parks and other similar areas. However, what happens if underground mining affects the surface? Subsistence is a term that describes some of the effects that underground mining can have of the surface land above the mine; but is it regulated by this statute? The answer is not as forthcoming as one might hope.

The SMRCA, through its original text and amendments, was possibly subject to two alternative interpretations. In Citizen's Coal Council v. Norton, the federal courts were forced to confront this conflict and determine if the language of the statute generally prohibited subsistence. Citizen's Coal Council v. Norton, 330 F.3d 478 (D.C. Cir. 2003). The Secretary of the Interior (and National Mining Assoc., an intervening defendant) interpreted the statute to indicate that the subsistence was not within the scope of the SMRCA , and thus underground mining was permissible in the protected areas where surface mining was not. Citizen's Coal Council, argued that this interpretation was arbitrary and capricious, therefore an inappropriate administrative action under the Administrative Procedures Act. Resolution depended upon the court's application of the Chevron test.

The Chevron test provides a framework for a court to analyze an administrative agency's interpretation of a statute. The test first requires the court to analyze if the statute is clear. If the statute is clear, then it is followed. If the statute is not clear, then the agency's interpretation is afforded deference and the court upholds that interpretation as long as it is reasonable. The district court granted summary judgment, finding that the statue was clear and denied underground mining in protected areas. The appellate court reversed, holding that the statute was unclear but that the agency's interpretation was reasonable. What should be a conceptually simple test was applied to directly opposite results by these courts. This highlights the difficultly of applying the Chevron test. In her article, Erin G. McKenzie analyzes the problems in applying this test and its possible effects such an inconsistency may have on the coal industry.

Tribal Environmental Sovereignty: Culturally Appropriate Protection or Paternalism?

Article By: Anna Fleder and Darren J. Ranco, JNREL Vol. 19, No. 1

Abstract BY: Anthony Cash, Staff Member

According to popular conceptions in the United States, Native American culture is closely tied to the earth and, therefore, environmental awareness. Thus, it will come to most with little surprise that an examination of cases concerning Native Americans' tribal rights to regulate environmental issues within the Federal system would be illustrative of the larger issues confronting tribal sovereignty. By analyzing the issues and the direction of the court's ruling in Albuquerque v. Browner, 97 F.3d 415 (10th Cir. 1996), as compared to other recent decisions delineating the place of Native American tribes within the complex environmental regulatory scheme of the United States, one can see the possible solutions to problems posed by the tribal attempts at environmental regulation that affect non-tribal lands and people.

The decision in Browner, was made possible by the 1987 amendments to the Clean Water Act. These amendments allowed states to exercise a certain amount of authority in determining water quality standards and allowed for Native American tribes to be treated as states for certain purposes including the determination of water quality standards. In determining these standards for a five-mile long portion of the Rio Grande, the Pueblo of Isleta Indian Reservation adopted provisions more restrictive than New Mexico. The EPA's enforcement of these standards resulted in serious restrictions being impose on a waste water plant located near Albuquerque. The Tenth Circuit's decision in Browner ultimately sided with the Isleta Pueblo on every issue.

This was clearly a victory for the environment as it enabled tribes to regulate the amount of pollution entering waters which flowed through their lands, but Browner's impact on tribal sovereignty is not so clear. On one hand, Browner did allow tribal authorities to exert power over non-tribal peoples and land. On the other hand, Browner puts tribes in the position of becoming subservient to the Federal government in order to gain control over their own water quality standards. In essence, this puts the tribes in the position of semi-sovereign nations. Thus, tribal sovereignty is threatened at the same time that it is advance.

Browner, makes one thing very clear if tribes are to advance their interests and maintain cultural independence, then they must be willing to engage with the federal government in legal actions. But what legal actions and how to balance the need of tribal sovereignty against the need for cross-cultural dialogue and participation must be determined by the tribe involved on a case by case basis.

