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California Special Session

On Wednesday, Governor Edmund G. Brown, Jr., called a special session in the Legislature of the State of California to review the Rainy Day Fund that was placed on the November ballot. The session will start on Thursday, April 24.

Early this year, the Governor proposed changes which he claims will strengthen the Rainy Day Fund by allowing the state to pay down its debts and unfunded liabilities. The changes include providing for the increase in deposits during spikes in capital gains revenue; allowing supplemental payments toward the state’s debts and liabilities; and limiting withdrawals. The Governor would also create Proposition 98, a reserve of school funding and a prevention against future cuts. This reserve would not affect the guaranteed level of funding for the schools.

McCutcheon v. FEC – 2014 Electoral Impacts

On Wednesday, in a 5-4 decision likely to be one of the more controversial of the Roberts Court, the U.S. Supreme Court struck down limits on the total amount of money a single donor may contribute to candidates and to political committees. The ruling in this case, McCutcheon vs. FEC, effectively removed a certain type of donation limit, known as an aggregate, that dictated how much one person could legally donate during a single, two-year election cycle known as a biennium.

Prior to the ruling, one person was allowed to give a maximum of $48,600 directly to all candidates and $74,600 to political parties and political action committees, setting the two-year total at $123,000. This effectively limited a single donor to making 18 maximum level candidate donations of $2,600 per year. This ruling now allows a donor to give $2,600 to as many candidates as they want. In a mid-term year where all 435 members of the House are up for re-election, a single donor could hypothetically donate $2,600 to every candidate of a party for a total of $1,131,000 – far greater than the previous $48,000 limit. The court threw out a similar aggregate limit for donations to political parties and pacs. A single donor could now give $74,600 biannually to a party in every state, where before they could not exceed this limit.

It’s important to note that this ruling does not apply to donations to the so-called ‘super-pacs’ born out of 2010’s Citizens United decision, to which a person may give unlimited donations and are not directly associated with political candidates or parties. Individuals remain free to donate as much money as they wish to any number of these institutions.

While a huge step forward for those who view campaign finance laws as a violation of free speech, the ruling still falls short of a total dismantling of existing law, a scenario where donors would be allowed to give directly to candidates, parties and pacs in an unlimited amount, the ‘holy grail’ of campaign finance reform. This hypothetical situation does now not seem so far-fetched to many opponents of the court’s ruling. Many even see this as inevitable given the courts aggressive stance against campaign finance laws.

HB hbGoing forward towards the 2014 midterm elections the results of this ruling will begin to demystify themselves to the average voter, similar to the formidable rise of super PAC’s during the 2012 election cycle following the still-controversial Citizens United v. FEC decision that paved the way for this week’s landmark ruling. On a national level, this ruling will give large-scale donors the ability to impact state level elections in an unprecedented scale and kicks the door open to out of state money in state elections.

In response, blue state legislators will likely move quickly to amend state law to limit what they view as the fallout from this ruling, and many angry and condemning resolutions will be filed. The Red state reaction will likely be more measured, as many conservatives also publically bemoan the corrupting influence of money on politics. However given the instrumental role that the Republican National Convention and Senate Minority Leader Mitch McConnell, R-Kentucky, played in this case, opposition will be noticeably less vocal, specifically in leadership circles. The right will have to balance this alongside the negative perception of having out of state money influence local elections.

Efficiency Measures Have States Seeing Green

Whether you live in a traditionally red state or blue state, chances are that you live in a state where one party has a controlling grip over the government. In 37 states (75 percent!) both legislative and executive power is held solely by one party. In 14 of these the party controlling the legislature also holds a supermajority in both chambers, effectively eliminating the need for compromise across party lines on many issues. While such hyper-partisanship can be overwhelmingly negative for both policy makers and citizens, states red and blue have nevertheless been able to come to similar consensuses on certain energy efficiency requirements, aimed at both saving the state money and increasing the standards of state-owned buildings. Indeed, NCSL has estimated that every dollar spent on energy efficiency can save two in the long run – quite an impressive investment, and one hard for policymakers to overlook in an age where consistent belt tightening has become the norm.

To date, 47 states plus the District of Columbia have adopted varying levels of energy efficiency requirements for public buildings, the holdouts being Alaska, Nebraska and Wyoming. According to the U.S. Department of Energy, Alaska has the highest per capita energy cost in the country, with Wyoming a close second and Nebraska rounding out the list at 16. Similar rankings, such as one by the American Council for an Energy-Efficient Economy, rank these states at or near the bottom. A typical state spends about half of what Alaska or Wyoming does annually per-person on energy.

