Buying a Business? Make Sure Your Written Agreement Protects You from Future Competition! By: Tim Odil

Clean Water Act Rule: Review of the Clean Water Act Jurisdictional Rule Considerations for Moving Forward by: John Kolanz

John recently had an extensive article published in The Water Report (see link below).  He also spoke at CSU on June 13th on the Waters of the United States rulemaking at the 2017 Universities Council on Water Resources/National Institutes for Water Resources Annual Conference.  Way to go John!

Clean Water Act Rule: Review of the Clean Water Act Jurisdictional Rule Considerations for Moving Forward by: John Kolanz

 

Kolanz, John A. “Clean Water Act Rule: Review of the Clean Water Act Jurisdictional Rule Considerations for Moving Forward .” The Water Report 160 (2017): 1-31. Www.NEBC.com. Web. 15 June 2017.

Utah Rodent in Middle of Ideological Tug-Of-War by: John A. Kolanz

 

Against the backdrop of the Trump Administration’s determined deregulatory efforts, the Tenth Circuit Court of Appeals (which covers Colorado) recently affirmed substantial federal authority to regulate activity on private lands. While the Court delivered its opinion in the context of the Endangered Species Act (“ESA” or “Act”), the case has broader implications for environmental regulation in general.

Congress passed the modern day ESA in 1973, with barely a dissenting vote. The Act’s main goal is to conserve threatened and endangered species along with their supporting ecosystems. The ESA quickly gained a reputation as one of the most powerful environmental laws ever enacted when it stopped a massive and nearly-completed federal water project in its tracks to save a newly-discovered diminutive fish (snail darter) that is unsuitable for rod and reel. (Congress eventually had to pass special legislation to allow completion of that project – the Tellico Dam.)

The Act can likewise affect private actions. Once a species is “listed,” the Act’s keystone provision prohibits the “take” of that species without a permit or other authorization. While “take” includes killing, the prohibition encompasses a much broader range of actions, such as harassing, harming, pursuing, or capturing. It can even include significant habitat modification or degradation.

With respect to some species, this broad prohibition can complicate routine land management activities. Such was the case with the Utah Prairie Dog (“UPD”), a listed species that lives only in Utah, and mostly on non-federal land.

People for the Ethical Treatment of Property Owners (“PETPO”) is a group of over 200 private landowners and other entities who say that regulation of the UPD has prevented them from building homes and starting small businesses. PETPO challenged the authority of the United States government to regulate the take of UPDs on private land.

The United States Constitution delineates Congress’s powers. Those not granted to Congress are reserved to the states or the people. The Constitution’s Commerce Clause authorizes Congress to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Congress relied on this authority to pass the ESA and other environmental laws.

PETPO argued that the Commerce Clause does not authorize Congress to regulate the take on non-federal land of a purely intrastate species that does not itself substantially affect interstate commerce. The Circuit Court, however, declined PETPO’s invitation to evaluate the prohibited activity in isolation, and instead considered its place in the ESA as a whole.

The Court determined that Congress had a rational basis to believe that regulating the take of the UPD is essential to the Act’s broader regulatory scheme. The Court found this broader scheme to substantially affect interstate commerce, and therefore upheld the federal government’s authority to protect the UPD.

To hold otherwise, the Court said, would leave a “gaping hole” in the ESA, since almost 70% of species listed under the Act exist solely within one state. The Court further explained that excising a specific activity governed within a larger statutory scheme would subject Congress’s Commerce Clause authority to “death by 1000 cuts.” This would call into question the validity of the ESA itself, as well as other environmental laws.

The result in this case was not really surprising. Every other Federal Circuit Court that has considered the issue has upheld the federal government’s authority to protect purely intrastate species under the Act.

That is not to say that the UPD should rest comfortably in its burrow. The stringency of the Act itself has long generated calls for legislative relief. Today’s political climate may make such efforts more likely.

Perhaps more importantly, since the mid-1990s the United States Supreme Court has showed renewed interest in reassessing Congress’s Commerce Clause power. Landmark opinions in 1995 and 2000 began to curb a power that some legal scholars had begun to regard as virtually limitless.

The Trump Administration’s deregulatory effort envisions a stronger state role in environmental regulation. This effort will undoubtedly encourage further legal challenges, and one – perhaps the UPD case – will eventually find its way to the Supreme Court. When that happens, the makeup of the Court will play a significant role in the outcome.

The Supreme Court’s conservative justices show a decided preference for stricter limits on Congress’s Commerce Clause power. Depending on the case and the makeup of the Supreme Court at that time, the resulting decision could profoundly and forever change the structure of environmental regulation in this country.

 

John Kolanz is a partner with Otis, Bedingfield and Peters, LLC in Loveland. He focuses on environmental and natural resource matters and can be reached at 970-663-7300 or JKolanz@nocoattorneys.com.

 

A version of this article was recently published in BizWest. Please see the following link:

Dance like no one is watching; email like it may one day be read aloud in a deposition – By: Christian J. Schulte, Esq.

Why Is My Contract So Long?


“The time to repair the roof
is when the sun is shining.”
-John F. Kennedy

 

You entered into a pretty basic commercial deal, and decided to do things properly and get it drawn up by an attorney. You’ve now received a ‘draft’ from the attorney and it’s long. It was a simple deal. Why are there so many terms? Why is it several pages in length? The answer lies in risk-shifting, or preparing for the rain.