Is President Bush’s Vision Impaired? An Analysis of President Bush’s ‘Climate VISION’ Initiative

By: Brittany Howell; article originally appeared in JNREL Vol. 19, No. 1

Abstract By: Ramsey Groves, Staff Member

The Department of Energy introduced the Bush Administration's "Climate VISION" initiative in February 2003. "VISION" represents "Voluntary Innovative Sector Initiatives: Opportunities Now." And its purpose is to encourage American businesses and industries to reduce the ratio of greenhouse gases (GHG's) by eighteen percent. However, because change is voluntary as opposed to mandatory, there is a concern that Climate VISION will have little positive impact on the environment.

Climate change references fluctuations in temperature, precipitation, and wind, and the impacts of these variations can be incredibly problematic. For example, experts predict that climate change will cause severe weather events, such as hurricanes, to occur more often. The earth's climate changes naturally due to variations in the concentration of certain gases in the atmosphere. However, humans can contribute to climate change when they engage in activities that emit greenhouse gases. Many of these gases are products of industrial activity, and thus a number of industries have a stake in the regulation of greenhouse gases.

Affected industries are not in favor of mandates requiring them to reduce emissions because this would be very costly. Further, the Bush Administration opposed policies that required reductions in emissions because of a fear that mandatory targets could harm economic growth. For instance, experts predict a considerable rise in gasoline and electricity prices in the event of emission regulation. The energy, manufacturing, transportation, and forest sectors of the economy would all be affected by mandates requiring emission reductions. While each of these sectors have taken some steps to reduce the ratio of greenhouse gases, many people feel that this voluntary program is not what is needed.

Opponents of the Climate VISION initiative take issue with, among other aspects, the fact that the program is voluntary. In the past, there have been several failures of voluntary initiatives. Few, if any, companies will voluntarily take steps to limit production in a way that will place them at a disadvantage relative to competition. Further, President Bush appears to have been influenced by friends in affected businesses. Critics claim that the Bush Administration consulted with oil companies concerning their climate change policy. These opponents argue that the input of oil companies resulted in an ineffective initiative.

Several viable alternatives to the Climate VISION initiative have been suggested by experts. One proposal is to begin a practice of carbon sequestration. Basically, this process entails storing carbon, a greenhouse gas, so that the buildup of carbon dioxide in the atmosphere will slow. Another alternative is to promote biomass energy.

While the Climate VISION initiative is a step in the right direction, it simply is not enough. Although we cannot implement a program that will negatively affect our struggling economy, other alternatives must be considered. Our legislators and policymakers must assume the task and make effective changes.

Should CERCLA Contribution Action Be Available to Potentially Responsible Parties Absent Federal Civil Action?

Article By: Patricia L. Pearlberg; originally published in JNREL Vol. 19, No. 1

By: Natasha C. Farmer, Staff Member

Congress enacted the Comprehensive Environmental Response, Communication, and Liability Act ("CERCLA") on December 11, 1980. This Act was subsequently revised and reauthorized with the enactment of the Superfund Amendments and Reauthorization Act ("SARA"). These two enactments are collectively referred to as CERCLA. CERCLA was designed to prevent further contamination and the release of toxic substances by requiring clean-up of existing hazardous sites, ensuring that the costs of cleaning up these sites are borne by the "responsible" parties, and creating liability provisions to deter future environmental releases by imposing high costs on careless waste management and disposal practices.

Under CERCLA, Potentially Responsible Parties ("PRPs") are defined broadly and can include past operators and owners of facilities who can be sued. In determining liability, courts have determined that liability under CERCLA is strict, joint, several, and retroactive. In Avaiall Services, Inc. v. Cooper Indus., Inc., 312 F.3d 677 (5th Cir. 2002), the defendant and its predecessor companies owned and operated three facilities and were engaged in the business of aircraft engine maintenance that "required the use of petroleum and other hazardous substances." The plaintiff purchased the facilities and the aircraft engine maintenance business from the defendant. As a result of the hazardous substances seeping into the ground and groundwater, the plaintiff initiated an extensive cleanup, costing it millions of dollars and lasting for more than a decade. Soon after, the plaintiff filed a § 113(f)(1) contribution suit under SARA alleging the defendant as a PRP.

