Legal News for 4/30 - Clark Disbarment, Climate Data Disclosures, Clean Energy Permitting, Trump Trial, Binance Sentencing and Vice Taxation

Minimum Competence

This Day in Legal History: Organization of American States Established

On this day, April 30, in 1948, a significant event in the realm of international law and diplomacy occurred with the establishment of the Organization of American States (OAS). This was formalized through the signing of the Charter of the Organization of American States during the Ninth International Conference of American States held in Bogotá, Colombia. The creation of the OAS marked a pivotal moment in regional cooperation, emphasizing the importance of legal and political solidarity among its member states.

The Charter, serving as the foundational legal document of the OAS, laid down the principles of peace and justice, promoting the solidarity and collaboration among the member countries. The OAS was established primarily to foster mutual assistance and defend the sovereignty, territorial integrity, and independence of the states within the Americas.

The organization's core objectives included strengthening peace and security, promoting the effective exercise of representative democracy, ensuring the peaceful settlement of disputes among members, and facilitating economic, social, and cultural development. Over the years, the OAS has played a crucial role in various diplomatic and political crises in the Western Hemisphere, acting as a forum for multilateral negotiations and conflict resolution.

The establishment of the OAS also symbolized a collective effort to prevent foreign interference in the Americas, which was a growing concern during the post-World War II era, particularly with the onset of the Cold War. The OAS's commitment to democracy and human rights has been tested through various crises, but it continues to serve as a prominent regional entity in promoting democratic values and facilitating cooperation among its member states.

Today, the OAS includes all 35 independent states of the Americas and continues to influence the legal and political landscape of the region. Its ongoing initiatives and missions focus on critical areas such as the promotion of human rights, fostering educational and cultural exchange, and addressing contemporary challenges like drug trafficking, political instability, and the protection of the environment. The establishment of the OAS remains a landmark in the history of international relations in the Western Hemisphere, reflecting a lasting commitment to regional solidarity and cooperative governance.

Jeffrey Clark, a former Trump administration official and US assistant attorney general, is facing the possibility of disbarment as the only sanction deemed appropriate by DC Bar officials. In late 2020, Clark attempted to influence Justice Department superiors to send a letter to Georgia officials, improperly questioning the election results. This act was characterized by DC Bar lawyers as a dishonest attempt to create national chaos just before January 6. The situation escalated after a three-person panel preliminarily found that Clark violated at least one ethics rule, which could potentially affect his future career prospects, particularly in a potential second Trump administration.

Clark's legal representatives, Harry MacDougald and Charles Burnham, have not yet responded to requests for comments on the matter. Meanwhile, Clark has claimed in court filings that the disciplinary proceedings are being used politically against Trump's allies, arguing through his lawyer that the case is politically charged.

The three-person panel involved in the case sought advice from DC Disciplinary Counsel Phil Fox on possible lesser sanctions if disbarment were not pursued. However, Fox, alongside two other attorneys, argued that suggesting a sanction other than disbarment would be inconsistent with their professional duty. They emphasized that lawyers who betray their country by violating professional conduct rules should face disbarment. The final stages of the disciplinary process will involve a recommendation by the panel, followed by reviews by the Board on Professional Responsibility and the DC Court of Appeals.

The ethical violation considered here is Clark's attempt to misuse his position to influence electoral outcomes, a severe breach of the Rules of Professional Conduct, which mandates adherence to lawful and ethical standards by practicing lawyers. This emphasizes the critical nature of legal integrity and the repercussions of its breach.

Jeffrey Clark Disbarment Is Only Possible Sanction, DC Bar Says

A new study by global consulting firm Workiva reveals that a significant majority of companies, nearly 90%, plan to voluntarily disclose extensive data on their carbon footprint, surpassing the mandated requirements. In the U.S., 86% of surveyed companies expressed intentions to adhere, wholly or partially, to Europe’s Corporate Sustainability Reporting Directive, despite not being obligated to do so. This directive requires companies with subsidiaries in the EU to report on their impact on local communities and fair labor practices, with enforcement potentially starting by 2026.

Meanwhile, the U.S. Securities and Exchange Commission's efforts to mandate climate impact disclosures have been delayed due to ongoing litigation, even as their proposed rules on greenhouse gas emissions reporting are perceived as less stringent.

The motivation for these voluntary disclosures, as explained by Andie Wood, vice president for regulatory strategy at Workiva, stems from substantial investor demand and competitive pressures. Companies are committed to providing robust and comparable data, recognizing the strategic value in transparency.

The survey involved environmental, social, and governance (ESG) practitioners from 2,204 companies globally, including 660 U.S.-based firms, all having at least 250 employees and a minimum of $250 million in annual revenue. Although these companies are confident in the accuracy of the data they volunteer, they anticipate challenges in meeting the more stringent EU reporting requirements. About 83% of respondents see accurately collecting data to comply with EU standards as a challenge, highlighting the complexity involved in fulfilling these regulatory expectations. This reflects a broader understanding among businesses that while they are confident in their current disclosures, there is room for improvement in efficiency and compliance with international standards.

Most Companies Plan to Voluntarily Disclose Climate Rules Data

On Tuesday, the Biden administration announced the implementation of its second set of changes to the U.S. environmental permitting rules, aiming to accelerate the development of renewable energy infrastructure and other projects. These modifications are designed to balance the rapid construction of clean energy projects with the preservation of established environmental safeguards.