The most common of these, the U.S. Green Building Council’s Leadership in Energy and Environmental Design, or LEED, has been required in 16 states with similar legislation that would require the standard or alternatives pending in several other states. This system requires buildings to meet certain energy efficiency standards in order to receive certification from the Green Building Council as energy efficient. LEED estimates that buildings held to this standard can see from 30 to 60 percent energy reductions and savings.

If national trends continue as expected – going green has proven itself as a way for states to both make and save money – energy efficiency movements are likely to continue flourishing. While building standards are a small yet crucial piece of this puzzle, states are likely to continue to make efforts on similar fronts, including energy efficient vehicles, appliances and greener alternatives to power generation that every American relies on.

Virginia Special Session on March 24, 2014

Virginia Governor Terry McAuliffe (D) has called a special session of the General Assembly. During the session, which convenes March 24, 2014, the General Assembly will work to resolve the outstanding state budget. After a protracted standoff on whether to expand Medicare coverage, the legislature failed to pass a budget during the recently concluded regular 2014 session. Governor McAuliffe has stated that this break in negotiations will give lawmakers the opportunity to hear from their constituents on the matter and find common ground in order to pass the crucial two-year, $96 million budget.

For a copy of the letter from the Governor to the General Assembly please click here.

Attorneys General Join Legislators in Pushing Patent Trolls Back Under Bridges

Vermont’s Democratic Attorney General Bill Sorrell recently came out swinging in a lawsuit against one of the biggest so called ‘patent trolls,’ or entities that exist for the purpose of licensing patents in order to sue companies for alleged infringement of those patents. Known as non-practicing entities (NPEs), or patent assertion entities (PAEs), these organizations have been operating in the shadows over the past decade, gradually ramping up their activities to a point where lawmakers are starting to take notice. These entities typically operate by sending vaguely worded letters to companies demanding payment in the form of licensing fees with an unreasonably short payment deadline – sometimes two weeks or less. The cost of dealing with these legal threats can be costly for many companies, who would rather settle than take the matter to court, where potential legal fees far exceed the cost demanded by the trolls. Through a combined effort by Sorrel and state legislators, Vermont was able to pass the first patent troll law making bad-faith assertions of patent infringement illegal, thereby allowing the Attorney General to prosecute patent trolling offenders.

Vermont is not the only state that has moved to end or curb the potential economic damage caused by patent trolling organizations, as Sorrel’s work has emboldened other states, and the U.S. Congress to act on the matter. Among the states taking action:

  • Kentucky SB 116 passed the Senate on February 25 and is pending in the House Judiciary Committee. The bill would make bad-faith assertion of patent infringement a violation of the state’s consumer protection law.
  • Maine LD 1660 is currently pending in the Joint Judiciary Committee. It would allow victims of patent trolls to bring forth civil suit in order to recoup losses caused by bad faith assertions of patent infringement.
  • In Minnesota, the state’s Attorney General has issued a ‘stay-away’ order to the largest and most egregious patent troll, MPHJ Technology Investments, LLC.
  • Nebraska’s Attorney General has warned patent trolls operating in the state, and legislation that would prohibit them, LB 677, is pending in the House Judiciary Committee.
  • New Jersey AB 2462 would prohibit making bad faith assertions of patent infringement. The bill is pending in the Assembly Commerce and Economic Development Committee.
  • New York’s Attorney General reached a deal with MPHJ to create new guidelines to assure patent claims to not use improper tactics.
  • Oregon SB 1540 was signed by Democratic Gov. John Kitzhaber on March 3 and took effect immediately. This new law prohibits bad faith claims of patent infringement.
  • South Carolina also has a bill pending in the House Judiciary Committee, HB 4629, which would make it an unlawful trade practice to make a bad faith assertion of patent infringement.

The largely bipartisan movement to regulate patent trolls is unlikely to lose steam in the near future as the number of lawsuits filed by patent trolls has increased nearly six-fold since 2004 to a peak of 4,600 in 2012. Under existing federal law, companies that are targeted by patent trolls may only recover litigation fees if a suit is deemed to be objectively baseless and filed in bad faith. Federal judges up to this point have been reluctant to do so, leaving companies and small businesses on the hook for their own legal expenses caused by these frivolous lawsuits.

As such, a federal resolution is likely. The U.S Supreme Court took up the issue in February. Federal legislation, HR 3309, sponsored by Rep. Bob Goodlatte, R-Virginia, is scheduled for a March 12 hearing in the Senate Judiciary Committee. The bill previously passed the House in December with a vote of 325-21. The two Supreme Court cases, expected to be ruled on in early July, include Octane Fitness, LLC v. Icon Health & Fitness, Inc. andHighmark Inc. v. Allcare Health Management Systems, Inc.