American Forest & Paper Ass'n v. EPA
(N.D. Cal.)
Water Discharge Permits
The NAM and other associations filed challenges to purported state authority under the National Pollution Discharge Elimination System (NPDES) to implement Endangered Species Act requirements. Filed 5/20 and 5/27/97. This case could affect all discharge permits as EPA tries to imy pose Endangered Species Act requirements through NPDES programs under the Clean Water Act (CWA). On 3/30/98, the Fifth Circuit ruled that EPA cannot condition CWA permit decision on Endangered Species Act consultations. The Tenth Circuit case was dismissed on 9/1/98 with a decision holding that the plaintiffs did not have standing.
A 1996 EPA rule tried to delegate CWA enforcement and permitting decisions to Louisiana, but added new requirements that the state consult with the U.S. Fish and Wildlife Service and National Marine Fisheries about the possible effects of discharges on certain species. The 5th Circuit ruled that the CWA does not allow such consideration of factors outside the nine concrete criteria specified for the issuance of a permit.
The Court also ruled that an association need not have commented on a proposed rule during the rulemaking process to bring suit after the rule is issued. It also found that the association had "injury in fact," not speculative injury, because its members must comply with the provisions as their permits come up for renewal every five years, and because the EPA has already identified the circumstances under which it will veto a proposed permit.
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Bennett v. Spear
(U.S. Supreme Court)
Can only environmentalists bring citizen suits?
In this case, the Court unanimously held that the petitioners had standing to seek judicial review of a "Biological Opinion" issued by the Fish and Wildlife Service, under the citizen-suit provision of the Endangered Species Act (ESA) and the Administrative Procedure Act (APA).The Biological Opinion concluded that the long-term operation of the Klamath Project, a series of lakes, rivers, dams, and irrigation canals administered by the Bureau of Reclamation, was likely to jeopardize the continued existence of two endangered species of fish. The Opinion recommended that the Bureau protect these fish by maintaining minimum water levels on certain bodies of water. The Bureau agreed to follow this suggestion. Petitioners, who have competing economic and other interests in Klamath Project water, alleged that the Service's determination that the endangered fish were in jeopardy violated Section 7 of the ESA, that the minimum water level recommendation violated Section 4 of the ESA, and that each action was arbitrary and capricious under the APA. They further claimed that they had standing to bring these claims because the minimum water levels threatened to reduce their irrigation water supply. The Court first considered whether petitioners' standing under the ESA's citizen-suit provision was to be evaluated under the prudential principle that a "grievance must arguably fall within a zone of interests protected or regulated by the statutory provision . . . invoked in the suit." The Ninth Circuit had ruled that the zone-of-interests standard applied to claims brought under this provision and that the petitioners' claims fell outside the zone of interests protected by the ESA. The Supreme Court, however, held that the breadth of this citizen-suit provision (authorizing "any person" to "commence[e] a civil suit") indicated that Congress had determined that the zone of interests test was not to be the measure of standing under the ESA. The Court also concluded that the petitioners had standing under Article III. The Court held that at the pleading stage, an alleged reduction in irrigation water supply constituted an "injury-in-fact." Under the "relatively modest" causation standard in place at this stage of litigation, the Court further found that this injury was "fairly traceable" to the issance of the Biological Opinion and was likely to be "redressed" if the Opinion was set aside. The Court noted that judicial review of the petitioners' claims was authorized under two different federal statutes: while the petitioners' Section 4 claim was reviewable under the citizen-suit provision contained in the ES, their Section 7 claim was reviewable only under the APA.
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United States v. Hoechst Celanese Corp.
(4th Circuit)
Court deference to EPA enforcement decisions
This case involves an enforcement action for alleged violations of the federal regulations pertaining to equipment in facilities that produce or use benzene. The NAM filed a brief supporting arguments concerning the government's refusal to comply with Administrative Procedures Act and Clear Air Act provisions mandating that prior notice be given of agency regulatory requirements, thus, attempting to make a significant change in the meaning of a rule without first going through notice and comment. The Court deferred to EPA’s interpretation of "use," and found HCC had notice as of 1989. The case affects companies that recycle benzene at their facilities. Decided 10/27/97. This case was appealed to the Supreme Court, but the Court declined to review it.
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American Forest & Paper Ass'n v. EPA
(5th Circuit)
Water Discharge Permits
The NAM and other associations filed challenges to purported state authority under the National Pollution Discharge Elimination System (NPDES) to implement Endangered Species Act requirements. Filed 5/20 and 5/27/97. This case could affect all discharge permits as EPA tries to impose Endangered Species Act requirements through NPDES programs under the Clean Water Act (CWA). On 3/30/98, the Fifth Circuit ruled that EPA cannot condition CWA permit decision on Endangered Species Act consultations. The Tenth Circuit case was dismissed on 9/1/98 with a decision holding that the plaintiffs did not have standing.
A 1996 EPA rule tried to delegate CWA enforcement and permitting decisions to Louisiana, but added new requirements that the state consult with the U.S. Fish and Wildlife Service and National Marine Fisheries about the possible effects of discharges on certain species. The 5th Circuit ruled that the CWA does not allow such consideration of factors outside the nine concrete criteria specified for the issuance of a permit.
The Court also ruled that an association need not have commented on a proposed rule during the rulemaking process to bring suit after the rule is issued. It also found that the association had "injury in fact," not speculative injury, because its members must comply with the provisions as their permits come up for renewal every five years, and because the EPA has already identified the circumstances under which it will veto a proposed permit.
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National Association of Manufacturers v. EPA
(D.C. Circuit)
EPA Credible Evidence Rule
(Also known as Clean Air Implementation Project vs. EPA). The NAM filed this petition 4/18/97 to review a final EPA rule relating to credible evidence. The case affects manufacturers subject to new source performance standards (NSPS) and national emission standards for hazardous air pollutants (NESHAPs) under the Clean Air Act. The case was dismissed on 8/14/98 as unripe.
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National Association of Manufacturers v. U.S. Dep't of the Interior
(D.C. Circuit)
Natural Resource Damage Assessments
The NAM petitioned the D.C. Circuit to review final regulations establishing simplified "Type A" procedures for natural resource damage assessments under the Comprehensive Environmental Response, Compensation and Liability Act. The procedures rely on complex computer modeling with very little site-specific input, and create a rebuttable presumption against potentially responsible parties, including many NAM members. The NAM argued that the regulations were invalid because (1) liability might be imposed without a showing of actual injury, (2) an assessment includes restoration without considering feasibility or cost-effectiveness, and (3) a restoration model assumes losses that are speculative and hypothetical. The D.C. Circuit court on 1/16/98 rejected the NAM arguments, concluding that the Department of the Interior's interpretation of the relevant CERCLA provisions were entitled to deference and that its damage submodels "suffice."
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United States v. Bestfoods (CPC International, Inc.)
(U.S. District Court for the District of Columbia)
CERCLA liability for parent corporation is limited
Vacating the decision of the Sixth Circuit, a unanimous Supreme Court specified when a parent corporation may be held liable, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as an operator of a polluting facility that is owned and operated by its subsidiary. The mere fact that the parent corporation actively participated in and exercised control over the operations of the subsidiary will not, in itself, make the parent corporation derivatively liable unless, under applicable law (which the Court declined to identify), the subsidiary has been controlled to such an extent that it should not be regarded as a separate entity (a doctrine known as "piercing the corporate veil"). However, if the parent corporation actively participated in and exercised control over the operations of the facility itself, then it may be held directly liable as an operator of the facility.The NAM filed an amicus brief 2/20/98 arguing that state corporate law clearly limits the liability of shareholders of corporations (including shareholders that are themselves corporations), even when they actively participate in running the corporation. The brief argued that the courts should not create a new body of federal common law in place of the well-established body of state common law in this area.
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American Trucking Associations, Inc. v. EPA
(D.C. Circuit)
EPA air quality standards for ozone and particulate matter
(consolidated with American Petroleum Institute & NAM v. EPA) -- The NAM filed a brief in March of 1998 calling on the court to review the final rules on the EPA's new air quality standards for ozone and particulate matter, as well as a final EPA rule relating to the "federal reference method" for National Ambient Air Quality Standards. On May 14, 1999, the U.S. Court of Appeals for the District of Columbia rejected these rules implemented by the EPA concerning ozone pollution. This ruling, a victory for manufacturers, was subsequently appealed to the Supreme Court, which reversed in 2001.The D.C. Circuit's ruling temporarily stopped the EPA from assuming arbitrary authority. Manufacturers have struggled with EPA standards that are unrealistically strict and not reasonably related to clear health benefits. The ruling required EPA to say why the ozone pollution levels it has set are reasonable in term of health effects The Court denied in part and granted in part the EPA’s petition for rehearing on Oct. 28, 1999. The Government petitioned for Supreme Court review, on 1/26/99. The EPA appealed three issues, including whether: 1) the rulemaking process used by the EPA in revising the ozone and PM NAAQS "effects an unconstitutional delegation of authority"; 2) the D.C. Circuit erred in assuming it had authority to review as a final agency action EPA’s "preliminary preamble statements on the scope of the agency’s authority to implement the revised ‘eight-hour’ ozone NAAQS;" and 3) subpart 2 of the Clean Air Act (which sets requirements for areas to come into attainment with the one-hour ozone standard) restricts EPA’s authority under other provisions "to implement a new and more protective ozone NAAQS" until the one-hour standard is attained.
EPA did not appeal the D.C. Circuit’s finding that the Agency must consider all health effects, both negative and positive, in setting a standard. Background: When EPA issued its new air rule for ozone, the agency ignored the advice of its own scientific advisory panel and sidestepped a 1996 law designed to mitigate the costs of major rules on small businesses. These issues are the driving force behind an NAM lawsuit challenging EPA’s new ozone air quality standard. Two NAM briefs filed 3/23/98 ask the Court of Appeals to throw out the rule. The NAM briefs noted that EPA’s new standard lacks the scientific support called for under the Clean Air Act and could actually lower health protection. The new standard: Supplants congressional intent with an unsubstantiated policy decision made by the EPA Administrator; andIgnores EPA’s own Clean Air Scientific Advisory Committee, which found no discernable health benefit in moving to a different standard.Just as bad, EPA ignored its statutory duty to comply with the Small Business Regulatory Enforcement Fairness Act (P.L. 104-121), which requires agencies to study the potential impacts of major rules on small entities and find ways to mitigate their costs.
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Harmon Industries, Inc. v. Browner
(8th Circuit)
EPA enforcement rights under RCRA
On 9/16/99 the Eighth Circuit ruled that the Environmental Protection Agency can not bring its own enforcement action under the Resource Conservation and Recovery Act to secure additional penalties or impose other burdens on companies that generate wastes deemed hazardous under the Act. States currently administer their own RCRA-authorized programs that include settlements of violations. The court agreed with an NAM amicus brief asserting that the power of EPA to "overfile," or simultaneously enforce RCRA against companies being prosecuted under state RCRA programs would subject manufacturers to duplicative or inconsistent corrective measures and additional penalties. According to the court, the state enforcement authority is in lieu of and supplants the federal program.This is an important victory for manufacturers that have been subjected to multiple enforcement actions by the EPA and affected states.
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United States v. Smithfield Foods, Inc.
(4th Circuit)
NPDES requirements
In this case, the NAM supported Smithfield Foods seeking reversal of an EPA civil enforcement suit for violation of its National Pollutant Discharge Elimination System (NPDES) permit. Smithfield had an agreement with the Virginia State Water Control Board to meet new permit requirements, but the EPA sought to impose more than $12 million in fines despite an agreement Smithfield had reached with Virginia to connect to the local waste water treatment system.The Fourth Circuit ruled 9/14/99 that because Virginia had not formally modified the permit to allow certain discharges, its written statements that the phosphorous standard would not be enforced were irrelevant. It ruled that imposing both daily and monthly fines were not double counting. It also refused to allow Smithfield to offset its liability with payments being made to tie in to a municipal waste treatment facility. The bottom line: letters from state officials, without changes in the actual permits, will not eliminate federal EPA enforcement of NPDES requirements, and EPA can impose strict financial requirements.
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Arizona Public Service Co. v. EPA
(D.C. Circuit)
Indian tribal authority under the Clean Air Act
The NAM filed suit against the EPA 4/10/98 arguing that an EPA rule improperly granted Indian tribes authority to act under the Clean Air Act. On 5/5/00, the D.C. Circuit upheld EPA’s 2/2/98 Final Air Quality Planning and Management Rule for Indian Tribes ("Rule"). In April, 2001, the Supreme Court declined to hear the appeal.The Rule provides that the EPA will delegate to any federally recognized Indian Tribe, upon receipt of a properly completed tribal application, authority to implement federal Clean Air Act ("CAA") programs over lands located within the exterior boundaries of what EPA refers to as "Indian Country", as that term relates to a tribe. "Indian Country" thus includes all lands within the boundaries of a traditionally federally recognized Indian reservation (including privately owned, non-Indian lands), lands within the boundaries of off-reservation areas held in trust for a tribe by the federal government, and other lands over which a tribe can demonstrate that it has jurisdiction. Under the Rule, off-reservation "trust lands" include those lands purchased or acquired by a tribe or tribal member and placed into trust--including lands acquired for commercial and gaming casino purposes. The EPA’s definition of Indian Country conflicts with the far more restrictive definition of "reservation" used by Congress, the federal courts and even the EPA in other federal laws, cases and regulations governing tribal affairs. Pursuant to the Rule, tribes may also "redesignate", as "Class I" areas for air quality management purposes, lands located outside of traditional reservation boundaries. Under current federal law, only lands within such boundaries may be redesignated as Class I. Redesignation to Class I status invokes the most stringent federal air quality protection standards relating to the siting of new or modified manufacturing facilities in areas sometimes located several hundred miles away from the Class I area. Other features of the Rule include the elimination of the Title V requirement for review in state court of adverse tribal operating permit decisions and permitting delays and the insulation of tribes from citizen suits for asserted violations of the law. Moreover, upon approval of a tribal authority application under the Rule, state air permitting agencies will be stripped of their own authority to issue or renew installation, operation and other air permits to industrial sources located or seeking to locate within Indian Country, and existing state air permits issued to such sources will be invalidated. Prior to issuance of the Rule, tribes, like states, were required to affirmatively demonstrate the public health, welfare and environmental bases for their assertion of environmental authority over lands that are clearly otherwise within their jurisdiction. That is no longer the case. The Court’s decision now allows the EPA (an administrative agency), in conjunction with tribes, to redraw state boundaries for regulatory purposes and to dispossess state permit holders of substantial rights. The EPA asserts that other federal environmental laws similarly allow EPA to delegate to a tribe authority to regulate other environmental media within "Indian Country". The Petitioners in the case included, among others, the State of Michigan, several Arizona and New Mexico utility companies, the National Association of Manufacturers, the American Forest and Paper Association, the Michigan Chemical Council, the Rhinelander Area Chamber of Commerce and the Timber Producers Association of Michigan and Wisconsin, Inc. It is their position, among others, that decisions to redraw state boundaries for regulatory purposes must be made within the framework of established federal law and the United States Constitution, with full public participation, and not at the whim of federal administrative agencies. For more information regarding the Rule, contact Brian J. Renaud of Howard & Howard Attorneys, P.C., at (248) 723-0356, counsel in the case for NAM, AF&PA, the Michigan Chemical Council, the Rhinelander Area Chamber of Commerce, Inc. and the Timber Producers Association of Michigan and Wisconsin, Inc. Case decided on 5/5/00.
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Friends of the Earth v. Laidlaw Environmental Services, Inc.
(U.S. Supreme Court)
Ability of individuals bringing citizen-suits to seek civil penalties
Friends of the Earth brought an enforcement action against Laidlaw pursuant to the citizen-suit provision of the Federal Water Pollution Control Act (Clean Water Act). They alleged ongoing violations by Laidlaw of certain permits and sought monetary penalties, declaratory judgment, injunctive relief, attorneys’ fees and costs.The district court found that Laidlaw had committed several permit violations and imposed a penalty of $405,800. The court did, however, deny plaintiffs’ request for declaratory judgment and injunctive relief because Laidlaw’s violations had not harmed the environment and Laidlaw had been in substantial compliance for several years at the time the court issued its final order. The plaintiffs appealed the size of the penalty to the Fourth Circuit Court of Appeals, but did not challenge the denial of injunctive relief. Laidlaw argued that plaintiffs lacked standing. Applying Steel Co. v. Citizens for a Better Environment, the court concluded that "this action is moot because the only remedy currently available to Plaintiffs—civil penalties payable to the government—would not redress any injury Plaintiffs have suffered." It vacated the order of the district court and remanded the case with instructions to dismiss the action. On January 12, 2000, the Supreme Court reversed by a vote of 7 to 2. It held that the case is not moot even where the company has come into compliance with its permit, since it was in violation at the time of the complaint, and its violations could continue into the future if undeterred. It sent the case back to the lower courts to determine whether there was any chance that the company might still violate its permit in the future. The ruling is a step back from the Steel Company decision, where it found that citizen suits could not be filed for wholly past permit violations.
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Gulf Metals Inds., Inc. v. Delta Lloyds Ins. Co.
(Texas Supreme Court)
Insurance policy pollution coverage
The NAM filed an amicus brief with Halliburton Co. and Dresser Industries, Inc. on March 13, 2000 in a case involving how a standard insurance policy will be interpreted with respect to pollution. States have developed different interpretations of the standard language, and the NAM supports an interpretation that would allow coverage for unexpected and unintended discharges or emissions, even though they may not occur quickly. The Texas Supreme Court declined to hear this appeal on April 13.
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Pacific Lumber Co. v. Marbled Murrelet
(U.S. Supreme Court)
Attorney’s fees under Endangered Species Act
The NAM filed an amicus brief supporting a request for attorneys' fees where the lumber company won a citizen suit brought against it under the Endangered Species Act. (S. Ct., cert. denied 1/21/00).
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United States v. van Loben Sels
(9th Circuit)
Criminal liability for waste water
On February 28, 2000, the NAM filed an amicus brief opposing the criminal prosecution of a manufacturing CEO for the company's pollution release into a local waste treatment plant. The Ninth Circuit denied the petition for rehearing on 4/14/00. The issue involved whether a public sewer system should be considered part of the "environment" for purposes of the sentencing guidelines.
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Piney Run Preservation Association v. County Commissioners
(4th Circuit)
Discharge permit provisions
The NAM applauded the Fourth Circuit's 10/10/01 ruling in this case giving public and private permit holders under the Clean Water Act a margin of protection for discharges that would be reasonably contemplated in their permits. The Court held that there is a "protective shield" within which limited deviations in the properties of the permitted discharges are allowed, as long as the permit holder complies with the terms of the permit and the challenged discharges are within the "reasonable contemplation" of the permitting authority at the time the permit was granted.The NAM had filed an industry amicus brief with the Fourth Circuit in April on behalf of the defendants in the case. Plaintiffs sued when it was learned that a county-run wastewater treatment facility was discharging warm water into a local stream, even though its environmental permit did not expressly allow for heated discharges. NAM general counsel Jan Amundson said, "Although this ruling would suggest that future permit applicants need to be diligent and comprehensive with specific language during the application process, it should also send a signal to those contemplating nit-picking nuisance suits. The courts may be losing their patience for them."
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South Camden Citizens in Action v. NJ Dept. of Environmental Protection
(3rd Circuit)
Disparate impact of environmental permits
The NAM filed an amicus brief with the American Chemistry Council and the Chemical Industry of New Jersey on 6/29/01 opposing a citizen suit alleging that state environmental permits discriminate against racial or ethnic groups. This case involves the proposed development of a "brownfield," an area of abandoned, inactive or underutilized industrial sites that are located in urban areas that are disproportionately populated by minority and/or low-income citizens. Development of these sites attracts new industrial facilities, providing net benefits to their communities.The Third Circuit had wisely granted a stay of the district court’s decision, thus allowing St. Lawrence Cement Co. to start operations and remain open until a Merits Panel could hear the case. The district court 5/10 ignored the U.S. Supreme Court’s 4/24 Sandoval decision, which said private individuals may not sue states under Civil Right Act Title VI over unintended consequences of state agency decisions, including permits for manufacturing facilities. The NAM's brief argued that EPA's "disparate impact" regulations cannot be enforced by private plaintiffs under 42 U.S.C. § 1983, nor can they be enforced by private plaintiffs under section 602 of Title VI of the Civil Rights Act of 1964. Such claims are "so vague and amorphous -- so subjective and standardless-- that they strain judicial competence." The NAM brief said the district court ruling "opens up state environmental permits to collateral attacks in federal court . . . based on criteria that are not clearly delineated, understood or agreed upon." In addition, it "will result in federal courts throughout the nation sitting as local zoning boards reviewing environmental permit decisions." On 12/17/01, the Third Circuit agreed, ruling that there is no private right of action under Section 602 of the Civil Rights Act to enforce the "disparate impact" rules of the EPA.
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Whitman v. American Trucking Associations, Inc.
