Sneaking Suspicions
Archives-- June 1-7, 2003

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This page includes posts from June 1-7, 2003 in the usual reverse order. Each posting on the home page is perma-linked to these archive pages.

June 7, 2003
Science and Music, Working Together in Space Exploration

This morning's Tampa Bay Online ran this AP headline and lede paragraph about an intriguing new Mars project sponsored by NASA:

NASA to Send Rovers to Study Mars
NASA will send out the first of two rovers to Mars on Sunday, scraping away rock and photographing images in an important mission in the elusive search for life on the Red Planet.

My immediate reaction?

This is a great idea.

I've always been interested in seeing how music and science could work together on projects of mutual interest. In his famous Two Cultures lectures, C. P. Snow warned that art and science sometimes seem to drift apart. This new space project is a wonderful opportunity to blur those age-old distinctions.

Here's a photograph of The Irish Rovers, borrowed from their website:

Which of these boys will be going to Mars?

The news story didn't say which Rover would be going to Mars, but it could be either Wallace Hood (far left), the mandolin and tin whistle player, or George Millar (second from left), a founding member of the group and its primary writer/researcher.

I'm assuming that whichever Rover goes to Mars on this historic trip, searching for signs of life, he'll spend a significant amount of time trying to find The Unicorn.

Of course, I might be wrong about that.

June 7, 2003
Traffic report

June 6 marked the 17-month anniversary of this site. As of that date, 119,601 visitors have viewed 154,086 pages.

Thanks very much for your patronage. Stop by again soon.

June 6, 2003
Left the gate a bit too early

Bob Baffert is well known among those who follow horse racing.

The trainer has had a remarkable number of successes in a long career, including several winners of Triple Crown races.

On the other hand, the Ninth Circuit ruled today that when it comes to suing a state racing commission in Federal Court over a horse doping prosecution, Baffert left the gate too early.

The decision should be a handy reminder of the jurisdictional limits on those who seek to race into federal court to block a routine administrative prosecution under commonly used state regulatory frameworks.

A horse Baffert trained called "Nautical Look" won a race at Hollywood Park. Under California’s horse racing regulations, the victory required blood and urine samples from the horse. (There's nothing in the record about whether the jockey used the stall next door at the same time for the same purpose.)

Using routine evidence handling requirements, the horse's samples were split up and then tested. Its urine samples turned up positive for trace amounts of morphine.

These results led to administrative charges against Baffert by the Racing Board, and an eventual proposal that Baffert should be suspended from any horse racing in California for 60 days.

During the hearing, Baffert learned that the blood samples taken from Nautical Look had been destroyed, pursuant to a policy of regular destruction of such samples after a time period in which no testing requests were made for them.

Baffert did two things in response to this news. First, he appealed his administrative penalty, and obtained a stay of the suspension during the appeal through the state system. Second, while these state proceedings were in progress, he filed suit in Federal Court under 42 U.S.C. Section 1983, arguing that his due process rights were violated by the Board’s failure to preserve the blood samples.

The Board argued they shouldn’t even be in Federal Court, because they were still in the middle of the administrative process at the state level, citing Younger v. Harris, 401 U.S. 37 (1971), the Supreme Court case that recognized this jurisdictional hurdle in administrative cases like Baffert’s. The District court disagreed, however, and entered an injunction against the Board.

The Board then appealed to the Circuit Court, and won.

In the appeal proceedings, Baffert admitted that the state had a legitimate interest in regulating the sport of horse racing, but argued that it was more important that he be able to obtain a Federal Court decision on his due process claims: 

Plaintiff literally claims that “[t]he only competent figure to rule on Constitutional issues . . . is a Federal Judge.” Although we appreciate the vote of confidence, Younger and its progeny repeatedly and explicitly hold to the contrary....[citation omitted] (“Minimal respect for the state processes, of course, precludes any presumption that the state courts will not safeguard federal constitutional rights.”). Saddled with these precedents, Plaintiff’s arguments cannot succeed. The substance of Plaintiff’s claim does not justify federal interference.

Baffert’s other arguments essentially took issue with complying with the full range of California’s administrative enforcement scheme, including rights to appeal through the California Supreme Court and then the U.S. Supreme Court on a writ of certiorari. These contentions relied primarily on considerations of the several layers of review both at the administrative and then in the courts, and the time required for those reviews.