Section 113(f)(1) of SARA was enacted by Congress to encourage cost sharing among PRPs. This section allows PRPs to seek contribution from other PRPs if it assumed a disproportionate share of the cleanup costs, as the plaintiff claimed here. However, there is much dispute on what the statutory language of this section means. There are disputes to whether Section 113(f) is only limited to federal contribution actions "during or following" a federal action. Patricia L. Pearlberg's article, "Should A CERCLA Contribution Action Be Available To Potentially Responsible Parties Absent Federal Civil Action?" discusses CERCLA's statutory language and structure, legislative history, and public purpose of the Act.

The Balancing of Coal and Coalbed Methane Interests Within the Coalbed Methane Statutory Schemes of Virginia, West Virginia, and Kentucky

Article by: Sharon O. Flanery and Leslie R. Miller-Stover; originally appearing in JNREL Vol. 19, No. 2

Abstract by: Kyle Hermanson, Staff Member

Virginia, West Virginia, and Kentucky each have coal seams that lay within the Appalachian Basin and each of the states have adopted statutory schemes designed to maximize the utilization of those natural resources. Their statutes are intended to both ensure the safe production of coalbed methane (CBM) and coal within the same coal seam and balance the rights of the CBM and coal interest holders when they conflict. In 1990, Virginia became the first of the three states to specifically regulate the production of CBM, doing so within its existing scheme of oil and gas regulations. Virginia's statute states that its provisions should be construed to encourage the exploration for and production of the Commonwealth's oil and gas reserves. The statute goes on to provide that the production of coal should be maximized so long as it does not substantially affect the rights of a gas or oil owner. West Virginia and Kentucky's statutes differ in that they emphasize the recovery of coal and that the recovery of CBM should be promoted, provided it does adversely affect the safety or mining of coal seams.

CBM is natural gas that lies trapped in coal seams. CBM is unique in that it is both generated and stored within coalbeds, with the coal acting like a sponge and storing six times the volume of natural gas found in conventional reservoirs. CBM is often produced as a safety measure in advance of underground mining. However, CBM can also be produced for commercial reasons from unmined coalbeds as well as from the fractured rock wastes generated by longwall mining. In order to produce CBM, "stimulation" of the coal seam is usually required. Fluids are injected into the seam at high pressures in order to stimulate the coal and release the gas. There is some concern that this process may affect both the safety and productivity of coal mining.

Despite Virginia's stated emphasis on gas production over coal, the Commonwealth has the toughest standard for the production of CBM, requiring coal owner consent before a permit for stimulation can be granted and providing no venue for appeal should consent not be obtained. West Virginia and Kentucky, like Virginia, also require a permit for stimulation. However, where consent cannot be obtained, both states allow the stimulation applicant to request a hearing before a state agency review board. At the hearing, the applicant must prove that the stimulation will not render the coal seam unmineable or unsafe for mining in order to obtain a permit. In West Virginia, even if a CBM producer obtains a stimulation permit, absent coal owner consent, the producer is subject to tort liability for any damage caused to coal or mining equipment by the stimulation.

In addition to stimulation, the location and spacing of CBM wells provide ample grounds for conflict between CBM producers and coal operators due to potential safety hazards and significantly increased costs to coal operators related to well placement. Through the enactment of statutes, Virginia, West Virginia, and Kentucky have addressed these and several other issues involved in balancing the interests of the producers of two valuable resources, however each state's statutes differ in their specifics and goals.

Sustainable Development and the Regulation of the Coal Bed Methane Industry in the United States

Article by: Allan Ingelson; Originally published in JNREL Vol. 20, No. 1

Abstract by: Derek Leslie, Staff Member

This article critiques the regulatory regime in place to facilitate Coal Bed Methane (CBM) development and production in the United States. Applying the principles underlying the concept of sustainable development, Professor Ingelson suggests that the regulations affecting CBM development are to a large degree a mixed bag and are far from being considered an example of regulation that would successfully promote sustainable development.

