• Rick Hitchcock served on the planning committee and moderated a panel on the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) at the Annual ABA Region 4 Conference on March 3 in Atlanta.

• Darlene Marsh was a featured speaker on a panel on the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) at the Annual ABA Region 4 Conference on March 3 in Atlanta.

• Commissioner Robert Martineau, Jr. of the Tennessee Department of Environment and Conservation was a featured speaker on an panel on Enforcement – Today and Tomorrow at the Annual ABA Region 4 Conference on March 3 in Atlanta.

• Randy Womack of Glankler Brown, PLLC has been selected to serve on the Blue Stream Task Force Advisory Committee.  The Task Force, organized by the City of Memphis, consists of over 45 community, civic, industry leaders and subject matter experts.  The Task Force is charged with determining ways to leverage and stimulate metro water assets in order to create jobs, enhance the quality of life, and promote a conduit for commerce and travel by water.  The Committee is also being asked to identify water resource concerns and issues that require attention and need to be addressed using both short and long-term strategies.

• Stephanie Durman has been named General Counsel for the Tennessee Clean Water Network.

• Bill Penny and Gregory Young have joined Burr & Forman LLP in their Nashville Office.

By: Amanda M. Herrit, M.S., CPESC, QHP**

Do you have water features on your project site? You may need to consider potential impacts to these areas. Prior to the disturbance of jurisdictional waters, permits and mitigation are typically required by federal agencies.  Some states have permitting and mitigation requirements in addition to the federal requirements.

We are often asked by our clients “How long will water permitting take?” or “Will impacting an onsite ditch affect the project?” There is not a simple standard answer to these questions. Each site must be evaluated based on specific federal and state regulations, type and extent of anticipated impacts, quality of the existing habitat, and scope of the project.  The following four steps address how to make your project a success while staying ahead of the potential changes in regulations.

1)     Be aware of potential regulatory changes – Navigating the regulatory process is always a challenge and it is important to consult with an environmental professional prior to preparing a permit application as regulations frequently change.  In April 2014, the U.S. Army Corps of Engineers (USACE) and Environmental Protection Agency (EPA) jointly issued a proposed rule for defining Waters of the U.S.  The intention of the proposed rule is to more clearly define Waters of the U.S. subject to the Clean Water Act.  As defined in the proposed rule, Waters of the U.S. include traditional navigable waters and all waters that have a significant nexus to navigable waters and tributaries to navigable waters.  The tricky part is that natural, man-made, or man-altered ditches, canals, and impoundments can potentially be considered tributaries to navigable waters and construction impacts to these features potentially can require federal permitting.

The proposed rule change has encountered opposition as a result of the anticipated increased cost of permitting and mitigations and the apparent expansion of regulation over waters of the U.S. As a result of the proposed rule change, the Waters of the United States Regulatory Overreach Protection Act of 2014 (HR 5078) was passed by the U.S. House of Representatives on September 9, 2014, although the bill was not considered or passed by the Senate. In response to comments and criticisms, the EPA released a Questions and Answers to explain and clarify the proposed rule as applying prior Supreme Court decisions interpreting waters subject to the Clean Water Act.

2)     Hire a professional with permitting experience - Tennessee regulations require professionals to have experience assessing and permitting water resources. Tennessee also requires professionals to obtain certifications before assessing whether waters may or may not be regulated.  For example, as of July 1, 2014, the Tennessee Department of Environment and Conservation (TDEC) requires a Tennessee-certified Qualified Hydrologic Professional (QHP) to conduct hydrologic determinations prior to initiating the permitting process.

3)     Plan wisely and involve your natural resource professional early – Many clients come to us after the design phase has been completed and the permitting phase is in progress to find that they may have jurisdictional waters located on their project site.  By involving your professional early in the process, assessment for potential jurisdictional waters can occur prior to purchase, avoiding such surprises.

By involving a professional early in the design process, clients may avoid the unnecessary cost and project delays associated with federal and/or state permitting and mitigation. For example, Terracon was contracted by the Huntsville City Board of Education as the environmental and geotechnical consultant for the Jemison High School and McNair Junior High project.  After completing a site reconnaissance for the Phase I ESA, Terracon reviewed the proposed site and determined that streams and wetlands may be present. A preliminary jurisdictional waters assessment identified intermittent streams and wetlands on site.  With the assistance of Terracon, the design team was able to reconfigure the site design to minimize impacts to jurisdictional waters so that the disturbance was kept within the limits of an USACE Nationwide Permit and no compensatory mitigation was required.