On the other hand, Baffert already obtained a stay of the suspension, which presumably would remain in place however long the appeals would take. While Baffert might feel special about himself and his profession, there really wasn’t anything exceptional about his case. Furthermore, there was no indication that the destruction of the blood evidence was aimed at Baffert or was anything other than a policy-based incident.  Therefore, the Circuit Court held that the case should have been dismissed:

Plaintiff obviously disagrees vigorously with the result that he has achieved thus far in California. However, his lack of success does not render the forum inadequate. Because Plaintiff’s case fits cleanly within the criteria for abstaining under Younger, the district court was obliged to decline jurisdiction….

Now, it just so happens that a Baffert-trained horse named War Emblem stumbled as it left the gate in the Belmont Stakes race, eliminating all hopes for a Triple Crown.

I wonder, therefore, if the Ninth Circuit took any special steps to issue this analogous result for Baffert’s own race against the California Racing Board, just a day before this year’s event.

June 6, 2003
Too much of an effort

So two more shoes dropped at the NYT, with the resignations of Howell Raines and Gerald Boyd.

The NYT is a big institution. It will survive this screw-up, and perhaps even flourish, if the paper's remaining and incoming leadership take the right lessons from the experience and remember that their only stock in trade is their credibility, regardless of the paper's intended or unintended political slant.

There are some remaining sore spots, however, one of which was raised in the story reporting the reaction of former NYT reporter Jayson Blair:

(On Thursday, Blair released the following statement via e-mail: “I am sorry to hear that more people have fallen in this sequence of events that I had unleashed. I wish the rolling heads had stopped with mine.”)

In light of what Blair already said about this sad affair, I have deep, deep trouble believing this last statement.

It's just too much of an effort.

Link to MSNBC quote via Drudgereport.

UPDATE: One other thing--to all those bloggers and/or others thinking a bit triumphantly about their own possible contributing role in causing this change in NYT management--don't get cocky.

June 5, 2003
Pump, pump, pump it up—the Chesapeake Bay, that is.

Today’s News-Journal ran an AP story about a promising suggestion to apply some old technology to alleviate a modern-day environmental problem in the Chesapeake Bay.

A Maryland man, a science advisor for the Anne Arundel County school district, made a serious proposal to use windmills to restore oxygen to polluted portions of the Bay.

So-called “dead zones” within estuaries don’t have enough oxygen to support fish, crabs, and the other critters living there. It’s a widespread problem, made worse during the summer as water temperatures increase.

The idea is pretty simple, and relatively cheap compared to other alternatives:

The windmills could be rigged on barges, along shorelines and near oyster beds. They would pump oxygen through weighted hoses to the murky depths of the bay.…

An army of 22-foot windmills, enough to cover the bay's worst trouble spots, would cost less than $500 million - a fraction of the $18 billion to $20 billion some scientists and environmentalists have estimated they would need.

State and Federal officials are interested, and plan to review further test results before moving ahead with implementation.

There’s no word yet, however, on whether the folks running these windmills will attach little statues of divers or treasure chests to the hoses releasing the air bubbles on the bottom of the Bay.

The diver floats above the chest as the bubbles move the chest lid up and down.

Note: Of course there’s a pun involved in the title to this post. It also happens to be a cheer used during high school football games in our little bit of God’s country.

June 4, 2003
Fairness, like beauty, in the eyes of the beholder

The Washington Post story today published a story by Dana Milbank and Jonathan Weisman about the predicted impact of the latest round of federal income tax cuts.

The headline used on the front page of WaPo's Internet version was certainly provocative enough:

Middle Class Hurt by Tax Cut

Now, that's an oxymoron. As the story points out, even under some generously skewed assumptions toward the liberal side of thinking, for the group earning between $45,000 and $337,000 the cut in their income taxes should be 7 per cent.

How exactly should paying less taxes hurt?

Milbank and Weisman helpfully explain, by reference to a form of tax envy. Both the income groups below that range and the income groups above that range will see an even greater cut in their tax burden.

Ouch, I suppose.

To me, that's just a fact of life in this country. The very, very rich are also very, very influential, and therefore can find ways to reduce their tax burden, even if the Federal income tax system itself remains extremely progressive, as Milbank and Weisman show. The poor also have their champions, and the Republicans were politically astute enough to push for some changes that reduced income taxes even further for the bottom fifth or so.

What's left was noted in the real headline above the actual story, which was far more neutral and far more accurate:

Middle Class Tax Share Set to Rise

Even then, however, the headline folks couldn't resist missing half the story with the subhead below:

Studies Say Burden Of Rich to Decline

As the story itself points out repeatedly, it would have been far more accurate if the following was the subhead:

Studies Say Burden Of Rich, Poor to Decline

The story also includes this related gem:

The result may be a surprise to both sides: By the end of the decade, the middle class will be picking up a greater share of the government's tab.

