Speaker 1: This is Bloomberg Law, with June Brusso from Bloomberg Radio.
Speaker 2: The Board was not heedless of environmental effects here. It
Speaker 2: consulted with dozens of agencies, considered every proximate effect, and
Speaker 2: ordered ninety one mitigation measures. Eighty eight miles of track
Speaker 2: should not require more than thirty six hundred pages of
Speaker 2: environmental analysis.
Speaker 3: Former US Solicitor General Paul Clement argued that federal regulators
Speaker 3: had done enough to consider the environmental impact of a
Speaker 3: proposed eighty eight mile railway in Utah and shouldn't have
Speaker 3: to also consider upstream and downstream impacts that are remote
Speaker 3: in time and space. All parties agree that under the
Speaker 3: National Environmental Policy Act or NEPA, agencies only have to
Speaker 3: consider environmental effects that are reasonably foreseeable. But Justice is
Speaker 3: across the ideological spectrum struggle with how to define that.
Speaker 3: What would be the test here? Justice is Elena Kagan,
Speaker 3: Clarence Thomas, and Chief Justice John Roberts. Here's this eighty
Speaker 3: eight miles of lying and railroads are going to cross
Speaker 3: it and wildfires are going to start as a result.
Speaker 3: Is that within time and space? But how far down
Speaker 3: line or upstream or downstream should you love.
Speaker 4: I have trouble seeing how this is going to work
Speaker 4: out as a practical matter if you're at the agency
Speaker 4: or the council for the private party. I mean, what
Speaker 4: are you going to do. You're going to say, Okay,
Speaker 4: I've identified this possible issue, but I think it's too
Speaker 4: far away.
Speaker 3: Clement did admit that his proposed test wasn't an easy one.
Speaker 2: If I could give you a ten word test that
Speaker 2: took care of every hard case, I mean, you know,
Speaker 2: they give me tenure at Harvard, but.
Speaker 3: I think you know having I'm sure they give you
Speaker 3: that any That last comment coming from Justice Kagan, who
Speaker 3: was once the dean of Harvard Law School. Joining me
Speaker 3: is environmental law expert Pat Parento, a professor at the
Speaker 3: Vermont Law and Graduate School. Pat first tell us about
Speaker 3: the environmental concerns here.
Speaker 1: So this case involves a proposed eighty eight mile rail
Speaker 1: link in the Uinta Basin of Utah, which is huge.
Speaker 1: In fact, it's as big as Maryland, and it's loaded
Speaker 1: with all kinds of fossil fuels, including what's called waxy
Speaker 1: crude oil. I hadn't heard about that term before, but
Speaker 1: that's the product that they want to ship on this
Speaker 1: rail line, and the Surface Transportation Board, which is a
Speaker 1: federal agency within the Department of Transportation, has the authority
Speaker 1: to license or approve construction of this link, which will
Speaker 1: take the oil from the Uina Basin east and connect
Speaker 1: it with the national railroad network and take it all
Speaker 1: the way to the Gulf Coast where it will be
Speaker 1: refined into various products for both domestic and export consumption. Right,
Speaker 1: So the concerns here are the drilling and the extraction
Speaker 1: that's going to occur as a result of providing this
Speaker 1: critical link. Without this railroad, this oil reserve couldn't be exploited.
Speaker 1: So it is a major resource with economic value and
Speaker 1: some jobs undoubtedly and income to Utah and the county.
Speaker 1: The Youth Tribe of Indians is involved in this, and
Speaker 1: they have concerns about the drilling which will potentially impact
Speaker 1: some of their resources. And there's concerns about spills, which
Speaker 1: are inevitable when you're moving oil by rail. There's always
Speaker 1: either chronic low level spills, leakages, or in some cases,
Speaker 1: of course worse than that, derailments, and we've seen that.
Speaker 1: But then of course downstream there's concerns about burning all
Speaker 1: of this spoiled duh and the impacts on climate change,
Speaker 1: but also impacts on the communities around the refineries in
Speaker 1: the Gulf Coast Fort Arthur, Texas being as primary focus
Speaker 1: of this. So a variety of environmental issues typical of
Speaker 1: a major infrastructure project like this.
Speaker 3: So now tell us about the legal issue here.