(U.S. Supreme Court)
Clean Air Act regulations
On 2/27/01, the Supreme Court rejected two main arguments in a challenge by the NAM and other industry groups of the Environmental Protection Agency’s power to set national air-quality standards under the federal Clean Air Act.
EPA concedes that these basic air-quality standards drive regulatory and compliance expenditures that run into the hundreds of billions of dollars per year. Nevertheless, the legal test applied by EPA, and approved by the Court, permits EPA to ignore the tools that have proven most effective in shaping and implementing effective regulatory programs.
These tools include, among others, consideration of indirect as well as direct effects; identification of significant risks of public heath; assessment of the costs and benefits of alternative margins of safety in preventing health risks; and a keen awareness of the practical and real-world effects of regulatory choices. These very tools are now at work shaping the regulatory policies of other federal agencies, including the Occupational Safety and Health Administration, and there is no reason that they could not be effectively applied to EPA as well.
The Supreme Court ruled that costs may not be taken into consideration when EPA sets clean air quality standards. It also ruled that the Clean Air Act is not an unconstitutional delegation of legislative power from Congress, since it includes language that "fits comfortably within the scope of discretion" previously permitted under prior Supreme Court precedents.
The Court did, however, remand the case for the lower court and the EPA to determine other issues and to reconsider how to reconcile conflicting interpretations of the implementation schedule for compliance. The NAM will actively pursue its remaining complaints about the ozone and particulate matter regulations.
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American Trucking Associations, Inc. v. EPA
(D.C. Circuit)
Ozone and particulate matter regulation
This litigation by the NAM and other business groups against the EPA went all the way to the U.S. Supreme Court in 2001 (see Whitman v. American Trucking Associations, Inc.)
. The Court remanded it to the D.C. Circuit for further proceedings regarding the validity of EPA's standard for ozone and particulate matter. On 3/26/02, the D.C. Circuit found that the EPA's 1997 NAAQS rules for PM2.5 and ozone are neither arbitrary nor capricious. The Court denied petitions for review except to the extent the Supreme Court’s 2001 decision and the D.C .Circuit’s 1999 decisions require further action by the EPA.The D.C. Circuit began by pointing out that its earlier decisions addressed only whether the Clean Air Act (or the EPA’s reading of the CAA) adequately limits the EPA’s discretion. However, the 3/26 decision involves whether the EPA reasonably exercised its discretion under the CAA. The Court found that the agency was not arbitrary and capricious in promulgating either rule. With respect to PM2.5, the Court said that the EPA need not “identify perfectly safe levels of pollutants” and need not “definitively identify pollutant levels below which risks to public health are negligible.” Importantly, the Court also rejected environmental groups’ challenges to the PM2.5 standard as insufficiently stringent. On ozone, the Court found that the EPA had a basis for its conclusion that the existing one-hour standard was inadequate. Based on the rulemaking docket, the Court concluded that the EPA’s choice of the 0.08 parts per million level was not arbitrary and capricious. Earlier holdings that the 8-hour ozone implementation policy is unlawful and that the EPA must consider evidence of ground-level ozone’s beneficial effects are left undisturbed by this ruling.
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Interim Guidance on federally permitted releases suspended
The NAM and 12 other organizations sued the EPA on March 17, 2000. Its petition for review challenged the EPA's interim guidance on the definition of federally permitted releases for air emissions. As a result of the suit, the EPA suspended the Interim Guidance on 5/19/00 in a motion to the court.On 4/17/02 the Environmental Protection Agency (EPA) published its "Guidance on the CERCLA Section 101(10)(H) Federally Permitted Release Definition for Certain Air Emissions." This guidance supersedes the December 17, 1999 Interim Guidance, which is now deemed to be withdrawn. The NAM praised the new guidance in a press release. The new guidance clarifies the discussion of volatile organic compounds (VOCs) and particulate matter (PM) limits and controls and when releases of hazardous substances which are constituents of these pollutants could qualify for the FPR exemption under CERCLA [Comprehensive Environmental Response, Compensation, and Liability Act] and EPCRA [Emergency Planning and Community Right-to-Know Act]. The Guidance also adds a section addressing nitrogen oxide (NO) and nitrogen dioxide (NO2). The guidance also discusses certain releases from minor sources and announces a forthcoming guidance document that addresses grandfathered sources. The lawsuit was dismissed voluntarily.
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National Electrical Manufacturers Association v. Sorrell
(U.S. Supreme Court)
Vermont light bulb labeling law
The NAM joined with the Electronic Industries Alliance in an amicus brief 11/20/01 urging the Second Circuit to rehear a case in which Vermont's light-bulb labeling law was upheld. Our concern is that state laws must be narrowly tailored not to unduly interfere with the free flow of goods nationwide, and Vermont's law relating to light bulbs containing mercury could seriously disrupt the distribution system of these products. The court denied the petition for rehearing on 1/8/02.The NAM filed an amicus brief supporting Supreme Court review of this issue, since there are many situations where states may enact laws that purport to affect both in-state and interstate commerce equally, but that as a practical matter make it extremely expensive for manufacturers and distributors to comply with conflicting, or simply different, labeling requirements at the end-user level. The Supreme Court declined to hear this appeal on 6/10/02.
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New York v. Federal Energy Regulatory Commission
(U.S. Supreme Court)
FERC regulation of access to electricity
The Supreme Court held 3/4/02 that the Federal Energy Regulatory Commission (FERC) may require that a public utility transmit competitors' electricity over its lines on the same terms that it applies to its own energy transmissions if the utility has unbundled the cost of transmission from the cost of energy when billing its retail customers. The Court also held that FERC's decision not to impose the same requirement on utilities that continue to offer only bundled retail sales was a permissible policy choice. This case is important to all businesses engaged in the transmission or sale of energy.
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United Haulers Association, Inc. v. Oneida-Herkimer Solid Waste Management Authority
(U.S. Supreme Court)
Waste flow-control regulation
The NAM supported an appeal to the Supreme Court of an adverse ruling by the Second Circuit that would allow a municipality, country or state to impose flow-control restrictions on the interstate transportation of solid waste. Flow-control laws allow local jurisdictions to prop up their disposal facilities by preventing waste generated in the locality from being taken anywhere else. The 1994 Supreme Court decision in the Carbone case ruled that a town's law flow-control ordinance discriminated against interstate commerce. The Second Circuit in this case provided a blueprint for local governments to avoid the Carbone decision by vesting part of the ownership of private waste disposal facilities in a public entity. The NAM filed a joint brief arguing that this ruling will seriously disrupt the interstate market in solid waste disposal services, including recyclables, and is based on a myopic focus on who owns the facility. On 1/7/02, the Supreme Court declined to review this case.
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United States v. Power Engineering Company
(10th Circuit)
Overfiling
The NAM supported a challenge to a district court ruling that allowed the EPA to "overfile," or bring a separate enforcement action under the Resource Conservation and Recovery Act (RCRA) against a company already being prosecuted by the Colorado Dept. of Public Health and the Environment. Other courts of appeals have taken the NAM’s position that such overfiling is illegal. The NAM's brief was filed on 9/17/01 with the American Iron and Steel Institute, the American Petroleum Institute, the Chamber of Commerce of the United States, the Environmental Federal of Oklahoma, the Michigan Manufacturers Association and the Western States Petroleum Association. On 9/4/02, the court affirmed, ruling that EPA's interpretation of RCRA is "not unreasonable."
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Bonnette v. Conoco, Inc.
(Louisiana Supreme Court)
Speculative damages
The Louisiana Supreme Court emitted a glimmer of sanity 1/28/03 when it overturned lower court rulings that made a company liable for speculative injuries and unproven damages from materials in soil taken from company property. We challenged the use of the “linear no-threshold” model of causation in tort litigation. This model essentially states that any level of exposure to a toxic agent is sufficient to cause injury.This is an important asbestos contamination case because the trial court and the appellate court awarded damages without any actual injuries: the claims arose from a slightly increased chance of contracting cancer and the fear of getting cancer, along with property damage. 143 plaintiffs filed suit, and then sought class action status. The trial court awarded from about $18,000 to $48,000 to individuals in 4 families. In its ruling, the Louisiana Supreme Court rejected 6 to 1 the trial court's awards for a "slightly" increased risk of contracting an asbestos-related disease, emotional distress and punitive damages. It allowed an award for property damage. The NAM supports the bedrock principle that proof that the defendant’s behavior actually caused harm should be a prerequisite to redress in our tort system lest our courts become flooded with lawyer-driven claims brought on behalf of persons who merely fear, but do not yet have and may never have, an injury.
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National Services Industries, Inc. v. New York
(2nd Circuit)
Successor liability under CERCLA
The NAM, Allied Waste Industries, Inc. and the National Solid Wastes Management Association filed an amicus brief 2/7/03 urging the court to reverse a district court ruling that holds an innocent business asset purchaser liable under CERCLA as a “successor” for Superfund damages caused by the selling company. Brief. (CERCLA is the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, which governs the clean-up of Superfund sites.)On 12/17/03, the court ruled, as most other federal courts have, that CERCLA does not include the "substantial continuity" doctrine. Courts must look to traditional common law rules of successor liability, instead of more liberal rules designed to expand the net of CERCLA liability. The court agreed that imposing an onerous "substantial continuity" standard would deter economically beneficial transactions and impose unpredictable liability of purchasers, depressing the price they would be willing to pay for a company's assets. This is a big win for NSI and other companies that want to buy the assets of other companies without assuming unknown Superfund liabilities. The case was sent back to the trial court for further proceedings, but the ruling overturned a judgment of $12,449,479.51 against NSI.
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United States v. Alcan Aluminum Corp.
(2nd Circuit)
Joint CERCLA liability
The NAM filed an amicus brief 6/5/01 with other organizations challenging a district court ruling that Alcan has joint and several liability under CERCLA for processing waste that is commingled with other wastes, without regard to its benign nature. The brief also argued that CERCLA should not be applied retroactively.In January, the Second Circuit ruled that Alcan could not avoid joint and several liability because its waste was not merely at background levels (since it contained PCBs that are not naturally occurring), and that the harmed caused could not be separated from the overall damage at the cleanup site. The court also ruled that CERCLA may be applied retroactively. The decision makes it harder for companies that contribute only small amounts of materials to a hazardous waste cleanup site to limit their liability for a much larger share of the cleanup costs.
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Alaska, Department of Environmental Conservation v. EPA
(U.S. Supreme Court)
EPA authority over state CAA permitting
The Supreme Court held 1/21/04, in a 5-4 decision, that the Environmental Protection Agency (“EPA”) may override a state’s exercise of authority under Section 169(3) of the Clean Air Act (“CAA”), 42 U.S.C. § 7479(3). Under the CAA, a new facility in an “attainment,” or already-clean, area must use the “best available control technology” (“BACT”) to control the emission of certain regulated pollutants. Section 169(3) provides that a “permitting authority” (ordinarily a state environmental agency) may determine the BACT for a proposed facility in an attainment area on a case-by-case basis taking into account several enumerated factors. The Supreme Court held that the BACT requirement constrains a state’s exercise of discretion under Section 169(3). It further held that the EPA had authority, under Sections 113(a)(5) and 167 of the CAA, to verify whether a state had complied with the BACT requirement and issue a stop-construction order if a state’s BACT selection is unreasonable. This case is important to any business engaging in activities that implicate the CAA or other federal statutes delegating authority to the States.
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Engine Manufacturers Association v. South Coast Air Quality Management District
(U.S. Supreme Court)
Preemption of state motor vehicle emission requirements
The Supreme Court held 4/27/04 that Section 209(a) of the Clean Air Act, 42 U.S.C. § 7543(a), preempts California air-quality-management district regulations that require certain motor vehicle fleet operators to purchase vehicles that the State has classified as “low emission” or that operate on an alternative fuel. Section 209(a) provides that no “State or political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines covered by this part.” The Court rejected arguments that the word “standard” in Section 209(a) reaches only production mandates imposed on manufacturers, and does not encompass purchase restrictions. The Court held that this argument was inconsistent with the plain meaning of “standard” and would create a nonsensical regulatory regime in which a manufacturer could not sell federally approved vehicles because state law would abrogate a purchaser’s right to buy them. The outcome of this case is important to the entire transportation industry.The NAM and 7 other business organizations filed an amicus brief 8/29/03 arguing that the fleet rules conflict with the Clean Air Act and are preempted.
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Aviall Services, Inc. v. Cooper Industries, Inc.
(U.S. Supreme Court)
Voluntary cleanup
The Supreme Court held 12/13/04 that a private party who has not been sued under Section 106 or 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9606 or 9607, may not obtain contribution under CERCLA Section 113(f)(1), 42 U.S.C. § 9613(f)(1), to recover amounts spent voluntarily remediating contaminated properties. The Court reasoned that Section 113(f)(1) limits a private party to seeking contribution “during or following any civil action” and that reading this provision to allow for contribution in the absence of a civil action to determine liability would render this limitation superfluous. Justice Ginsburg, joined by Justice Stevens, dissented on the ground that Section 107, which provides that persons responsible for cleanup costs under CERCLA “shall be liable for . . . necessary costs of response incurred by any other person,” should be read to create an implied right of action for contribution which is not limited by Section 113(f)(1) .This case is important for any business that owns properties containing hazardous substances, or that has sold properties in the past to companies that might voluntarily undertake remediation.
Decision below: 312 F.3d 677 (5th Cir. 2002) (en banc).
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Bates v. Dow Agrosciences LLC
(U.S. Supreme Court)
FIFRA preemption
The Supreme Court 4/27/05 clarified the extent of federal preemption stemming from the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. § 136. FIFRA, which regulates the use, sale and labeling of pesticides, provides that States "shall not impose or continue in effect any requirements for labeling of packaging in addition to or different from those required under this [Act]." The Court held that "[r]ules that require manufacturers to design reasonably safe products, to use due care in conducting appropriate testing of their products, to market products free of manufacturing defects, and to honor their express warranties or other contractual commitments plainly do not qualify as requirements for "labeling or packaging," even if those rules might induce manufacturers to alter product lables. Thus, FIFRA does not pre-empt a group of Texas peanut farmers' state law claims against a pesticide manufacturer for defective design, defective manufacture, negligent testing, and breach of express warranty. In contrast, the Court also concluded that "petitioners' fraud and negligent failure-to-warn claims are premised on common-law rules that qualify as "requirements for labeling or packaging." FIFRA therefore pre-empts those claims unless the corresponding requirements are equivalent to, and fully consistent with, FIFRA's labeling standards - a question to be resolved on remand. This decision is important to any business that is subject to FIFRA.Decision Below: 332 F.3d 323 (5th Cir. 2003).
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Massachusetts v. EPA
(D.C. Circuit)
EPA upheld in not regulating greenhouse gases as a pollutant
These cases were filed in 2003 by 12 states and various environmental and other organizations to force the Environmental Protection Agency to regulate greenhouse gases (carbon dioxide, methane, nitrous oxide and hydrofluorocarbons) from new motor vehicles as pollutants. The EPA and 10 other states opposed the suits, and the CO2 Litigation Group, of which the NAM is a member, intervened. On 7/15/05, the D.C. Circuit issued a splintered decision allowing the EPA to continue to decline to regulate greenhouse gases. Judge Randolph ruled that the EPA had discretion and a scientific justification not to regulate greenhouse gases, and, although Judge Sentelle refused to reach this issue, he ruled that the petitioners did not have standing to bring the case. Thus, the EPA’s decision stands. Judge Tatel dissented, arguing that the EPA does have the authority and has failed to give an adequate explanation for not regulating greenhouse gases. Whether the EPA is mandated by statute to regulate greenhouse gases is unresolved. It has declined to do so at this point. The NAM does not believe the EPA has this authority, nor is there sufficient evidence that emissions of greenhouse gases from domestic automobiles endanger public health or welfare.
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New York v. EPA
(D.C. Circuit)
New Source Review regulations
The NAM is one member of a coalition of associations known as the NSR Manufacturers Roundtable which filed a motion 1/15/03 to intervene in a suit brought by NY, CT, ME, MD, MA, NH, NJ, RI and VT against the EPA's final regulation governing the procedures for companies to install stringent emission controls at their facilities under the Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR) provisions of the Clean Air Act. These states challenged the legality of EPA's rule, and the NSR Manufacturers Roundtable intervened to insure that the court considers the views of manufacturers and the effects of the rule on industry. The Roundtable includes the Alliance of Automobile Mfrs., the American Chemistry Council, the American Forest & Paper Assn., the American Iron and Steel Institute, American Petroleum Institute, the Council of Industrial Boiler Owners, National Mining Assn., the National Petrochemical & Refiners Assn., the Portland Cement Assn. and the NAM.
The NSR Manufacturers Roundtable’s first brief (filed 5/11/04) challenged EPA language in the rule’s preamble and argued that the statutory language, as well as the history of its enforcement, makes clear that the first step of the analysis of whether there is a change to an existing emissions unit at a stationary source is the requirement that the emitting capacity of the existing unit must be increased (i.e., that “new pollution” be created) by the change.
An 8/30/04 brief supported the EPA’s methodology for determining whether annual emissions have significantly increased. The D.C. Circuit issued a mixed ruling on 6/24/05. It upheld some of the EPA’s decisions, vacated others, and rejected as not ripe industry’s challenge to the rule’s preamble language on the “actual-to-potential” methodology. The court’s main rulings are: EPA may use past emissions and projected future actual emissions, rather than potential emissions, in measuring emissions increases;EPA may use a 10-year lookback period in selecting the 2-year baseline period for measuring past actual emissions from sources other than utilities;EPA may use a 5-year lookback period in certain circumstances for electric utilities;EPA may abandon a provision authorizing states to use source-specific allowable emissions in measuring baseline emissions;EPA may exclude increases due to unrelated demand growth from the measurement of projected future actual emissions;EPA may implement the Plantwide Applicability Limitations (“PAL”) program;EPA may not use the Clean Unit applicability test, which measures emissions increases by looking to whether “emissions limitations” have changed;EPA may not exempt certain pollution control projects that decrease emissions of some pollutants but that cause collateral increases of others;EPA may not waive recordkeeping requirements for sources making changes. EPA will have to justify or revise this waiver.
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United States v. Duke Energy Corp.
(4th Circuit)
Permits for power plant repairs
This case is about whether permits are required when power plant repairs are made to allow boilers to continue in service and operate for more hours than before the renovations. The EPA argued that these repairs were modifications that allowed the boilers to produce more emissions (albeit at the same rate per hour) than authorized by existing permits. Duke Energy argued that the definition of a modification that would necessitate a new permit includes only changes that increase the hourly emission rate, since that is the definition the EPA uses under its New Source Performance Standards (NSPS). The Fourth Circuit ruled 6/15/05 that the EPA cannot interpret the word “modification” two different ways when the statutes in which the word appears define it identically. Consequently, since the definition of modification under the NSPS only applies to changes that increase the hourly emission rate, no permit is required.This is a significant victory for any business that generates emissions regulated by the Clean Air Act. American industry would grind to a halt if it were required to scrutinize for potential permits thousands of renovation activities each year. For instance, if the activity is a necessary repair or replacement project, the result could be an extended shutdown of the facility until it could be undertaken. The NAM and other business organizations filed a brief 10/15/04 supporting this result. The joint brief argued that New Source Review permit requirements are only triggered when facilities are physically changed or modified to create an increase in emissions over the level approved in the original permit process.
This case on appeal to the Supreme Court is Environmental Defense v. Duke Energy Corp.
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United States v. E.I. DuPont de Nemours and Co.
(3rd Circuit)
EPA’s power to recover oversight costs at Superfund sites (en banc)
The Environmental Protection Agency charges companies for remedial planning and remedial action monitoring costs that the EPA incurs, either themselves or through government contractors, while monitoring clean-up activities at Superfund hazardous waste sites. Since its 1993 Rohm and Haas decision, the U.S. Court of Appeals for the Third Circuit (covering Pennsylvania, New Jersey and Delaware) has not allowed such cost shifting from the EPA to manufacturers. That favorable ruling has now been overruled. It held that Congress conferred power on the EPA with an intelligible principle governing the exercise of such power, namely, that the remedial action be “not inconsistent” with the National Contingency Plan, which sets forth methods and criteria for determining the appropriate extent of removal, remedy and other measures. Other provisions also guide and constrain the EPA in its ability to impose oversight costs on responsible parties.The NAM joined with the American Chemistry Council, the American Petroleum Institute, the Chamber of Commerce, the Corporate Environmental Enforcement Council, the National Petrochemical and Refiners Association and the Superfund Settlements Project in an amicus brief 7/13/05 in support of DuPont. We argued that Congress never intended for EPA to finance its oversight activities by assessing the costs against those whom it regulates. Such a scheme must be authorized by a “clear statement” from Congress, particularly to avoid the many serious problems with the administration of the program. Our brief provided a detailed look at the history of (1) EPA performing more oversight than necessary, (2) EPA relying too heavily on contractors, (3) EPA not managing its contractors effectively, (4) EPA not negotiating effectively with its contractors, (5) contractors charging for excessive support costs, (6) and contractors having incentives to operate inefficiently. In addition, we warned that (1) EPA’s poor documentation and billing practices further reduce accountability, (2) the money collected is placed into special accounts with little accountability to Congress, and (3) an adverse ruling in this case could allow the EPA to assess similar costs under the Clean Air Act and the Clean Water Act. The EPA has been able to reduce its program support costs on an aggregate basis recently.
