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Quentin Riegel

Court Ruling Pushes EPA Toward More Regulation

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

Government agencies have a tremendous advantage when it comes to defending new regulations in court. Judges start with a legal presumption that not only gives the benefit of the doubt to the agency, but sets a very high bar for reversing rules that most people might not have issued. As long as an agency’s rules are authorized by statute and not clearly erroneous or otherwise an abuse of discretion, courts will accept them.

That’s what the D.C. Circuit did today when it largely upheld the Environmental Protection Agency’s (EPA) rules on boilers and incinerators. All of the challenges to the rules by the Manufacturers’ Center for Legal Action and other business organizations were rejected by the appellate court. The court upheld one EPA requirement that could not be met by any small, remote incinerator or heavy oil-fired boiler in use today. It similarly rejected industry complaints about new energy assessment and recordkeeping requirements, as well as concerns about compliance with the rules when equipment malfunctions despite full compliance with regulations and due diligence by operators.

What is unusual is that the court agreed with several arguments made by environmental groups. It ordered the EPA to issue a regulation for cyclonic burn barrels and to decide whether certain other incinerators must be regulated under the Clean Air Act. The court also ordered the agency to provide further explanations about the decisions it made not to regulate emissions of a certain hazardous pollutant (non-dioxin/furan organic pollutant), about why certain exemptions should be allowed and about why it declined to regulate certain non-mercury emissions.

The bottom line is the court upheld all of the EPA’s regulations and ordered the agency to cover even more than it did, or at least give a full explanation of why it won’t.

If You’ve Touched Asbestos or a Similar Hazard, Can You Sue?

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

How much exposure to a hazardous substance gives you the right to sue the manufacturer? Now that scientific analysis of genes and atoms is so widespread, are manufacturers obligated to warn of infinitesimal risks? If not, where do you draw the line? How much exposure is enough to require a company to take action to warn everyone who might be exposed?

State courts around the country are now answering these questions. Earlier this month, the Georgia Supreme Court ruled that proving that a substance caused an injury requires reliable expert testimony, and not an expert who simply concludes that any exposure to asbestos at work–regardless of the extent of the exposure–was a cause of the worker’s mesothelioma. The expert’s testimony must be based on sufficient facts or data, using reliable scientific principles and methods. The Manufacturers’ Center for Legal Action argued for this result in an amicus brief filed with the court.

Courts in at least eight other states have recently ruled likewise, concluding that the theory that any exposure to a hazard causes an injury is not a scientifically proven proposition that is accepted in epidemiology, pulmonology or other medical fields. Nevertheless, it is still possible for plaintiffs with sufficient evidence of “frequency, regularity and proximity” of exposure to make a case.

Scientific discovery is therefore the keystone for future litigation. Manufacturers will need to keep up with the latest scientific findings relating to their products. Courts will need to assess whether a product is hazardous enough to actually cause harm, taking into account the latest information about dosage and response. It is critical that courts be gatekeepers who allow only valid scientific principles and sufficient evidence of exposure. Less demanding standards would essentially result in absolute liability for any company that makes hazardous materials if those products cross the path of the client of an aggressive trial lawyer. The Georgia court’s decision upholding strict evidentiary standards will help manufacturers focus on what they do best: improving products and creating jobs.

Four Ways the Supreme Court Helped Your Business This Year

By | Shopfloor Legal | No Comments

The U.S. Supreme Court issued its final opinions of the term this week, and various hot-button social issues caught much of the media’s attention. But what about the cases that directly affect manufacturers? How did the Supreme Court rule on issues that affect your ability to compete and create jobs, such as the burden of government regulations and aggressive litigation against you?

There is good news to report. First, the Supreme Court issued a rare decision ordering the Environmental Protection Agency (EPA) to halt enforcement of the Clean Power Plan while the rule’s legality is sorted out in a lower court. The Manufacturers’ Center for Legal Action (MCLA) sought this order because of the dramatic way in which the EPA decided to regulate the electric generation sector.

Second, the Supreme Court was quite willing this year to allow manufacturers to challenge other agency decisions in court. The Hawkes Co. case allows immediate judicial review of the Army Corps of Engineers’ decisions about their jurisdiction. The Encino Motorcars case shows how companies can challenge significant changes in agency interpretations that are insufficiently justified. At the same time, the Supreme Court made it clear that parties that sue companies must meet rigorous standing requirements to be in court. However, it allowed the certification of a class of plaintiffs through statistical evidence of injury rather than actual injury, making class-action cases against manufacturers easier to file.

Third, a couple of aggressive theories of liability have been tamped down. In particular, litigation from foreign parties against manufacturers in the United States continued to be scaled back when the Supreme Court ruled that the European community cannot use our Racketeer Influenced and Corrupt Organizations Act to litigate claims arising from acts occurring abroad unless there is a clear injury in the United States. In addition, claims by third parties against manufacturers under the False Claims Act for regulatory violations were substantially limited to claims for actual fraud.

Fourth, the Supreme Court continues a longstanding policy of enforcing arbitration agreements that states have tried to undermine with consumer protection laws allowing for burdensome class-action procedures. The DIRECTV case threw out a California statute that would have eliminated class-action waivers in consumer contracts.