4)     Allow time for permitting – Permitting takes time and may take six to twelve months and potentially up to two years to complete, depending on the types of permits required. It is critical for project managers to plan accordingly and be prepared for potential permitting delays.

In summary, involving a natural resource professional early in the project conception phase may save time and money in the long run.  Natural resource permitting should be included as part of the project schedule in order to avoid potential project delays. 

References:

Definition of “Waters of the United States” Under the Clean Water Act, 79 Fed. Reg. 22188 (April 21, 2014), available at http://www2.epa.gov/cleanwaterrule/definition-waters-united-states-under-clean-water-act.

Dudley, Sandra, Director, Division of Water Resources, Hydrological Determination Services, Tennessee Department of Environment and Conservation (June 16, 2014).

Higgins, Sean. EPA contradicts itself with Clean Water Act rule, federal agency says. Washington Examiner (October 7, 2014), available at http://washingtonexaminer.com/epa-contradicts-itself-with-clean-water-act-rule-federal-agency-says/article/2554465.

H.R.5078 - Waters of the United States Regulatory Overreach Protection Act of 2014, available at https://www.congress.gov/bill/113th-congress/house-bill/5078.

Proposed “Definition of ‘Waters of the States’ Under the Clean Water Act” 40 CFR 230.3, available at http://www2.epa.gov/sites/production/files/2014-06/documents/proposed_regulatory_wus_text_40cfr230_0.pdf.

Questions and Answers about Waters of the US Proposal, available at http://www2.epa.gov/uswaters/questions-and-answers-about-waters-us-proposal-pdf.

*This article was edited for content. 

**Amanda M. Herrit, M.S., CPESC, QHP, is a Project Environmental Scientist at Terracon in Chattanooga.  Ms. Herrit is a Tennessee-certified Qualified Hydrologic Professional and a multi-state certified inspector in erosion and sedimentation control.  She served as the environmental project manager for the Jemison-McNair project.

The Environmental Show of the South is the largest and most comprehensive environmental conference and tradeshow in the region. Its goal is to provide high-quality, low-cost environmental training as well as updates on government/industry developments and trends, with a particular focus on solid and hazardous waste issues. The 44th annual event will be held April 22-24, 2015.  Register today to reserve your spot!

As Chair of the Environmental Law Section, I want to thank all the Board members for their help in keeping this wonderful Section running smoothly in 2015.  I especially want to thank Darlene Marsh, Co-Chair, Willa Kalaidjian, Newsletter Editor, and Jenny Jones, of the TBA, who jumped in and helped when I had unexpected health issues.  All in all we have had a very productive year.

I want to discuss sustainability and “green” living a bit in this article.  These two words have become household conversations in all income levels, all areas of society, and all over the world.  These subjects affect all people whether they are aware of it or not.  I read in Wikipedia that “sustainability is the endurance of systems and processes.  The organizing principle for sustainability is sustainable development, which includes the four interconnected domains: ecology, economics, politics, and culture.“  It seems to me, every person on earth participates in one, or probably more than one, of these four domains.  Sustainability is a social challenge that includes urban planning/transportation, personal lifestyles, and ethical manufacture, sales and consumerism.  As green and sustainable living become more and more immersed in the everyday conversation of folks all over the world, it is also becoming a larger part of the legal world, both nationally and internationally.    

These two subjects are at the core of the Environmental Law Section of TBA.  Whether you want to have a basic understanding of what the issues are or you want to immerse yourself and get involved, the ELS is the place to go. The annual Show of the South is a three day conference sponsored by the Tennessee Department of Environment and Conservation (TDEC) that offers experts on the law and technical issues for some of the most important and timely topics of that year.  The conference offers continuing legal education (CLE) credit for lawyers, and you have the opportunity to mix and mingle with high level professionals in the field.   ELS also offers an annual CLE in the early winter.  Information on accessing the videos on TBA's website from our last CLE program this past January is available in this newsletter.  For law students that may be aspiring environmental attorneys, we offer the annual Hastings writing competition.  This year's competition is underway and we are currently accepting submissions.  

