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Tax Law

State Net Capitol Journal – September 10, 2012

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Budget & Taxes

CA STRUGGLES TO BALANCE ENVIRONMENTAL, ECONOMIC CONCERNS: The California Environmental Quality Act (CEQA), passed in 1970, has been credited with helping to preserve the state's lush wetlands and keep condos off the slopes of the majestic Sierra Nevada mountain range. But the landmark law has also opened the door to lawsuits - some completely unrelated to the environment - that have done little to help the state weather the worst economic crisis since the Great Depression.

"Something is broken," said Leron Gubler, president of the Hollywood Chamber of Commerce. "A lot of jobs could have been saved if not for these lawsuits, as well as new jobs once these projects were completed."

Gubler said lawsuits - and the threat of litigation - had delayed recent projects in the city that had cost it more than 6,000 jobs.

The legitimacy of some of the CEQA lawsuits that have blocked projects in the state seem questionable at best. A plan to paint bicycle lanes in San Francisco, for instance, has been delayed four years by a suit filed by a local resident who claims the lanes will cause pollution. And the owner of a gas station in San Jose has been blocked from adding another pump by a lawsuit filed by the owner of a competing station located across the street.

Republicans, who consider the law an egregious example of overregulation, have tried for years to weaken it. But owing to the power of the state's environmental lobby and the popularity of environmental issues with the state's voters, they've had little success. With the state's unemployment rate still hovering above 10 percent, however, Democrats are increasingly joining in that effort. Last month state Sen. Michael J. Rubio (D) turned his bill about King River fisheries (SB 317) into a CEQA enforcement overhaul. The bill was quickly quashed, but Rubio said he'll try again next year.

"This is a very important law that we have to protect, but we have to strip away the possibility" of it "being abused," he said. "These kinds of lawsuits are not living up to the intent of the law."

But environmental groups said Rubio's bill, which would have limited suits against development projects in some circumstances, would have effectively stripped the law of its enforcement mechanism.

"It wasn't reform: it was gutting the law," said David Pettit, a lawyer for the Natural Resources Defense Council.

Pettit acknowledges that the CEQA has given rise to some frivolous litigation, but he insists such cases are rare. In fact, a 2005 study by the Public Policy Institute of California indicated that less than 1 percent of all projects in the state face lawsuits under the act. But Petit said the issue "is going to come back."

"The development community has never liked it, and they're playing the jobs card now," he said. (NEW YORK TIMES, SOUTHERN CALIFORNIA PUBLIC RADIO, STATE NET)

AL SUES TO AVOID $7.5M FEDERAL BILL: Last year, the U.S. Department of the Interior informed Alabama that it had been overpaid more than $7.5 million in royalties from offshore drilling in the Gulf of Mexico since 1986 and it has to pay that money back. The overpayments are the result of a change the department made in the zone boundaries of certain federal leases. But the state alleges that change - which would redirect more revenue from the leases to Mississippi - was made outside the normal bureaucratic process, and it has filed suit to block the change in federal court in Washington, D.C.

"If upheld, this change would afford Mississippi the right to certain ... revenues that have been paid to Alabama over the last 26 years [and that have been long since obligated and expended by the state for public purposes] and that otherwise would be distributed to the state of Alabama in the future," the lawsuit, filed earlier this year, states.

Gulf of Mexico Offshore Oil Drilling Rig

Louisiana has filed a similar suit, seeking to nullify the $2.81 million the federal government says it owes as a result of the revenue recalculation. (AL.COM)

BUDGETS IN BRIEF: Low-wage jobs in the hospitality, retail and healthcare industries have been leading the economic recovery in FLORIDA, according to a study by Florida International University's Research Institute on Social and Economic Policy. Higher-wage construction and government jobs, meanwhile, have been in retreat, with construction hiring down about 50 percent - or 270,000 jobs - from previous peaks, and declining property-tax revenues forcing governments to cut their payrolls (MIAMI HERALD). • IOWA economic development officials approved $100 million in tax credits over four years for Egypt-based Orascom Construction Industries. The state's economic development director, Debi Durham, said the incentive was needed to keep the company's proposed $1.4 billion fertilizer plant from being lured to Illinois, which had been aggressively lobbying for the project (DES MOINES REGISTER, BLOOMBERG BUSINESSWEEK)

- Compiled by KOREY CLARK

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