Speaker 1: So this has to do with the scope of the
Speaker 1: Environmental Impact Statement that the Surface Transportation Board prepared for
Speaker 1: this project. And actually STB, as it's called, did you
Speaker 1: know what you might consider a pretty thorough job. I
Speaker 1: mean it amounts to literally thousands of pages of analysis
Speaker 1: when you look at the whole administrative record. The eis
Speaker 1: itself has many hundreds of pages. I forget it, maybe
Speaker 1: nine hundred, but a very substantial document. And they did
Speaker 1: look at these upstream impacts of drilling and the downstream
Speaker 1: impacts of potential spills and the refinery, but they only
Speaker 1: did so to a certain level. And the DC Circuit,
Speaker 1: when this came to the DC Circuit for review, said,
Speaker 1: you know, STB, you did an okay job, but not
Speaker 1: good enough. You needed to delve more deeply into these
Speaker 1: upstream downstream issues than you did. So what it comes
Speaker 1: down to is how much analysis does NEPA require when
Speaker 1: you have an eighty eight mile project that is approved
Speaker 1: by this agency, the STB, And how far beyond the footprint,
Speaker 1: if you will, of the project does NEPA require you
Speaker 1: to go when you're analyzing these more remote in time
Speaker 1: and distance problems. And that was the focus of the
Speaker 1: argument before the Supreme Court.
Speaker 3: Was there an answer to what kind of test would
Speaker 3: work here? I mean, did anyone have that answer?
Speaker 1: Yes? Paul Clement, who's a former solicitor generally and I
Speaker 1: states for a while, so he's a very accomplished, seasoned
Speaker 1: Supreme Court litigator and frankly did a terrific job representing
Speaker 1: his clients, of course, who want to develop these oil reserves,
Speaker 1: and his tests which he offered and explained over and
Speaker 1: over again to the court. He was up there for
Speaker 1: almost an hour being questioned by almost everybody on the bench,
Speaker 1: and his test was the following. Number one, you do
Speaker 1: take into account how remote in time and space are
Speaker 1: the impacts that you're talking about? Number one? And number two,
Speaker 1: how many of those impacts are actually within the jurisdiction
Speaker 1: and authority of the agency in question, namely STV. His
Speaker 1: answer to both of those was a, the impacts, particularly
Speaker 1: the refinery impacts, which are five hundred miles away or more,
Speaker 1: are way too remote in time and distance and speculative
Speaker 1: in terms of what will actually happen and so forth,
Speaker 1: and they're subject to other agencies jurisdiction, either state agencies
Speaker 1: or federal agencies. Another agency that's involved with rail safety,
Speaker 1: for example, So when you talk about the condition of
Speaker 1: the tracks and whether there's the potential for spills, his
Speaker 1: argument is that's another agency's problem, that's not StB's concern.
Speaker 1: And refinery operations that's again that's subject to Texas state
Speaker 1: regulation for whatever that's worth, as well as you know
Speaker 1: EPA and other agencies. So on his remote in time
Speaker 1: and space argument, he said, these impacts that the DC
Speaker 1: circuit found fault with are not required by NEPA. And
Speaker 1: number two, he said, when you have these other agencies
Speaker 1: with responsibilities and STB does not have any authority to
Speaker 1: control these impacts, then NEPA doesn't require STB to have
Speaker 1: to analyze them. What's the point he said, of analyzing
Speaker 1: all this to the nth degree when they can't do
Speaker 1: anything about it. And so that was his argument.
Speaker 3: Did the challengers have a test.
Speaker 1: Yeah, so the challengers said, well, first of all, NEPA
Speaker 1: has always wired consideration of indirect effects, and these are
Speaker 1: foreseeable indirect effects. And there really wasn't a whole lot
Speaker 1: of argument. Even Clement conceded, these are foreseeable impacts. They
Speaker 1: may be difficult to quantify, although the environmental advocates that
Speaker 1: they weren't difficult to quantify. I mean, you know how
Speaker 1: much oil is going to be extracted, and from that
Speaker 1: you can begin to calculate how much will be refined,
Speaker 1: and what kind of spills might happen and so forth.
Speaker 1: You know, the environmental groups challenging this project where I thought,
Speaker 1: we're able to say, look, what we're asking for here
Speaker 1: is not that unreasonable. It's not that different from what
Speaker 1: courts have required in the past, and it should still
Speaker 1: be the test here that you know, when the agency
Speaker 1: undertakes to do an analysis, it needs to do it right.
Speaker 1: And the response to that, because of course this kept
Speaker 1: going back and forth like a ping pong match, the
Speaker 1: response to that is, well, yeah, but what you're doing
Speaker 1: is punishing the agency STB for agreeing to consider things
Speaker 1: that it really doesn't control, and that can't be right.