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Air-Conditioning, Heating & Refrigeration Institute v. Energy Resources Conservation and Development Commission
(U.S. Supreme Court)
Preemption of California energy regulations
The NAM and five other associations filed an amicus brief 10/14/05 supporting an appeal of a Ninth Circuit ruling that allows California to demand detailed information from manufacturers about energy efficiency. We argue that the California regulations are preempted by the Energy Policy and Conservation Act of 1975, which sets energy and water-use efficiency standards for appliances and expressly preempts any state regulation that “provides at any time for the disclosure of information with respect to any measure of energy consumption or water use” that differ from federal requirements. California argues that the law only applies to disclosure of information to consumers and not to the state government itself. Our brief argues that there is a split in the circuit courts, that there should be no presumption against preemption here, and that the issue is an important and recurring one appropriate for the Supreme Court to resolve.On 6/19/06, the Court declined to hear this appeal.
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American Lung Ass'n v. EPA
(D.C. Circuit)
8-hour ozone Phase I Implementation Rule
The NAM, the American Chemistry Council, the American Forest and Paper Association and the American Petroleum Institute filed joint motions to intervene to help defend the EPA against two suits brought by the ALA and 3 environmental groups over some of its Clean Air Act rules. The rules relate to issues that were reconsidered by the EPA as a result of earlier litigation, and are entitled, “Nonattainment Major New Source Review Implementation Under 8-Hour Ozone National Ambient Air Quality Standard: Reconsideration,” and “Implementation of the 8-Hour Ozone National Ambient Air Quality Standard – Phase 1: Reconsideration.”
Industry supports the new rules because they provide reasonable answers to questions relating to the implementation of tougher clean air requirements. First, since the old system of measuring emissions has been revoked, the new rules do not mandate certain contingency measures if an area of the country does not meet those old standards. Second, even though the old standard has been revoked, portions of it remain in place and there are new ways to demonstrate compliance with the standard. Third, new source review permitting requirements will be triggered based on the new 8-hour standard, which generally will apply to fewer facilities.
For further details, see South Coast Air Quality Management District v. EPA.
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Carabell v. U.S. Army Corps. of Engineers
(U.S. Supreme Court)
Clean Water Act jurisdiction
A divided Supreme Court ruled 6/19/06 that the Army Corps of Engineers may have impermissibly exercised jurisdiction under the Clean Water Act over wetlands connected to tributaries of “navigable waters” only by man-made drains and ditches. To constitute a “navigable water” under the Act, a water or wetland must have a “significant nexus” to waters that are or were navigable in fact or that could reasonably be made so. The Sixth Circuit ruled that even a transitory “hydrological connection” to a tributary of a “navigable water” constituted a “significant nexus,” a test satisfied by the drains and ditches. The Supreme Court reversed and remanded, but no opinion garnered a majority “on precisely how to read Congress’ limits on the reach of the Clean Water Act.”In the plurality opinion joined by Chief Justice Roberts and Justices Thomas and Alito, Justice Scalia set forth a two-part test for whether wetlands are subject to the Act: “First, that the adjacent channel contains a ‘water of the United States,’ (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” The plurality concluded that “ecological considerations” warrant treating a wetland as part of an adjacent navigable water only where there is a continuous surface connection—and, thus, a “boundary-drawing problem”—between the wetland and the adjacent navigable water. The plurality remanded the case for consideration of whether the drains and ditches contained a permanent flow of water, and whether they possessed a surface connection sufficient to sustain the Corps’ jurisdiction. Justice Kennedy, concurring only in the judgment, took issue primarily with the plurality’s rejection of “ecological considerations.” Noting that the “absence of an interchange of waters [may make] protection of the wetlands critical to the statutory scheme,” Justice Kennedy concluded that “wetlands possess the requisite nexus … if the wetlands … significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” The concurrence also contested the plurality’s permanence requirement. Justice Kennedy did recognize, however, that the wetlands’ proximity to navigable-in-fact waters should be considered “on a case-by-case basis” to avoid “the potential overbreadth of the Corps’ regulations[.]” Justice Kennedy concurred in the remand because the lower courts had not adequately considered “whether the specific wetlands at issue possess a significant nexus with navigable waters.” This decision is significant to any business involved in the development of property in or around wetlands.
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In re Final Rule to Implement the 8-Hour Ozone NAAQS -- Phase 1
(EPA)
Ozone regulations
The National Petrochemical & Refiners Association (NPRA) and the NAM 6/29/04 submitted to the EPA a Petition for Reconsideration of the final rule to implement the 8-hour ozone national ambient air quality standard (NAAQS) and the designations and classifications for the ozone standard. Industry is concerned that the timetable for certain facilities in nonattainment areas to come into compliance is too short. At least 15 regions of the country will need more time to come into compliance than is provided by the EPA.
Due in part to our efforts, the EPA reconsidered the issues before publishing its final rule. Industry supports the new rule because it provides reasonable answers to questions relating to the implementation of tougher clean air requirements.
For further details, see American Lung Association v. EPA.
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New Mexico v. General Electric Co.
(10th Circuit)
Money damages; double recovery
The NAM joined with the American Chemistry Council, American Petroleum Institute, National Mining Association, the U.S. Chamber of Commerce, the U.S. Council for International Business and 5 other associations in an amicus brief 5/27/05 in the U.S. Court of Appeals for the 10th Circuit. We argued that the state of New Mexico may not seek money damages from companies involved in the clean-up of hazardous materials in the South Valley Superfund Site. The lower court had ruled that New Mexico did not prove that it would have used the water under the Superfund site, and therefore could not prove damages.The NAM brief informed the court that New Mexico’s claim seeks double recovery. The companies worked together for nearly 15 years with the U.S. Environmental Protection Agency and the New Mexico Environmental Department to return water at the site to drinking water standards, yet were being sued to replace the resource that they cleaned up. Allowing such double recovery is a direct threat to the federal and state cleanup programs. To be successful, such cleanup efforts must have the maximum voluntary participation by the companies involved. It is unfair to allow the state with one hand agree to the clean-up plan and implementation at the site, and then have it turn around and sue for damages because it thinks the clean-up should have done more. In addition, CERCLA (the Superfund law) provides a limited number of ways in which an EPA remediation remedy may be challenged in court. This is to help prevent time-consuming litigation that would hinder the prompt clean-up of Superfund sites. Furthermore, we argued that the state cannot claim damages for the lost use of the water if no one in fact ever suffered damages from not having the water available. Now that the water has been cleaned, it is available for future use. The state admits that the more than $1 billion in damages it seeks will not be used for water quality remediation. The industrial community and natural resource trustees have been working toward increased cooperation and trust in the resolution of natural resource damage cases at individual sites, as well as to increase mutual understanding and certainty in the process as a whole. Claims like the one brought by the State of New Mexico have the potential to gravely set back this progress. Attorneys general from 13 other states filed an amicus brief in support of New Mexico.
On October 31, 2006, the Tenth Circuit rejected New Mexico's challenge. It ruled that the state could not challenge CERCLA remediation efforts until they are completed, and seeking money damages does just that. It ruled that CERCLA preempts "any state remedy designed to achieve something other than the restoration, replacement or acquisition of the equivalent of a contaminated natural resource."
The state also has no claim for damages from the loss of water, since New Mexico is part of the Middle Rio Grande Administrative Area, which controls the use of water and substituted another well's water for the water temporarily lost to the clean-up effort. Thus, there was no net loss of water to Albuquerque.
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New York v. EPA
(D.C. Circuit)
Equipment Replacement Rule case
The NAM is a member of the Equipment Replacement Rule Coalition, which filed a brief 12/9/05 in a suit brought by the State of New York against the EPA over the agency's 10/27/03 final rule titled "Prevention of Significant Deterioration (PSD) and Non-Attainment New Source Review (NSR): Equipment Replacement Provision of the Routine Maintenance, Repair and Replacement Exclusion." This rule governs the factors that determine whether companies must obtain EPA permits before replacing broken or deteriorating equipment at their industrial facilities. New York challenged the rule as too lenient. The Equipment Replacement Rule Coalition, comprising various trade associations, manufacturers and utilities, generally support the EPA's new rule.
Our brief on the merits argued that EPA has discretion under the Clean Air Act to issue the rule, and that major modifications are not any physical plant changes, but only those that increase an existing unit’s design capacity to emit.
On 3/17/06, the Court vacated the rule. It decided that the Clean Air Act’s permit requirements for “any physical change” do not allow the EPA to expand the category of projects that it views as “routine replacement.” The only exceptions are projects that do not result in emissions increases or that are de minimis. The decision leaves the existing Routine Maintenance, Repair and Replacement Exclusion in place.
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Pakootas v. Teck Cominco Metals, Ltd.
(9th Circuit)
CERCLA
After the Environmental Protection Agency issued a Unilateral Administrative Order to a Canadian company to conduct a study on contamination of the Columbia River in this country from its smelter in Canada, an Indian tribe sued to enforce the order. The company argued that the EPA does not have jurisdiction under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the U.S. federal district court ruled otherwise. The company appealed, and the Ninth Circuit affirmed, ruling 7/3/06 that the EPA’s order only applied to a “facility,” as it’s defined in CERCLA, within the territorial boundaries of the United States. Even though the smelter was located in Canada, the definition of a facility under CERCLA is an area where a hazardous substance has been deposited or otherwise comes to be located. This is a very broad definition of facility that subjects foreign companies to liability for pollution in the United States.The court also ruled that the slag located in the United States was leaching hazardous substances, thus satisfying the legal requirement for liability that there be a “release” from the facility into the environment. EPA’s jurisdiction did not extend to the smelter across the border, but does cover the underwater facility and hazardous releases in the United States. The NAM joined with the National Mining Association supporting Teck Cominco’s appeal. In an amicus brief filed 6/13/05, we argued that CERCLA applies only within this country unless Congress clearly expresses an intent to apply it extraterritorially, which it did not. These kinds of disputes are quintessentially an international concern, not for unilateral action by one country's EPA. Private litigation upsets the resolution of such disputes through diplomatic means, or through the long-standing model of an arbitration group that was specifically established for the smelter in the 1930s. Allowing such litigation in U.S. courts opens them up to worldwide claims, particularly as environmental science improves, and could subject U.S. firms to retaliatory litigation abroad, imposing multiple and conflicting standards on environmental behavior.
Teck Cominco appealed for rehearing. On 7/24/2006, the NAM and the National Mining Association filed a brief in support of this appeal, arguing that the site of the release is irrelevant for resolving the question whether the United States is improperly applying its law to an entity based in another country. The decision ignores the history of negotiated international disputes and transforms CERCLA into a global environmental statute. Rehearing was denied on Oct. 30, 2006.
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Rapanos v. United States
(U.S. Supreme Court)
Clean Water Act jurisdiction
A divided Supreme Court ruled 6/19/06 that the Army Corps of Engineers may have impermissibly exercised jurisdiction under the Clean Water Act over wetlands connected to tributaries of “navigable waters” only by man-made drains and ditches. To constitute a “navigable water” under the Act, a water or wetland must have a “significant nexus” to waters that are or were navigable in fact or that could reasonably be made so. The Sixth Circuit ruled that even a transitory “hydrological connection” to a tributary of a “navigable water” constituted a “significant nexus,” a test satisfied by the drains and ditches. The Supreme Court reversed and remanded, but no opinion garnered a majority “on precisely how to read Congress’ limits on the reach of the Clean Water Act.”In the plurality opinion joined by Chief Justice Roberts and Justices Thomas and Alito, Justice Scalia set forth a two-part test for whether wetlands are subject to the Act: “First, that the adjacent channel contains a ‘water of the United States,’ (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” The plurality concluded that “ecological considerations” warrant treating a wetland as part of an adjacent navigable water only where there is a continuous surface connection—and, thus, a “boundary-drawing problem”—between the wetland and the adjacent navigable water. The plurality remanded the case for consideration of whether the drains and ditches contained a permanent flow of water, and whether they possessed a surface connection sufficient to sustain the Corps’ jurisdiction. Justice Kennedy, concurring only in the judgment, took issue primarily with the plurality’s rejection of “ecological considerations.” Noting that the “absence of an interchange of waters [may make] protection of the wetlands critical to the statutory scheme,” Justice Kennedy concluded that “wetlands possess the requisite nexus … if the wetlands … significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” The concurrence also contested the plurality’s permanence requirement. Justice Kennedy did recognize, however, that the wetlands’ proximity to navigable-in-fact waters should be considered “on a case-by-case basis” to avoid “the potential overbreadth of the Corps’ regulations[.]” Justice Kennedy concurred in the remand because the lower courts had not adequately considered “whether the specific wetlands at issue possess a significant nexus with navigable waters.”
This decision is significant to any business involved in the development of property in or around wetlands.
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S.D. Warren Co. v. Maine Board of Environmental Protection
(U.S. Supreme Court)
Clean Water Act jurisdiction
The Supreme Court 5/15/06 decided that river water utilized by private dams is “discharge” within the meaning of Section 401 of the Clean Water Act, 33 U.S.C. § 1341 (a)(1), after the water’s hydroelectric use in the dam. Section 401 requires that if an activity “may result in any discharge into the [Nation’s] navigable water[s],” an applicant for a federal license or permit must obtain a certification that the activity will not violate state water quality standards. The Act does not define the term “discharge,” apart from providing that “[t]he term ‘discharge’ when used without qualification includes a discharge of a pollutant, and a discharge of pollutants.” 33 U.S.C. § 1362(16). The Court unanimously concluded that because the term is not further defined in the statute and is not a term of art, it is to be construed “in accordance with its ordinary and natural meaning”—a “flowing or issuing out.” The Court rejected arguments that a different meaning is dictated by the surrounding language of Section 401, by the meaning of Section 402 of the Act, or by legislative history. This decision is important to any business that may be subject to regulation under the Clean Water Act.Decision Below: 868 A.2d 210 (Me. 2005)
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South Coast Air Quality Management District v. EPA
(D.C. Circuit)
8-hour ozone Phase I Implementation Rule (Consolidated with American Lung Assn. v. EPA)
The NAM is part of a joint industry effort to support the Environmental Protection Agency’s 8-Hour Ozone Phase I Implementation Rule. Since enactment of the Clean Air Act in 1990, EPA has been working to implement provisions that establish ozone control requirements and deadlines for compliance. First it established a standard based on a 1-hour measurement system, with 5 classifications of violations (marginal, moderate, serious, severe or extreme). In 1997, EPA replaced the 1-hour standard with a more stringent standard with an 8-hour averaging time, and, after court challenges that went to the Supreme Court, again modified the regulation to provide different compliance timetables depending on the levels of ozone in a particular area.The State of Ohio sued to delay the 8-hour standard and to force EPA to adopt more reasonable deadlines. It feared that implementation will require the “depopulation strategy,” whereby all local industry must shut down and all local vehicle traffic must be stopped in the Cleveland-Akron area. The Baton Rouge Chamber of Commerce sued to eliminate enforcement under the old 1-hour standard. The American Lung Association, the Natural Resources Defense Council and others, sued to force the use of specific timetables for implementation and to prevent companies from backsliding from the old standard. The NAM and other industry groups intervened in these suits to generally support the EPA’s latest efforts. Our brief argued that the EPA’s balance of compliance requirements involving either the old 1-hour standard or the tougher 8-hour standard is valid. Nothing in the Clean Air Act requires old standards to remain in effect in perpetuity. Since the old standard was revoked, penalties should not continue to be assessed under that system. We supported EPA’s determination that an area subject to the 8-hour measuring standard should be subject only that the new classification system that goes with it.
On December 22, 2006, the D.C. Circuit vacated the rule and remanded the matter to EPA for further proceedings. The court upheld EPA's decision to revoke the 1-hour ozone standard, but imposed substantial restraints. It struck down EPA's decision classifying nonattainment areas under the generally less demanding Subpart 1 (of Part D of Title I), instead ruling that areas with 8-hour "design values" (the measured concentration of ground-level ozone) above .09 ppm must be classified under Subpart 2. It called EPA's decision to apply only Subpart 1 requirements to areas with 8-hour design values between .08 ppm and .09 ppm unreasonable. In addition, EPA's rules were designed to prevent "backsliding" by regulated industries, and the D.C. Circuit ruled that several requirements continue to apply (such as New Source Review requirements, section 185 emission fees, contingency plans for failure to improve, and local transportation planning restraints).
Until further word from EPA, the new 8-hour designation/classification system was vacated, but the designations/classifications themselves were in a separate rule that was not vacated. Thus, those designations and classifications apparently remain in effect, with State Implementation Plans due in June. In addition, the anti-backsliding provisions under the 1-hour rule are still in effect.
On March 22, 2007, the NAM joined with other organizations in a petition for rehearing. We argued that the court's decision expands EPA's Section 172(e) authority to prevent companies from backsliding on ozone pollution limits. We argued that the backsliding provision applies only if air quality standards are relaxed, and the EPA in fact issued revised standards that are more stringent. In addition, existing case precedent requires that courts defer to EPA interpretations that are reasonable. The court's decision second-guessed the EPA's interpretation, and conflicts with that of another federal appeals court. The petition for rehearing was denied 6/8/2007.
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E.I. DuPont de Nemours and Co. v. United States
(U.S. Supreme Court)
Contribution in Superfund cleanup cases
The NAM joined other groups 12/27/06 in an amicus brief urging the Supreme Court to hear an appeal by DuPont involving the costs of cleaning up contaminated Superfund sites. The right to collect a fair share of the cleanup costs from other parties, including governments, who are responsible for contributing to the hazardous wastes in Superfund sites, is critically important to manufacturers and to the cleanup process. Our brief urges the Court to review a Third Circuit decision that denied the right of a manufacturer to seek contributions from other parties that helped create the problem.
We argue that CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, was enacted to facilitate prompt and effective cleanup of contaminated sites, and a right of contribution is integral to achieving this goal. The Third Circuit's decision will impede the national effort to clean up sites, will unfairly burden a few private parties, and will discourage or delay the redevelopment of many of our nation's cities. The court's decision is also in direct conflict with decisions by unanimous panels of the Second and Eighth Circuits.
The brief describes four important categories of cleanups that will be discouraged and/or delayed by the Third Circuit's ruling: (1) thousands of sites polluted by the federal government, (2) thousands of sites subject to corrective action under Subtitle C of the Resource Conservation and Recovery Act (RCRA), (3) Superfund sites, and (4) thousands of brownfields sites whose only realistic potential for cleanup is voluntary action by responsible parties.
The NAM joined with the Superfund Settlements Project, the American Chemistry Council, the American Petroleum Institute and the United States Conference of Mayors in the brief.
On 6/18/07, the Court granted the petition, vacated the lower court's decision and sent the case back for reconsideration in light of its recent decision in United States v. Atlantic Research Corp. The lower court is expected to rule in favor of Dupont.
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Environmental Defense v. Duke Energy Corp.
(U.S. Supreme Court)
New Source Review permit requirements
On April 2, 2007, the Supreme Court ruled unanimously that the definition of the word “modification” can be interpreted in different ways by the EPA under separate Clean Air Act enforcement regulations with different ways of implementation. It overturned a Fourth Circuit ruling that required EPA to conform the interpretation of “modification” in regulations for the Prevention of Significant Deterioration (PSD) to the interpretation of that word under the New Source Performance Standards (NSPS) regulations.
The NSPS regulations apply when a stationary source is modified so that its hourly emissions rate increases. The PSD regulations require a permit when a modification of a stationary source is a major one and only when it would increase the actual annual emission of a pollutant above the actual average for the two prior years.
The Supreme Court upheld EPA’s decision to impose permit requirements under the 1980 PSD regulations that may apply even though a change to a major stationary source does not increase an emitting unit's hourly emissions rate. It ruled that an enforcement court may not implicitly invalidate the 1980 PSD regulations unless it is shown that review of the underlying issue could not have been obtained in accordance with the normal Clean Air Act judicial review procedures.
In terms of impact, this ruling is limited to an interpretation of the 1980 PSD rules, which have since been amended in 2002. In the rule amendments, EPA clearly indicated that it would use for the future an annual emissions test for PSD and provided specific standards that govern application of that test. Thus, the potential scope of impact for this ruling is limited to enforcement for actions that may have occurred under the prior version of EPA's rules.
The NSR Manufacturers Roundtable, including the NAM, participated in this case in the Fourth Circuit and in the Supreme Court.
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Massachusetts v. EPA
(U.S. Supreme Court)
Whether EPA must regulate greenhouse gases as pollutants
In a major 5-4 ruling, the Supreme Court decided 4/2/2007 that the EPA must reconsider its decision not to issue new motor vehicle emission standards under its authority under section 202(a)(1) of the Clean Air Act, relating to the regulation of air pollutants associated with global climate change. Under that section, the EPA Administrator must regulate air pollutants when, “in his judgment,” such pollutants “may reasonably be anticipated to endanger public health or welfare.” 42 U.S.C. § 7521(a)(1). Several parties petitioned the EPA to set regulatory standards for air pollutants associated with climate change. The EPA denied the petition, concluding that it lacked authority to do so, and that, even if it had authority, it would deny the petition based on various policy considerations not expressly addressed in the statute, including scientific uncertainties, the inefficiency of piecemeal approaches to the climate change issue, and foreign policy concerns.