The article begins by considering both the theoretical underpinnings of sustainable development as well as the CBM regulatory process as it exists under the current framework. The President's Council on Sustainable Development (PCSD), established in 1993 by President Clinton, proposed ten draft sustainability goals that incorporated five widely recognized sustainability principles that provide the necessary metric for reviewing the CBM regulatory regime. These five baseline principles suggest that Sustainable Development 1) respects ecological integrity, 2) is based on an efficient use of natural, manufactured, and social capital, 3) promotes equity, 4) relies on participatory approaches, and 5) requires environmental stewardship by all levels of decision-makers.

The CBM regulatory system advances these principles to varying degrees. The system is only partially successful at respecting ecological integrity. Regulation advancing this principle includes the scheme's incorporation of the Endangered Species Act, an ecosystem management planning approach for federal lands, and environmental impact assessments under the National Environmental Protection Act (NEPA). However, due to constitutional constraints, much of the process is truncated with respect to development on private lands, where significant development is likely to occur. The principle of the efficient use of resources reveals a system that is to some points sustainable. However, it does not seem to provide for an efficient use of capital as neither full-cost accounting, a polluter pays principle, nor the precautionary approach have been fully incorporated. As to the promotion of equity, the regulatory scheme also fails. This sustainability principle suggests costs and benefits should be distributed equally among the current and future generations. However, the legal system now in place does not require CBM developers to compensate owners for "reasonable use" damage caused by CBM operations. Landowners may not receive compensation for loss of crops, soil damage, decreased land values, et cetera. Inter-generational equity is also challenged by the current regime, because of the nature of the development and current consumption of CBM, depriving future generations of this finite resource. The fourth sustainability principle of public participation is largely addressed by the framework in place. The environmental impact assessment process, as well as citizen lawsuit provisions, provides stakeholders with a reasonable opportunity to participate in the decision-making process. The fifth principle, stewardship, suggests the government must promote and advocate the idea of sustainability both to the public and industry. While the EPA's attempt to incorporate some sustainability concepts in the CBM regulatory framework represents to some degree this principle, the Bureau of Land Management, as well as the various state agencies, have shown no effort to provide leadership in pursuing sustainable CBM development.

Looking at these concepts in detail, Professor Ingelson concludes that the CBM regulatory system does not effectively promote CBM sustainability. While aspects of the system certainly aim towards the goal of CBM sustainability, other features of the regime clearly prioritize other policy goals such as economic growth and use of CBM as an energy resource.

Takings Jurisprudence as Three-Tiered Review

Article by: Mark W. Cordes, originally appeared in JNREL Vol. 20, No.1

Abstract by: John Hendricks, Staff Member

Takings jurisprudence has been for all practical purposes a complex and often confusing legal area. However, in analyzing takings jurisprudence, it is possible to draw comparisons to the traditional Supreme Court jurisprudence regarding equal protection. While this comparison is not exact, it does provide an overarching classification system for takings. Like equal protection analysis, takings jurisprudence can be roughly divided into three-tiers of scrutiny based on what type of taking has occurred.

The type of takings subject to the most stringent level of review is takings which involve the permanent physical invasion of property. This category of takings is analogous to the strict scrutiny applied to equal protection claims. The Court has adopted a near per se rule that physical invasions constitute a taking. Just as the Court has protected against suspect classifications, so has it been protective of physical invasions of property by the government, such government action is almost always unconstitutional.

The second level of review in takings jurisprudence involves situations regarding development extractions. Under the standards announced in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), a court should look for a "rough proportionality" between the extraction and the use of the land. This approach can be compared to intermediate scrutiny, in that it is not invalid per se and the court will look at the reasons for the government action.

Finally, the third type of takings is takings based on a land use regulation's economic impact. These types of takings can best be compared to the deferential review or minimum rationality review applied in equal protection cases. While the comparison between takings based on a land use regulation's economic impact and deferential review may seem to conflict with the Court's analysis in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1977), and Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), in an abstract sense, both types of review are similar. While takings based on a land use regulation's economic impact are subject to a factual inquiry, the government is still granted a level of deference that is similar to deferential review in equal protection cases. Ultimately, the comparisons between takings jurisprudence and equal protections cases provide an analytical framework for understanding the sometimes murky world of takings jurisprudence.