Speaker 1: So Clement also suggested that the Court could adopt what's
Speaker 1: known as the harmless error rule. Right. So what he's
Speaker 1: saying is all right, So STB didn't have an initial
Speaker 1: obligation to consider these impacts, but it did so voluntarily,
Speaker 1: and you shouldn't punish them for that, particularly when we
Speaker 1: said when you're flyspecking. That was the term he used
Speaker 1: flyspecking the analysis. So you know, here's what I would
Speaker 1: say as the bottom line. There's no support on the bench,
Speaker 1: either liberals or conservatives, to uphold the DC Circuit. That
Speaker 1: was clear. The liberal wing of the bench asked as
Speaker 1: many difficult questions of the environmental group and the environmental
Speaker 1: advocate as did the conservative justices, in some cases even
Speaker 1: more aggressive.
Speaker 5: Right.
Speaker 1: So they were clearly signaling they were not going to
Speaker 1: be upholding the DC Circuit. And my reading is what
Speaker 1: they were really signaling to the rest of the conservative
Speaker 1: colleagues on the bench was, let's see if we can
Speaker 1: find a basis to overturn the DC Circuit's decision and
Speaker 1: allow this project to proceed that doesn't do any more
Speaker 1: damage to the NEPA process than quote is necessary to
Speaker 1: decide this case. So that's what I'm going to be
Speaker 1: looking for, not what the outcome is. The outcome's clear.
Speaker 1: You know, NEPA has been in front of the Supreme
Speaker 1: Court fifteen different times and has lost every single time.
Speaker 1: This will make the sixteenth time that NPA will have
Speaker 1: lost in the Supreme Court. That seems foreordained to me.
Speaker 1: But the real question is how broadly is the court
Speaker 1: going to go in limiting the scope of NEPA analysis
Speaker 1: In a variety of other cases, this is just you know,
Speaker 1: one eighty eight mile rail line, right, But NEPA applies
Speaker 1: to a huge number of federal actions, of course. So
Speaker 1: that's what I'm going to be looking for. Will they
Speaker 1: write a narrow opinion, overturn the DC circuit, let this
Speaker 1: project be finished, and leave it the rest of it alone.
Speaker 3: Coming up next on the Bloomberg Law Show, I'll continue
Speaker 3: this conversation with Professor Pat Parento of the Vermont Law
Speaker 3: and Graduate School. What happens to environmental reviews under the
Speaker 3: upcoming Trump administration. I'm June Grosso and you're listening to Bloomberg.
Speaker 3: Supreme Court seems almost certain to limit the scope of
Speaker 3: environmental impact studies. The question is how the Court will
Speaker 3: do so. The justices at oral arguments overwhelmingly suggested that
Speaker 3: the US Court of Appeals for the DC Circuit went
Speaker 3: too far when it required federal regulators to look at
Speaker 3: potential effects on communities on the Gulf Coast in considering
Speaker 3: whether to approve an eighty eight mile railway in Utah.
Speaker 3: I've been talking to Professor Pat Parento of the Vermont
Speaker 3: Law and Graduate School. Did it seem like some of
Speaker 3: the justice is thought that they didn't need to adopt
Speaker 3: a new test, that they could clarify the old one instead.
Speaker 3: Justice amy Cony Barrett said maybe the Court should just
Speaker 3: say what we've said before, but maybe put a little
Speaker 3: bit more flesh on the bone.
Speaker 1: Yes. In fact, she and Justice Kavanaugh both stressed that
Speaker 1: when you have a question like this of the scope
Speaker 1: of NIPA analysis and it's tied to the authority of
Speaker 1: the agency in question, right, that you should defer to
Speaker 1: the agency's determination of what's an appropriate scope, and only
Speaker 1: where that determination can be shown to be arbitrary and capricious.