The D.C. Circuit upheld the EPA’s decision, but the Supreme Court reversed. The majority ruled that the 11 states that filed suit had standing to sue because the standing requirements for challenging agency action unlawfully withheld are not as strict as regular standing requirements. The states need only show that they have suffered a "concrete and particularized injury," but not that the injury is immediate or that a favorable decision will redress that injury. Because the states have a procedural right to protect their interests, they have standing "if there is some possibility that the requested relief will prompt the injury-causing party to reconsider the decision that allegedly harmed the litigant." It also ruled that states are entitled to special treatment because they have given up some of their sovereign powers to the federal government.
It ruled that Massachusetts will suffer injury to coastal land that it owns, and since EPA did not dispute the existence of a causal connection between man-made greenhouse gas emissions and global warming, EPA's refusal to regulate such emissions contributes to that state's injuries. EPA cannot refuse to regulate just because auto emissions are such a small part of overall greenhouse gas emissions, since many regulations legitimately take incremental steps in addressing massive problems.
The Court held that an agency's denial of a petition for rulemaking is susceptible to "extremely limited" and "highly deferential" judicial review. It found that the plain language of the Clean Air Act defines "air pollutant" to include all airborne compounds of any kind, and regulating the quality of the air does not conflict with the Department of Transportation's authority to regulate automobile efficiency.
Finally, the Court ruled that the Clean Air Act requires EPA to form a judgment on whether greenhouse gases contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. Once it has found such endangerment, it has "significant latitude as to the manner, timing, content, and coordination of its regulations with those of other agencies." To avoid having to impose some regulations, it must either determine that greenhouse gases do not contribute to climate change, or provide some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do. Thus, the Court left open the possibility that EPA could withhold regulation, but only if it grounds its reasons for inaction in the Clean Air Act.
Justices Roberts, Scalia, Thomas and Alito dissented in part because they felt the states did not have standing, and that the Court's new rule giving states preferential treatment has no basis in existing case law. The majority cited a 1907 case that did not involve standing and that neither the states nor any of the supporting briefs mentioned. The dissent argues that a particularized injury to Massachusetts has not been shown, since the affidavits in support of that claim suggest that land subsidence, a non-global-warming cause, is affecting Boston's rising sea level. Injury is not imminent or certainly impending, and a computer model's conceded average error rate is greater than or equal to the projected sea level rise. The alleged connection between the fractional amount of global emissions that might be limited with EPA standards and the loss of Massachusetts coastal land is far too speculative to establish causation. Furthermore, a regulation is not likely to redress Massachusetts' injury, since it will have no proven effect on the voluminous amount of greenhouse gases emitted elsewhere in the world. Referring to a 1973 decision in United States v. Students Challenging Regulatory Agency Procedures (SCRAP), Chief Justice Roberts wrote, "Today's decision is SCRAP for a new generation."
A separate dissent written by Justice Scalia says there is no language in the Clean Air Act that requires EPA to make a judgment on greenhouse gases, and that the Act governs only air pollution, which EPA reasonably decided does not include carbon dioxide high in the atmosphere.
The NAM is part of the CO2 Coalition, which participated in this case in the D.C. Circuit and the Supreme Court. The decision granting standing to states to challenge federal agency action, or inaction, without the same restrictions as other plaintiffs could lead to increased litigation by the states against a variety of federal agency decisions.
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National Association of Home Builders v. Defenders of Wildlife
(U.S. Supreme Court)
Application of Endangered Species Act to Clean Water Act permits
On June 25, 2007, the Supreme Court ruled 5-4 that the Endangered Species Act does not prevent the EPA from transferring its authority to issue Clean Water Act permits to a state pollution control agency. Transferring such authority is non-discretionary, and the Clean Water Act does not require consideration of statutes not specifically mentioned in that Act when doing so.
Had the Clean Air Act been read to include requirements from other statutes, EPA might have been similarly required to incorporate various other statutory requirements into a variety of laws. This could have affected Section 404 permits, federal flood insurance issued by FEMA, and permits for federal projects that might be required to consider terrorism risk during environmental impact studies under the National Environmental Policy Act.
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National Parks Conserv. Assn. v. Tennessee Valley Auth.
(6th Circuit)
Statute of limitations for challenging Clean Air Act preconstruction permit compliance
The NAM joined with 4 other business groups in support of a petition for rehearing of an adverse decision by the Sixth Circuit involving how far into the future the EPA or a citizen may challenge in court alleged violations of preconstruction permits under the Clean Air Act. On 8/14/07, the petition was denied.
The statute of limitations for CAA enforcement is 5 years. However, the appeals court ruled that every day a facility operates without the best available control technology constitutes a discrete violation. It also ruled that TVA has an obligation to get a construction permit even after the construction has been completed. A dissenting judge felt that the obligation to get a permit can only be violated once, like a carpenter's contract to repair a roof. Even though there may be aftereffects in each case from the failure to do the original work properly, the violation occurred at one point in time, and only the harms occur later.
Our brief argues that the lawsuit involves factual inquiries that depend on substantial amounts of data, witness testimony and other documentary evidence that becomes stale if not litigated in a reasonable amount of time. An initial inquiry into whether a change made at a facility is a modification covered by the permit requirements involves a complex multi-step analysis, made on a case-by-case basis, based on data existing at the time of the modification. The purpose of a statute of limitations is to prevent vexatious litigation years after acts giving rise to the litigation occur. In any event, companies are still subject to ongoing regulatory requirements, because they are subject to operating permits. There is no allegation that an operating permit was violated in this case.
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San Francisco BayKeeper v. Cargill Salt Division
(9th Circuit)
Waste containment
The NAM joined with the American Forest & Paper Association, American Petroleum Institute, Chamber of Commerce of the United States, Corn Refiners Association, Grocer Manufacturers of America and the Western States Petroleum Association in an environmental case involving waste containment ponds. The issue is whether a citizen's group can sue a company under the Clean Water Act for damages because the company did not have a permit to use a containment pond for salt processing residues at its salt-making facility in California. The Clean Water Act's jurisdiction extends only to "navigable waters" of the United States, and we argued that there is no jurisdiction over a containment pond that is not hydrologically connected to -- and has no impact on -- any navigable waterway. It is not enough that a pond simply be adjacent to or in proximity to waters of the United States -- there must be a more direct connection.
The Supreme Court's 2006 ruling in the Rapanos case was expected to offer some guidance, but it was a splintered decision.
On March 8, 2007, the Ninth Circuit overruled the lower court's decision. It deferred to the EPA's regulatory definition of "waters of the United States", which does not include waters that are simply adjacent to navigable waters. While wetlands that are adjacent to navigable waters are subject to Clean Water Act jurisdiction, other bodies of water, such as the waste collection pond in this case, are not. The court distinguished the Rapanos decision because it applies only to wetlands. Even if a party were permitted to show that there was some hydrological connection between the pond and navigable waters, the evidence was speculative or insubstantial in this case.
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Starrh and Starrh Cotton Growers v. Aera Energy LLC
(California Supreme Court)
Waste containment damages
On Sept. 26, the NAM filed an amicus letter urging the California Supreme Court to review two issues in a case of subsurface trespass resulting from migration of wastewater and the subsequent alleged reduction of water quality in an aquifer. First, even though California has a three-year statute of limitations for actions against permanent trespass, the lower court ruled that this trespass was not permanent, but continuing. Our brief argues that such an interpretation improperly eliminates the statute of limitations defense in cases where subsurface water has been migrating for many years.
Second, even though California law is very clear on the measure of damages for a continuing trespass, providing that a plaintiff may recover “the value of the use of the property” that the defendant gained and the “reasonable cost of repair or restoration of the property to its original condition,” the court of appeals nonetheless allowed additional damages that may include profits enjoyed by the defendant that are directly linked to the trespass. Our brief argues that including profits in the calculation of damages overstates the benefit that a company obtains, with the proper measure of damages for “benefits obtained” being the costs that the company avoided by engaging in the challenged activity. That, combined with the actual damages resulting from the trespass, takes away all incentive for the trespass and provides more than full compensation to the plaintiff. Guidance from the California Supreme Court on both of these issues would substantially aid California landowners and businesses by verifying settled principles, eliminating uncertainty and a jackpot-justice approach to litigation, and satisfying the demands of due process to provide fair notice of the law of damages for trespass.
On Oct. 24, the California Supreme Court denied the petition for review.
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United Haulers Association, Inc. v. Oneida-Herkimer Solid Waste Management Authority
(U.S. Supreme Court)
Waste flow-control regulation
This is the second time this case has been appealed to the Supreme Court. This time around, the NAM joined with the National Solid Waste Management Association and the American Trucking Associations to urge the Court to review an adverse ruling by the Second Circuit that would allow a municipality, county or state to impose flow-control restrictions on the interstate transportation of solid waste. Flow-control laws allow local jurisdictions to prop up their disposal facilities by preventing waste generated in the locality from being taken anywhere else. The 1994 Supreme Court decision in the Carbone case held that a town's law flow-control ordinance discriminated against interstate commerce. The Second Circuit in this case provided a blueprint for local governments to avoid the Carbone decision by vesting part of the ownership of private waste disposal facilities in a public entity.
Our amicus brief argued that this ruling would seriously disrupt the interstate market in solid waste disposal services, including recyclables, and it ignored the practical economic effect of the ordinance, which is the key determinant when analyzing issues of discrimination against interstate commerce.
On April 30, 2007, the Court affirmed the Second Circuit's ruling, 6 to 3. It held that the county's restrictions treat in-state and out-of-state private business interests equally, and the government has an interest different from and superior to that of private businesses, since government is responsible for protecting the health, safety and welfare of its citizens. The Court was reluctant to interfere with numerous state and local government initiatives undertaken in furtherance of their police power. In addition, most of the burden of the regulation falls on those who voted for the laws, and they can change them through the normal political process.
The decision gives state and local governments vast power to control the disposal of all wastes within their jurisdictions, even though it may be more expensive.
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United States v. Atlantic Research Corp.
(U.S. Supreme Court)
Contribution in Superfund cleanup cases
The Supreme Court considered 3 cases in 2007 about whether parties that voluntarily undertake to clean up Superfund hazardous waste sites can sue, under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) other parties that contributed to the wastes. On June 11, 2007, the Court ruled unanimously in Atlantic Research that they can. The NAM filed an amicus brief in another, DuPont v. United States, which was sent back to the lower court for reconsideration in light of the decision in this case.
The Court ruled that § 107(a) makes potentially responsible parties (PRPs) liable for any costs of response incurred by any person consistent with the national contingency plan. It reaffirmed that a private party may bring suit under § 113(f) to obtain contribution from other liable parties only after having been sued themselves. It concluded that a private party may sue under § 107(a) even if it has not been sued by some one else.
The right to collect a fair share of the cleanup costs from other parties, including governments, who are responsible for contributing to the hazardous wastes in Superfund sites, is critically important to manufacturers and to the cleanup process. CERCLA was enacted to facilitate prompt and effective cleanup of contaminated sites, and a right to sue for cleanup costs is integral to achieving this goal.
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In re Deseret Power Electric Cooperative
(EPA Environmental Appeals Board)
EPA preconstruction permits for facilities with CO2 emissions
On March 21, the NAM joined with six other organizations in an amicus brief supporting EPA’s 2007 approval of a preconstruction permit for a new power plant in Utah. The Sierra Club appealed the approval, arguing that the EPA must limit carbon dioxide (CO2) emissions in the permit.
Our brief argued that the EPA’s permitting process should not be turned into a regulatory tool to control CO2 emissions. The EPA had already determined that CO2 was not a regulated pollutant and thus did not need to be addressed within a preconstruction permit.
On June 16, the EAB issued an order requesting further briefing on whether carbon dioxide monitoring requirements are enforceable under the Clean Air Act, and on the effect of the Supreme Court's decision in Massachusetts v. EPA.
On September 12, the NAM and five other organizations filed a supplemental brief. First, we argued that CO2 is not currently regulated under the Clean Air Act, as there is only monitoring of, not restrictions on emissions of, CO2. Second, we argued that that the issues the EAB seems to be focusing on go beyond its authority, and that any expansion of the preconstruction permit program to greenhouse gases is a determination that should be made by the EPA Administrator, via rulemaking, or by Congress.
On Nov. 13, 2008, the Environmental Appeals Board rejected the Sierra Club's contention that permits must include "best available control technology" for carbon dioxide, but sent the case back to the EPA to reconsider whether to impose the requirement under its discretionary authority, and to develop an adequate record for its decision. It encouraged the EPA to consider whether the issue in this case should be resolved "in the context of an action of nationwide scope, rather than through this specific permitting proceeding."
Former EPA Administrator Stephen Johnson issued an interpretative guidance memorandum on Dec. 18 that concluded that PSD permits do not need to include BACT limits for greenhouse gases. The Sierra Club is challenging that guidance. If they succeed, the number and type of facilities (e.g., any which emit certain levels of CO2) requiring EPA permits would explode, resulting in an impassable regulatory gridlock that would overwhelm permitting authorities and bring new permits to a halt. Under such a scenario, even large department stores, schools, and medium-size office buildings would require Clean Air Act preconstruction permits in order to be built or expanded.
Related Documents: NAM supplemental brief (September 12, 2008) NAM brief (March 21, 2008)
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Massachusetts v. EPA
(D.C. Circuit)
Whether to compel EPA to determine that carbon dioxide endangers public health or welfare
The NAM is a member of the CO2 Litigation Group, which was an intervenor helping to defend EPA in this case. Massachusetts sought a court mandate to force EPA to determine that carbon dioxide is an air pollutant that contributes to air pollution "which may reasonably be anticipated to endanger public health or welfare."
We filed a brief 5/15/08 arguing that no such finding is required by the statute unless EPA decides to establish emission standards for new motor vehicles, nor is there any deadline for making such a determination. No clear statutory rights are being harmed by any delay by EPA, and EPA has announced an intention to begin a rulemaking later this spring anyway.
We argued that EPA must be able to consider this proposed rulemaking in the larger context of other regulatory obligations with respect to fuels used in motor vehicles and nonroad engines, as well as new or modified major stationary sources of emissions, comprising perhaps thousands of new facilities not currently subject to stringent Clean Air Act permit requirements.
Climate change from carbon dioxide must be addressed in a comprehensive way with input from the public through the legislative and regulatory processes, not through a judicial directive that truncates public debate.
On June 26, the court denied Massachusetts' petition without opinion, except for a statement by Judge Tatel concurring in part and dissenting in part. He would hold on to the case until EPA gives greater indication that it is moving forward with the regulation. The EPA announced in March that it would issue an Advance Notice of Proposed Rulemaking sometime in the future.
Related Documents: CO2 Litigation Group brief (May 15, 2008)
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Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1
(U.S. Supreme Court)
FERC regulatory power
During an energy crisis in the Western U.S. in late 2000 and early 2001, several utility companies who had decided they could no longer afford to buy electricity from their normal suppliers and had an immediate need to secure power for their customers negotiated long-term contracts to buy electricity from alternate suppliers. After the energy crisis passed and energy prices dropped, the utility companies asked FERC to allow them to modify their contracts to enable them to pay lower prices for wholesale energy and subsequently lower their customer rates. In refusing their request, FERC explained that the Supreme Court’s Mobile-Sierra doctrine establishes a presumption that contracts negotiated by sophisticated parties like public utilities are “just and reasonable” in accord with the Federal Power Act and thus cannot be revised. The Court carved out an exception for cases where the contracts are against the “public interest” (for example, when not permitting modification would jeopardize the supply of power to retail users).
The Ninth Circuit reversed FERC’s decision, holding that the Mobile-Sierra doctrine only applies in “limited circumstances” and that, by failing to consider the market conditions in which the contracts at issue were formed, FERC had failed to determine whether such “limited circumstances” were present here. The Ninth Circuit also held that even if the Mobile-Sierra doctrine applied, its public interest exception would permit contract modification because the high electricity rates excessively burdened consumers.
The Supreme Court ruled 6/26/08 that FERC was required to follow the Mobile-Sierra presumption of reasonableness, and the validity of a contract is not affected by an environment of electric power market "dysfunction." The Court rejected the Ninth Circuit's "zone of reasonableness" test, and underscored the need to honor contracts unless they seriously harm the public interest. There must be "unequivocal public necessity" to set aside a contract rate. However, the Court affirmed the Ninth Circuit's ruling on other grounds: FERC's defective analysis of the market effects needs to consider longer-term burdens, and FERC needs to more carefully consider whether there was unlawful market manipulation that disrupted fair, arms-length contract negotiations.
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National Association of Manufacturers v. EPA
(EPA)
Information Quality Act request
The National Association of Manufacturers submitted a formal request 10/9/07 to the U.S. Environmental Protection Agency asking that it correct scientific errors in a package of documents related to its proposed revision of the National Ambient Air Quality Standard for ozone. By law, these errors must be corrected to ensure and maximize the quality of scientific information disseminated by EPA and used for making regulatory decisions. Once these errors are corrected, the NAM is confident that EPA will have a much stronger scientific foundation for the final decision the agency will make on the ozone standard in March 2008.
The NAM’s petition identified several important information quality errors, such as:
• EPA’s risk assessment isn’t transparent.
EPA did not fully disclose analyses it recently performed and inserted at the last minute into the administrative record for the proposed revised standard. The Agency is obligated by law to ”show its work.”
• EPA’s risk estimates are purposefully exaggerated.
EPA misreported or exaggerated the results of the studies it relied on, and ignored studies that had found no health effects from ozone levels below the current standard. EPA knowingly used assumptions and models that give inflated estimates of health risks.
These practices are prohibited under federal information quality standards that EPA has adopted.
• EPA’s risk assessment did not follow technical recommendations made by the National Academy of Sciences.
Since the Clean Air Act was last amended in 1990, the Academy has issued a series of reports providing technical advice concerning how to estimate and portray the risks posed by air pollution. Among other things, the Academy has pressed EPA to be more candid about the uncertainties in its estimates and predictions. EPA has ignored most of these recommendations.
The practical effect of these errors is that the public is not accurately informed about what the science says about ozone air pollution, nor is it aware just how uncertain EPA’s risk estimates really are. Through our petition, the NAM expects that EPA will correct these errors as the law requires, and provide the public scientific information that is accurate, reliable, and unbiased, and presented in an accurate, clear, complete, and unbiased manner.
In March, 2008, the EPA indirectly responded to our criticisms as part of its general response to significant public comments. We were dissapointed that the EPA did not adhere to the substantive elements in its Information Quality Guidelines, especially in not acknowledging the validity of any of our complaints related to the covered information contained in its proposal and supporting documents.
Consequently, we filed a Request for Reconsideration of the EPA's denial of our Information Quality Act petition. See link below for further developments.
Related Documents: Summary of NAM's Request for Reconsideration (October 14, 2008) NAM's Petition for Correction of Record (October 9, 2007)
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Teck Cominco Metals, Ltd. v. Pakootas
(U.S. Supreme Court)
CERCLA
After the Environmental Protection Agency issued a Unilateral Administrative Order to a Canadian company to conduct a study on contamination of the Columbia River in this country from its smelter in Canada, an Indian tribe sued to enforce the order. The company argued that the EPA does not have jurisdiction under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the U.S. federal district court ruled otherwise. The company appealed, and the Ninth Circuit affirmed, ruling 7/3/06 that the EPA’s order only applied to a “facility,” as it’s defined in CERCLA, within the territorial boundaries of the United States. Even though the smelter was located in Canada, the definition of a facility under CERCLA is an area where a hazardous substance has been deposited or otherwise comes to be located. This is a very broad definition of facility that subjects foreign companies to liability for pollution in the United States.
The court also ruled that the slag located in the United States was leaching hazardous substances, thus satisfying the legal requirement for liability that there be a “release” from the facility into the environment. EPA’s jurisdiction did not extend to the smelter across the border, but does cover the underwater facility and hazardous releases in the United States.
The NAM joined with the National Mining Association in 2 briefs supporting Teck Cominco’s appeal and petition for rehearing in 2005 and 2006. We argued that CERCLA applies only within this country unless Congress clearly expresses an intent to apply it extraterritorially, which it did not. These kinds of disputes are quintessentially an international concern, not for unilateral action by one country's EPA. Private litigation upsets the resolution of such disputes through diplomatic means, or through the long-standing model of an arbitration group that was specifically established for the smelter in the 1930s. Allowing such litigation in U.S. courts opens them up to worldwide claims, particularly as environmental science improves, and could subject U.S. firms to retaliatory litigation abroad, imposing multiple and conflicting standards on environmental behavior.