Most of these decisions stand the test of time, making it even more important for the Supreme Court to hear from manufacturers about the substantial effect that litigation has on their ability to survive and thrive. The MCLA made your voice heard in the Supreme Court this year, with important and beneficial results.

Unanimous Supreme Court Ruling Offers Some Relief

By | Shopfloor Legal | No Comments

Responsible government contractors can breathe a short sigh of relief as a result of a surprisingly helpful opinion, albeit one that does not entirely relieve companies of liability under the broadly worded and highly punitive False Claims Act. At a time when consensus is hard to come by in other branches of government, a unanimous Supreme Court decision today cracked down on an expansive litigation tactic that would have subjected manufacturers across the country to potential treble damages liability for a wide range of regulatory or contractual violations.

The ruling affects companies that sell goods or services to the federal government. If you submit a bill to the government, someone may claim that you are trying to defraud the government if you are not in full compliance with your contract or with statutory or regulatory requirements under it. Fortunately, the Supreme Court scaled back the types of claims that third parties can make about your billing. It reversed an appeals court ruling that would have made every bill an implied representation of compliance with all relevant regulations and would have made any undisclosed violation of a precondition of payment grounds for a lawsuit for fraud.

Instead, courts will recognize fraud claims only if they involve violations of material statutory, regulatory or contractual requirements. The FCA does not apply to insignificant regulatory or contractual violations. However, the court will allow implied false certification claims in limited circumstances, where your claim for payment makes specific representations about the goods or services provided and where your failure to disclose noncompliance with material requirements “makes those representations half-truths.” This means that future lawsuits will require courts to conduct a “rigorous” and “demanding” inquiry into what you told the government about your deliverables, what part of your performance of the contract was deficient and how important that deficiency was to the government. Much leeway remains for third parties to make claims arising from a company’s lack of compliance with its obligations, but the legal standards are much clearer and eliminate FCA liability for insignificant violations of thousands of complex statutory and regulatory provisions that are not material to the contract.

The case is Universal Health Services, Inc. v. United States ex rel. Escobar, and the Manufacturers’ Center for Legal Action filed an amicus brief supporting this result.

The National Economy Gets a Boost from a Federal Appeals Court

By | Shopfloor Legal | No Comments

State legislators continue to try to impose their particular requirements and policy preferences on out-of-state manufacturers. Today, a federal appeals court issued a long-awaited ruling striking down an attempt by Minnesota to ban the use of electricity generated by large energy facilities in other states that use disfavored fossil fuels. The decision makes clear that states are limited by national laws like the Federal Power Act and the Clean Air Act, and one judge went even further to find the state’s restrictions to be an unconstitutional interference with interstate commerce. The Manufacturers’ Center for Legal Action supported this outcome with an amicus brief in the case, and the ruling is an important judicial restraint on local restrictions with interstate and national effects.

Unfortunately, states continue to adopt laws that purport to protect their own interests but that can cause dramatic effects on manufacturers outside their borders. Unique state labeling requirements, such as those for genetically engineered products, force companies to find national solutions for a single-state requirement. Trucking regulations in one state affect any manufacturer whose products move in interstate commerce.

Now under consideration are permit conditions for an export facility in Longview, Washington, that would prevent a manufacturer from simply transporting its product through the state because it is a disfavored fossil fuel. While it’s not a state law that is under consideration, it’s another way that state and local authorities are trying use their regulatory power to impede manufacturing, transportation and exports and the jobs that come with them. We will continue to remind them, even if we have to enlist the support of federal judges, that we must work together to develop national strategies to attain all of our economic and environmental goals.

Court Expedites Land Use Jurisdictional Challenges

By | Shopfloor Legal, Shopfloor Main, Shopfloor Policy | No Comments

If you are injured, the Supreme Court usually finds a way to allow you into a courtroom to air your grievances. Then it’s up to you to convince a judge or jury that the law provides a remedy.

Today’s unanimous decision from the Supreme Court in the Hawkes Co. case is an important reminder that the courts are open if your legal rights are impaired by the government. The courts serve a critical role in our tripartite system of democracy, providing checks and balances that are essential to prevent overreach by Congress and the executive branch. The decision gives a property owner the right to go to court after an agencyin this case the U.S. Army Corps of Engineers (Corps)decides that your property is under its regulatory authority. Corps or Environmental Protection Agency (EPA) decisions that your property is within their jurisdiction subject you to liability under the Clean Water Act, and you now have the right to challenge those decisions in court.

This ruling is important to ensure that such agency decisions are not arbitrary and capricious, or do not otherwise exceed an agency’s statutory authority. But legal challenges themselves are very expensive and time-consuming. It is far better that the agency get its jurisdictional determinations right from the beginning, under clear direction from Congress and with the proper application of its delegated authority.

Unfortunately, the Clean Water Act is anything but clear about the Corps’ jurisdiction, and the Manufacturers’ Center for Legal Action is in the middle of a long legal battle to clarify the meaning of the statute. That fight is over the administration’s latest interpretation of federal jurisdiction over “waters of the United States,” and we hope to provide further arguments to property owners when they think the government has reached too far. At the end of the day, we look forward to a final decision from the Supreme Court on how far the Corps’ and EPA’s jurisdiction goes, so that everyone, including individual landowners like the Hawkes Co., will better know where permits are required and whether they need to head back to the courtroom to vindicate their rights.

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 manufacturers in the United States, 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