Legal News for Tues 9/17 - Biden Admin Initiative Against HFCs, Cigna Sues FTC, Kroger Merger Continues, Land Value Tax Benefits

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This Day in Legal History: Treaty of Fort Pitt

On September 17, 1778, the newly independent United States and the Lenape (Delaware) Nation signed the Treaty of Fort Pitt, marking the first formal treaty between the U.S. and a Native American tribe. The treaty established a military alliance during the American Revolutionary War, with the Lenape agreeing to assist the U.S. in its fight against the British. In return, the U.S. promised protection and the possibility of creating a 14th state for Native Americans in the future.

Despite its significance as a symbol of diplomacy, the treaty was quickly undermined. U.S. forces often ignored the agreement, and American expansion continued to threaten Lenape lands. The promise of a Native American state was never realized, and tensions between the two sides worsened. This violation of the treaty set a precedent for many future treaties between the U.S. government and Native American tribes, where promises were made but rarely honored. The Treaty of Fort Pitt highlights the complex and often troubled relationship between Native nations and the U.S. government during the early years of American independence.

The Biden administration is launching a new initiative to combat the smuggling of hydrofluorocarbons (HFCs), potent greenhouse gases used in refrigeration, across U.S. borders. The Environmental Protection Agency (EPA), Customs and Border Protection (CBP), and other agencies are collaborating, using new tools like artificial intelligence to identify suspicious shipments. HFC smuggling has surged as the U.S. phases out these chemicals under the 2019 American Innovation and Manufacturing (AIM) Act, which mandates an 85% reduction by 2036. Since fiscal year 2024 began, about 25 illegal shipments have been stopped, but the scale of smuggling remains large.

Smugglers use various methods, such as relabeling containers and falsifying import documents, to sneak HFCs into the country. The black market for these refrigerants mirrors the illicit trade of chlorofluorocarbons (CFCs) in the 1990s after their global ban. Enforcement efforts include developing human intelligence sources, new AI technologies, and enhanced collaboration between government agencies. However, enforcement challenges persist, as it's difficult to catch every shipment and distinguish legal from illegal HFCs once they enter the market.

Biden Fights Smugglers Trafficking Climate-Warming Refrigerants

Cigna Group’s Express Scripts is suing the Federal Trade Commission (FTC) over a July report that it claims unfairly portrays pharmacy benefit managers (PBMs). In its lawsuit, filed in Missouri, Express Scripts calls the report “unfair, biased, erroneous, and defamatory” and demands the agency retract it. This legal action intensifies the ongoing conflict between PBMs and the FTC, which has been investigating the industry for over two years.

The FTC's report accuses PBMs of steering patients to their own pharmacies and charging higher rates. Express Scripts, along with other PBM giants like CVS Health and UnitedHealth Group, disputes these claims, arguing that PBMs help control drug prices and counteract pharmaceutical companies' power. Cigna’s lawsuit also accuses the FTC of ignoring data it submitted, favoring instead what it calls “unsupported innuendo.” The FTC has rejected these accusations and stands by its report, stating that it aims to clarify the complexities of the PBM market. The case is now before the U.S. District Court in Missouri.

Cigna Sues Federal Trade Commission Over ‘Defamatory’ Report

The U.S. antitrust trial over Kroger's $25 billion bid to acquire rival grocer Albertsons is wrapping up, but the legal battles are far from over. Following the Portland trial, where the Federal Trade Commission (FTC) and several states argued that the merger would harm shoppers and unionized grocery workers, two more trials are set to challenge the deal. Washington state's attorney general began a separate trial on Monday, arguing that the merger would raise prices, reduce competition, and allow Kroger to close unionized stores. Later this month, Colorado will bring its own case, focusing on the impact on local farmers and consumers.

Kroger and Albertsons, which have already spent $864 million on merger-related costs this year, argue that the deal would lower prices and allow them to compete better with retail giants like Walmart and Amazon. Despite their assurances that no stores will close due to the merger, critics warn that closures could occur in the future. The ongoing legal challenges could prolong the merger process and add significant costs for the companies.

Kroger-Albertson's US anti-trust trial to end but other legal blocks loom | Reuters

In my column for Bloomberg this week, I explore how land value taxes (LVTs) can address the inequities in the current property tax systems across the U.S.

Property taxes, especially in economically disadvantaged areas, have been scrutinized for burdening low-income homeowners. A land value tax, which taxes only the land's value and not any structures or improvements, could provide a fairer alternative. LVTs can stabilize tax burdens, promote development, and reduce land speculation. This tax system would also allow for income-adjusted progressivity, helping municipalities create more consistent revenue streams while avoiding the boom-and-bust cycles tied to real estate.

In contrast, traditional property taxes—which tax both land and buildings—can disincentivize property improvements, make it cheaper to hold vacant land, and unfairly burden residents in areas with declining commercial property values. This is especially evident in places like Chicago’s south suburbs, where declining commercial revenue is pushing low- and middle-income homeowners to the brink. Similar stories are unfolding in towns like Harvey, Illinois, and Wake County, North Carolina, where property taxes have surged beyond many residents' ability to pay.

Shifting to an LVT would alleviate these problems by taxing land rather than improvements, encouraging landowners to develop or sell underused land, and ensuring more financial stability for homeowners. The switch could be an important step in revitalizing economically depressed areas, promoting development, and creating a more equitable tax system.

Land Value Taxes Can Resolve Property Tax Systems’ Inequities

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