Speaker 1: That's the sort of standard review test under the Administrative
Speaker 1: Procedure active course. Only where you can show that you
Speaker 1: know the agency made basically interrational determination of scope. Should
Speaker 1: the court step in, Kavanaugh said, in light of the
Speaker 1: re sense passage of what's called the Builder Bill by Congress,
Speaker 1: this is the Infrastructure Bill, And in that bill they
Speaker 1: actually amended NEPA in a variety of ways, including putting
Speaker 1: a page limit on environmental impact statements of one hundred
Speaker 1: and fifty pages and putting a time limit on how
Speaker 1: long the NEPA process could take, namely one year for
Speaker 1: certain kinds of important projects. And this kind of a
Speaker 1: project would be included as a critical sort of energy
Speaker 1: infrastructure project. Right, So Kavanaugh referred to that passage of
Speaker 1: that law and said, you know, there's no way agencies
Speaker 1: can do everything that the DC Circuit is requiring them
Speaker 1: to do in one hundred and fifty pages in a
Speaker 1: year's timeframe. So he said the court should be giving
Speaker 1: different squared was the term he used to agency interpretations
Speaker 1: of the scope of their analysis. So, yeah, I think
Speaker 1: if this case, you know, comes out doing minimal damage,
Speaker 1: let's put it that way to NEPA, it will be
Speaker 1: for the Court to refer to this new congressional act,
Speaker 1: the Builder Bill, and emphasized that courts should not be
Speaker 1: second guessing agencies when they determine how far they're going
Speaker 1: to go, and analyzing these indirect effects, taking into account
Speaker 1: time and distance and authority and so forth. So I
Speaker 1: can anticipate seeing a decision that lays out more clearly
Speaker 1: the role of the courts in reviewing cases like this
Speaker 1: and limiting judicial review, but maybe not going so far
Speaker 1: as to adopt Clements tests, which would be a very
Speaker 1: significant narrowing of NIPA analysis, and one in which the
Speaker 1: Biden administration, of course, in their argument because they're the
Speaker 1: defendant the STB is the defendant in the case, did
Speaker 1: not agree with Clement's tests. Edwin Needler, also a former
Speaker 1: Solicitor General, argued the case for the Biden administration and
Speaker 1: tried his best to distinguish his approach and the Biden
Speaker 1: administration's approach from what Clement was proposing. But frankly, that
Speaker 1: doesn't matter, does it. In light of who's coming to
Speaker 1: office in January. The views of the Biden administration will
Speaker 1: have no bearing whatsoever going forward.
Speaker 3: So just back to Kavanaugh and the deference squared, he said,
Speaker 3: it seems to me the difference of the courts has
Speaker 3: to be huge with respect to how the agencies think
Speaker 3: about the scope of what they're going to consider. How
Speaker 3: does that fit in with this court that last term
Speaker 3: throughout the Chevron doctrine, and you know, deference to agencies
Speaker 3: interpretations of ambiguous statutes. Now they're willing to give deference.
Speaker 1: Well, you know, they're all saying consistency is the hob
Speaker 1: goblin of small minds. So yeah, there's a little bit
Speaker 1: of inconsistency there, right, So we will defer to agencies
Speaker 1: when we like what they're doing, but not differ to
Speaker 1: them when we don't. I'm not going to go completely
Speaker 1: cynical on that, although I'm tempted, but certainly there's tension
Speaker 1: here between when you're going to give an agency difference
Speaker 1: and when you're not. So I would say this that
Speaker 1: when it comes to this narrower question of what's the
Speaker 1: scope of analysis with these indirect effects, these are you know,
Speaker 1: admittedly there's some speculation about exactly what these effects are
Speaker 1: going to be and how they're going to be handled
Speaker 1: by a variety of different agencies that have authority. So
Speaker 1: you know, this is a gray area of nep law.
Speaker 1: I have to say, and you know, reasonable people, I
Speaker 1: suppose can disagree about how far you should go. If
Speaker 1: I'm arguing the other side of this, what I'm going
Speaker 1: to say is, look, STD has a very clear binary
Speaker 1: decision here, right, either approve the new rail line or not.
Speaker 1: In the final analysis, It's a yes or no question.
Speaker 1: And to answer that question, you have to balance the benefits,
Speaker 1: economic and otherwise of the proposed rail line and the costs,
Speaker 1: including environmental costs. And I would argue including climates costs. Right,
Speaker 1: So I can make the argument that this is perfectly
Speaker 1: reasonable to require STV to look at lots of things
Speaker 1: that it doesn't control, because the one thing it does
Speaker 1: control is whether to allow this project to be built,
Speaker 1: and that turns on water. It's net and overall benefits
Speaker 1: versus its costs. Right, So you can make an argument,
Speaker 1: I think, And I've made these arguments in my past
Speaker 1: life because I wrote an odd article called small Handles.
Speaker 1: When do federal regulations privatize actions by others? And so
Speaker 1: I've made the arguments that it doesn't really matter what
Speaker 1: the scope of the agency's authority is. The question is
Speaker 1: should they approve this project or not? And that requires
Speaker 1: looking at as many things as you can reasonably consider,
Speaker 1: not looking at things that are purely speculative or you know,
Speaker 1: angels on ahead of a pen kind of calculations. But
Speaker 1: those things that you can reasonably foresee and calculate and
Speaker 1: way in the balance should be weighed. But that's not
Speaker 1: where this case is going to come out. I'm just
Speaker 1: telling you an alternative view of what NIPA might require
Speaker 1: of an agency like this, even though it doesn't control
Speaker 1: everything that happens as a result of its decision.