The case was appealed to the Supreme Court. On May 2, 2007, the NAM and the National Mining Association filed an amicus brief urging the Court to take the case. We argued that the lower court's decision invites retaliation against American businesses and fosters uncertainty and discord for many industries with respect to the definition of "arranger liability." We argued that arranger liability under CERCLA applies when a company owns hazardous material and arranges with a third party for its disposal or treatment, not when the company does it itself.
On Jan. 7, 2008, the Supreme Court declined to review this appeal. The United States Government had earlier filed a brief opposing the appeal.
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Alaska Wilderness League v. Kempthorne
(9th Circuit)
Standards for assessing NEPA requirements for offshore drilling
Two judges in the Ninth Circuit issued an overly strict interpretation that requires companies wanting to drill for oil in the waters off the north coast of Alaska to perform studies under NEPA, the National Environmental Policy Act, that examine very detailed effects of the drilling configuration sought to be installed. Such studies cannot be performed without conducting the kind of full-scale test that would require a permit, a Catch-22.
The NAM joined with the Mountain States Legal Foundation and the Chamber of Commerce in an amicus brief urging further review of this decision by a larger group of Ninth Circuit judges. We argued that there should be a "full and fair discussion" of environmental impacts, which is enough to constitute a "hard look" to satisfy NEPA, and that the new, tougher standard adopted by 2 of the 3 judges in this case went too far.
Facilitating oil exploration and development in Alaska is needed to increase America's access to domestic sources of reliable energy. It is part of the NAM's comprehensive energy strategy to adequately address our nation’s energy needs.
In an order dated March 6, 2009, the Ninth Circuit withdrew the 3-judge opinion and planned to issue a new one. However, Shell withdrew its drilling plan in May, 2009, and submitted a new scaled-back proposal for the 2010 season. The court dismissed the case as moot.
Related Documents: NAM brief (February 17, 2009)
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American Farm Bureau Federation v. EPA
(D.C. Circuit)
Particulate matter air quality regulations
The NAM is part of the Fine Particulate Matter Petitioners Group, which filed a petition for review in the D.C. Circuit of a final EPA regulation published in October, 2006, entitled "National Ambient Air Quality Standards for Particulate Matter." This case involves stringent new EPA air quality standards, which industry and agricultural groups say go too far and environmental groups and states say are not strict enough.
The regulation applies both to fine particles (generally smaller than 2.5 micrometers in diameter) and to larger particles (less than 10 micrometers). It retains an annual fine particle standard of 15 micrograms per cubic meter, and ratchets down the daily standard from 65 to 35 micrograms per cubic meter. It retains the 150 micrograms level for daily exposure to larger particles. The agriculture and mining industries are not exempt. The new standard is expected to increase the number of nonattainment areas around the country significantly. Our challenge focused primarily on the fine particle portion of the rule.
Also included in the Fine Particulate Matter Petitioners Group are the American Coke & Coal Chemicals Institute, the American Forest & Paper Association, the American Iron & Steel Institute, the Chamber of Commerce, the Corn Refiners Association, the National Cotton Council of America, the National Oilseed Processors Association and the Portland Cement Association. Our petition was consolidated with others from the American Lung Association and other environmental groups, the National Mining Association, the National Cattlemen's Beef Association, 13 states, the Agricultural Retailers Association, the Utility Air Regulatory Group and others.
On Jan. 29, 2008, we filed a brief supporting EPA's decision to keep the fine particulate matter standard at 15 micrograms per cubic meter. It properly kept the limit at 15 because the risk attributed to that level of ambient exposure has stayed the same or decreased since EPA established that standard in 1997. EPA also properly set the secondary fine particulate matter standard at a level identical to the primary standards, providing increased visibility protection and providing the requisite level of public welfare protection.
We opposed a challenge to the standard that argued the EPA should have adopted recommendations of the Clean Air Scientific Advisory Committee (CASAC), because the Clean Air Act only allows that group to recommend revisions and the ultimate decision is in the discretion of the EPA Administrator.
On Feb. 24, 2009, the D.C. Circuit remanded the fine particulate standard to the EPA, as well as the EPA's decision to equate the primary and secondary fine particle standards, but upheld the coarse particulate standard. The court ruled that "the EPA did not adequately explain why an annual level of 15 μg/m3 is sufficient to protect the public health while providing an adequate margin of safety from short-term exposures and from morbidity affecting vulnerable subpopulations." It noted in particular three short-term studies that the EPA did not adequately explain away. During the remand, EPA's rule will remain in effect. It also found that EPA acted unlawfully when it failed to determine what level of visibility protection was needed to protect the public welfare. EPA's failure to set a target level of visibility was fatal to the standard it set.
With respect to an industry challenge to the regulation of coarse particulate matter, the court said that EPA need not wait for conclusive evidence of adverse health effects before regulating. It rejected the challenge and upheld this portion of EPA's regulation.
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American Petroleum Institute v. Salazar
(U.S. District Court for the District of Columbia)
Whether polar bear regulation should deny Alaskan industry greenhouse gas emissions exemption that applies to other states
On May 15, 2008, the Department of the Interior issued an Interim Final Special Rule designating the polar bear as threatened under the Endangered Species Act, based on its determination that global climate change, resulting from increased concentrations of greenhouse gases in the atmosphere, threatened to injure the bears' habitat by reducing polar ice. As part of this rule, the Department provided an exemption for greenhouse gas emissions, since they are part of a worldwide phenomenon that cannot be traced to particular activities in particular locations affecting the bears. This exemption applied to greenhouse gas emissions in all states except Alaska. On August 27, the NAM joined with the American Petroleum Institute, the U.S. Chamber of Commerce, the National Mining Association and the American Iron and Steel Institute in filing a complaint challenging the Department's omission of Alaska from the exemption. Manufacturing and other business operations in Alaska that may produce greenhouse gases should not be treated differently than those of companies in the other 49 states. This "Alaska Gap" exposed Alaskan operations to increased permitting burdens and/or the risk of enforcement by government authorities and citizen suits. Our lawsuit challenged the Alaska Gap as arbitrary and capricious, since the best scientific data in the rulemaking record do not demonstrate enough of a connection between specific actions resulting in emissions and an effect on the polar bear. The NAM supported the exemption for all states from permitting for greenhouse gas emissions that might affect polar bear habitat, not just every one but Alaska. The NAM was not challenging the decision to designate the polar bear as a threatened species. On December 16, 2008, the Department of the Interior amended the rule to eliminate the "Alaska gap" carve-out provision, but implemented a more narrow carve-out. The business groups decided not to challenge the more narrow carve-out, and on April 6, 2009, stipulated that our complaint could be dismissed. In the stipulation order, the court recognized that the business groups were Defendant-Intervenors in both the Center for Biological Diversity case and the Defenders of Wildlife case, which involve other issues affecting polar bears. See the Center for Biological Diversitysummary for details on these combined cases.
Related Documents: NAM complaint (August 27, 2008)
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Burlington N. and Santa Fe R.R. Co. v. United States
(U.S. Supreme Court)
Apportionment of liability under CERCLA
This case was consolidated on appeal with Shell Oil Co. v. United States. Click here for a summary of the two cases. The NAM filed two amicus briefs in these cases.
Related Documents: NAM brief (November 24, 2008) NAM brief (July 25, 2008)
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Connecticut v. American Electric Power Co.
(2nd Circuit)
Public nuisance from electric utilities
The NAM joined with 10 other major business groups to urge the Second Circuit to reject lawsuits brought by 8 states against 6 major electric power utility companies over global warming. The states claim that the utilities, by emitting carbon dioxide from the process of burning fuel to produce electricity, contribute to global warming and create a public nuisance in their states. Our brief argued, and the lower court judge found, that this issue is a political question unsuitable for resolution in the courts. We warned that this suit, if allowed, would open the door to nuisance suits targeting any activity that uses fossil fuel for energy, such as companies using a fleet of cars or trucks, and that global warming and energy usage are international and national issues that are not amenable to solution through the case-by-case, patchwork approach of nuisance suits.This suit basically seeks to have the judiciary decide how fossil fuel energy should be used in this country. This issue is a political question that should be decided only after the kind of full debate and public participation that the political, legislative and administrative processes of government can provide. Energy-intensive industries include aluminum, chemicals, forest products, glass, metal casting, mining, petroleum refining and steel. Even farming and road building could be subject to nuisance suits. A second brief filed in the Open Space Institute case is virtually identical. See also: Open Space Institute, Inc. v. American Electric Power Co.
On Sept. 21, 2009, two judges of the Second Circuit issued an opinion reversing the trial court and sending the case back for trial. They ruled that the claims are not political questions, that the plaintiffs have standing, and that they have stated claims under the federal common law of nuisance. The court found that a decision by a single federal court concerning a common law nuisance action brought by domestic plaintiffs against domestic companies for domestic conduct does not establish a national or international emissions policy. The court said that the relief sought in this case "applies in only the most tangential and attenuated way to the expansive domestic and foreign policy issues raised by Defendants." It said that well-settled principles of tort and public nuisance law provide guidance on how to handle the case. Until Congress steps in to preempt the field of the federal common law of nuisance, courts can decide cases involving such claims. The court found that there is no unified U.S. policy on greenhouse gas emissions, and that a court case would not interfere.
With respect to standing, the court said that at this point in the litigation the plaintiffs "need not present scientific evidence to prove that they face injury or increased risk of injury, that Defendants' emissions cause their injuries, or that the remedy they seek will redress those injuries." It is enough that the states have an interest in safeguarding the public health and their own resources. The court found that the plaintiffs sufficiently alleged that their claimed injuries (global warming) are "fairly traceable" to the defendants' emissions.
The judges also ruled that private parties are allowed to bring federal common law public nuisance suits, although the case precedent for this is limited. In addition, federal environmental law does not displace this common law nuisance action, since neither Congress nor the EPA has yet regulated greenhouse gases "in any real way."
This litigation will now continue, but the case is being appealed to the Supreme Court. Major producers of electricity must go through lengthy and expensive governmental emission permitting procedures, and even when fully approved, plants will still be subject to suits challenging their emissions. This is an untenable situation that will lead to increased costs, conflicting court judgments and more expensive energy for manufacturers and the American public.
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Entergy Corp. v. EPA
(U.S. Supreme Court)
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National Association of Manufacturers v. EPA
(EPA)
Request for Reconsideration of Information Quality Act request regarding ozone
The NAM filed a Request for Correction under the Information Quality Act asking that EPA correct scientific errors in a package of documents related to its proposed revision of the National Ambient Air Quality Standard for ozone. See summary linked below.
EPA rejected, disagreed with, or otherwise denied every information quality error described in the NAM's request for correction. Consequently, on Oct. 14, 2008, the NAM submitted a 160-page Request for Reconsideration detailing a variety of problems with the EPA's studies and processes. Many of the epidemiological studies EPA staff found persuasive used research designs that were known at the time to be demonstrably substandard. Staff relied on complex statistical methods to coax data into revealing effects from ozone so small that humans cannot even recognize experiencing them. Finally, EPA staff insisted that certain studies provide valid and reliable evidence of respiratory health effects from ozone even though they rejected these same studies in their July 2007 draft Integrated Science Assessment for Oxides of Nitrogen.
The appeal seeks more cogent answers than EPA provided in its response to the Request for Correction. The document also identifies a number of process changes that are necessary to ensure that future NAAQS reviews fully and consistently adhere to the Agency's Information Quality Guidelines and the Information Quality Act.
On Jan. 15, 2009, EPA responded by "deferring consideration" of our request, pending resolution of the challenge to the ozone NAAQS rule in the U.S. Court of Appeals for the D.C. Circuit (see link below). NAM may resubmit this request after the conclusion of that litigation.
Related Documents: NAM Request for Reconsideration (October 14, 2008)
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Open Space Institute, Inc. v. American Electric Power Co.
(2nd Circuit)
Public nuisance from electric utilities
This is a consolidated case with Connecticut v. American Electric Power Co. Click here for the full summary.
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PSEG Fossil LLC v. Riverkeeper, Inc.
(U.S. Supreme Court)
Use of cost-benefit analysis in cooling water intake regulation
The Second Circuit ruled that EPA could not use cost-benefit analysis when implementing certain provisions of the Clean Water Act. The regulations at issue address existing power plants, but the court's ruling directly jeopardized favorable regulations governing all other users of cooling water, such as in the steel, chemical, paper and petroleum industries. Indeed, all consumers of electric power are likely to be impacted by an increase in the cost of electricity.
The NAM joined with four other organizations in an amicus brief urging the Supreme Court to hear this appeal. The issue involves Section 316(b) of the Clean Water Act, which establishes requirements for cooling water intake structures at electric power plants, in order to minimize the impact of such structures on fish. The Second Circuit ruled that EPA choose the most effective technologies for minimizing the impact of these structures that the affected companies as a whole "can reasonably bear," without any consideration of the costs and benefits of that technology, unless two different technologies "produce essentially the same benefits."
The Second Circuit's ruling conflicted with that of another federal circuit as well as EPA's own interpretation of the statute. Our brief argued that this interpretation may affect thousands of industrial, commercial and institutional facilities that use cooling water. We also argued that the EPA acted within its authority to take into account "restoration measures" that enhance the numbers and conditions of the affected fish, but the Second Circuit rejected that as an acceptable method of minimizing the adverse impact of water intake structures on aquatic life. The operative statutory language is unclear and the EPA's interpretation is entitled to judicial deference.
Third, we argued that the Second Circuit's decision was based in part on its interpretation of Section 301 of the Clean Water Act, which governs wastewater treatment requirements. This erroneous interpretation had the potential to affect many more facilities than just the electric generating plants that were the subject of this case, and even many more than plants that have cooling water intake structures.
After the Supreme Court agreed to hear this appeal, along with Entergy Corp. v. EPA (No. 07-588) and Utility Water Act Group v. Riverkeeper (No. 07-597). We filed a brief on the merits of the legal issues on appeal on July 21, 2008.
On April 1 in a 6-3 decision, the Supreme Court held that EPA permissibly relied on cost-benefit analysis in setting the national performance standards and in providing for cost-benefit variances from those standards. Even though the legislation did not expressly provide for consideration of costs, it was within the EPA’s discretionary authority to do so, and the courts will uphold a reasonable exercise of that discretion.
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Shell Oil Co. v. United States
(U.S. Supreme Court)
Arranger liability under CERCLA for sale of useful goods
The Ninth Circuit decided that a manufacturer of a hazardous substance is jointly and severally liable under CERCLA for any spill or misuse of the product by a third party after the substance has left the custody and control of the manufacturer. However, the product in question was sold as a useful commercial product to a third party, and not as hazardous waste. The seller relinquished control at the point of delivery, and the material subsequently leaked and contaminated some soil. The Ninth Circuit’s ruling means that a seller of a useful product that may be hazardous has actually “arranged for the disposal” of the product within the meaning of CERCLA, and is thus liable for the cleanup costs.
The Supreme Court reversed, on May 4, 2009. The plain meaning of the statute requires that a company should have had an intent to arrange for the disposal of a hazardous material to be found liable as an "arranger." The NAM's amicus brief urging the Court to review the case had made this same argument, as opposed to the Ninth Circuit's much looser test that imposed liability if disposal was merely a foreseeable byproduct of the transaction.
The Shell case was consolidated with Burlington N. & Santa Fe R.R. Co. v. United States, which raised an issue relating to the apportionment of responsibility to various parties under CERCLA. The Ninth Circuit ruled that it is possible to divide liability among various parties that may have contributed to the contamination, but that there was insufficient evidence to do so here; thus, both the railroad and Shell were held to be jointly and severally liable. The Supreme Court reversed this ruling as well, saying that the trial court correctly found that liability could be apportioned, and that the railroad was liable for 9% of the cleanup costs. It ruled that apportionment is appropriate when the evidence is sufficient to provide a reasonable basis to do so.
The NAM argued that the heightened evidentiary standards established by the Ninth Circuit for demonstrating that there is a basis for apportioning harm are inconsistent with the standards set forth in the Restatement (Second) of Torts and with the approach adopted by other circuit courts, which have applied the Restatement approach in the CERCLA context. Additionally, we contended that apportionment in this case would be consistent with the policies underlying CERCLA, especially when one considers that concerns about the potentially harsh impacts of joint and several liability led Congress to delete any specific reference to joint and several liability in the statute.
Related Documents: NAM brief (November 24, 2008) NAM brief (July 25, 2008)
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Summers v. Earth Island Institute
(U.S. Supreme Court)
Whether plaintiffs have standing to directly challenge agency regulations
In 2002, as part of President Bush’s Healthy Forest Initiative, the U.S. Forest Service issued regulations that excluded small timber-clearing projects from the requirements of public notice, comment, and administrative appeal under both the National Environmental Policy Act (NEPA) and the agency’s internal administrative appeal process. In September 2003, the Forest Service decided to allow salvage logging of 238 acres which had been destroyed in a fire the previous summer in California’s Sequoia National Forest. Under its new regulations, the Forest Service did not conduct a NEPA environmental review before making its decision and did not allow any administrative appeals of the decision.
Several environmental groups brought suit under the Administrative Procedure Act (APA), arguing that the Forest Service’s new regulations were facially invalid and that the decision to allow salvage logging was improper. Shortly after the suit was filed, the Forest Service withdrew its decision to allow the salvage logging project. In July 2004, the parties entered into a partial settlement agreement in which the Forest Service agreed not to reauthorize the sale without first preparing a NEPA environmental review for the project. On their part, the environmental groups agreed to “dismiss with prejudice” their claims related to the salvage logging project, although they continued pursuing the suit as a direct facial challenge to the Forest Service regulations.
In July 2005, a federal district court in California issued a nationwide injunction against the new Forest Service regulations, which the 9th Circuit upheld in August 2006.
On March 3, 2009, a sharply divided Supreme Court reversed, holding that the environmental groups lacked standing to challenge the Forest Service regulations. The Court reasoned that after the controversy regarding the salvage logging project had been settled, there was no longer any concrete and particularized injury to the groups. An organization like this must show an “imminent and concrete harm” to its members’ interests at the time the suit is filed.
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Alaska Eskimo Whaling Comm'n v. Salazar
(9th Circuit)
Validity of permit for exploratory oil and gas drilling in Alaska
The Department of the Interior approved an exploratory oil and gas drilling permit in the Beaufort Sea north of Alaska that was then challenged by various groups. The Department conducts a 4-stage process: (1) preparing a five-year leasing
program, (2) selling leases, (3) permitting exploration in the leased regions, and (4) allowing development and production in the leased region. This challenge involved the exploration phase, and came after the Department had prepared a 1,001-page environmental impact statement in the preparation phase, a 4-volume environmental impact statement in the sales phase, and a 109-page environmental assessement of the exploration plan. Finding that the exploration would cause no significant impact on the environment, it approved the plan.
The NAM joined with other business groups in filing an amicus brief urging the federal court not to block the exploratory drilling. In light of the massive investments needed and already made in Outer Continental Shelf (OCS) development, and the shortness of time during the Alaskan summer, it was important that exploratory drilling not be disrupted by this litigation. Congress intended to promote the "swift, orderly and efficient exploration of our almost untapped domestic oil and gas resources in the Outer Continental Shelf," which is predicted to account for more than 40% of domestic oil production and 25% of natural gas production by 2012. Allowing exploratory drilling is an important step in the process of utilizing the OCS to move toward greater energy self-sufficiency, to provide economic stimulation, to improve national security, to maintain a favorable balance of payments in world trade, and to create jobs.
We also argued that an environmental impact statement is not required for an exploration plan, based upon the fact that an EIS was completed at an earlier stage.
On April 7, the NAM filed another amicus brief on the merits, making many of the same points previously made. On May 13, the court ruled that the Minerals Management Service met its obligations to take a "hard look at the consequences of its actions" and to provide a "convincing statement of reasons to explain why a project's impacts are insignificant." The court found that the agency's decision was supported by substantial evidence on the record and that it did not act arbitrarily.
Related Documents: NAM brief (April 7, 2010) NAM brief (January 6, 2010)
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Comer v. Murphy Oil U.S.A.
(5th Circuit)
Whether global warming lawsuit is a political question
The NAM and other organizations supported an appeal of an adverse decision by the U.S. Court of Appeals for the Fifth Circuit in a global warming public nuisance case. The plaintiffs, Mississippi residents and property owners, alleged that the emissions from more than 150 energy and manufacturing companies increased global warming and contributed to the severity of damages resulting from Hurricane Katrina. Our brief in support of the appeal argued that the plaintiffs' theory of liability would dramatically expand tort law beyond anything ever recognized because of the tenuous link between the alleged conduct and the alleged harm. In addition, this case involves a complex regulatory matter requiring the balancing of economic, environmental and international interests, and is constitutionally the domain of the political branches of government, not the courts.
The trial court had dismissed the case on these grounds, but a three-judge panel of the Fifth Circuit reversed, allowing the case to proceed. The NAM and the defendants wanted all the judges of the Fifth Circuit to review this ruling. That court did agree to review the 3-judge ruling, and arguments were scheduled for May 24, 2010.