Somehow, the notion that this result might have been a surprise amuses me greatly.

June 3, 2003
Some trusts are better than others

The Seventh Circuit yesterday issued two separate opinions about trusts and creditors’ access to trust assets.

These decisions confirm that some trusts are far better than others.

Long before Outboard Marine Corporation found itself in such awful financial condition that it became subject to a Chapter 7 bankruptcy proceeding, it decided to do something nice for its senior management. OMC created what’s called a “rabbi trust,” so called because of an IRS Letter Ruling that involved a similar trust set up by a congregation for its rabbi.

OMC's rabbi trust eventually held about $14 million in assets, with access to those proceeds triggered by such unusual events as a major change in corporate control. In essence, the trust provided enough air for its executive beneficiaries to float gently back to earth, strapped to their golden parachutes .

The company used a Model Rabbi Trust agreement approved by the IRS, including provisions that limited access to the proceeds. Without these controls, the IRS would treat the assets as income to the executives.

These access limits extended to creditors. Under specific trust language, general (unsecured) creditors could tap into these funds under certain conditions (such as this bankruptcy proceeding). Nonetheless, the Bank of America, as the agent for secured creditors that loaned OMC a pile of cash after the rabbi trust was established, couldn’t claim these moneys in the bankruptcy proceedings.

That’s what the OMC bankruptcy court ruled, and the Seventh Circuit affirmed that decision on appeal.

A very different kind of creditor fared much better in the other case, involving a very different kind of trust.

Herbert Engh was a pilot for American Airlines. He was also a tax protester, with all the usual success attaining that status implies.

In 1991 Engh was convicted of federal income tax evasion and failure to file tax returns, eventually serving 28 months of a 48-month sentence. His problems with paying his share started several years earlier, however, with an argument he lost to the IRS about a tax deduction on his 1979 return.  Engh paid the deficiency, and then jumped on the bogus tax argument bandwagon with a vengeance.

Somehow Engh decided that he was among those special folks for whom Federal tax laws didn’t apply. On the other hand, he respected some laws, or at least he tried to use them to his advantage.

In 1983, for example, Engh created the “Marstonmoor Trust,” into which he transferred the family home, a four-acre parcel on Marstonmoor Road in Davis
, Illinois. The trust was allegedly established “for the benefit of [Engh’s] daughters,” but the court couldn’t help noticing a few things about this particular trust arrangement:

[T]he record in this case is brimming with evidence supporting the district court’s conclusion that the transfer in question was fraudulent. ... Illinois law looks to the presence of “badges of fraud.” [citation omitted.] And Engh has badges galore. For one thing, no consideration was given for property that had considerable value (“love and affection” is not legal consideration [citation omitted]). For another, Engh retained possession of the property, continuing at all times to live there and pay property taxes and maintenance expenses. Transferring the title of assets while retaining their use and enjoyment is a sham. Finally, Engh’s transfer was to family members, and although a transfer to family members doesn’t always raise eyebrows, eyebrows must be raised here when the transfer is viewed in the context of what else was going on in Engh’s life when the conveyance was made. Regardless of what other motivations for the transfer may have been present, a clear intent to avoid a creditor—the IRS—was also present.

Under these circumstances, the appellate court readily agreed that Engh’s trust was invalid, and that the IRS could foreclose on the Marstonmoor property to collect on a long overdue income tax deficiency.

Perhaps Mr. Engh should have consulted the same tax advisors that OMC used. Then again, that would have required a change of attitude about dealing appropriately with one's obligations.

June 2, 2003
Looks like my aim was a little off about targeted redevelopment

Last September I wrote a post about potential redevelopment of commercial real estate.

Boarded up businesses are blights on the community, after all, and so the adaptive reuse of these parcels should be encouraged. 

At the time, the Ames company was running its Going Out of Business sales. Due to traffic problems in the Rehoboth Beach area, I suggested that Target could have a much easier time taking over the building and renovating it for their business than if they tried to put in a new site on virgin acreage.

Looks like my aim was off a bit, at least for now.

Instead, the Ames store is now being converted to a late night dance club.

If the new owners can work out some major kinks in the renovation process, it could be a popular replacement for the recently demolished Renegade, Rehoboth’s famous gay-oriented nightclub.