I hope all you find one, if not many reasons, to join and get active in our section.  In order to stay abreast of this timely and international subject, I feel certain this is one great resource to keep well informed on the growing fields of green and sustainable practices.

The Environmental Law Section wants to serve its members the best we can.  If there are any suggestions you have to serve you better please do let us know.  Thank you for a wonderful 2014 and we hope you will consider joining in 2015. 

Rachel Jakubovitz
2014-2015 Chair, TBA Environmental Law Section

Join Your TBASCUS colleagues for a spring trip to the U.S. Space & Rocket Center in Huntsville, Alabama

The Tennessee Bar Association is pleased to announce an exciting spring trip for TBASCANS, April 17-18, 2015, to the U.S. Space & Rocket Center in Huntsville, Alabama.  This exciting weekend event will be held in conjunction with the spring meeting of the TBA Board of Governors.

A new smartphone app developed by the ABA’s Commission on Law and Aging allows individuals and families to manage and share their health care advance directives and related information. The app, which offers unlimited storage and management of personal and family profiles and documents, is the latest resources released by the commission to help individuals make health care decisions. Other tools include a multi-state health care power of attorney, a consumer’s toolkit for health care advance planning and a guide to making medical decisions for others.

Written By Teresa M. Klenk

Nearly every year, tax practitioners receive a smorgasbord of new and exciting tax provisions to ponder over and plan around for the upcoming year. In 2014, this did not happen - our legislators have been more focused on immigration, health care, and mid-term elections, just to name a few. As a result, there are not a lot of new tax provisions to focus upon for 2015. Nevertheless, here is a brief summary of some of the changes in the world of tax, both federal and state, that may be of interest to you.

Expiring Tax Provisions

Several important federal tax credits, deductions, and exclusions expired at the end of 2013. A sampling of some of the more popular of these provisions includes:

• 50% Bonus Depreciation

• Research Credit

• Wind Energy Credit

• ALERT TENNESSEANS – State Sales ?Tax Deduction

• Exclusion for Mortgage Debt Forgiveness

• Tax-free distributions from IRAs to ?Charity ?It was a nail-biter as to whether or not these provisions would be extended for tax year 2014. However, on December 16, 2014, by a vote of 76-16, the Senate approved the extension through December 3, 2014 of these expiring tax provisions. As of the submission date of this article, the extender bill, H.R. 5771, went on to President Obama, who is expected to sign it. ?

Delete Your Generic Circular 230 Email Disclosures ?

The Internal Revenue Service (“IRS”) issued final regulations effective June 12, 2014 (Treasury Decision 9668). These regulations cover written tax advice. The highlight of these regulations is that there is now no need for generic Circular 230 disclaimer language. These disclaimers have been found at the bottom of nearly every email sent from a tax attorney or accountant for the past ten years (whether the email had anything to do with tax or not). So feel free to take those generic disclosures off your emails, effective immediately.

Other changes include:

• One standard for all written tax advice (no heightened standard for “covered opinions”). The new standard is now basically one of reasonableness. Practitioners must:

(1)  base their advice on reasonable factual and legal assumptions;

(2)  use reasonable efforts to get the facts and representations needed to form an opinion; and

(3)  consider all the relevant facts that the practitioner knows or should know.

• Practitioners may now consider the likelihood of reaching a settlement (but not the likelihood of an audit) when giving written tax advice.

• There is a more stringent standard of review for a practitioner who knows or has reason to know his opinion will be used to promote or market a potentially abusive tax shelter.

Premium Tax Credit

Starting in 2014, taxpayers who buy health insurance through the Health Insurance Marketplace (the “Exchange”) may be eligible for the new Premium Tax Credit (“PTC”), as provided for in the Patient Protection and Affordable Care Act (the “ACA”). If eligible for the PTC, the taxpayer can choose to:

• Have some or all of the PTC paid directly to the insurance carrier to reduce the taxpayer’s monthly health insurance premium; OR

• Wait and get the PTC back as a refund when the taxpayer files his or her federal income tax return.

To qualify for the credit, household income must fall between 100 percent and 400 percent of the federal poverty line. As an example, for 2014, the income limits are as follows:

$11,490 up to $45,960 for one individual $15,510 up to $62,040 for a family of two $23,550 up to $94,200 for a family of four

The credit is only available for insurance purchased on the Exchange. To be eligible for the PTC, an individual must meet other requirements as well. These include:

• The individual cannot get affordable coverage through an eligible employer plan that provides minimum value.