Speaker 3: So we should mention that Justice Neil Gorsitch recused himself
Speaker 3: just last week.
Speaker 1: Yes, so he did not say why. The speculation is
Speaker 1: that he or his family may have a financial interest
Speaker 1: in one of the parties that would benefit from this
Speaker 1: rail line. That's the speculation. But given credit, he was
Speaker 1: asked to refuse by the respondents who were, you know,
Speaker 1: the environmental concerns here, and he did, so, you know,
Speaker 1: we kudo to Neio Gorsics for that. I would say I.
Speaker 3: Would too, especially considering how many times Justices Alito and
Speaker 3: Thomas have been asked to recuse and they haven't.
Speaker 1: Yeah, at least one has paid attention to the sort
Speaker 1: of concern about ethics on the bench. But there's still
Speaker 1: five there's still five Conservatives, so there's clearly five votes
Speaker 1: to overturn the DC circuit. As I say, the question
Speaker 1: is how are they going to do it and will
Speaker 1: the Liberals have some influence on that? Can they convince
Speaker 1: their colleagues to limit the reach of whatever decision they make?
Speaker 3: So you mentioned the upcoming Trump administration. Do you think
Speaker 3: that they will just ignore any climate action at the
Speaker 3: federal level? I mean, what's the thought about how they
Speaker 3: might approach the environment.
Speaker 1: Well, you know, we might be happy if they did
Speaker 1: just ignore it, but they're not going to just ignore it.
Speaker 1: They're going to turn the clock back. They're going to
Speaker 1: reverse everything Biden did. They're going to try to claw
Speaker 1: back money under the Inflation Reduction Act. They're going to
Speaker 1: repeal the power plant rule, the tail pipe rule, the
Speaker 1: methane rule. They're going to require maximum oil and gas
Speaker 1: leasing both offshore and onshore on public lands right down
Speaker 1: the list. What they're proposing to do, and they're putting
Speaker 1: the people in place to do it, is to turn
Speaker 1: us completely around and go in the absolute wrong direction.
Speaker 1: Instead of facilitating the transition to a clean energy, clean
Speaker 1: transportation economy, which is well underway right instead of facilitating that,
Speaker 1: they're going to throw up roadblocks and try to stop it.
Speaker 1: It's really, frankly, to use a not technical term, insane
Speaker 1: what they're talking about. It doesn't make sense, economically, environmentally,
Speaker 1: public health. None of what they're talking about makes sense.
Speaker 1: Do some of these programs need improvement, of course they
Speaker 1: always do. Should Congress update some of these statutes to
Speaker 1: take account of new ways of dealing with these problems,
Speaker 1: of course they should. Should the federal government put some
Speaker 1: money into helping industry clean up, Yes, and so on.
Speaker 1: But that's not what we're going to see. I'm sure
Speaker 1: we're not going to see that.
Speaker 3: Can they do that in four years if they pay
Speaker 3: attention to the requirements of the law, the Administrative Procedure Act,
Speaker 3: et cetera.
Speaker 1: Well they didn't the last time, and Trump won. Of course,
Speaker 1: they lost most of their cases, almost eighty percent of
Speaker 1: the challenges. That this time around, their trying looks to
Speaker 1: learn from their mistakes, we'll see. You know, the top
Speaker 1: level people they're talking about are not capable. I don't
Speaker 1: think of implementing what Trump is talking about. So the
Speaker 1: real question is going to be who are they bringing
Speaker 1: in in the you know, second and third tiers of EPA,
Speaker 1: Department of Interior, Department of Energy, and so on. That
Speaker 1: level you know of the agencies is where the action is.
Speaker 1: And you know, if they get really capable people who
Speaker 1: have some experience in government with these agencies, then I
Speaker 1: do worry. And if they start, as I think they will,
Speaker 1: start driving out some of the career professionals, particularly for
Speaker 1: my old agency at EPA, people I know and admire greatly.
