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Quentin Riegel

Permit Traps – Proceed at Your Own Risk

By | Energy, Infrastructure, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Policy | No Comments

Government decisions derailing permits for infrastructure projects raise serious questions about future access and the cost of energy in this country. Affordable energy supplies are critical to the viability and competitiveness of U.S. manufacturers, but equally important is the ability to obtain a wide variety of other permits to carry on routine manufacturing operations. After successfully navigating federal, state and local government requirements, as well as opposition from national environmental groups during the permit approval process, a company is authorized to do business as long as it follows the permit.

When a Clean Water Act permit is approved and the individual is in compliance, the Act provides a shield against arbitrary enforcement actions and citizen suits. The permit sets those limits. Unfortunately, a company can be forced to defend itself in court when someone tries to claim that the permit requires more than it does. If undermined, the permit shield can be no shield at all, or at least a very expensive one to maintain.

That’s the situation in a case now before the U.S. Court of Appeals for the Fourth Circuit in Richmond. A citizen’s group wants the court to insert new limits in a permit that the government had considered and decided not to include. In an amicus brief, the Manufacturers’ Center for Legal Action argued that suits like this upend the process for setting and implementing water quality standards by second-guessing the interpretations of those responsible permitting authorities. They also create serious after-the-fact liability without fair notice.

This kind of regulation by litigation threatens to add another layer of government control, activated by special interest groups, on regulatory decisions. Enforcing permit requirements is appropriate, but changing the terms of a permit in the middle of production is an entirely new problem that increases uncertainty, saps the life from productive investments, and dampens our ability to create and sustain jobs.

Has the EPA Gone Too Far on Ozone?

By | Energy, Shopfloor Legal | No Comments

We think so. The Environmental Protection Agency’s (EPA) latest round of rulemaking setting a National Ambient Air Quality Standard for ozone lowers the tolerance level from 75 to 70 parts per billion (ppb). Though the change in the numbers is small, it is expected to be very difficult to achieve and, we argue, not “appropriate” as required by the Clean Air Act.  This is particularly true in areas of the country that are already struggling to comply with the previous levels, and the new rule will subject additional regions to stricter emission controls or permit denials.

Today, in our first major legal brief challenging the rule in court, we detailed why the EPA has actually exceeded its statutory authority to reduce the level. A key reason stems from background ozone levels. The new limits will simply be impossible to achieve if ozone naturally occurs at 70 ppb without any cars, trucks, power plants or manufacturers in this country.

The EPA said it was prohibited from considering the effect of background levels of ozone when setting its standard. Unfortunately, background levels fluctuate. Spikes in ozone can occur from natural phenomena like wildfires, lightning storms and weather conditions that transport ozone and the substances that create it from other countries, including those as far away as China. Even vegetation like pine trees produce gases that react to create ozone. Studies show that lightning can add as much as 25-30 ppb and wildfires can add more than 50 ppb. One modeling study estimates that Asian emissions contributed 8-15 ppb in certain areas of our country and that nearly half of springtime ozone readings above 70 ppb in the southwestern United States would not have occurred without migration of these pollutants from Asia.

A region fails to comply with the standard if it exceeds the ozone limits for an average of four days a year. Shouldn’t there be an exception when there are identifiable spikes from uncontrollable external sources? The law requires that standards be attained, but lowering the standard to this new level makes that much harder, if not impossible, in some areas. The EPA must take appropriate account of the evidence that background ozone concentrations that cannot be controlled can reach levels that will prevent attainment. The act requires such consideration, and failure to do so is arbitrary.

No Second-Guessing Allowed When EPA and Corps of Engineers Assert Jurisdiction over WOTUS

By | Shopfloor Legal, Shopfloor Main | No Comments

Whether or not you agree with the U.S. Army Corps of Engineers’ and Environmental Protection Agency’s (EPA) latest rule defining the scope of their power to regulate property that affects “waters of the United States,” there is no doubt that the threshold questionwhether the federal government has jurisdiction over particular actions on your propertyis an important one. If your property is subject to their jurisdiction and you want to do anything that might affect regulated areas, you’ll need to go through an expensive permitting process.

Permits under Section 404 of the Clean Water Act for development of lands that are now covered by the broader regulation entail spending money for four types of costs: permit application costs, compensatory mitigation costs, permitting time costs and impact avoidance and minimization costs. Studies relied on by the government estimate that a typical general permit costs from $22,079 each plus $12,153 per acre covered by the permit, while individual permits can cost more than twice that amount. And if you don’t get a permit, civil and criminal penalties, as well as private enforcement penalties from environmental activists, can be imposed. Read More

The Gotcha Claim: It’s Easy to Defraud the Government

By | Manufacturers’ Center for Legal Action, Shopfloor Legal | No Comments

You don’t have to intend to defraud the government to be sued for doing it. These days, individuals are suing manufacturers over essentially government-contract or regulatory-compliance issues by using an aggressive theory of liability under the False Claims Act (FCA). Individuals who have not themselves been harmed can sue government contractors under the FCA and recover huge awards, even when the contractor has committed no fraud.