After Midnight, or simply A.M., had placed a full-page advertisement in Camp Rehoboth Letters indicating “a new late night dancing experience begins May 23.” Customers arriving at the club that evening were treated to pulsating lights and gotta groove music - it just happened to be located in a tent in the parking lot.

Despite working round-the-clock for three weeks, the club simply wasn’t ready said Eric Teves, one of the club’s owners. Teves and Rob Dick, both managers at Rehoboth’s Blue Moon bar and restaurant, Steve Fallon of Shore Haus and Dan Contarino, an event promoter, are the collaborators behind the revival of the Rehoboth dance scene.

In addition to a 1,400 square foot dance floor and several bars, the former department store needs a lot of additional safety features installed before the formal opening. The awful example set by the Rhode Island fire earlier this year means that the state fire marshal’s office is taking no chances.

The need for this sort of entertainment continues, however, at least according to the new developers:

When the Renegade bar closed its doors earlier this year, a void was created in the gay dance scene. “We started thinking about what we could do back in January,” said Teves, “because if the area cannot provide entertainment for the younger crowd they’ll stop coming. Face it, they’re here on vacation and want to party all night and hit the beach during the day.”

The real question, of course, is whether the owners of After Midnight will run any blue light specials when the old store is fully refurbished and open for business for its new clientele.

June 1, 2003
Finding the money through Enron-like accounting

The Washington Post ran a very good round-up today of the many ways in which state governments are trying to evade fundamental though difficult responsibilities.

Staff writer Dale Russakoff provides example after example of fiscal year shifting and other gimmicks some states are using to close budget gaps.

The basic cause and the ill-chosen solutions are well-described by this sentence in the second paragraph:

Unable to stomach enough tax increases or spending cuts to close budget gaps in Year Three of the worst fiscal crisis in a half-century, states are postponing -- and possibly exacerbating -- the day of reckoning through creative accounting.

Russakoff found Michael Granof, a University of Texas public finance expert, available for the appropriate quote:

Granof likened the current year to a crash course in how to make governments look fiscally healthy on paper, despite serious underlying problems.

"I compare it to Enron, because Enron's accounting, by and large, didn't violate generally accepted accounting principles. It was just extremely aggressive," he said. "That's what the states are doing. They're pushing the envelope. These gimmicks are basically off-the-balance-sheet debt. It's what Enron had."

Just read the whole thing, as they say.

It's a fair but scathing indictment of the absence of political courage in state after state, regardless of party affiliation, and seemingly heedless of the long-term consequences of dereliction of duty.

June 1, 2003
A LULU of a Claude candidate

The top headline on the front page of this morning's statewide newspaper is a classic Claude candidate about an equally classic LULU (Locally Unwanted Land Use):

Neighbors Criticize Landfill Expansion

Well, duh.

News-Journal reporter Jeff Montgomery did his usual thorough job covering, as it were, the continuing controversy over plans to build up Cherry Island, the only major landfill in upstate Delaware, to an eventual height of 288 feet.

The paper's graphics department helpfully points out that the Statue of Liberty tops out at 305 feet. Give me your huddled masses of garbage, yearning to be piled up, I suppose. (For those looking for fun facts, Delaware's highest point is only 447.85 feet, at a spot about eight miles northwest of the landfill.)

The story includes some great NIMBY quotes from local representatives, expressing dismay over the fact that this landfill is the only one around, and that maybe others should share in the fun:

  • "There's tremendous opposition" to the expansion, said Wilmington City Councilman Charles Potter Jr., D-1st. "The city and nearby areas have borne this dump for many years. It's time for someone else to take their share."
  • "We have to ask if it's right to promote growth in Bear and Middletown when all the waste from new developments goes to Wilmington," said Rep. David H. Ennis, R-Fox Point. "It may be that we need to consider putting something closer to areas that are producing the waste."

In fairness to the NIMBYites, they actually have a point. It is a little odd to have only one landfill for an over 400 square-mile county with about a half-million population.

In fact, I wouldn't be terribly surprised if the Delaware Solid Waste Authority, the agency responsible for handling almost all of the state's trash, wasn't trying to make a not-too-subtle point or two with this proposal.

The agency has the power to determine new locations and acquire new land for this purpose. Nonetheless, I don't see them using that authority without some serious political backing from a bipartisan collection of legislators and others. Showing folks what must happen at Cherry Island unless another option is taken could prove to be a useful exercise.

That said, I still give the headline five Claudes.


Contact Information:

Fritz Schranck
P.O. Box 88
Nassau, DE  19969


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© Frederick H. Schranck 2002-2003