Speaker 1: If those people have had enough and are second tired
Speaker 1: of being abused and threatened, which they are being threatened,
Speaker 1: they're going to leave. And we're seeing that already. I'm
Speaker 1: seeing it because they're showing up on our doorstep asking
Speaker 1: for jobs at Vermont Law School, right, So that's a
Speaker 1: big concern. If they drive out the real professionals from
Speaker 1: these agencies and replace them with quote Trump loyalists, we're
Speaker 1: in serious trouble. Then we're talking about permanent damage to
Speaker 1: some of these institutions. That does worry me greatly, even
Speaker 1: more than what they're going to try to do with
Speaker 1: regulatory rollbacks, because we do have courts out there still,
Speaker 1: there are still good judges out there who are not
Speaker 1: going to let them run rampant over the rule of
Speaker 1: law and just do whatever they want, regardless of what
Speaker 1: the law and the APA requires. If they try to
Speaker 1: do what they did or they're gonna get stopped, They're
Speaker 1: gonna get slowed down. And in this case, delay is everything.
Speaker 1: The more that you can delay what Trump is trying
Speaker 1: to do, the more he becomes a real lane duck.
Speaker 1: And then that the midterm elections kick in, and then
Speaker 1: we see if maybe there's a turning point that will
Speaker 1: further limit the damage that Trump is threatening against environmental programs.
Speaker 3: President Joe Biden has said nobody can reverse the clean
Speaker 3: energy solutions that are already underway in this country. We'll
Speaker 3: see what happens come January. Thanks so much, Pat. That's
Speaker 3: Professor Pat Parento of the Vermont Law and Graduate School.
Speaker 3: Coming up next on the Bloomberg Law Show. Why is
Speaker 3: there an uptick in divorces after the Holidays? I'm June
Speaker 3: Grosso and you're listening to Bloomberg. 'tis the season, and
Speaker 3: you might notice an uptick in engagements of happy couples,
Speaker 3: But once the tree comes down, it's an uptick in divorces.
Speaker 3: You'll likely see. Joining me is an attorney who handles
Speaker 3: matrimonial and family law matters Lauren Crane. She's a partner
Speaker 3: at Bender and Crane, a female owned boutique law firm
Speaker 3: in New York. So is the holiday season a popular
Speaker 3: time for people to get engaged.
Speaker 5: A lot of people do get engaged in the holiday season.
Speaker 5: And typically people who do get engaged, they look forward
Speaker 5: to getting married and they start to plan forward, and
Speaker 5: it's really a celebratory time. But people who are getting
Speaker 5: engaged think about whether they get engaged on a holiday
Speaker 5: or not. So if you get engaged and you give
Speaker 5: someone an engagement ring on a holiday versus on any
Speaker 5: other day, if you actually don't get married, the ring
Speaker 5: and the purpose of the ring could become subject to
Speaker 5: a hearing. If one person says they were given a
Speaker 5: gift of an engagement ring on Christmas or New Year's
Speaker 5: versus another day, then it would be the person who
Speaker 5: gave the ring it would be their property.
Speaker 3: So after the engagement, the question of a prenup comes up.
Speaker 3: So a young couple starting out, neither of them has
Speaker 3: any substantial assets, do they really need a prenup?
Speaker 5: So it also depends on whether they have multi generational wealth.
Speaker 5: So a lot of times, people who haven't started working
Speaker 5: yet but their parents have money, they set up trusts,
Speaker 5: and those trusts can be the issue of litigation long
Speaker 5: term and a divorce, at least in New York. So
Speaker 5: if you're going to inherit money or you're a beneficiary
Speaker 5: of a trust, then you should look into a prenap. Also,
Speaker 5: if you have interest in a business that hasn't yet
Speaker 5: taken off, but you've been creating this business long before
Speaker 5: you got engaged. That business you've put sweat equity into
Speaker 5: and you may want to protect that in the case
Speaker 5: of a divorce.
Speaker 3: Let's say you have two people who are in graduate
Speaker 3: school or law school. Yeah, no assets, do they need
Speaker 3: a prenup?
Speaker 5: So in that case, again, I don't have so many
Speaker 5: facts about their ass that's outside of being in school.
Speaker 5: But if you already have a case where the parties
Speaker 5: one of them wants to work long term, one of
Speaker 5: them doesn't want to work, you know, there's lots of
Speaker 5: decisions you're going to make through a marriage, and so
Speaker 5: sometimes it's even easier just to set it out before
Speaker 5: you get married and set it out in a prenup.
Speaker 5: We've had that a few times in our office.
Speaker 3: And what does a prenup cover.