On May 10, the NAM filed an additional brief arguing to a larger group of judges that the goal of this lawsuit is less to obtain compensation than to achieve the regulation of greenhouse gas emissions through litigation. We described how plaintiffs have tried to define a "nuisance" broadly to encompass the kind of claims that have largely been rejected by other courts. In addition, these kinds of political questions should be handled as a public policy debate, not as an adversarial proceeding in court.
Subsequently, the court announced that another judge had been recused from the case, destroying the quorum. On May 28, the court dismissed the appeal, and since it had previously vacated the 3-judge panel's ruling, the trial court's decision dismissing the lawsuit stands. This very unusual procedural development means that the appellate ruling that the NAM opposed was nullified without a formal opinion from a majority of the judges. The case was appealed to the Supreme Court, which declined to review it.
The plaintiffs later filed a similar suit, but the district court dismissed it because the claims had already been dismissed in the first case. In addition, the judge found that the parties had no standing to sue, since they cannot show a sufficient connection between the defendants' emissions and the plaintiffs' property damage. The court also found the claims non-justiciable political questions that have no "judicially discoverable and manageable standards for resolving" them, and because these policy determinations are entrusted to the EPA.
Related Documents: NAM brief (May 7, 2010) NAM brief (December 4, 2009)
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Consumer Electronics Association v. City of New York
(S.D.N.Y.)
Validity of New York's oppressive e-waste law
New York City adopted a very strict electronic waste collection law that mandates manufacturers of computers, monitors, televisions, laptops, portable digital music players and other equipment to set up door-to-door collection programs and collect a prescribed amount of discarded products every year, or pay a stiff fine. The law also imposed retroactive liability for products already sold, and requires manufacturers to pick up products made by other manufacturers. Only manufacturers are held liable; distributors, retailers, consumers, and the City of New York are not responsible for sharing in the cost of this waste collection program.
The Consumer Electronics Association and the Information Technology Industry Council sued the city, and the NAM put together a coalition of business groups to file an amicus brief in support of a motion for a preliminary injunction against the law. Our brief warned that the proliferation of state and local laws such as New York City's E-Waste law would impose a severe burden on manufacturers in violation of the Commerce Clause of the Constitution, in part because it would shift costs that should properly be borne by the city's own residents and taxpayers to out-of-state manufacturers. The law could disrupt and discourage voluntary industry efforts, and penalizes companies that have no control over consumer decisions regarding the disposal of their products.
In many ways New York's law is much different from other local and state laws, and the NAM is concerned that many products other than consumer electronic products are being targeted for similar treatment. This is a long-term issue that will be addressed in a variety of ways, and the NAM will be active in helping to develop reasonable solutions.
Late in May, New York State passed a new electronics recycling law that preempts all local regulations like New York City's. On June 28, 2010, the court approved a settlement agreement dismissing the litigation. The parties agreed to work together to develop an accessible system to collect used electronics in New York City.
Related Documents: NAM brief (December 11, 2009)
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General Electric Co. v. Jackson
(D.C. Circuit)
Constitutionality of EPA's Unilateral Administrative Orders
When EPA determines that an environmental cleanup is required at a contaminated site, it has three options: (1) conduct the cleanup itself and file suit to recover the costs, (2) get a court order, or (3) issue a Unilateral Administrative Order (UAO) compelling a potentially responsible party to undertake a specified action. This case involves the constitutionality of UAOs, which are issued without any right to a hearing prior to their issuance.
The NAM filed an amicus brief supporting GE in this case, arguing that such orders constitute immediate and substantial deprivations of property without any opportunity for a pre-deprivation hearing before a neutral decision-maker. The lower court improperly found that the cost to EPA of providing a hearing to be substantial (if all UAOs are challenged), but the court did not consider the cumulative effect of UAOs on business in the balance. We also questioned the court's ruling that constitutional rights are less where the company has not shown that EPA's administrative procedure result in an unacceptable rate of error. We argued that no case requires a company to show that an agency has erred on the merits of a case in order to establish a due process violation. Furthermore, many potential defendants do not have substantial resources to reallocate from job creation, product development or other productive uses in order to vindicate their constitutional rights.
On June 29, 2010, the court affirmed the lower court's ruling, finding that manufacturers have the option of refusing to comply with a UAO, thus forcing the EPA to go to court to enforce the order. It also did not feel that the losses experienced by a company subjected to potentially improper UAOs (stock declines, loss of brand value or increasing costs of financing) were enough to constitute violations of due process.
Specifically, it ruled that a company that refuses to comply with a UAO has several safeguards under the law: a court must find (1) that the UAO was proper, (2) that the company "willfully" failed to comply "without sufficient cause," and (3) that, in the court's discretion, fines and treble damages are appropriate. The company has protections if it reasonably believes the UAO is improper.
Related Documents: NAM revised brief (December 30, 2009) NAM brief (September 22, 2009)
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In re Shell Gulf of Mexico, Inc.
(Environmental Appeals Bd.)
Whether greenhouse gas considerations are proper in EPA permitting decisions
On March 31 and April 9, 2010, the EPA issued permits for exploratory oil and gas drilling operations in the Chukchi and Beaufort Seas north of Alaska. Various environmental groups challenged the permits before EPA's Environmental Appeals Board, arguing that carbon dioxide that will be emitted during the exploration is currently subject to regulation, despite EPA's conclusion that greenhouse gases will not be subject to regulation until January 2, 2011, when the motor vehicle rule takes effect.
The NAM, American Petroleum Institute and Independent Petroleum Association of America filed an amicus brief 6/25/2010 arguing that challenges to EPA's regulatory decisions regarding whether to regulate greenhouse gases should be directed to those notice-and-comment rulemakings, not raised in the context of permit decisions. The challengers should either petition EPA for reconsideration of its "subject to regulation" ruling, or go to court to litigate over that regulation. The Environmental Appeals Board does not have the legal authority to review EPA regulations, but may only determine a challenged permit's compliance with the Clean Air Act and applicable regulations.
In December, 2010, the Appeals Board invalidated the permits and sent them back to the EPA, which granted them in September, 2011.
Related Documents: NAM Reply Brief (August 2, 2010) NAM brief (June 25, 2010)
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Monsanto Co. v. Geertson Seed Farms
(U.S. Supreme Court)
Standards for injunctions under NEPA
Genetically engineered crops are subject to approval by the Animal and Plant Inspection Service of the U.S. Department of Agriculture, which must prepare an Environmental Assessment to be approved for commercial use. Environmental groups brought suit under the National Environmental Policy Act (NEPA) arguing that the assessment was inadequate, and the trial court issued a permanent injunction against the use of the genetically engineered product (alfalfa) until a more extensive environmental impact statement could be prepared.
The Supreme Court decided that environmental plaintiffs are required to show irreparable harm to obtain the injunction. A permissive ruling would have made it much easier for environmental plaintiffs to stop the sale of certain products that are subject to government approval.
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Native Village of Point Hope v. Salazar
(9th Circuit)
Validity of permit for exploratory oil and gas drilling in Alaska
Please refer to the summary of the Alaska Eskimo Whaling Comm'n v. Salazar case.
Related Documents: NAM brief (April 7, 2010)
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North Carolina v. Tennessee Valley Auth.
(4th Circuit)
Public nuisance from electric utility
A federal judge imposed strict emissions controls on TVA power plants in Tennessee and Alabama based on a finding that the plants created a "public nuisance" in North Carolina under state law. The controls went far beyond state and federal emissions controls. On August 18, 2009, the NAM and other business groups supported TVA's appeal of this ruling to the Fourth Circuit, arguing that the state claims are preempted by the comprehensive interstate air pollution control scheme of the Clean Air Act, and that virtually any source of emissions in the country could be subjected to arbitrary case-by-case claims that they contribute to a public nuisance. The EPA established several major programs that already address interstate pollution, including the Clean Air Interstate Rule, the Nitrogen Oxide Budget Trading Program, the acid rain rules, the regional haze rules and the rules requiring permits for emissions. The lawsuit also amounts to a collateral attack on the national ambient air quality standards for particulate matter and ozone. This litigation is similar to that brought by various states against 5 major electric utilities and recently decided by the Second Circuit. See Connecticut v. American Electric Power. Such litigation is a dangerous threat because it not only interferes with the uniform regulation of emissions but it also expands the law of public nuisance in a way that could be used against many other industries.
On July 26, 2010, the Fourth Circuit overturned the district court, ruling that Congress is the policymaking branch of government responsible for setting national standards, and that public nuisance law does not encompass an activity expressly permitted and extensively regulated by both federal and state government. It also ruled that one state is not able to apply its home state law to activities occurring in another state.
The court's opinion highlights the chief problem created by this kind of litigation: "To replace duly promulgated ambient air quality standards with standards whose content must await the uncertain twists and turns of litigation will leave whole states and industries at sea and potentially expose them to a welter of conflicting court orders across the country." In addition, it ruled that, "An activity that is explicitly licensed and allowed by Tennessee law cannot be a public nuisance." This decision is an important milestone in our fight against the use of expansive and unwarranted legal theories by trial lawyers against manufacturers.
Related Documents: NAM brief (August 18, 2009)
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American Electric Power Co. v. Connecticut
(U.S. Supreme Court)
Public nuisance litigation against 6 electric utilities
The Supreme Court reversed a very troubling decision by the U.S. Court of Appeals for the 2nd Circuit that allowed 8 states to sue 6 major electric utility companies under a public nuisance theory. The theory is that each state is adversely affected by climate change caused in part by the utilities’ electricity-generating plants, and the courts should impose emissions limits.
The NAM and other business groups filed an amicus brief urging review of the case. We argued that only the political branches of government are equipped to resolve the complex and dynamic issues relating to climate change regulation, that the plaintiffs’ legal claims exceed the boundaries of public nuisance litigation, and that judges and juries are not empowered or competent to exercise extraordinary regulatory powers without clear boundaries and guiding principles.
Our brief argued that this case is far from the "ordinary tort suit" that the lower court thought it was. Instead, it is quite extraordinary, and the judiciary "has no experience dealing with public nuisance litigation created by a global phenomenon resulting from the release of greenhouse gases by millions, if not billions, of sources (including natural events) worldwide -- very few of which are subject to the jurisdiction of American courts or under the control of these defendants." It is inappropriate for courts to entertain standardless public nuisance litigation in an area that should be addressed by the political branches of government.
Click here for a summary of the Second Circuit's decision and the NAM brief in that court.
The Supreme Court's decision to review this case was announced on Dec. 6, 2010.
On 2/7/11, we filed a brief on the merits, arguing that courts cannot resolve political questions like this because there are no judicially discoverable and manageable standards to handle them, and courts have neither the expertise nor the authority to make those judgments. Public nuisance claims have been limited by geographical boundaries and defined circumstances, and courts should not step into legislative and executive branch issues to try to address public nuisance cases of global dimensions. A public nuisance is "the right thing in the wrong place, like a pig in the parlor instead of the barnyard." But were courts to impose judicial limits on electricity generating plants, they would be removing the geographic limitation and would be acting without a standard. In addition, public nuisance cases involve defined circumstances where the controversy can actually be resolved by an abatement order. Such an order in this case cannot be designed with any standard that would project or evaluate its efficacy. This litigation is not an "ordinary tort suit," but rather involves wholly new claims that are unbounded by any rational constraints, and courts should leave their resolution to the legislative and executive branches.
On June 20, 2011, the Court ruled that EPA action to regulate greenhouse gases displaces any federal common-law right to seek abatement of GHG emissions. There is no need for the courts to develop federal common law when Congress addresses a question of national concern, such as the regulation of air and water. It does not matter whether EPA actually exercises its authority to regulate GHGs; as long as the field of GHG regulation has been delegated to EPA, federal common law is displaced.
The NAM had urged the Court to overturn the lower court’s extreme ruling, and the Court agreed, up to a point. While it rejected the federal common-law claims, it left open the possibility that such a suit could be brought under state nuisance law. It sent the case back for the lower court to consider whether the Clean Air Act preempts state-law suits as well.
Related Documents: NAM brief on the merits (February 7, 2011) NAM brief (September 2, 2010)
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Center for Biological Diversity v. EPA
(D.C. Circuit)
Environmental group challenge to greenhouse gas tailoring rule
As part of our continuing efforts to make sure that EPA does not exceed its authority in the regulation of greenhouse gases from stationary sources of emissions, the NAM and 15 other business organizations in our coalition has moved to intervene in a lawsuit brought by an environmental group challenging EPA's power to focus on the largest emitters first. If the environmental group is successful, EPA and various states may be required to apply much more stringent criteria to permitting programs, which could impose enormous costs from foregoing operations or installing emission-control technology. Our motion to intervene does not concede that EPA's decision to regulate greenhouse gases is legally permissible.
The Center for Biological Diversity (CBD) sought a court order holding this case in abeyance pending resolution of other challenges to the tailoring rule, but the court rejected that request on June 15, 2011. The next day, CBD voluntarily moved to dismiss this case.
The NAM and other organizations have also filed a separate petition to review the EPA's tailoring rule. For a complete listing of NAM cases against EPA, click here.
Related Documents: NAM motion to intervene (June 28, 2010)
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Center for Biological Diversity v. Salazar
(U.S. District Court for the District of Columbia)
Intervention in environmentalists' Challenge to Interior's polar bear rule
The NAM and other business organizations moved to intervene in a case brought in California by three environmental organizations which challenged the Department of the Interior's rule relating to naming the polar bear a threatened species under the Endangered Species Act (ESA). Our involvement did not challenge or support that designation, but supported the Department's conclusion not to require special permits for companies that conduct greenhouse gas-emitting activities. Any activity that harms a threatened species may constitute an "incidental taking" and may require a special Fish & Wildlife Service (FWS) permit. Under the new rule, the government provided an exception for greenhouse gas emissions, since their effect on global warming cannot be traced to any particular activities in particular locations.
In a separate case, we challenged a particular provision that did not exempt the state of Alaska from the greenhouse gas exception. See American Petroleum Institute v. Salazar. After we filed that case, EPA amended the rule to eliminate the "Alaska gap" carve-out provision, but left in greenhouse gas requirements for operations within the current range of the polar bear. We continued to challenge that limited ruling (see Amended Complaint below).
On 12/3/08, our motions to transfer and consolidate this case with others filed in federal court in the District of Columbia were granted. This case was consolidated with Defenders of Wildlife v. Dep't of the Interior, which challenged the Department's Section 4(d) rule as having been promulgated without conducting an environmental impact analysis and as not providing for the conservation of the polar bear. Since these cases have been consolidated, our summary is consolidated here as well.
In 2010, we filed a memorandum and reply brief supporting the decision not to extend liability for affecting polar bears to activity occurring outside the current range of the bear. This will allow energy and industrial activity permitted under the Clean Air Act, the application of pesticides allowed under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), and other economic activities. The Endangered Species Act is not the proper mechanism for controlling carbon emissions. The U.S. Fish and Wildlife Service's decision is reasonable and supported by the statute.
On Nov. 4, 2010, the district court judge rejected the Service's view that only species that are in imminent danger of extinction are "endangered" under the law, and ordered the Service to reconsider its rule in light of the ambiguity of that term. The statute mandates consideration of 5 factors and the best available science to determine whether a species is endangered, and the agency should consider them and issue a new interpretation for court review. The existing rule will remain in effect while this new interpretation is under review.
After a hearing on April 13, 2011, the judge ordered the parties to submit briefs asking whether it needs to decide all the issues in the case if it remands the case to the FWS to comply with NEPA or ESA. The NAM's brief, filed June 3, 2011, supported the Fish & Wildlife Service's view that the rule complies with all relevant statutes, but if not, the appropriate remedy is to send the case back to the agency for further action without throwing out the current version. Otherwise, thousands of otherwise lawful activities outside the polar bear's current range would be called into question and possibly generate lawsuits, unnecessary administrative actions and delays, and potential liability. There are many actions that FWS could take that would address judicial concerns about its actions, such as providing further reasons or further NEPA analysis.
On June 30, District Judge Sullivan affirmed the legality of FWS's listing of the polar bear as a "threatened species" under the ESA.
On Oct. 17 and Nov. 18, the judge upheld the final rule under the Endangered Species Act, vacated the final rule and reinstated the Interim Final 4(d) Rule. He remanded the rule to FWS to conduct its NEPA review and to publish a final Environmental Assessment by December 6, 2012. The court ruled that the ESA does not require FWS to regulate greenhouse gases, and that the Service had a rational basis for its decision, despite the fact that it may limit the ability of environmental groups to sue greenhouse gas emitters under the ESA.
Related Documents: NAM Supplemental Brief (June 3, 2011) NAM Reply Brief (August 16, 2010) NAM Memorandum (March 26, 2010) NAM Amended Complaint (March 13, 2009) NAM Brief in Support of Motion to Transfer Polar Bear Litigation to Federal Court in D.C (September 29, 2008)
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National Corn Growers Ass'n v. EPA
(U.S. Supreme Court)
Right to EPA hearing prior to revoking pesticide tolerances
When the EPA unilaterally revoked a pesticide tolerance under the Federal Food, Drug and Cosmetic Act (FFDCA), it arguably violated the right of pesticide manufacturers to an adjudicatory hearing. The action effectively banned the pesticide, and whether there is a right to a hearing in such circumstances has ramifications for pharmaceuticals, medical devices, food and beverages and certain consumer products as well.
Hearings are required whenever there are material issues of fact that are disputed between the government and the manufacturer. Despite four decades of safe product use in this case, EPA made changes in its risk assessment assumptions without providing a hearing. The D.C. Circuit deferred to EPA's decision, and the case was appealed to the Supreme Court.
The NAM and other groups filed an amicus brief 3/18/11 urging the Supreme Court to review this case. We argued that administrative agency hearings before a neutral factfinder are essential to due process, and that the lower court's ruling contravenes the FFDCA's hearing requirements. American industry relies on hearing rights, and the ruling in this case could affect not only rights under this statute, but also under statutes and regulations such as those covering packaging (Fair Packaging and Labeling Act), seabed mining (National Oceanic and Atmospheric Administration regulations), the importation or exportation of natural gas (Department of Energy regulations), tax levies on property (IRS regulations), and air carrier agreements (Department of Transportation rules).
On May 31, 2011, the Court declined to hear the appeal, leaving the lower court's decision in place.
Related Documents: NAM brief (March 18, 2011)
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Natural Resources Defense Council v. EPA
(D.C. Circuit)
Validity of EPA's guidance on ozone fee waivers
On January 5, 2010, EPA published guidance to the states that allowed them to waive fees under Section 185 of the Clean Air Act relating to compliance with ozone emissions regulations. The guidance assisted states in preparing their own State Implementation Plans. It allowed states to either use the Section 185 fee program or "an equivalent alternative program" that is "consistent with the principles of section 172(e)" of the Clean Air Act.
NRDC sued EPA in March to argue that EPA's action allowing an equivalent, alternative program was arbitrary and capricious, and that allowing fee waivers if an ozone nonattainment area meets an 8-hour testing standard instead of a 1-hour standard was also improper. An 8-hour standard is more protective of the environment than a 1-hour standard.
In April, the NAM and 4 other business groups moved to intervene in this suit in support of EPA. That motion was granted. The case affects fees that were then set at $8,766 per ton of volatile organic compounds and nitrogen oxides emitted above a baseline amount from major stationary sources within areas of the country that are classified as severe or extreme nonattainment areas.
The NAM and other intervenors filed a brief on Jan. 31, 2011, arguing that EPA's interpretation is reasonable and consistent with congressional intent. It is important that states have the flexibility to design equivalent alternative programs that do not unfairly and inappropriately penalize well-controlled major stationary sources of ozone. Companies that have already dramatically reduced ozone emissions are unable to make further reductions without a harmful drop in productivity, and states should be able to develop alternative programs that focus on sources that are better able to achieve further reductions.
On July 1, the court rejected EPA's arguments that the plaintiffs lacked standing, that the Guidance did not qualify as final agency action, and the plaintiffs' claims were unripe for judicial review. It then ruled that the Guidance qualified as a legislative rule that EPA was required to issue through notice-and-comment rulemaking, and that one of its features -- the "attainment alternative" -- violated the plain language of the Clean Air Act. The court vacated the EPA's guidance and ruled that it could not offer an alternative that allows violations of the old 1-hour standard to continue. The law does not allow EPA to retreat from requirements it sets that prove to be too stringent and unnecessary to protect public health, and EPA must go back to Congress if it wants to do so.
Related Documents: NAM brief (January 31, 2011) NAM motion to intervene (April 5, 2010)
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Portland Cement Ass'n v. EPA
(D.C. Circuit)
Challenge to EPA's regulation of emissions during Startups, Shutdowns and Malfunctions
The NAM is part of the SSM Coalition, named for EPA's new Clean Air Act regulations governing special circumstances often present during startup, shutdown or malfunction (SSM) of process equipment or pollution control equipment. On Jan. 4, 2011, the Coalition moved to file an amicus brief in litigation brought by the Portland Cement Association which challenges 2 EPA regulations governing Portland Cement plants. Our particular interest is the rule which establishes national emission standards for hazardous air pollutants (NESHAPs) under Section 112 of the Act.
