On this day in legal history, November 16, 1973, a pivotal moment in U.S. energy and environmental law occurred when President Richard Nixon signed the Trans-Alaska Pipeline Authorization Act. This Act marked a significant shift in the nation's approach to energy resource development and environmental policy. By sanctioning the construction of an 800-mile oil pipeline from Prudhoe Bay in the north of Alaska to Valdez in the south, the Act aimed to alleviate the 1973 oil crisis by tapping into the vast oil reserves of Alaska's North Slope.
Notably, the Act contained a controversial provision that effectively bypassed standard environmental legal processes. This provision expedited the pipeline's construction by limiting judicial review and effectively quashing existing legal challenges related to environmental concerns. It reflected the tension between the nation's growing energy demands and the emerging environmental consciousness of the 1970s.
The pipeline's construction, completed in 1977, was an engineering feat, traversing some of the most challenging and pristine terrains in Alaska. However, it also raised substantial environmental concerns, such as the impact on the permafrost, wildlife, and the indigenous peoples' way of life. The project became a case study in balancing economic development with environmental preservation, a debate that continues in modern environmental law.
The Act's legal implications were far-reaching. It set a precedent for how Congress could intervene in ongoing environmental legal disputes. This aspect of the law has been a point of debate among legal scholars, with discussions focusing on the balance between legislative action and judicial independence. Additionally, the Act sparked a wave of environmental activism and legal challenges, contributing to the strengthening of environmental legislation in the subsequent years.
In retrospect, the Trans-Alaska Pipeline Authorization Act of 1973 remains a landmark in U.S. legal history. It not only transformed Alaska's economy and the U.S. energy landscape but also played a crucial role in shaping the discourse around environmental law and policy. This legislation represents a unique intersection of energy, environment, and law, encapsulating the complexities and challenges of the era.
The U.S. Senate has successfully passed a stopgap funding bill to prevent a partial government shutdown, with the bill now heading to President Joe Biden for approval before the weekend deadline. This action marks the resolution of the third fiscal standoff in Congress this year, which previously brought the government close to defaulting on its over $31 trillion debt and nearly led to shutdowns affecting pay for approximately 4 million federal workers. The recent crisis was closely followed by the ousting of Republican House Speaker Kevin McCarthy on October 3, leaving the House leaderless for three weeks.
The bill, which received bipartisan support, extends funding for key areas such as military construction, veterans benefits, and various other federal programs until January 19, 2023. This date is notably close to the start of the 2024 presidential campaign season, marked by the Iowa caucuses. Democrats expressed satisfaction with the bill for adhering to previously agreed spending levels and avoiding controversial provisions. In contrast, some Republicans, while keen to avoid a shutdown, voiced frustration with the compromise, vowing to push for reduced federal spending when the current funding expires.
The repeated confrontations over government funding have hindered Congress from addressing other significant issues, including President Biden's request for substantial aid for Israel, Ukraine, and U.S. border security. The bill's passage provides a temporary respite, but it also sets the stage for further political negotiations and potential conflicts as new deadlines loom.
Right-wing conspiracy theorist Alex Jones is seeking court permission to sell an array of personal items—including firearms, jewelry, cars, boats, and a cryogenic chamber—to fund his personal bankruptcy costs. This move follows his filing for bankruptcy protection last year after being ordered to pay over $1 billion in judgments for falsely claiming the 2012 Sandy Hook Elementary School shooting was a hoax. Jones plans to promote these sales on his Infowars radio and video talk shows, believing this will increase the items' value due to supporter demand. The proceeds from the sales are intended for legal fees and any remaining funds will be used for payments as part of a Chapter 11 plan. This request comes amidst criticisms of Jones' lavish spending habits and follows a court ruling that about $1.1 billion of his debt from defamation judgments cannot be discharged under bankruptcy laws due to his intentional and malicious conduct.