Speaker 5: Generally, so, a prenup can cover anything that the couple
Speaker 5: wants as long as it doesn't cover child's support or
Speaker 5: child's custody. So it can cover, at least in New York,
Speaker 5: spousal support, equitable distribution, which is how you would divide
Speaker 5: your assets once you get married. Can cover council fees
Speaker 5: in the event of the divorce, whether one person is
Speaker 5: waiving their right to receive counsel fees in the long term.
Speaker 5: It can also cover state rights upon a person's death,
Speaker 5: so it can cover a array of issues.
Speaker 3: In the movies, prenups cause problems. In real life does
Speaker 3: it cause problems?
Speaker 5: So prenups sometimes do cause problems, but remember these are
Speaker 5: problems that people would face once they get married. People
Speaker 5: go into a marriage or a wedding and they envision
Speaker 5: their wedding day, but they don't envision the next day
Speaker 5: when they have to budget to pay for a house
Speaker 5: or a vacation or any of your ongoing expenses. So
Speaker 5: although you look forward to the wedding, you don't think
Speaker 5: about the next steps that once you're married, and then,
Speaker 5: in the unfortunate stance that you actually do get divorced,
Speaker 5: then they don't think about that. But prenups are conversations
Speaker 5: that couples are going to have in the long term,
Speaker 5: whether they have it before they get married or after
Speaker 5: they get married.
Speaker 3: What about getting a post nup instead of a pre nup?
Speaker 5: So we've done a few post nups in our office,
Speaker 5: and they sometimes are post nups just to sity. You know,
Speaker 5: how you envision certain property that you acquire during the
Speaker 5: marriage would proceed. But there's a lot more documents that
Speaker 5: have to be exchanged because you're already married, versus a
Speaker 5: prenuptial agreement when you haven't yet been married.
Speaker 3: So is there any point in doing a post up
Speaker 3: or just wait for the divorce?
Speaker 5: So in some instances a postnup would work. If someone's
Speaker 5: gifting the money to a child, a parent is gifting
Speaker 5: money to one of the spouses and they want to
Speaker 5: buy a house, and the parents want to ensure that
Speaker 5: that house goes to the person they're gifting in the
Speaker 5: event of a divorce. Or sometimes you know, people have
Speaker 5: resets in their marriage, so they do a ponent agreement,
Speaker 5: but it doesn't automatically lead to a divorce. So it's
Speaker 5: very different than a divorce.
Speaker 3: Do you find that after the holidays people split up more? So?
Speaker 5: I think that sometimes when you go from the Thanksgiving
Speaker 5: holiday to the Christmas holiday, people are spending a lot
Speaker 5: more family time, and so sometimes that can awaken them
Speaker 5: to realize that maybe they do want to get a divorce.
Speaker 5: And before they would get a divorce, you should always
Speaker 5: consult with you know, one or two attorneys and make
Speaker 5: sure you meet an attorney that you like and you
Speaker 5: fit with, and then you can proceed to plan. A
Speaker 5: divorce doesn't happen overnight because remember you're married, so you
Speaker 5: know a lot of people who have kids, they don't
Speaker 5: want to ruin a Christmas holiday or a vacation that
Speaker 5: they have planned during that time. So typically we see
Speaker 5: an uptick of calls to discuss the possibility of having
Speaker 5: a divorce after Thanksgiving, and then people tend to file
Speaker 5: for divorce after Christmas.
Speaker 3: Do more people file for divorce when it's a boom
Speaker 3: economy or more people file in a recession? If you know?
Speaker 5: So in New York it doesn't matter in our particular
Speaker 5: cases because typically people have large wealth in Manhattan. Our
Speaker 5: typical clients, you know, our private school parents who can
Speaker 5: afford the lifestyle in New York, so a boom or
Speaker 5: a bus economy doesn't really affect our business in that way.
Speaker 3: I've heard this term gray divorce boom. What is that?
Speaker 5: So that's the after the kids have left the house,
Speaker 5: when they've graduated and you know, their kids have gotten married.
Speaker 5: Some families are starting more families are starting to get
Speaker 5: divorced later in life. And the reason is is people
Speaker 5: tend to reevaluate their lives later. People I think are
Speaker 5: living longer and they've come to the realization that they
Speaker 5: want to die married to this person, so they want
Speaker 5: to get divorced later in life, even though it may
Speaker 5: be more complicated.
Speaker 3: You think it's more complicated because if the kids are
Speaker 3: out of the house, doesn't that take one big factor,
Speaker 3: you know, one troublesome fact out of the divorce.
Speaker 5: Yes, But then you have a much longer term marriage.