• The individual is not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or Tricare.

• The individual did not file a Married Filing Separate tax return (certain limited exceptions may apply).

• The individual cannot be claimed as a dependent by another person.

The United States Supreme Court will hear oral arguments on King v. Burwell in December of 2014. At stake in this case is whether millions of taxpayers who bought their health insurance on a federal Exchange are eligible for the PTC.

If a state did not set up its own statewide insurance exchange, then a resident of that state could buy their insurance on the federal insurance exchange. Many states (including Tennessee) did not create their own state exchange.

There is a question about whether the PTC is available to individuals who bought their insurance on the federal Exchange. The ACA says that the PTC is available to individuals that purchase insurance on an “Exchange established by the State.” The IRS issued regulations that say the PTC is available to taxpayers that purchase insurance on either the federal exchange or a state exchange. The plaintiffs in the King v. Burwell case challenged the authority of the IRS to issue a regulation that expands the availability of the PTC beyond what is expressly stated in the ACA.

If the Supreme Court overturns this IRS regulation, then residents of states without a state exchange stand to lose their PTC. Without the PTC, residents of these states may have difficulty affording the “affordable care” offered on the federal exchange. To make a wording change in the ACA to address this problem will require the agreement of Congress. Some think that there is a slim chance of this happening, given the great divide between both parties about the ACA. Needless to say, there is a great deal of interest in how the Supreme Court will rule on this important issue.

Tennessee Tax Changes During the 2014 Legislative Session

• Inheritance Tax. For decedents dying in 2015, if the value of the gross estate is under $2,000,000, the estate is not required to file a short form inheritance tax return. (Public Chapter 808). Remember that 2015 is the last year that Tennessee will have an inheritance tax. Tennessee no longer has a gift tax.

• Professional Privilege Tax Delinquencies. Professional privilege taxpayers that are 90 days or more delinquent on paying their professional privilege tax must now get current with these taxes before they may renew their professional license. This law does not apply in situations where delinquent taxpayers have entered into a payment plan agreement with the Department of Revenue, have requested an informal review conference, or have filed suit. Also, this law does NOT apply to attorneys. (Public Chapter 763).

• Repeal of the “Jock Tax”. The professional privilege tax on National Hockey League players is repealed beginning for regular season games played in Tennessee after April 24, 2014. For National Basketball Association players, the professional privilege tax is repealed for regular season games played in Tennessee after June 1, 2016. (Public Chapter 760).

The “Jock Tax” was an unusual type of tax (classified as a professional privilege tax) imposed on NBA and NHL players who played games in the state. The tax rate was $2,500 per game with an annual cap of $7,500. NFL players were not taxed.

Many other states have a similar tax. However, Tennessee was the only state to charge the same flat rate of tax to every player regardless of the amount of salary the player received. In some instances, after paying the tax, rookie players ended up receiving no pay at all for the game played.

The other interesting feature of the tax was that the tax collected went to the operators of the arenas where the teams play. The intent was to use the tax revenue to help fund improvements to the arenas and attract large concerts and events.

The Grizzlies lobbied hard against the repeal of the “Jock Tax” but the Predators were in favor of repeal. This is likely the reason for the extended phase out for the NBA players.

• Amendment 3 Passes. The voters of Tennessee agreed to an amendment to Article II, Section 28 of the Constitution of Tennessee. Tennessee’s constitution will now provide that the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income or any state or local tax measured by payroll or earned personal income. The amendment also says that “nothing contained herein shall be construed as prohibiting any tax in effect on January 1, 2011, or adjustment of the rate of such tax.” So, while a tax on payroll or earned personal income will now be unconstitutional, taxes in existence as of January 1, 2011, such as the Hall Tax, state and local sales tax, and Tennessee franchise and excise tax are expressly permitted, and the rates of these taxes may be increased.

Originally Published in Dicta, January 2015

This year’s Estate Planning and Probate Forum will feature a panel of Probate Masters, including Elaine Beeler (Williamson County), Howard Hogan (Knox County) and Robin Miller (Hamilton County).  In order to make this session even more beneficial to our attendees, our panelists have requested that we solicit questions prior to the Forum.  If you have a question that you would like to have answered by the probate panel at the Forum, please submit for consideration no later than February 13.