Here’s what can happen. Suppose a manufacturer sells items to the government at $10 apiece. The government buys 1,000 of them for $10,000. If someone discovers that the manufacturer was out of compliance with an environmental or workplace regulation, he or she may file an FCA claim saying every product was sold under the false premise of compliance with those regulations. The result: $30,000 in treble damages, aggregate civil penalties of up to $11 million and attorneys’ fees—a steep penalty for a $10,000 contract. All of this can happen even though the government is fully satisfied with the performance of the contract and got what it paid for. Read More

Manufacturers File Second Suit Against EPA’s Clean Power Plan

By | Briefly Legal, Manufacturers’ Center for Legal Action, Shopfloor Legal | No Comments

Today, the Manufacturers’ Center for Legal Action filed a second lawsuit as part of our fight against the EPA’s overreaching regulations on energy. Earlier this year, we filed suit against the portion of the Obama Administration’s “Clean Power Plan” that would impose restrictions on existing power plants. Now, we’re arguing against the regulation on new power plants, which will limit access to new energy sources for manufacturers and for all Americans.

As we’ve noted before on Shopfloor, manufacturers have long demonstrated their commitment to environmental sustainability and reducing greenhouse gas (GHG) emissions. Since 2005, manufacturers’ annual GHG emissions have fallen by more than 10 percent while our value added to the economy has increased by 26 percent. We are producing more, while emitting less. In addition, manufacturers’ technological innovations and ingenuity have been integral in U.S. annual emissions falling by 700 million tons since 2005, which is a reduction greater than any other nation in the world. Read More

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Center Perspectives: Foreign Claims Against Manufacturers Deserve Supreme Court Scrutiny

By | America's Business, Briefly Legal, Shopfloor Legal, Shopfloor Main | No Comments

Foreign Claims Against Manufacturers Deserve Supreme Court Scrutiny

After a federal appeals court unearthed one provision of the Judiciary Act of 1789 in 1980, foreign nations have used the Alien Tort Statute (ATS) to claim violations of the “Law of Nations” by a variety of manufacturers for activities involving allegations of human rights abuses taking place in foreign countries. The statute was intended to allow federal courts to hear a few limited claims involving such matters as acts of piracy, violations of safe-conducts or interference with the rights of ambassadors. Read More

Free Flow of Commerce Suffers from Judge’s GMO Ruling

By | Manufacturers’ Center for Legal Action | No Comments

U.S. District Court Judge Christina Reiss ruled Monday that a major industry challenge to Vermont’s labeling law for food products containing genetically modified organisms (GMOs) can proceed, but that the enforcement process will not be slowed while the case is adjudicated. The ruling refused to forestall the effective date of July 1, 2016, when many food products offered for sale in Vermont must have labels saying whether they were produced entirely or in part with genetic engineering.

The ruling was in response to efforts by Vermont authorities to throw the case out, and by manufacturers to suspend the regulation until the courts can resolve fundamental constitutional and statutory questions that have arisen from this first-in-the-nation GMO labeling law. The 84-page decision covered a wide range of issues, and concluded that the industry was not able to overcome the substantial requirements for getting a preliminary injunction – most notably the need to prove irreparable harm from a law that will not be enforced for another year. Read More

Cost Consideration: Supreme Court Hears Arguments in Michigan v. EPA

By | Energy, Manufacturers’ Center for Legal Action | No Comments

Today the Supreme Court hears arguments in Michigan v. EPA, to resolve whether the Environmental Protection Agency (EPA) must consider costs when deciding whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.

It’s surprising that an agency would not consider costs when deciding how to regulate. We could make cars safer by requiring that they be made like tanks. We could reduce hospital infections by requiring hazmat-style protective equipment.  But alternatives like these are usually not appropriate. It is more reasonable to approach every regulation by weighing its unique costs and benefits. Read More

MCLA Amicus Argues a Balanced Consideration of Costs and Benefits for EPA

By | General | No Comments

If U.S. manufacturers had no costs from complying with federal, state and local regulations, they would have a significant advantage over competitors that have such costs. Wouldn’t that be nice? Obviously, compliance costs are an important factor in many business decisions, and the greater the costs, the harder it is for manufacturers to produce and to compete. Read More

BP Deepwater Horizon Settlement Raises Fundamental Constitutional Issue

By | Manufacturers’ Center for Legal Action | No Comments

This week, Halliburton Co. agreed to a $1.1 billion settlement of claims by the commercial fishing industry and others affected by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.  Last year, BP Exploration and Production Inc. and BP America Production Co. (“BP”) sought a court ruling that its own agreement to pay claims to injured parties should be limited to those who were actually affected, directly or indirectly, by the spill.

This is an obvious argument. It is a bedrock principle of Article III of the U.S. Constitution that courts are to resolve actual cases or controversies, which means that plaintiffs must have some injury and defendants must be the ones responsible for it.  BP has already acknowledged responsibility for its share of the damages from the spill, and in order for courts to have jurisdiction, the plaintiffs must show that they were injured by the spill.

Unfortunately, the Fifth Circuit ruled in May, with 3 judges dissenting, not to review a ruling that allowed claims without having to submit evidence that the claims arose as a result of the spill.  See our blog post here.  This failure has serious implications because it allows courts to certify classes of claimants for settlement purposes that could never have been certified to sue in court. Manufacturers of all kinds could face huge liabilities to parties never affected by their products.

BP has appealed to the Supreme Court of the United States. The NAM’s Manufacturers’ Center for Legal Action filed an amicus brief today urging the Court to take the case and reverse the lower court.  We warned that the lower court’s ruling will allow improper settlements and distributions, discouraging future settlements, increasing litigation costs, and flooding the courts with complex, time-consuming and expensive cases.  It also makes the courts complicit in an unsettling expansion of their power.

Quentin Riegel is Vice President and General Counsel for the National Association of Manufacturers.