Good Things Come to Those Who Wait?

by Bruce Goodman, Energy Lawyer

In May 2011, in front of 40 of Michigan’s top leaders in clean energy manufacturing, Governor Snyder presented the first Reinventing Michigan Award to Energetx Composites. Having waited impatiently for four months, this group of entrepreneurs (ready to unleash their economic gardening skills, resources, and innovation) asked the Governor for his energy policy. Answer: his energy policy would be forthcoming “in the fall”. In August, when Valerie Brader was named the state’s energy policy officer, Mike Finney stated “Energy concerns are at the center of our economic future, whether we are talking about its cost and availability or job creation and new business potential in green energy manufacturing.”  Then word went out that the Governor’s energy policy statement would be pushed to the first quarter of 2012. More waiting for those concerned about: RPS, standby rates, distributed energy, bioenergy, offshore wind, deregulation, customer choice, coal-fired generation, solar manufacturing, and advanced energy storage. The State of the State message last week yielded another setback: energy policy is being pushed off until “this fall”. Michigan has been treading water on energy policy for over a year. We are in a policy twilight zone. Elected officials need to hear from the clean energy manufacturing community now. Policy delayed is policy denied.

More plat-created headaches for waterfront property owners

by Eric Guerin, Riparian Rights Attorney

On December 20, 2011 the Michigan Court of Appeals issued its third decision in Ward v Barron Precision Instruments, involving the Warwick Farms plat in Genesee County.  The plat consisted of six “first- tier” lots adjacent to Warwick Lake and five back-lots.  A copy of the plat map can be viewed here.

Plaintiffs owned the first tier-lots and defendants owned all of the land that was part of the original parcel that was not platted.

The first-tier lots were separated from the lake by an irregular strip of land.  A notation on the plat map indicated that the strip of the land between the first-tier lots and Warwick Lake “is reserved for the private use of the proprietors.”  The trial court originally held that, notwithstanding that private reservation, the first tier lots extended to the water’s edge, providing the first-tier owners with riparian rights.  The court of appeals reversed that decision in 2006, holding that the reserved strip of land was owned by defendants, subject to an easement in favor of the plaintiffs.  The case was remanded to the trial court for determinations regarding the use and maintenance of the easement  and a subsequent appeal, remand and a third appeal followed.

Because Ward III is an unpublished decision, it is not binding precedent.  It does, however, teach or remind us of important lessons:

1.  Do not overlook the significance of a small strip of land between your lot, or a lot you are considering purchasing, and the water’s edge.  In many plats of waterfront property, the individual lot lines do not extend to the water’s edge.  Because the value and appeal of those properties is often dependent upon the ability to erect a dock, moor boats and otherwise exercise riparian rights, seek the advice of counsel experienced in riparian rights matters.

2.   Litigation is expensive and time consuming.  The Ward lawsuit was originally filed in 2003 and many issues appear to still be unresolved, even after three trips to the court of appeals.

3.  Evidence regarding the historical and traditional use of a disputed area in a plat, to help determine the plat proprietor’s intent regarding usage, should be limited to evidence of usage at or very near to creation of the plat.  Many plats of waterfront areas were prepared in the early part of the last century, making such evidence unavailable.  Though the plat in Ward was recorded in 1964, Ward reminds us that recent evidence of use, often proferred by back-lot owners, may not be relevant.

Cell Tower Emissions (or Radiation)

by John Pestle, Cell Tower Attorney

A heated topic which sometimes comes up in cell tower leasing and zoning is the safety of the emissions (some call it radiation) from cell towers. 

First the law.  The Federal cell tower zoning law expressly prevents zoning approvals from being based on a cell tower’s “radio frequency emissions” to the extent the tower complies with FCC emission regulations.  This preemption provision is not unique – the same principle applies generally to radio, TV and other radio transmitters.  This is because the FCC claims exclusive jurisdiction over radio frequency emissions.  It has set safety rules for such emissions that apply to all radio transmitters.  As a result it and the courts have preempted state and local governments which have tried to regulate various types of towers based on their radio frequency emissions.

Second, given the law, what can a zoning authority do?  It can require a cell phone company to run tests to show that the installation complies with the FCC’s rules.  It can take action if these rules are violated.  And it should look to other grounds to legitimately deny or condition zoning approval.

But in general it should not allow testimony about the adverse effects of RF radiation.  I’ll get into that, related practical advice and RF radiation in the leasing context in my next post.

