Legal News for Tues 8/6 - DOE $2.2b Investment in Grid, Justice Thomas More Undisclosed Flights, Google is a Monopoly and Column on Sales Tax Compliance

Minimum Competence

This Day in Legal History: Voting Rights Act

On August 6, 1965, President Lyndon B. Johnson signed the Voting Rights Act into law, marking a pivotal moment in U.S. legal history. This landmark legislation aimed to eradicate racial discrimination in voting, targeting practices like literacy tests and poll taxes that had disenfranchised African Americans, especially in the South. The Act introduced federal oversight in jurisdictions with a history of discriminatory voting practices, requiring them to obtain federal approval, or "preclearance," before changing voting laws. This measure was crucial in preventing new discriminatory practices from emerging.

The Voting Rights Act was a major victory for the Civil Rights Movement, leading to a significant increase in voter registration and participation among African Americans. Its effectiveness and impact on civil rights have made it one of the most important pieces of legislation in American history. However, the Act faced challenges over the years, most notably in 2013, when the Supreme Court's decision in Shelby County v. Holder invalidated the preclearance coverage formula, weakening its enforcement. Despite these changes, the Voting Rights Act of 1965 remains a cornerstone of efforts to ensure equal voting rights in the United States.

The Department of Energy is set to announce a $2.2 billion investment to enhance the electrical grid across 18 states. This funding, part of the Grid Resilience and Innovation Partnerships (GRIP) program from the 2021 infrastructure law, will support eight projects aimed at increasing transmission, storage, and distribution capacities to meet rising electricity demand and mitigate risks from extreme weather. These projects will add nearly 13 gigawatts of grid capacity, equivalent to the power of 6.5 Hoover Dams.

The investments include constructing 625 miles of new transmission lines in New York, North Dakota, and Montana, and upgrading 400 miles of existing power lines elsewhere. The new transmission lines will enhance the reliability of the Eastern and Western grids and promote wind power development by the Standing Rock Sioux Tribe. Additionally, four Native American tribes in California will use the funding to develop microgrids, improving power reliability in outage-prone areas.

In North Carolina, Duke Energy and the state’s Department of Environmental Quality will reconstruct an existing power line to bolster the grid in the eastern region. Virginia’s Department of Energy will receive funding to address the grid strain from data centers. More GRIP projects will be announced later this year, building on previous investments that have already added significant capacity and transmission lines to the grid.

Energy Department Gives $2B to Boost Power Grid Across 18 States\

Justice Clarence Thomas reportedly took additional undisclosed flights on billionaire Republican donor Harlan Crow’s private jet, according to new records obtained by the Senate Finance Committee. Committee Chair Sen. Ron Wyden (D-Ore.) received documents from the US Customs and Border Protection showing that Thomas and his wife, Ginni, traveled from Hawaii to New Zealand and back on Crow’s jet in November 2010. Wyden is seeking more information from Crow’s attorney to understand the extent of Crow’s undisclosed gifts to Thomas, which could inform potential legislation regarding federal financial disclosure laws, gift tax returns, and audit requirements for Supreme Court justices.

Wyden's letter follows calls for Supreme Court reform, particularly since former President Trump's appointments solidified a conservative majority. President Biden has supported 18-year term limits for justices and an enforceable ethics code. Recent ProPublica reporting revealed that Thomas accepted lavish vacations and private jet travel from Crow without disclosure. Although Thomas updated his financial disclosures in June, he only reported an eight-day trip to Indonesia on Crow’s yacht.

Wyden's investigation includes examining whether Crow evaded taxes by claiming business deductions for personal trips taken with Thomas. Crow's spokesperson dismissed Wyden's request, asserting that previous inquiries had been addressed and were intended to harass. The Finance Committee, however, has the authority to obtain Crow’s taxpayer records, though Wyden prefers voluntary compliance. The Supreme Court has yet to comment on the matter.

Thomas Took More Undisclosed Flights, Senate Panel Says (1)

On August 5, a U.S. judge ruled that Google violated antitrust laws by spending billions to create an illegal monopoly and establish itself as the world's default search engine – paying for the privilege with companies like Apple, and its Safari web browser, and Mozilla, with Firefox. This decision marks a significant win for federal authorities challenging Big Tech's market dominance. The ruling sets the stage for a second trial to determine possible remedies, which might include breaking up Google’s parent company, Alphabet.

U.S. District Judge Amit Mehta declared Google a monopolist, noting its control of 90% of the online search market and 95% on smartphones. The process for implementing remedies could be prolonged, potentially extending into 2026 due to appeals. Alphabet's shares dropped 4.5% following the announcement.

The ruling follows allegations that Google paid $26.3 billion in 2021 to maintain its search engine as the default on smartphones and browsers. U.S. Attorney General Merrick Garland praised the decision as a historic win, emphasizing that no company is above the law. The White House also hailed the pro-competition ruling as a victory for Americans.

This case, initiated during the Trump administration, is the first major decision among several antitrust cases against Big Tech. It underscores bipartisan support for antitrust enforcement, as highlighted by Senator Amy Klobuchar. Other companies facing similar lawsuits include Meta, Amazon, and Apple.

The Google case is the first major antitrust action since Microsoft’s settlement in 2004 over its Internet Explorer monopoly. The drawn-out legal process may delay any immediate impact on consumers, but it signals a robust stance against monopolistic practices in the tech industry.

Google has an illegal monopoly on search, US judge finds | Reuters

Google illegally maintains monopoly over internet search, judge rules | AP News

In my column this week, I speak a bit about how state tax authorities could better serve small businesses.

A proposal before the Multistate Tax Commission (MTC) aims to revolutionize sales tax compliance through voluntary audits for complex retail establishments with substantial annual receipts. The Sales Tax Compliance Assurance Review program seeks to foster a cooperative relationship between tax authorities and businesses, emphasizing education and support over punishment. To maximize its effectiveness, states should be encouraged to opt in via information-sharing agreements and by showcasing success stories.

The program’s prospective approach involves real-time reviews and resolutions for compliance issues, rather than retrospective audits. This allows businesses to identify and resolve issues early. Retailers with complex tax situations can apply for the program, starting with pre-audit conferences to introduce their recordkeeping systems to tax authorities. State tax administrations would benefit from enhanced compliance and useful data for future audits, while businesses could have their practices reviewed outside of formal audits.

However, the program's success hinges on broader state participation. Currently, only 26 states are MTC members, excluding major states like Pennsylvania, New York, and California. More states must join to create uniform sales tax policies nationwide. Demonstrating the program's benefits in participating states could encourage others to join.

Additionally, a certification process for point-of-sale (POS) systems should be integrated into the program. This would involve developing criteria for POS systems' compliance with sales tax laws, allowing developers to apply for certification. Certified systems would provide retailers with assurance of good-faith compliance, reducing the likelihood of audits based on software use alone.

This expansion would enhance the MTC’s program, aligning with its goals by offering additional compliance support for retailers. If the MTC implements these enhancements, it could pave the way for real-time tax remittance and a fully digitalized sales tax system.

Voluntary Audit Proposal Needs More State Buy-Ins to Work Best

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