Speaker 5: So then there's an issue of spousal support if one
Speaker 5: person didn't work, and how long they would pay spousal
Speaker 5: support for. And also, as you're married longer, your assets
Speaker 5: become more and more entangled, so it may not be
Speaker 5: so easy to piece apart all of your assets. You know,
Speaker 5: you may have investments in private equity funds that you
Speaker 5: can't easily retrieve. It can't happen a short term marriage,
Speaker 5: but in a longer term marriage, the longer you're married,
Speaker 5: the more entwined your assets are.
Speaker 3: In most divorces, is it the children that are the
Speaker 3: biggest issue or.
Speaker 5: Is it money, So that really depends on the case.
Speaker 5: A lot of times parents are able to come together
Speaker 5: and realize that they're separating, and they try and protect
Speaker 5: their children from the being intricately involved in their divorces,
Speaker 5: such as getting an attorney for the child or testifying
Speaker 5: before a judge and closed chamber. So they choose to
Speaker 5: settle that issue very quickly through either a mediate or
Speaker 5: some use a family therapist, and so that issue can
Speaker 5: be taken off the table. However, in cases of high conflicts,
Speaker 5: where maybe there's abuse or the people never were able
Speaker 5: to communicate very well together, that can make custody much
Speaker 5: more involved and it can last much longer, so it
Speaker 5: can become much more contested. As they say, however, it
Speaker 5: also involves money because children cost money, so at times
Speaker 5: they're intertwined. So if one parent has more money, or
Speaker 5: one parent has less money, or they earn equally, it
Speaker 5: can be how expenses are paid for the kids, so
Speaker 5: it can become more complicated.
Speaker 3: Have you seen any changes in divorce, any patterns that
Speaker 3: are different in the last let's say ten years or so.
Speaker 3: Or is divorce still divorce?
Speaker 5: Divorce is still divorce no matter what time or what date.
Speaker 5: But divorce is still messy. And however, it's really guided
Speaker 5: by the two people who are married, and they should
Speaker 5: try and work together. Cases do tend to linger longer
Speaker 5: in the court system.
Speaker 1: Now.
Speaker 5: The divorces right now in New York can take between
Speaker 5: two and six years to actually finalize. So I would
Speaker 5: say that that is the only biggest changes that now
Speaker 5: it's taking significantly longer. I don't know if it's due
Speaker 5: to more filings or the reason that they do tend
Speaker 5: to take longer.
Speaker 3: That's a long time to wait for a divorce. So
Speaker 3: I also wanted to talk to you about no fault divorce.
Speaker 3: How many states have no fault divorce?
Speaker 5: All fifty states have no fault divorce. New York was
Speaker 5: the last to get no fault divorce and that was
Speaker 5: in twenty ten.
Speaker 3: And are some states moving or thinking about or trying
Speaker 3: in some way to get rid of no fault divorce.
Speaker 5: I hope they're not because no fault divorce would only
Speaker 5: clog court systems more. And also when I was practicing
Speaker 5: before twenty ten, we had one case that was going
Speaker 5: to go to trial over a false divorce. Now, in
Speaker 5: a false divorce, you can have a jury trial, unlike
Speaker 5: just a divorce matter, where a jury could decide whether
Speaker 5: one person can prove that they have the grounds as
Speaker 5: they call it, to get a divorce, such as cruel
Speaker 5: and usual punishment, stuff like that. They can they can
Speaker 5: try and prove that they were abused, and it can
Speaker 5: retrigger the person who has been abused. It's a horrible
Speaker 5: process fault divorce, if you think about it. If a
Speaker 5: person has to prove that the other that their spouse
Speaker 5: was horrible to them during their marriage, and they have children,
Speaker 5: no matter the age of the children, these two people
Speaker 5: are eventually going to sit at their children's and they
Speaker 5: are going to remember everything that was testified at that trial,
Speaker 5: which will have nothing to do with their children, but
Speaker 5: just how they treated each other during their marriage, which
Speaker 5: would prevent them from actually working together for the benefit
Speaker 5: of their kids and their grandkids.
Speaker 3: That's one change in the Law. I guess we can
Speaker 3: applaud thanks so much for coming on the show. Lauren.
Speaker 3: That's Lauren Crane of Benderin Crane. And that's it for
Speaker 3: this edition of the Bloomberg Law Podcast. Remember you can
Speaker 3: always get the latest legal news by subscribing and listening
Speaker 3: to the show on Apple Podcasts, Spotify, and at Bloomberg
Speaker 3: dot com, slash podcast, slash Law. I'm June Grosso and
Speaker 3: this is Bloomberg