Avoiding an Uncapping of Property Taxes: Klooster v. City of Charlevoix

by Chris Caldwell, Cottage Law Attorney and
Laura Radle, Cottage Law Attorney

A common concern among Michigan homeowners is the dreaded “uncapping” of real estate taxes.  But the rules in this regard are somewhat confusing.  In general, for as long as someone owns a parcel of real estate, the “taxable” value of that property remains “capped” and increases only incrementally from year to year.  However, when property is conveyed to another party, a “transfer of ownership” usually occurs and the property taxes are uncapped.  Specifically, the transfer of property to children upon the death of the cottage owner is an uncapping event.  In some cases, the uncapping can raise the property taxes so dramatically that the children cannot afford the property, effectively defeating a client’s attempt to keep the cottage in the family.

However, Michigan law currently contains several exceptions to the “transfer of ownership” rule.  Most importantly for cottage planning purposes, a transfer of the property that creates or terminates a joint tenancy, if certain other conditions are met, will not uncap the cottage.  The joint tenancy exception has two requirements:

1. First, at least one of the joint tenants must have been an original owner – that is, that person must have owned the property before the joint tenancy was created and at the time the property was last uncapped. 
2. In addition, at least one person involved in the transfer must have been a joint tenant for the entire time that the joint tenancy was in existence. 

The joint tenancy exception was recently confirmed by the Michigan Supreme Court in Klooster v. City of Charlevoix.  In that case, Mr. Klooster’s father was the “original owner” of a parcel of real estate and later created a joint tenancy with Mr. Klooster by adding him to the title of the property.  When Mr. Klooster’s father died, the entire property passed to Mr. Klooster by operation of the joint tenancy.  The court held that Mr. Klooster’s father was an “original owner” and that his death, which terminated the joint tenancy, did not uncap the property taxes for the cottage.  Because Mr. Klooster was not an original owner himself, however, his subsequent creation of a joint tenancy with his brother resulted in an uncapping.

So what does this case mean for cottage owners?  In Klooster, the Supreme Court concluded that “original owners” of property may use certain joint tenancies as a means for transferring property without uncapping property taxes.  However, people must be careful, because, as Klooster demonstrates, not every joint tenancy will allow parties to avoid uncapping.  There is also the possibility that the legislature could change the law to avoid this result.  For the time being, this approach can be an important part of a successful cottage planning strategy to keep your family cottage in the family.  Yet, joint tenancy alone is not the silver bullet.  It won’t solve the other problems related to cottage ownership such as who gets to spend which prime summer weeks at the lake and how the cost of the new roof will be divided among the owners.  In many cases, the concerns regarding the future management of the cottage will outweigh any tax concerns.  Therefore, while Klooster provides an interesting planning tool, one must consider various other options when planning for the family cottage.

Image credit: Dave Sizer

Michigan Initiates 2011 Ballast Water Reporting Program

By Tim Lundgren, Water Law Attorney

The DEQ’s Office of the Great Lakes announced that it has initiated the 2011 Ballast Water Reporting Program, authorized by Section 3103a (MCL 324.3103a) of the Natural Resources and Environmental Protection Act, which was added in 2001. The program requires the DEQ to determine the following:

• whether ballast water management practices provided by the Shipping Federation of Canada are being complied with by all oceangoing vessels operating on the Great Lakes and the St. Lawrence waterway; and,
• whether ballast water management practices provided by the Lake Carriers’ Association and the Canadian Shipowners Association are being complied with by all non-oceangoing vessels operating on theGreat Lakes and the St. Lawrence waterway.

Any owner or operator not identified on the list of complying vessels, or any persons in the state who have contracts for the transportation of cargo with a vessel operator that is not on the list, are not eligible for new grants, loans or awards administered by the DEQ after March 1, 2012.

Ballast Water reporting forms may be submitted electronically. Details of the Ballast Water Reporting Program are available online.

Saginaw Bay Area Contemplates Establishing a Port Authority

By Tim Lundgren, Water Law Attorney

Community leaders in the Saginaw Bay area are contemplating establishing a Port Authority that would manage air, rail, and commercial shipping in the area and serve as a stimulus for local economic development. The only official Port Authority in the state is the Detroit/Wayne County Port Authority. The Port of Detroit is an international deep-water port that operates one of the largest Foreign Trade Zones in the country. It is hoped that the Port Authority structure could facilitate building similar economic development engines elsewhere in the state. A Port Authority could coordinate multiple modes of transportation, improving the efficiency and cost-effectiveness of moving commercial traffic through the region.