EPA's new approach to establishing NESHAPs and its novel interpretations of Section 112 apply not only to the portland cement case, but it plans to adopt similar requirements for a variety of other sectors, including chemical plants, pulp and paper mills, steel pickling operations and wood furniture manufacturing.
The court granted permission to file an amicus brief, and we did so on May 23, 2011. The brief argued that EPA's MACT standard cannot be met by any existing facility and that EPA's standard does not satisfy the statutory requirement that it be achievable.
We also argued that EPA did not justify its decision to no longer recognize the special circumstances that arise during equipment malfunctions. Reasonable performance standards should recognize that sudden, unexpected failures of a manufacturing process or pollution control technology are not part of a source's normal operating mode, and should not be subject to harsh EPA penalties when they occur. EPA could have considered alternatives, such as work practice standards, that would address deviations from normally achievable emissions standards that may occur during periods of malfunction.
Finally, we argued that EPA should have recognized that differences in the source of raw materials makes compliance with a uniform national MACT standard difficult or impossible. It was arbitrary and capricious for EPA fail to make allowances for emissions based on the sources of supply.
On Dec. 9, 2011, the court remanded the NESHAP rule to EPA for reconsideration, but rejected all other issues that challenged EPA's actions.
Related Documents: NAM brief (May 23, 2011) NAM Motion to File Amicus Brief (January 4, 2011)
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Wilderness Society v. U.S. Forest Service
(9th Circuit)
Intervention in environmental suits challenging federal NEPA compliance
For many government projects involving manufacturers, the National Environmental Policy Act requires federal agencies to evaluate the environmental impact of their actions, and these evaluations are increasingly challenged in court by environmental groups. In such litigation, courts usually allow manufacturers to intervene in the suits to help defend the agency’s actions and to help the court understand the impact of the case on their business. If environmental analyses are deficient, the projects cannot proceed.
This case involves a Ninth Circuit procedure that generally bars such intervention. The practice, informally known as the “federal defendant rule,” is based on the premise that only the federal government can be held liable for failing to perform environmental assessments, and that private parties do not have a significant protectable interest in the litigation.
The NAM and other groups filed an amicus brief 10/21/2010 arguing that the rule should be abandoned. Private parties clearly have a substantial interest in defending agency actions under NEPA, and Federal Rules of Civil Procedure 24(a) allows such a party to intervene. We cited many examples where private parties have such interests, including development projects that involve work in wetlands, the construction of natural gas pipelines or nuclear power plants, and the development of genetically engineered crops.
Our concern is not just about the application of the federal defendant rule to projects subject to NEPA, but also to the fact that it has been extended to other statutes, including the Endangered Species Act, the National Forest Management Act, and the Plant Protection Act. Intervention should be allowed to parties with significant interests in the outcome of such litigation. Often, private parties have massive investments at stake.
On 1/14/2011, the Ninth Circuit rejected the federal defendant rule and said that lower courts should not automatically reject non-federal parties from intervening in litigation at the merits stage, or liability phase, of a law suit. Instead, courts should consider whether the party has a legally protectable interest in the litigation and a connection between that interest and the claims in the case. The decision was en banc, involving 11 of the judges in the Ninth Circuit, and provides great assurance that the federal defendant rule will no longer be used in that circuit. Thirty-seven amicus groups urged this result, and only one other federal circuit court of appeals hangs on to the federal defendant rule.
Related Documents: NAM brief (October 21, 2010)
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Alec L. v. Jackson
(D.D.C.)
Litigation seeking to impose 6% annual reductions in greenhouse gases under "public trust" theory
An environmental group in California spearheaded litigation and administrative proceedings in all fifty states, as well as this lawsuit in federal court against the EPA and the Departments of the Interior, Defense, Agriculture, Energy and Commerce, to try to force government to impose further greenhouse gas emissions reduction policies under a "public trust" theory. The federal suit was brought by WildEarth Guardians, Kids vs. Global Warming and five individuals who sought to preempt the federal legislative and regulatory processes by getting a federal judge to compel massive societal changes that they believe are necessary to address climate change.
On Oct. 31, 2011, the NAM moved to intervene in this litigation, because the law suit, if successful, would have a dramatic effect on manufacturing processes and investments, increasing production and transportation costs, decreasing global competitiveness and driving jobs and businesses abroad. The litigation, which seeks a minimum 6% reduction in carbon dioxide emissions every year, would be devastating to the entire U.S. economy.
Along with our motion to intervene, we asked the court to dismiss the law suit for various reasons: (1) the case presents political questions that the courts are not able to resolve, (2) the plaintiffs lack standing because their injuries are too speculative and not likely to be reduced by the relief sought, (3) the public trust doctrine does not exist under federal law and the claims have been displaced by federal regulation in this area, and (4) the doctrine does not apply to the atmosphere or require a duty to regulate greenhouse gas emissions.
A hearing was held before Judge Edward Chen on November 30, 2011 to determine whether to grant the government's request that the case be transferred from a federal court in northern California to one in the District of Columbia. The NAM supported this request. On December 6, the court agreed, ordering the case transferred. A hearing was held on April 2, and the judge granted our motion to intervene. A hearing was held on May 11 to consider our motion to dismiss the case.
On May 31, Judge Wilkins granted our motion to dismiss. He ruled that public trust claims are grounded in state, not federal, law, and the allegations in this suit represent "a significant departure" from the public trust doctrine as it has been traditionally applied to water-related activities. Federal courts may exercise jurisdiction in a case if it raises a federal question, but the public trust doctrine is a matter of state law. The judge also ruled that even if the doctrine had been a federal common law claim at one time, it has been displaced by federal regulation under the Clean Air Act. Citing the American Electric Power case from the Supreme Court, he found that federal judges may not set limits on greenhouse gas emissions "in the face of a law empowering EPA to set the same limits, subject to judicial review only to ensure against action arbitrary, capricious, . . . or otherwise not in accordance with the law."
The court closed with a suggestion that the parties need not "stop talking to each other once this Order hits the docket. All of the parties seem to agree that protecting and preserving the environment is a more than laudable goal, and the Court urges everyone involved to seek (and perhaps even seize) as much common ground as courage, goodwill and wisdom might allow to be discovered."
That is certainly a laudable suggestion, as the plaintiffs have filed administrative petitions in 39 states and the District of Columbia to seek similar relief at the state level, and 31 of those have already been denied. Suits were brought in 10 other states, and were dismissed in 9 of them, many with appeals or amended complaints in the works.
However, the plaintiffs filed a motion for reconsideration of the court's ruling, and the NAM filed an opposition on 7/16/12. The motion was denied on 5/22/13.
Related Documents: NAM Opposition to Motion for Reconsideration (July 16, 2012) NAM Reply brief Supporting Motion to Dismiss (April 23, 2012) NAM brief re Intervention (March 26, 2012) NAM Opposition to Plaintiffs' Motion for Preliminary Injunction (November 2, 2011) Declaration of NAM chief economist Dr. Chad Moutray in support of intervention (October 31, 2011) NAM Motion to Dismiss (October 31, 2011) NAM Motion to Intervene (October 31, 2011)
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American Chemistry Council v. EPA
(D.C. Circuit)
"Grounds arising after" challenge to EPA regulations relating to greenhouse gases
The NAM and 16 other business associations filed 4 petitions for review in the U.S. Court of Appeals for the D.C. Circuit, challenging EPA regulations from 1978, 1980 and 2002 that are a part of EPA's effort to regulate greenhouse gases from stationary sources of emissions. No one anticipated that these previously issued rules would be used to mandate greenhouse gas permit requirements, but that is the interpretation EPA has adopted. Our legal challenge was consolidated under the case captioned American Chemistry Council v. EPA.
We also filed an administrative petition for reconsideration with EPA on the same rules. Our lawsuits and the administrative petition challenged each of the four older rules to the extent that EPA considers them to allow the regulation of pollutants such as greenhouse gases that are not subject to a National Ambient Air Quality Standard (NAAQS). Our administrative petition went into great detail regarding the grounds for our request (see Related Documents below). The petitions below also contain the text of the regulations that were challenged.
Our main brief on the merits was filed May 10, 2011, focusing primarily on the timeliness of the lawsuits and on the fact that EPA’s interpretation of the Clean Air Act is unreasonable and creates absurd results.
Oral arguments were held Feb. 29, 2012.
We argued that Congress intended for EPA to require PSD permits only for facilities that can financially bear the substantial regulatory costs and which, as a group, are primarily responsible for deleterious emissions. The number of permits needed by facilities that meet these criteria was about 280 per year, a number consistent with congressional intent to limit the permit program to a manageable number. The greenhouse gas regulations, however, would require more than 81,000 PSD permits per year, according to the EPA, crushing EPA, state agencies and the economy.
EPA’s reading of the Clean Air Act is unlawful because it severs the link between the PSD permit program and the attainment of national ambient air quality standards (NAAQS). We argued that PSD permits are only required for emissions of a “criteria” pollutant, such as sulfur dioxide, nitrogen oxides or lead, and then only if the emissions occur in an area that has attained compliance with national standards.
EPA’s interpretation also is flawed because it leads to requiring an absurd number of permits. Its interpretation was announced three decades ago, and this is the first time a court has been asked to scrutinize its lawfulness. Only now do sources emitting major amounts of GHGs have to get PSD permits, and now their complaints about EPA’s interpretation are ripe for judicial review.
The purpose of the PSD permitting program is to maintain air quality in areas of the country that have attained satisfactory levels of quality, hence the name "Prevention of Significant Deterioration". EPA sets ceilings for each of a number of specific pollutants, and requires permits for new facilities that might emit more of those pollutants into areas in attainment. Our brief argued that EPA is now forcibly making the PSD permit program an all-purpose regulatory program. However, to do so, we argued that EPA must first define greenhouse gases as criteria pollutants, and specify the maximum levels at which they may be present in attainment areas. It has not done so, and it is arguably impossible to set meaningful NAAQS levels for greenhouse gases.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
On August 10, 2012, the NAM coalition filed a petition for rehearing en banc, asking that all the judges on the D.C. Circuit review the 3-judge panel's ruling. We argued that the panel relied on an unreasonable interpretation of the Clean Air Act to approve "the most sweeping expansion of EPA authority in the agency's history, for the first time covering a broad swatch of mobile and stationary sources of greenhouse gases and granting itself discretion to determine and revise the scope of the statute’s coverage, previously fixed by the statute’s explicit terms, for the indefinite future." The panel's ruling conflicts with Supreme Court decisions, produces absurd results, and could lead to annual cost increases of more than $20 billion upon full implementation.
On December 20, 2012, the D.C. Circuit denied our petition. Judges Brown and Kavanaugh filed separate dissenting opinions that supported our arguments. Such dissents are rare, sending a clear signal that significant legal issues remain to be addressed.
On April 18, 2013, the NAM filed a Petition for Writ of Certiorari wth the U.S. Supreme Court and awaiting the Court's determination whether to hear the case. The NAM's involvement in thisw case is critical because no other petitioners have been found to have standing to challeng the PSD regulations and NAM members are adversely affected by EPA's overly burdensome requirements.
Related Documents: NAM petiton for writ of certiorari (April 18, 2013) NAM petition for rehearing en banc (August 10, 2012) NAM reply brief (August 5, 2011) NAM opening brief (May 10, 2011) NAM petition re: 1980 PSD Rule (July 6, 2010) NAM petition re: 2002 PSD & SIP Rule (July 6, 2010) NAM petition re: Part 51 Rule (1978) (July 6, 2010) NAM petition re: Part 52 Rule (1978) (July 6, 2010) NAM petition to EPA to reconsider PSD rules (July 6, 2010)
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American Lung Ass'n v. EPA
(D.C. Circuit)
Environmental challenge to EPA's decision not to reconsider ozone regulation in 2011
The EPA has been reconsidering whether to lower the limits on ozone emissions from stationary sources since early in 2010, and engaged in a lengthy reconsideration process. Finally, President Obama called on EPA to put aside their reconsideration of the existing standard. OIRA Administrator Cass Sunstein sent a letter to EPA explaining the reasons that he was sending the proposal back to EPA for reconsideration, including that "a new standard now is not mandatory" and new scientific work is underway and will be based on the best available science. EPA then withdrew its proposed regulation and terminated reconsideration of the March 2008 standards.
The American Lung Association, Environmental Defense Fund, Natural Resources Defense Council and Appalachian Mountain Club sought court review of this decision. The Ozone NAAQS Litigation Group, of which the NAM is a member, moved to intervene in this litigation to support EPA's decision not to change the existing ozone limits at this time. Our participation is needed because EPA represents the "general public interest" and the agency may not adequately represent the interests of manufacturers in avoiding costly and burdensome emissions limitations. On Dec. 1, we filed an opposition to the ALA's motion to coordinate or consolidate this case with Mississippi v. EPA, involving the 2008 ozone standard. We argued that ALA's motion is premature, since EPA is considering filing a motion to dismiss, which, if granted, would moot other issues in the case.
On Feb. 17, 2012, the Court dismissed ALA's petition for review, saying that it "lacks jurisdiction over the agency's non-final decision to defer action on the 2008 voluntary revision of the national ambient air quality standards for ozone." This decision mooted all the other issues in the case. The court also adopted a briefing schedule for separate litigation challenging the 2008 standard.
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Defenders of Wildlife v. Bureau of Ocean Energy Management
(11th Circuit)
Environmental challenge to oil drilling exploration plan permit in Gulf of Mexico
On October 12, 2010, the Secretary of the Interior lifted the moratorium on deepwater drilling in the Gulf of Mexico, after extensive consultations with the Bureau of Ocean Energy Management. When the Bureau approved Shell's exploration plan (EP), some environmental groups sued to halt the exploration. They sought to overturn the Bureau's "Finding of No Significant Impact," claiming that erroneous assumptions led the agency to understate the risk of an oil spill.
The court reviewed the issues whether Shell’s EP violated the environmental assessment provisions of the National Environmental Policy Act (NEPA) or the interagency consultation provisions of the Endangered Species Act (ESA). On June 22, 2012, the court denied the petition for review, refusing to overturn the Bureau's approval of Shell’s EP to conduct deepwater drilling in the Gulf of Mexico because the environmental group petitioners failed to overcome the extremely deferential “arbitrary and capricious” standard of review for the Bureau's actions.
On Nov. 23, 2011, the NAM joined with other business organizations in an amicus brief in support of the Bureau's decision. Reimposing a moratorium would do little to protect the environment and would stall America's economic recovery and compromise our energy security. The toll would be particularly high for communities in the Gulf States that have faced more than their fair share of disasters and are still recovering from losses caused by Hurricanes Katrina and Rita, the Macondo oil spill, the drilling moratorium and the current slowdown in regulatory approvals. Slow approvals also affect the overall U.S. economy, meaning fewer jobs, less oil and gas production, foregone tax revenue and royalties, and increased dependence on foreign oil.
Our argument focused on the Bureau's statutory obligation to balance economic and energy-policy interests with environmental effects. Jobs and energy security must be taken into account under the law, and exploration of the Outer Continental Shelf involves billions of dollars in investments and hundreds of thousands of jobs. This lawsuit threatened to require extensive Environmental Impact Statements (EIS) for every exploration plan. However, the court explained that it is within the Bureau's discretion to not require a separate EIS for every exploration and that it could rely on prior EISs to approve future EPs. In addition, the court held that when interagency consultation is reinitiated, the prior consultations remain valid until the new process is completed.
Ultimately, the court deferred to the Bureau's balancing of environmental concerns with the expeditious and orderly exploration of resources in the Gulf of Mexico and denied the environmental groups petition for review of the Bureau’s action.
Related Documents: NAM brief (November 23, 2011)
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Defenders of Wildlife v. U.S. Dep't of the Interior
(U.S. District Court for the District of Columbia)
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Mingo Logan Coal Co. v. EPA
(U.S. District Court for the District of Columbia)
EPA interference with existing Clean Water Act permits
Mingo Logan Coal Co. challenged an EPA decision that it argued retroactively changed a Clean Water Act permit issued by the U.S. Army Corps of Engineers four years earlier. This change withdrew certain creeks as disposal sites for dredged material, affecting the validity of a permit that EPA had previously reviewed and assented to, and even though the permit holder was in full compliance with it.
The NAM and 11 other business groups filed an amicus brief urging the trial court judge to rule that EPA does not have the authority to modify previously issued permits under Section 404 of the Clean Water Act. The section 404 permitting program authorizes roughly 60,000 permits representing about $220 billion in economic investment every year, and EPA's assertion of authority to revise existing permits creates tremendous investment uncertainty for all permit holders and potential project proponents. Inevitably, that uncertainty will translate into higher risks in borrowing, less investment, lost jobs and slower growth throughout the U.S. economy.
Our brief highlighted the dramatic change that EPA's action represents. Section 404 permits are required for the discharge of fill material into waters of the United States (including wetlands), and affects construction of utility infrastructure, housing and commercial development, renewable energy projects like wind farms or solar arrays, and transportation infrastructure projects such as highways and rail lines. While EPA has occasionally exercised its authority and often uses the threat of such action to obtain concessions during the permitting process, it has never before used Section 404(c) authority to review a previously permitted project.
We also highlighted a study by Dr. David Sunding, a professor at UC Berkeley, showing that the threat that EPA may modify existing permits distorts the cost-benefit ratio of new investment projects. Existing permits are already subject to the Army Corps of Engineers' regulations governing suspension, revocation and modification, and now EPA's interference will delay or deter investment in new projects. For example, a 2% chance that EPA would act adversely decreases a project's cost-benefit ratio by an astounding 30%. Also detailed are effects on bank financing and interest rates, bond ratings, rationed credit, land prices, and other harms throughout the economy.
On Sept. 23, the government moved to strike the Sunding report from consideration, as it was not part of the record considered by EPA. We opposed this motion, arguing that EPA was repackaging their efforts to exclude us from the case, efforts that were rejected by the court in August. We also argued that the report did not add to the administrative record, but provided context for the court to interpret Section 404(c) and to understand the broad consequences that flow from the government's theory of liability.
On March 23, 2012, Judge Amy Berman Jackson ruled that EPA does not have the authority to render a permit invalid once it has been issued by the Army Corps of Engineers. The ruling found that Section 404(c) does not expressly give EPA that power, and even if it did have some power to interpret that section, its interpretation was unreasonable. The Corps is the only permitting agency identified in the statute, and the judge said, "This is a stunning power for an agency to arrogate to itself when there is absolutely no mention of it in the statute." It has the power to block the initial issuance of permits by refusing to allow the Corps to specify certain areas as disposal sites. But even if it had the power to subsequently remove the designation of certain sites, that does not affect the validity of the existing permit, which only the Corps can issue. Mingo Logan need only comply with the terms of the original permit.
The court described as "magical thinking" EPA's position that withdrawing a specification of a disposal site revokes the permit that affects that site. "It posit[ed] a scenario involving the automatic self-destuction of a written permit issued by an entirely separate federal agency after years of study and consideration. Poof!" Thus, even if the agency were accorded some deference under administrative law procedures, the agency's interpretation was unreasonable and could not stand. The judge also cited the NAM's amicus brief to show that eliminating finality from the permitting process would have a significant economic impact on industry, in turn making EPA's assertion of power less reasonable.
EPA appealed this ruling to the D.C. Circuit and won. Click here for details.
Related Documents: NAM brief (June 3, 2011)
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Challenging EPA's light-duty vehicle GHG emissions standards
On July 6, 2010, the NAM and 15 other business associations filed a petition for review in the D.C. Circuit challenging the EPA's final regulation of light-duty motor vehicles, also known as the Section 202 motor vehicle rule or the tailpipe rule. EPA has announced that this rule, which regulates greenhouse gases from certain motor vehicles, was effective on January 2, 2011. The rule thus established the first EPA regulation of greenhouse gas emissions, and the agency previously announced that once a pollutant is regulated, the usual permit requirements of the PSD program (Prevention of Significant Deterioration) kick in. As a result of this combination of interpretations, EPA has begun to regulate stationary sources of greenhouse gas emissions such as manufacturing facilities around the country.
Our lawsuit was the third in a series of suits challenging four EPA rules that together implement the greenhouse gas regulatory program. Our fundamental concern was over EPA's decision to automatically trigger PSD regulation of all stationary sources.
On Sept. 15, 2010, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December.
On June 3, 2011, the NAM and 66 other parties filed a combined brief, as required by court order, detailing all the key arguments arising from the motor vehicle rule. Section 202 of the Clean Air Act requires EPA to justify the level of emissions controls imposed by explaining why those controls represent a rational choice in light of the identified endangerment risk. However, EPA said that it had no obligation to show that its regulations would be effective or reduce harm. It failed to justify its interpretation that the light-duty motor vehicle rule triggers stationary source regulations, and failed to address the enormous burdens and costs imposed on stationary sources.
The motor vehicle regulation arises under Title II of the Clean Air Act, while the regulation of stationary sources of emissions is governed by Title I, which focused on local emissions in defined geographical areas causing elevated ground-level exposures to a pollutant. EPA failed to exercise its discretion to limit the scope of the pollutants subject to the Title I, Part C PSD program, as it has done in another context -- the visibility program under the state part of the Clean Air Act.