Contracts are generally signed in good times, when the sun is shining. The parties typically have high expectations of the success of the agreement and may not consider what happens if and when things don’t go as planned. However, it is important to prepare for the bad times, to formulate terms that consider risks that may arise after the contract is signed. There are many ways a contract can be drafted to guard against the rain – two of the more common ones are representations and warranties and indemnity provisions.

Representations and Warranties

A representation is simply a statement of fact upon which another party is expected to rely, while a warranty is a party’s assurance as to a particular fact coupled with an implied indemnification obligation if that fact is false. Representations and warranties are generally used to allocate risk by (1) apportioning exposure to potential losses and shifting risk from the recipient to the maker; (2) creating a direct claim against the maker if representations and warranties are inaccurate; and (3) serving as a basis for the parties’ indemnification rights.

Indemnification

An indemnification clause is a promise to protect and defend another in the event a particular set of circumstances leads to a loss suffered by another party. Indemnity provisions are the primary vehicle by which parties typically shift or apportion risk in a contract.  Indemnity provisions may include any, or all, of three obligations to (1) indemnify, (2) defend, and (3) hold harmless the other party. A well-drafted indemnification provision allows parties to customize their risk allocation by shifting the burden of loss and compensating an indemnified party for risks it did not assume and expenses that may not be recoverable under common law, like attorneys’ fees.

Having an attorney draft or review your contract before signing is recommended. It is imperative that you understand the potential consequences of the risk-shifting provisions in any contract. By carefully drafting and negotiating a contract before execution, during the good times, you can best protect yourself or your company from the inevitable rain.

Turning Over the Keys to Your Business By: Jeffrey T. Bedingfield

We’ve all heard the saying that there are only two things in life that are certain – death and taxes. The same might be said for your business that you’ve spent a good part of your life building. The difference is that the death of a business can be delayed or avoided all together and that depends upon how well you plan the passing of the business to a partner or the next generation.

Only about 30% of family businesses survive into the second generation and only about 12% into the third generation. For the most part, failures can be traced to one factor, little or no succession planning.

Succession planning, or, should I say, successful succession planning really boils down to creating continuity in management, culture and leadership in the midst of a change in ownership. It isn’t accomplished at an annual retreat or a planning session with an attorney, accountant or financial planner. It is developed and executed over a period of years.

Planning for a transition in the ownership of a family business has its own unique set of difficulties because you add family dynamics to the business dynamics. There are several key components to developing a successful plan that deals with family dynamics separately from the business dynamics. The key components to the development of a successful plan that deal with family dynamics are communication and trust. The key components to the development of a successful plan addressing business dynamics include culture, management and leadership.

The culture of a business is what defines that business internally and externally. It is the value system of the company and it establishes the reputation of the company within itself and the community. It defines the vision and goals of the company. Culture is what attracts and retains employees and customers. We all know that a big part of the reason why people do business with you is because they like you. Whether or not they like you more often than not depends upon culture.

Management of a company is not so much about who owns the company, but who will do the work of the business that makes it successful. The four areas of focus for management include administration and finance, operations and customer fulfillment, sales and marketing. More often than not in a family business, several of those areas are handled by you or another family member. While you may have developed the ability to handle each of those areas as you grew your business, turning over the reins of management of the company you’ve built requires that any person taking over one of those areas has the ability to hit the ground running. Before any business can be transitioned to the next generation, you must train those who will take over your responsibilities. You may be able to fill some areas with family members, but you might have to fill gaps in other positions with outsiders. More than likely, you are the individual who provides the leadership for the company and are the individual to whom everybody looks for direction. Before you can transition out of the business, you will need to find the individual or team who will take on that leadership role and give them the opportunity to position themselves in the eyes of all employees as the source of leadership and direction moving forward.

Assessing the abilities and competencies of employees and family members is a critical, but often awkward, part of succession planning. Not only must you find the right people, you must give them enough time to grow into their positions. Simply reaching a certain point in life and turning to a child and telling them that “it’s now your turn to make it or break it,” is a sure recipe for failure.

Finally, once the culture is clearly established, strong management is trained and in place, and leadership is established, you will have reached the point of being able to successfully “pass the baton” of ownership to the next generation. This is the point at which you complete the plan and set in motion your release of ultimate control to the next generation, whether in stages or all at once. Obviously, some control will be relinquished through developing and empowering management and allowing others to develop in leadership roles, but a change in ownership is really the transitioning of the ultimate control and responsibility for the business. A succession plan is as unique as each business and the owners of that business. There are many different tools available to the professional helping you develop your succession plan. They involve not only the structures for change in ownership, but also for providing incentives to retain key management and leadership and policies to create loyal employees.

The additional and unique nature of family dynamics in a business succession plan are more often than not accomplished through clear communication of the plan and the building of trust that the plan will be followed. Before the next generation can buy into any succession plan, they must first understand what that plan is. In addition, trust that the plan will be followed and executed can only be accomplished by the business owner fulfilling the promises and goals established by such a plan. Successful business succession planning is really most about preparation, common sense, communication and execution. It takes commitment to develop a plan and even greater commitment to follow it.

John Kolanz is a partner with Otis, Bedingfield and Peters, LLC in Loveland. He focuses on environmental matters and can be reached at 970-663-7300 or JKolanz@nocoattorneys.com.

jak