A recent study has revealed that GPT-4, a sophisticated AI chatbot developed by Microsoft-backed OpenAI, has surpassed the average performance of human test-takers on the Multistate Professional Responsibility Exam (MPRE), a legal ethics exam required in nearly every U.S. state for law practice. GPT-4 achieved a 74% accuracy rate on a simulated MPRE, compared to the estimated 68% average among human examinees. This study, conducted by LegalOn Technologies, suggests the potential for AI to assist lawyers in ethical compliance and align with professional responsibilities.
This finding adds to a growing body of research exploring the role of AI in legal education and attorney licensure. Previous studies showed that an earlier version of GPT-4 scored passably on law school final exams and that GPT-4 could pass the bar exam. Additionally, access to GPT-4 was found to increase speed in legal writing assignments but did not improve the quality of law students’ work.
Despite GPT-4's impressive performance, particularly in areas like conflicts of interest and lawyer-client relationships, its accuracy was lower in questions about communications regarding legal services and the safekeeping of funds. The National Conference of Bar Examiners, responsible for developing the MPRE, has not assessed the claims of GPT-4's ability to pass its ethics test. A spokesperson emphasized that attorneys possess unique skills that AI cannot currently replicate.
The study underscores the evolving role of technology in the legal profession and suggests that advanced AI models like GPT-4 can effectively apply ethical rules, marking a significant milestone in the intersection of AI and legal ethics.
The Tax Cuts and Jobs Act (TCJA) of 2017, which reduced the federal corporate income tax rate from 35% to 21%, promised to stimulate economic growth and curb global tax evasion by discouraging offshore profit shifting. However, six years later, evidence suggests its impact on reducing the use of tax havens has been minimal. The constant offshoring of about 35% of foreign profits and the consistent booking of about 50% of these profits in tax havens indicate the TCJA's limited effectiveness.
Some positive effects of the TCJA are observed in the actions of six major companies, including Alphabet Inc., Microsoft Corp., and Meta Platforms, Inc., which repatriated intellectual property to the U.S. This movement coincided with changes in the Irish tax code, making it difficult to attribute the repatriation solely to the TCJA.
A potential solution to the unresolved issues of the TCJA is a global minimum tax, as suggested by the EU Tax Observatory in the 2024 Global Tax Evasion Report. This tax would create a global tax liability based on a corporation's engagement with different markets, irrespective of where profits are geographically distributed. Over 140 countries agreed to a global minimum tax of 15% on multinational profits under a 2021 G20 and OECD initiative, but the effectiveness of this tax has been weakened due to modifications like the economic substance carve-out.
A more robust global minimum tax could provide a cohesive strategy to protect individual countries' tax bases, highlighting the need for a unified approach to combat tax avoidance. The TCJA's limitations underscore the importance of a global, interlinked system of policies to effectively address offshore profit shifting. The resolution to this issue lies in the collective action of the global community to pursue fiscal fairness.
An example will bring this into clearer view. Consider a multinational that has profits logged in three jurisdictions: Country A, Country B and Country C. In Country A, they have $10 billion in profits taxed at 10%; in Country B, $10 billion in profits taxed at 5%; and in Country C, $10 billion in profits, taxed at 0%. The global minimum tax in this hypothetical scenario is 15%.
The multinational company has $30 billion in profits across three countries—if they all uniformly taxed at 15%, the multinational would owe $4.5 billion in taxes. However, owing to none of the countries reaching that 15% threshold, there are deficits in the percentage each country has collected—in Country A, $500 million has been left on the table, in B the gap is $1 billion and in C all $1.5 billion has been left uncollected. The overall deficit, therefore, is $3 billion.
The most straightforward way to apportion that deficit among the three jurisdictions is to mirror the percentage of global sales the company makes in each jurisdiction. So, assuming 25% of sales went to Country A, they would be entitled to collect 25% of the $3 billion deficit—or $750 million. All three jurisdictions would be incentivized to close that uncollected gap by raising their tax rate to the global minimum of 15% and leave as little on the table for distribution through the sales-apportionment mechanism.
In this way, the multinational is taxed at the global minimum amount and each individual country is incentivized to “get on board” and collect as much as they are entitled to. Its a relatively simple solution to a complex problem, and it would need a lot of fine tuning–but to my mind it is infinitely closer to a true solution than anything currently in force or proposed.