“Federal Income Tax incentives for Energy from Renewable Resources”

Appearing in JNREL Vo1. 20, No.2, the following article was written by John Kaufmann. Staff member Kyle Hermanson wrote the following abstract. Readers should note that this article discusses the tax code as it existed at the time of the article's publication. Any person citing the article or engaged in tax planning should consult the current edition of the Code.

Countless experts have discussed the necessity for the United States to develop clean, renewable sources of energy in order to avoid the parade of horribles attendant upon continued dependence on fossil fuels. Despite this national dialogue, businesses and consumers have not invested heavily in renewable energy projects until recently. Two things are now beginning to make these projects cost effective. First, the tremendous increase in the cost of fossil fuel in the recent past has encouraged academics and business people alike to turn to renewable energy sources as a way to avoid the risks of price fluctuation in the fossil fuel markets. Second, the cost of energy from renewable sources is approaching that from traditional sources. Given these factors, investment in renewable energy sources presents a unique opportunity to do normative good and at the same time, to succeed economically.

When weighing an investment in a renewable energy project, one of the factors a business person needs to consider is the tax effect of the project. The Internal Revenue Code contains several sections which provide tax subsidies for users and producers of renewable energy sources. Many of these tax credits were added or amended by the American Jobs Creation Act of 2004 and Title XIII of the Energy Policy Act of 2005. The tax code implicates everything from events as small as a taxpayer adding a residential solar water heater or photovoltaic cell to events as large as an agricultural operation becoming an open-loop biomass energy facility. This article explores and explains the federal income tax benefits of renewable energy investments, listing subsidies and discussing their real effect on different classes of taxpayers.

Land and Home in the American Mind

Written by Will Sarvis this article appears in JNREL Vol. 22. No.2. This abstract was written by staff member Anthony Cash.

The American feelings towards property and home ownership have gone through drastic changes since the first settlers arrived in the United States. The early settlers were primarily informed by English common law, Christianity, and Enlightment philosophy, especially John Locke. These ideas have combined with Native American feelings of closeness to the land to produce a distinctly American way of viewing property and home ownership. This unique bond between Americans and the land they live upon has always informed their reactions to land use restrictions, government takings, and property law generally.

However, the industrialization of the United States and the current post industrial age have made previous affections with land ownership less functional ways of interacting with property. The United States is experiencing many of the same problems which have long plagued Europe. Central to these is a growing population that puts ever greater demands on limited space available. Of course these increased demands lead to a need for increased regulation and progressive zoning laws. These needs often conflict with the almost spiritual connection many Americans feel for their home and property. By examining the history and development of American feelings towards land and land ownership, we can hopefully understand a way forward that takes this bond into account, while advancing responsible land use restrictions.

“State Regulation of Complementary and Alternative Veterinary Therapies: Defining the Practice of Veterinary Medicine in the 21st Century”

Appearing in KJEANRL Vol. 1 No. 1 this article was written by Milton Toby. The abstract was written by staff member John Hendricks.

State regulations of complementary and alternative veterinary therapies ("CAVT") are in a state of upheaval and change. Part of the difficulty of regulating CVAT is defining CAVT under existing statutes. While the American Veterinary Medical Association ("AVMA") has drafted a Model Veterinary Practice Act ("MVPA"), few states have adopted the definition of CAVT provided in the MVPA or language similar to the MVPA. However, thirteen states have adopted a statutory definition of CVAT. Language contained in state statutes regulating CAVT such as "including but not limited to" likely satisfies the requirements of certainty and provides a method for regulating CAVT not specifically mentioned in a particular statutory definition of CAVT.

Even states that lack references to CAVT in their statutes may still regulate CAVT. The legal reasoning used in People v. Amber, would likely be applicable to veterinary statutes which do not specifically reference CVAT. In that case the court reasoned that "[w]hether actions constitute the practice of medicine is dependent upon the facts and not the name of the procedure, its origins or legislative lack of clairvoyance." If applied to most states veterinary statutes this reasoning would mean that the statute may regulate CAVT without specifically mentioning them and that the failure to mention CAVT would not allow non-veterinarian practitioners to operate unregulated within a state.

