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.

Pipeline Permitting and the Limits of Executive Power

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

The tortured, roundabout, drawn-out process that led last fall to the final disapproval of the Keystone XL pipeline project was equal parts astonishing and frustrating.  After a seven-year process, in the wake of determinations clearly to the contrary by the State Department, and in the face of unambiguous Congressional support, the Administration finally disapproved of the pipeline, finding that it was not in the national interest to approve the project.  Supporters of the pipeline wondered how it could be possible that the Executive branch could have such sweeping authority to kill a private commercial project that enjoyed strong bipartisan Congressional support and which the Administration had previously supported.  The decision clearly appeared to be one based on politics, but was it also one based on legitimate Constitutional authority?   In a brief recently filed by the Manufacturers’ Center for Legal Action in the US District Court for the Southern District of Texas, we join TransCanada in arguing that it was not.

In our amicus brief in TransCanada v. Kerry, we argue that the State Department’s prohibition of the pipeline violated the Constitutional separation of powers.  The Constitution explicitly grants to Congress the authority to regulate foreign commerce.  A cross-border pipeline clearly falls in the domain of foreign commerce.  While the Executive branch possesses the implied authority to regulate foreign affairs, which is oftentimes exercised collaboratively with Congress, and has relied upon that authority in this case, it does not have the authority to usurp the power of Congress to regulate commerce, particularly when Congress has clearly and repeatedly acted to demonstrate its support for construction of the pipeline.

While the President has noted that the pipeline crosses an international border, thereby implicating foreign affairs interests that fall within the realm of the implied power of the Executive, the justification offered for regulating the pipeline has nothing to do with border crossing, relations with Canada, or national security.  Rather, the President encroached on Congressional authority to regulate commerce in this case to create a helpful bargaining chip in the unrelated matter of the Paris Climate Change talks.  While this may be a legitimate political concern, it is not a permissible exercise of the foreign affairs power.

Stay tuned as this case progresses through the courts.  Not only are the specifics of the case very important, but in this era of heightened Executive branch power, the underlying separation of powers principles are equally so.

Court Upholds Industry Position on Requisite Harm to Initiate Litigation

By | Shopfloor Legal | No Comments

On May 16, 2016, the Supreme Court ruled in a 62 decision in favor of the NAM position in Spokeo, Inc. v. Robins. This case arose from an alleged statutory violation of the Fair Credit Reporting Act (FCRA). Spokeo published inaccurate information on its website that portrayed that the plaintiff, Robins, as having more education and a higher income than was true. Robins sued under the act for this error. This was a significant case for the business community that could have opened the litigation floodgates. The Ninth Circuit held that “the violation of a statutory right is usually a sufficient injury in fact to confer standing,” and that Robins could establish injury-in-fact because he alleged violations of “his statutory rights.”

The Supreme Court rejected the Ninth Circuit’s reasoning that particularization alone is enough to constitute injury-in-fact. Rather, the Supreme Court said to constitute injury-in-fact the harm must be both particularized (meaning that it must affect the plaintiff in a personal and individual way) and concrete (meaning it must be a de facto, real harm).

The Ninth Circuit erred by eliding over the separate concreteness inquiry, rendering its standing analysis incomplete.

The Supreme Court emphasized that concrete injuries need not necessarily be tangible, giving examples of injuries to free speech and free exercise. And it added that Congress plays an important role in elevating intangible harms to judicially redressable injuries. However, the Supreme Court said, “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” A plaintiff cannot simply allege a “bare procedural violation.” After all, a failure to provide the required notice under the FCRA might not cause any harm, because the information reported might be accurate. And even inaccurate information (for example, the Supreme Court said, listing an incorrect zip code) may not present any material risk of harm. The Supreme Court remanded the case to the Ninth Circuit to address whether the procedural violations of the FCRA alleged by Robins entail a degree of risk sufficient to meet the injury-in-fact concreteness requirement.

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.

MCLA Helped Secure Another Win for Businesses and Manufacturers

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This week, the MCLA helped secure another win for the business community. The decision in DC, CCDC v. DOL, by the D.C. Circuit Court, applied commonsense reasoning to reject the Department of Labor’s unprecedented attempt to expand the scope of federal law applicable to public works into the private sector. The court confirmed that where a public entity is not party to a construction contract, a “public works” project will not be subject to Davis-Bacon wage regulation, unless the project meets at least one of two criteria: (i) construction with public funding, or (ii) ownership or operation by the government.

The ruling could encourage private developers to seek out further opportunities to lease land from government entities for cost-efficient construction and development of private enterprises, because the risk of being subject to increased wage costs is eliminated if the developers follow the project delivery method used for the CityCenterDC, in which the District was not a party to the construction contracts leased the land to private developers. That being said, there are other similar cases in the legal pipeline, and this decision may be appealed to the U.S. Supreme Court. Notably, the president’s nominee for the Supreme Court was on the panel to hear the case, but recused himself from this decision.

The MCLA will continue to advocate for manufacturers in the courts preventing radical expansion of federal regulations. To learn more about the MCLA, visit our website.

A Court Powerless to Help You

By | Shopfloor Legal | No Comments

By TJ Wiethorn 

There is something in the courts called Auer deference, and you should really know about it. It can make you powerless in court, and it can make something you’ve done for years illegal overnight.

You could be in litigation with another party, but if a government regulation comes into the picture, an agency can butt in, submit a completely new interpretation of a rule and make a standard practice illegal, even if the agency was not a party to the case. Read More

Manufacturers Under Assault from State AGs

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Today’s announcement by a coalition of state attorneys general highlights again the underlying challenges manufacturers face with today’s legal climate. Their actions seek to intimidate those who are committed to free speech and debate. With an ever-present threat of fishing expeditions and litigation, manufacturers’ ability to freely exchange ideas and information is under assault.

Just as concerning, it appears that enterprising and partisan state attorneys general are also seeking to identify the next golden goose to create windfalls from the private sector for their state coffers. Once again, they think they have found it. Attorneys general should instead be focused on promoting a legal system that is conducive to economic growth and competitiveness.

This is a particularly disturbing action at a time when Americans want policymakers focused on policies that create jobs. This is a distraction that ultimately hurts the very shareholders they claim to be seeking to help.

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

U.S. Rejects Canada’s Claims to Self-Define IP Terms in Ongoing Dispute

By | intellectual property, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Main, Shopfloor Policy | No Comments

NAM Vice President of International Economic Affairs Linda Dempsey and NAM Vice President and Deputy General Counsel Patrick Forrest co-authored this blog post.

Manufacturers welcome the U.S. government’s strong rejection of Canada’s arguments in a pending investor-state dispute settlement (ISDS). Like the National Association of Manufacturers (NAM), the U.S. government has made clear that Canada cannot self-define core intellectual property (IP) obligations in the North American Free Trade Agreement (NAFTA). In a filing to the NAFTA tribunal hearing the case, the United States also fully affirmed that patents are investments that are protected from expropriation, meaning that the governments cannot seize or invalidate them without fair compensation. IP rights are of high importance to manufacturers in the United States and the good-paying jobs manufacturing provides throughout the country. Read More

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