The new rule introduces the concept of "categorical exclusions," which allows federal agencies to use previous decisions by other agencies for projects that are not expected to significantly impact the environment, thus bypassing more exhaustive reviews under the National Environmental Policy Act (NEPA). It also promotes programmatic environmental reviews for broad actions, aiming to reduce the level of scrutiny for projects that either mitigate their environmental impact or provide clear environmental benefits.

Additionally, the rule mandates that agencies must consider climate change impacts during environmental reviews and explore reasonable alternatives to minimize these effects. It also states that projects with long-term positive environmental outcomes may not require environmental impact statements (EIS).

This rule covers a broad spectrum of construction activities, including renewable energy projects and infrastructure like roads and bridges, which are supported by recent infrastructure and climate legislation. The White House Council on Environmental Quality (CEQ) has worked to expedite the permitting process, with the White House reporting a 14% increase in the federal permitting workforce and faster completion of EIS processes under this administration.

The rule is expected to attract more private investment in sectors such as advanced manufacturing and clean energy. Natalie Quillian, White House Deputy Chief of Staff, and Lael Brainard, the national economic adviser, highlighted the importance of providing businesses with the certainty needed to invest confidently and navigate the federal permitting process efficiently.

However, the rule has faced criticism from business groups who argue that it could favor certain projects, complicate agency analyses, increase litigation risks, and expand the scope of projects requiring NEPA review, potentially conflicting with the debt ceiling law. Despite these concerns, CEQ Chair Brenda Mallory expressed confidence in the new system's durability and effectiveness.

Biden Issues Permitting Changes to Speed Clean Energy Build Out

Donald Trump's criminal trial in New York, concerning charges of falsifying business records, is set to continue with testimony from a banker knowledgeable about the accounts involved in the alleged hush money scheme. This scheme was purportedly designed to influence the 2016 election by concealing a sex scandal. The trial, which marks the first criminal trial of a former U.S. president, began on April 22.

Trump, who is also the Republican candidate in the 2024 presidential election, faces accusations related to a $130,000 payment made to porn star Stormy Daniels, real name Stephanie Clifford, to prevent her from discussing a claimed sexual encounter with Trump in 2006. Trump has denied the encounter and pleaded not guilty.

The trial has heard from various figures, including former National Enquirer publisher David Pecker, who testified about using his publication to suppress negative stories about Trump during the 2016 campaign. Stormy Daniels and former Playboy model Karen McDougal, who also claims to have been paid for her silence about an alleged affair with Trump, are expected to testify.

Michael Cohen, Trump's former lawyer, is set to testify that he arranged and disguised the payments to Daniels and McDougal under Trump's direction, claims that Trump has denied. This case is one of several legal battles Trump is facing, with others concerning his efforts to overturn the 2020 election results and his handling of classified documents. Trump has labeled all these cases as politically motivated witch hunts.

Trump NYC hush money trial to resume with banker's testimony | Reuters

Changpeng Zhao, the former CEO of Binance, the world's largest cryptocurrency exchange, pleaded guilty to violating U.S. money laundering laws and is awaiting sentencing. The U.S. prosecutors have recommended a sentence that is twice the 18-month maximum suggested by federal guidelines, emphasizing the need for a stern penalty to serve as a deterrent in the cryptocurrency industry. Zhao has accepted responsibility and paid a $50 million criminal fine. His defense argues for probation, noting his cooperation and lack of prior criminal history.

Zhao's sentencing is part of broader legal actions against cryptocurrency executives following the industry's downturn in 2022, which revealed widespread fraud and misconduct. Binance, under Zhao's leadership, admitted to evading anti-money laundering measures and agreed to a substantial $4.32 billion criminal penalty. The exchange has been criticized for a lax approach that allegedly facilitated transactions involving criminal and terrorist groups, as well as other illegal activities. Zhao, who has stepped down from his role and is on a $175 million bond, has agreed not to appeal any sentence within the recommended guidelines.

Binance's CEO Zhao faces sentencing over money laundering violations | Reuters

In my column today, I discuss the increasing reliance of states on vice industries—like marijuana and online sports betting—for tax revenue. This approach seems attractive, especially as it promises substantial inflows that help offset persistent revenue shortfalls, a situation exacerbated by the Covid-19 pandemic. For instance, California alone generated over $160 million from cannabis taxes in just one quarter of 2023.

However, it's crucial to understand that these funds aren't "free money." They come with societal debts due to the decades of criminalization of these now-legal activities. Moreover, they bring potential future costs, such as increased health-related expenditures from addiction and mental health issues stemming from these industries.

While the immediate fiscal benefits are undeniable, allowing states to bolster their budgets without divisive tax hikes, the long-term sustainability and ethical implications need careful consideration. Market saturation and the ineffectiveness of regional exclusivity are real risks as more states legalize these activities. It's no longer necessary to cross state lines for gambling, reducing the unique economic benefits previously offered by state-specific legalization.

The revenue generated should not merely fill gaps caused by other tax policy failures but should specifically address the harms inflicted by these industries. Funds should be allocated to education, job training, and community development in areas most affected by past criminalization. Additionally, a portion should be earmarked for public health initiatives focusing on addiction treatment and mental health services.

It is imperative that the utilization of vice tax revenues is approached not just as an economic opportunity but as a means to rectify historical injustices and promote social equity. This requires a strategic shift in policy, prioritizing long-term social benefits over short-term fiscal gains. Effective redistribution of these funds is essential to ensure that the communities historically disadvantaged by these policies see real improvements.

Vice Taxation Isn’t ‘Free Money’ and Should Focus on Public Good

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