New Bio-economy Research Center at MSU

by Bruce Goodman, Energy Lawyer 

With an initial goal of developing cost effective, off-the-shelf anaerobic digestion technology for small and medium-sized farms, Michigan State University has established its Anaerobic Digester Research and Education Center. The Center brings together resources that were spread across four laboratories on the East Lansing campus. There are already 150 manure digesters at large dairy farms across the nation, with the potential for 8,000 more according to EPA estimates. If all sites implemented biogas systems, they could generate 1,500 MW of renewable energy. Michigan has 6,000 small to medium dairy farms that are being targeted under the MSU effort.

“Pascalization” Provides a New Alternative for Food Preservation

By Matt Eugster, Food Law Attorney

Pascalatization, also known as high-pressure processing (HPP), is a procedure for subjecting food to extreme water pressure (typically 40,000 to 80,000 PS) inside pressure chambers.  The extreme pressures used in the Pascalization process kills dangerous bacteria, molds and viruses without crushing or destroying the food.  Because no heat or chemical use is required, food can be preserved without cooking or altering the texture or flavor of foods.  With increasing “pressure” (pun intended) on the food industry to comply with increasing food safety standards and reduce chemical use, pascalization may provide a viable alternative for preserving foods.  The food processing industry has begun to take notice, and use of this technology is expected to increase.

Personal Liability Under FSMA?

By Steve Kluting, Food Law Attorney

A week ago, I walked into lunch at the Michigan Agri-Business Association annual conference and was delighted to see a room full of folks; I was even more delighted to hear several of the lunch speakers (including Senator Debbie Stabenow) talking about how “times are good right now” for our food and agriculture industries.  That’s a new tone for Michigan business, and a welcome relief. 

After lunch, we broke out into workshops.  I was one of four speakers at the Food Safety workshop speaking on the topic: “Food Safety Requirements: What the Law Says”.  My presentation focused, as you might expect, on the new requirements set forth in the Food Safety Modernization Act.  An interesting question was raised during my speech (I didn’t have an immediate answer to it): Is there any personal liability under FSMA to the individual (owner, operator, person in responsible charge) who signs the plan/report verifying that a food safety program is in place and that it’s adequate and effective.  Is the signor at risk of personal liability?  Does anyone have any insight or thoughts on this topic?  I’m going to look into it, particularly given how all of us tend to prioritize personal liability issues to the top.  I’ll keep you posted on what I uncover.

Trade Secrets – Protecting Your Confidential Information

by Harvey Koning, Business and Corporate Services Law Attorney

Some of the most valuable intellectual property in the world is not protected by a patent or trademark.  A famous example is the formula for Coca-Cola – it is protected as a trade secret.  A more recently created trade secret is the algorithm Google uses to rank websites.   Google protects it by keeping it secret.   But trade secrets are not limited to blockbuster inventions by huge companies – almost every business has trade secrets worth protecting.  What if your biggest competitor hired away one of your key employees?  What confidential information would you not want this person to take?   This article describes how to identify and protect your valuable trade secrets.

What is a “trade secret”?

“Trade secrets” can include customer lists, databases, pricing information, cost and profit margin information, computer programs, the content of contracts and much other valuable information.  Basically, anything that gives you a competitive advantage over your competition can be a trade secret.   A trade secret is something not generally known or easily discoverable by people outside your business.

If your information has “trade secret” status, then you can take legal action to prevent someone (such as a former employee) using the misappropriated information and, in some circumstances, you can seek a monetary recovery from someone who has misused your trade secrets.  Trade secrets offer important advantages.  They do not require any patent or trademark filings, fees or government approvals.   Trade secret protection does not expire after a fixed amount of time. 

 How do you obtain trade secret protection?

To get trade secret protection, you must make a reasonable effort to protect your confidential information.  A good place to start is by thinking about and listing what information you have that is not known to the public or easily discoverable that you would like to protect.  After you have identified your confidential  information, here are some of the steps you can take:  

• label the information “confidential” or “proprietary”
• have employees sign a confidentiality agreement
• limit access to those who need to know
• keep the information in a secure location
• remind departing employees of their obligation not to disclose confidential information

The particulars of your situation help determine the appropriate steps to take.  A good place to start is a company policy about protecting confidential information.

Making an effort to protect your confidential information is a wise investment in preventing your important information from falling into the wrong hands (anyone other than you!).