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Press Releases

US DOJ Won’t Challenge States on Marijuana Legalization ‘At This Time’

Press release from the U.S. Department of Justice; August 29, 2013:

Today, the U.S. Department of Justice announced an update to its federal marijuana enforcement policy in light of recent state ballot initiatives that legalize, under state law, the possession of small amounts of marijuana and provide for the regulation of marijuana production, processing, and sale.

In a new memorandum outlining the policy, the Department makes clear that marijuana remains an illegal drug under the Controlled Substances Act and that federal prosecutors will continue to aggressively enforce this statute. To this end, the Department identifies eight (8) enforcement areas that federal prosecutors should prioritize. These are the same enforcement priorities that have traditionally driven the Department’s efforts in this area.

Outside of these enforcement priorities, however, the federal government has traditionally relied on state and local authorizes to address marijuana activity through enforcement of their own narcotics laws. This guidance continues that policy.

For states such as Colorado and Washington that have enacted laws to authorize the production, distribution and possession of marijuana, the Department expects these states to establish strict regulatory schemes that protect the eight federal interests identified in the Department’s guidance. These schemes must be tough in practice, not just on paper, and include strong, state-based enforcement efforts, backed by adequate funding. Based on assurances that those states will impose an appropriately strict regulatory system, the Department has informed the governors of both states that it is deferring its right to challenge their legalization laws at this time. But if any of the stated harms do materialize—either despite a strict regulatory scheme or because of the lack of one—federal prosecutors will act aggressively to bring individual prosecutions focused on federal enforcement priorities and the Department may challenge the regulatory scheme themselves in these states.

A copy of the memorandum, sent to all United States Attorneys by Deputy Attorney General James M. Cole, is available below.

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Press Releases

Tennessee Joins Federal Suit Against Airline Merger

Press release from the Office of Tennessee Attorney General Robert Cooper; August 13, 2013:

Tennessee Attorney General Cooper today joined a coalition of six states in conjunction with the U.S. Department of Justice Antitrust Division and the District of Columbia in a federal court complaint challenging a pending merger that would make a combined U.S. Airways/American Airlines the largest worldwide carrier.

If approved, the merger would reduce the current number of the larger “legacy” airlines from four to three – U.S. Airways/American, United/Continental and Delta/Northwest – and the number of major airlines to five to four. In fact, the three remaining legacy airlines and Southwest would account for over 80% of domestic travel, making fare and fee increases easier to achieve and even more profitable for the airlines than they already are.

American and U.S. Airways compete directly on thousands of heavily traveled nonstop and connecting routes, including many to and from Tennessee.

“Studies show that Tennessee’s four major airports in Nashville, Memphis, Knoxville and Chattanooga will experience fewer flights to certain destinations and travelers will pay more for remaining flights,” Attorney General Cooper said. “If this merger is completed, consumers will face decreased competition and increased prices because airlines can cut service and raise prices with less fear of competitive responses from rivals.”

For example, US Airways and American currently complete for customers with flights between Nashville and Washington Reagan Airport. The merger would eliminate this competition. Service to Chattanooga, Knoxville and Memphis could also suffer from fewer flights to major cities.

History has shown that when competition shrinks, coordination by the remaining airlines becomes easier as similarities in their networks and business models grow. Before 2008, there were six legacy airlines, but various mergers followed, ostensibly to save costs to travelers and offer more options. However, the promised cost-savings from previous mergers never materialized, and the major airlines have followed each other in raising fares, imposing new fees on travelers, reducing service, and downgrading amenities.

American entered bankruptcy with plans to restructure and remain independent, and adopted a standalone business plan designed to “restore American to industry leadership, profitability, and growth.” Now American is on a path to compete independently as a profitable airline; its most recent quarterly results reported a company record-high $5.6 billion in revenues, with $357 million in profits. And earlier this year, American’s management presented plans to emerge from bankruptcy on a standalone basis that would increase the destinations it serves in the U.S. and the frequency of its flights.

In contrast, if this merger goes through U.S. Airways would likely continue to pursue its ‘capacity discipline’ strategy — substantial reductions of service and capacity, a phenomenon that has followed each significant legacy airline merger in recent years. U.S. Airways has said that capacity reductions achieved through capacity discipline enable fare increases, and that pricing power results from reduced industry capacity. As their CEO has said, there is an “inextricable link” between removing seats and raising fares.

See Department of Justice’s release here: http://www.justice.gov/opa/pr/2013/August/13-at-909.html.