While states that do not mention CAVT practices may be able to still regulate the procedures, "Hybrid States", which are states that define veterinary medicine in a broad enough way to include some CAVT practices, may have a more difficult time regulating all CAVT practices. These "hybrid states" raise issues of statutory interpretation which have been examined by few state courts. States that have only included specific enumerated CAVT practices in the definition of "veterinary medicine" have created an inference that non-enumerated CAVT practices do not constitute veterinary medicine.

Six states have also provided specific exemptions from state veterinary regulations for CVAT practices. Many other states provide non-specific exemptions under which CVAT practices may be included. However, the language of these statutes does not make it clear that CVAT practices are exempted. The lack of uniformity and conflicting language among state regulations and the need for uniform guidelines are demonstrated by the confusing and vague exemptions that CVAT practices may fall under.

Ultimately, there is a need for a harm-based system of state regulation of CAVT. In comparing the harm-based system to State v. Norene, the harm that state regulators should attempt to prevent should not be a generalized fear of public harm but a well defined risk. The use of CAVT treatment should not be limited to only licensed veterinarians. Instead licensing and supervision could allow adequately trained individuals to provide CAVT treatments through a uniform and defined statutory scheme. Several methods exist for creating a more reasonable and balanced regulation of CVAT procedures including gaining the animal owners consent, the use of liability insurance, and guaranteeing that licensed individuals are under the direct or indirect supervision of a licensed veterinarian.

No Contest? An Analysis of the Legality of Thoroughbred Handicapping Contests under Conflicting State Law Regimes

Appearing in KJEANRL Vol 1. No.1 this article was written by Laura A. D'Angelo & Daniel Waxman. The abstract was written by staff member J. Anthony Cash.

Gaming and the equine industry have long and profitable history together. However, the rise of viable gaming options has reduced the market share of gaming revenue collected via traditional track betting on horse races. In response the horse racing industry has experimented with a number of tactics, but none have been more successful than the advent of handicapping tournaments.

A handicapping contest holds much of the same appeal as a fantasy sports league or the World Series of Poker. In a handicapping contest, the most popular of which is the National Handicapping Championship, players pay an entry fee to bet set fictional amounts on a set number of specified races. The player who accumulates the largest fictional bankroll wins the contest and a significant share of the initial pool of entry fees. This creative format creates concern about its legality in a number jurisdictions.

Laura A. D’Angelo and Daniel Waxman confront this problem, analyzing the legality of handicapping contests under the state laws of both Kentucky and Florida, states with a significant horse racing industry. While providing a thorough analysis of the law of each jurisdiction, the authors illustrate a number of possible challenges to the legality of handicapping contest and their possible solutions. Ultimately, the authors’ analysis reveals the incompatibility between the gaming laws of Kentucky and Florida, the possible liability to horse racing establishments conducting handicapping contests, and the subsequent need for an industry wide push to enact legislation permitting handicapping contests.

In order to reach this conclusion, the authors investigate the Predominance/Dominant Factor Test and the Any Chance Test, two tests which have been used by Kentucky courts to determine whether an activity qualifies as a game of chance as opposed to a game of skill. Under Kentucky law wagers on games of chance violate the criminal prohibition against gambling, while wagers on games of skill do not. While the authors make a strong argument that handicapping contests qualify as games of skill under the Predominance/Dominant Factor Test and are, therefore, legal in Kentucky, they also point to case law that could indicate the more restrictive Any Chance Test applies in Kentucky. If that were the case, then handicapping contests would violate Kentucky law if they contain any element of chance, which they undoubtedly do.

Handicapping contests’ questionable legality in Kentucky is compared to their questionable legality under Florida law. Florida law has a more stringent restriction on gaming than does Kentucky. Consequently, the authors show that handicapping contests could be legal under Florida law if the Florida courts deem the entry fees paid to enter the handicapping contest to be “bona fide entry fees” for a “purse, prize, or premium” rather than a wager. Again the authors illustrate that this exemption requires handicapping contests to be viewed as a game of skill rather than a game of chance by the Florida courts.

Considering these factors, the authors’ suggested legislative and administrative exemptions for handicapping contests seem to be a logical solution to a pressing problem.