We also argued that EPA failed to address the “absurd consequences” that the motor vehicle rule produces for stationary sources of greenhouse gas emissions. Had it done so, EPA could have avoided those consequences by adopting a more reasonable interpretation of the Clean Air Act. Instead, it told the regulated community to address the stationary-source consequences of its regulation of greenhouse gases in the tailoring rule proceeding, but then refused to address the stationary source impacts in the tailoring rule, because that rule provided only relief and did not impose costs. This failure to consider the stationary-source impacts violates Section 202 of the Clean Air Act and is inconsistent with multiple mandates from Congress and the President.
The brief itemized several statutes and orders mandating that EPA consider economic effects: (1) Section 317 of the Clean Air Act, which requires an economic impact assessment, (2) the Regulatory Flexibility Act, which requires an analysis of effects on small businesses, (3) the Unfunded Mandates Reform Act, which requires an assessment of the impact on state and local governments, (4) the Paperwork Reduction Act, which requires OMB approval for significant information-collection obligations, (5) Executive Order 12898, which requires addressing disproportionate effects on minority and low-income populations, and (6) Executive Order 13211, which requires an assessment of a rule’s impact on energy supply, distribution and use.
The brief also argued that EPA has not demonstrated that the final rule will meaningfully and substantially reduce any endangerment to public health or welfare. It adds virtually no additional benefits to already existing fuel economy standards issued by the National Highway Transportation Safety Administration (NHTSA).
Oral arguments were held on February 28, 2012.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
Related Documents: NAM/Industry brief (June 3, 2011) NAM statement of issues (August 20, 2010) NAM petition for review (July 6, 2010)
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National Association of Manufacturers v. EPA
(5th Circuit)
Challenging EPA's denial of Texas Flexible Permit program
The NAM and 5 other business associations have asked the U.S. Court of Appeals for the Fifth Circuit to review EPA's decision published July 15 to disapprove revisions to a Texas Clean Air Act implementation plan that relates to the state’s Flexible Permits
Program. The Texas plan was submitted to EPA for approval in 1994 and revised several times since then. After a recent notice-and-comment period, EPA decided that the Texas plan did not meet its requirements for a minor plan revision ("Minor NSR SIP revision") for various reasons described in its decision. Alternatively, it ruled that the plan did not meet its requirements for a substitute Major NSR SIP revision.
This petition for review is the first step in a proceeding that will eventually present the court with detailed legal issues to be resolved. The Texas flexible permits program allows operators of facilities that generate air emissions flexibility in managing their operations. While one flexible permit is allowed per plant site or account, the applicant can choose which facilities and pollutants to include. The permits allow plants to exceed pollution limits from individual emission sources as long as the facility as a whole remains below an overall emissions cap. EPA's action highlights a serious struggle between national and state environmental authorities in regulating air emissions.
Click here for further developments in this case, which has been consolidated with Texas v. EPA.
Related Documents: NAM petition for review (September 13, 2010)
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Challenging EPA's tailoring rule for greenhouse gas regulation
On August 2, 2010, the NAM and 16 other business associations filed a petition for review in the D.C. Circuit challenging the EPA's final regulation that sets out its schedule for enforcing regulatory controls on greenhouse gas (GHG) emissions from stationary sources. The agency has previously announced that greenhouse gas emissions are subject to regulation beginning January 2, 2011, and the usual permit requirements of the PSD program (Prevention of Significant Deterioration) kick in. Because there are millions of facilities that fall under EPA's regulatory requirements, the agency has adopted the tailoring rule to focus its initial enforcement only on facilities with the largest amounts of GHG emissions.
This is the last of eight petitions filed by the NAM coalition of business organizations challenging EPA's efforts to regulate stationary sources of greenhouse gases.
Our lawsuit is the third in a series of suits challenging four EPA rules that together implement the greenhouse gas regulatory program. Our fundamental concern is over EPA's decision to automatically trigger PSD regulation of all stationary sources.
On Sept. 15, 2010, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December.
On June 20, 2011, the NAM and several other industry associations filed the fourth major legal brief challenging the EPA’s regulation of greenhouse gas emissions. This brief argued, in part, that the EPA’s tailoring rule essentially rewrote parts of the Clean Air Act by changing clear, congressionally established numerical thresholds for pollutants that are subject to regulation. The brief reiterated that the Clean Air Act was never meant to regulate GHGs. As a result, the rules should be vacated and remanded.
Oral arguments in the case were held on Feb. 29, 2012.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
On August 10, 2012, the NAM coalition filed a petition for rehearing en banc, asking that all the judges on the D.C. Circuit review the 3-judge panel's ruling. We argued that the panel relied on an unreasonable interpretation of the Clean Air Act to approve "the most sweeping expansion of EPA authority in the agency's history, for the first time covering a broad swatch of mobile and stationary sources of greenhouse gases and granting itself discretion to determine and revise the scope of the statute’s coverage, previously fixed by the statute’s explicit terms, for the indefinite future." The panel's ruling conflicts with Supreme Court decisions, produces absurd results, and could lead to annual cost increases of more than $20 billion upon full implementation.
On December 20, 2012, the D.C. Circuit denied our petition. Judges Brown and Kavanaugh filed separate dissenting opinions that supported our arguments. Such dissents are rare, sending a clear signal that significant legal issues remain to be addressed.
On April 18, 2013, the NAM filed a Petition for Writ of Certiorari with the U.S. Supreme Court and awaiting the Court's determination whether to hear the case.
Related Documents: NAM petition for writ of certiorari (April 18, 2013) NAM petition for rehearing en banc (August 10, 2012) NAM reply brief (November 16, 2011) NAM/Industry brief (June 20, 2011) NAM reply in support of partial stay (November 8, 2010) NAM statement of issues (September 15, 2010) NAM motion for partial stay (September 15, 2010)
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Challenging EPA's STR interpretation
On June 1, 2010, the NAM and other business organizations filed suit against EPA's latest interpretation of the so-called “Johnson Memo,” where the Agency stated for the first time that it will apply controls on greenhouse gas emissions on a wide range of manufacturing and other stationary sources beginning on January 2, 2011. This is the second piece of litigation against the EPA, which has issued 4 rules and interpretations that all combine to set limits on stationary sources of greenhouse gas emissions. Manufacturing facilities are among many sources of such emissions, and legal challenges must be filed now even though enforcement against many of these sources will not occur immediately.
This case is related to our challenge to EPA's endangerment finding. See our summary in NAM v. EPA described as "Challenging EPA's endangerment finding".
On Sept. 15, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December, 2010 and we spent 2011 filing briefs in all the greenhouse cases on the merits. Oral argument was held in the D.C. Circuit on February 29, 2012.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
Related Documents: NAM/Industry brief (June 20, 2011) NAM's Non-Binding Statement of Issues (August 30, 2010) NAM Petition to Review STR Rule (June 1, 2010)
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Challenging EPA's endangerment finding
In February, 2010, the NAM and other business groups filed a petition in federal appeals court challenging the U.S. Environmental Protection Agency’s (EPA) decision to regulate greenhouse gas (GHG) emissions from stationary sources through the Clean Air Act. Joining the NAM on the petition were the American Petroleum Institute, the National Petrochemical & Refiners Association, the National Association of Home Builders, the Corn Refiners Association, the Brick Industry Association, the Western States Petroleum Association and the National Oilseed Processors Association.
On March 18, 2010, a group of 21 industry associations and chambers of commerce filed a motion to intervene in the NAM suit in support of our position. This group represents a wide cross-section of sectors around the country that will be severely affected by EPA's effort to regulate stationary sources of greenhouse gases under the Clean Air Act.
A variety of other business groups and some states also challenged the endangerment finding. Some of these groups asked the EPA directly to reconsider its finding, but the agency turned down the request in July, 2010.
In the endangerment case, industry's opening brief was filed on May 20, 2011. Because the court required that all non-state petitioners and intervenors file only one brief, the views of 80 parties were consolidated, and the resulting brief includes disparate arguments from a variety of interests.
The brief explains that EPA does not say what constitutes a “safe climate,” acceptable global temperature ranges, or “safe” levels of GHGs in the atmosphere, nor will anyone be able to judge whether or when EPA has ever achieved a congressionally defined goal. EPA will not be able to say that its action will reduce global temperatures or that a temperature reduction will avoid an actual danger to public health and welfare.
The brief focused on, among other things, key EPA errors relating to (1) construing its authority to produce absurd results, (2) failing to provide a rational basis for determining whether GHG regulations will mitigate a defined public health or welfare risk, (3) lumping together six pollutants without making separate determinations about the effects of each, (4) failing to consider future mitigation and adaptation steps that impact whether health and welfare are endangered, and (5) failing to follow statutory procedures, including consultation with its own Science Advisory Board.
Congress did not intend for EPA’s endangerment finding to produce absurd results, yet that is the effect of EPA’s finding. The EPA should not have used the endangerment finding to cause PSD permitting requirements, since those requirements apply to emissions whose harm is concentrated in a particular geographic area. It should have adopted a more restricted reading of the statute, instead of a broad reading that would be narrowed by the absurd results doctrine.
We also argued that EPA has no rational basis for treating all six GHGs from motor vehicle emissions as a single air pollutant. Automobiles do not emit 2 of the six pollutants, and each of the pollutants that are emitted has radically different heat-trapping properties. In addition, EPA’s use of a “CO2 equivalent” as a proxy for regulation of each gas individually unlawfully avoids having to make endangerment findings for five of the six GHG air pollutants it seeks to regulate.
EPA also refused to consider “whether any harms from the regulated emissions will be independently averted or mitigated.” The agency also ignored emissions reductions that will occur from implementation of the Energy Independence and Security Act of 2007.
EPA's response was filed on Aug. 18, 2011. The agency argued that the administrative record was sufficient, that it reasonably classified six gases on one pollutant, and that it did not need to consider costs, administrative burdens, benefits or mitigation when making its endangerment finding. It also argued that it was not required to submit the proposed finding to the Science Advisory Board for review, and that complaints that it did not do so came too late in the process.
This litigation is one of many suits by the NAM and our coalition partners against EPA's attempt to regulate GHGs. In one, we challenged the agency’s interpretation of the so-called “Johnson Memo,” where EPA stated for the first time that it would apply controls on greenhouse gas emissions on a wide range of manufacturing and other stationary sources. See our summary in NAM v. EPA described as "Challenging EPA's STR interpretation". We subsequently filed additional suits challenging EPA's tailoring rule, tailpipe rule, and other rules being used to regulate stationary sources of greenhouse gases.
On September 26, 2011, the EPA's Inspector General issued a report in part finding that EPA did not make an independent assessment of key scientific evidence that it relied on in issuing its endangerment finding. We then asked the court to take judicial notice of the report. Public documents that are not already in the record of a case may be considered by a court, and we brought this development to the court's attention because it is directly relevant to EPA's claim in court that it exercised independent judgment when reviewing the scientific evidence.
Oral arguments were held on Feb. 28, 2012.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
Related Documents: NAM Request for Judicial Notice of EPA Inspector General's Report (September 30, 2011) Petitioners' Opening Brief (May 20, 2011) NAM Joint Briefing Proposal (January 10, 2011) NAM Docketing Statement (April 15, 2010) NAM Nonbinding Statement of Issues (April 15, 2010) NAM Petition for Review (February 16, 2010)
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Native Village of Kivalina v. ExxonMobil Corp.
(9th Circuit)
Public nuisance litigation over climate change is displaced by EPA regulation
A native village in Alaska sued various energy companies, alleging that greenhouse gas emissions cause climate change and made them relocate their village because of flooding. The trial court dismissed the case because it involves political questions that are not for courts to decide. It also said the plaintiffs did not have standing because they were unable to establish that their injuries are fairly traceable to the named defendants.
The issue was appealed to the Ninth Circuit. The NAM filed an amicus brief July 7, 2010, arguing that the case represents an unprecedented attempt by environmental lawyers to recast public nuisance as a "super tort", in an effort to bypass 4 time-honored elements of fundamental public nuisance law. Their theory is unfounded in federal or state law, and they cannot establish direct causation between the defendants' energy activities and the plaintiffs' injuries. In addition, to determine whether the elements of proving public nuisance were met, a court would have to address complex political questions and establish nationwide emissions standards.
Even the plaintiffs admitted the case was born out of their frustration with the legislative process. Allowing this kind of suit would give rise to endless claims of liability in highly speculative mass tort cases after every harsh weather event.
On September 21, 2012, the Ninth Circuit dismissed the case, finding that the plaintiffs' claims were displaced by federal law. Because EPA is regulating greenhouse gases, federal common law cannot be the basis for public nuisance claims in this area.
This is another in a series of cases involving public nuisance claims arising from greenhouse gas emissions, including the Comer, American Electric Power, and Tennessee Valley Authority cases, all of which the NAM has participated by filing amicus briefs. The AEP case largely rejected this kind of wasteful litigation, but left open the possibility of nuisance claims under state law.
Related Documents: NAM brief (July 7, 2010)
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Native Village of Point Hope v. Salazar
(9th Circuit)
Challenge to exploratory drilling permit in Alaska
The development of Alaska offshore oil resources is the center of legal disputes involving exploration permits issued by the Department of the Interior. Environmental groups have filed multiple lawsuits to impair the permitting process, and this one alleged violations of the National Environmental Policy Act (NEPA) and the Outer Continental Shelf Lands Act (OCSLA). At issue was a revised exploration plan prepared by Shell following an extensive environmental assessment and approved by the Department. The Government’s latest estimates show that the Beaufort Sea contains a staggering 6.3 billion barrels of undiscovered oil that is economically recoverable at roughly current market prices, and a recent economic analysis estimates that the development of these resources, including the Chukchi Sea, will create an annual average of over 54,000 new jobs over the next 45 years, generating $145 billion in employee payroll.
The NAM and other business groups filed an amicus brief Feb. 3, 2012, arguing that the OCSLA was adopted with the specific goal of encouraging the expeditious exploration and production of the Outer Continental Shelf. Thousands of exploration plans have already been approved under quick timetables, including 31 exploratory wells in the Beaufort Sea. The Department should be able to use its scientific and technical expertise to approve the exploration plans without undue court interference.
The first lawsuit was filed challenging an offshore exploration plan in the Beaufort sea, and a second was filed challenging a similar plan in the Chukchi Sea. These cases were consolidated in March, and on April 3, the NAM and other business groups filed a supplemental amicus brief raising the same concerns we had expressed before.
On May 25, the Ninth Circuit rejected the environmental challenges to the exploratory permits. It found that one part of the challenge was made moot by a subsequent filing of documentation, and that the agency was not arbitrary and capricious in issuing the company's plan with the documentation provided. Also, an agency can approve applications that have inconsistent statements, because the statements were not made by the agency and the statements reflected changing circumstances. Other evidence in the record need not be fully reconciled by the agency as long as the agency's conclusion is supported by substantial evidence on the record considered as a whole. The agency complied with the law's requirements to ensure that the exploration plan would not probably cause serious harm or damage to life, property or the environment, and its decision is entitle to deference when supported by the record.
Related Documents: NAM Supplemental brief (April 3, 2012) NAM brief (February 3, 2012)
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PPL Montana, LLC v. Montana
(U.S. Supreme Court)
Questions involving the definition of navigable waters to determine state ownership of riverbeds
On 2/22/2012, the Supreme Court reversed a Montana decision that found that the state held title to riverbeds under various dams and reservoirs long being used for hydroelectric power, and that PPL Montana must pay $41 million in back rent and millions more in future rent. The Court ruled on the definition of navigability for purposes of determining ownership of the riverbed. Had the state owned the land, the case could have affected electric power rates for customers in many areas.
The Court ruled unanimously that states could only assert ownership in land under rivers that were navigable at the time the state gained statehood. Current river conditions are not binding in this determination. Areas of rivers that could only be reached by portaging around obstacles are generally not navigable.
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Sackett v. EPA
(U.S. Supreme Court)
Right to preenforcement review of EPA compliance order
A couple who graded a small lot to build a house was ordered by EPA under the Clean Water Act to fill in the lot, replace vegetation and monitor the land for 3 years, or face a $32,500 penalty for each day of violation. They sought court review of the order, but were denied.
On March 21, 2012, the Supreme Court decided that they have a right to go to court to get pre-enforcement review of the order. They do not have to wait for EPA to sue them for violating the order in order to raise their claims. The unanimous Court held that the Administrative Procedure Act allows aggrieved parties to sue an agency after it takes "final agency action," and EPA's order qualified. Although the majority did not limit the claims that could be raised in such a challenge, Justice Ginsburg's concurring opinion argued that a challenge could only involve EPA's jurisdiction over the land in question. It remains to be seen whether the Court's opinion is ultimately interpreted in such a limited manner.
The NAM filed an amicus brief in 2011 supporting this result.
The case has implications beyond the Clean Water Act to similar orders under the Solid Waste Disposal Act (Resource Conservation and Recovery Act) and the Safe Drinking Water Act. EPA orders such as this one essentially coerce alleged violators into compliance, denying due process. Pre-enforcement review by the courts is a critical check on agency abuse. Otherwise, persons subject to such orders risk substantial financial penalties for violating an order even if they did not violate the Clean Water Act itself.
One of the claims the landowners hope to raise is whether their property is even subject to EPA jurisdiction in the first place. This question involves defining "waters of the United States," and, as Justice Alito mentioned in his concurring opinion, neither Congress nor EPA has provided a clear answer to this question. The NAM supports efforts to prevent EPA and the U.S. Army Corps of Engineers from expanding the federal government's regulation of private and public lands under the Clean Water Act, since such expansion would create significant regulatory barriers to economic growth in an already struggling economy. In 2011, we filed extensive comments on this proposed agency action.
Related Documents: NAM brief (October 3, 2011)
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Sierra Club v. EPA
(D.C. Circuit)
Environmental group's challenge of EPA's delay of the effective dates of its boiler rule and incinerator rule
The NAM and other groups moved to intervene in a law suit brought by the Sierra Club against EPA over the agency's decision to delay the effective date of new regulations on boilers and incinerators. The rules, issued on March 21, 2011, concern major source industrial boilers and commercial and industrial solid waste incinerators. When it published the rules, EPA announced that it would initiate administrative reconsideration of them, and later delayed the effective dates during the reconsideration period. Our intervention in this case was intended to support the EPA's decision to delay implementation.
At the same time, the NAM challenged the boiler MACT and incinerator rules themselves. The rules have the potential to dramatically impact the U.S. economy and impose enormous costs on key industrial sectors, and they force companies to make compliance investment decisions well in advance of their effective dates.
This suit by the Sierra Club was voluntarily dismissed on March 29, 2012. A similar suit brought in federal district court ended when the court invalidated EPA's delay notice.
Related Documents: NAM Motion to Intervene (August 15, 2011)
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Texas v. EPA
(5th Circuit)
Challenging EPA's denial of Texas Flexible Permit program
On December 3, 2010, the NAM and others filed a joint brief arguing that states have substantial discretion under federal law to adopt flexible requirements the apply to minor changes in plant operations as long as air quality is protected. We also argued that the Texas program meets all the federal Clean Air Act (CAA) standards, is in some cases years ahead of schedule, and the EPA’s action more than 15 years after the adoption of the Texas program has no legal support. EPA has also failed to defer to Texas’ interpretation of its own regulatory laws, as required by federal law. This litigation is intended to eliminate the ambiguity of EPA’s latest actions and to restore predictable air pollution control regulation in Texas.
On Aug. 13, 2012, the Fifth Circuit agreed, throwing out EPA's action. The court found that EPA's demands for language and program features in the state's implementation plan had no basis in the Clean Air Act or its implementing regulations. Instead, the Act sets goals and basic requirements, and gives the states broad authority to determine the methods and particular control strategies they will use to achieve the statutory goals. Environmental regulation is a shared responsibility of the federal and state governments, and EPA must approve state plans that meet the requirements of the Clean Air Act within 18 months of a state's submitting them for approval.
The Court rejected an EPA effort to require the state to adopt express language prohibiting major sources from evading statutory major new source review regulations. It found no requirement in the statute compelling such a statement, and even EPA's prior views accepted wide variations in state enforcement program language. Thus, EPA's attempt to require specific language in a state's implementation plan violated principles of federalism embodied in the Clean Air Act, as well as the Administrative Procedure Act.
The Court also rejected EPA's criticism of the flexible permit program's monitoring, recordkeeping and recording provisions. Texas allows its enforcement director discretion to write monitoring and recordkeeping requirements into each permit, based on the size, needs, and type of facility applying for a permit. The Court found that there was no authority in the law to allow EPA to limit the director's discretion, and EPA provided no evidence that the Texas program interferes with attaining Clean Air Act requirements. In fact, EPA approved similar director discretion in previous state plan amendments.
Finally, the Court rejected similar EPA arguments about the methodology allowed for calculating each emissions cap at a permitted facility. The agency's objections "rely on standards not found in the CAA or its implementing regulations."
Related Documents: NAM reply brief (March 17, 2011) NAM brief (December 3, 2010)
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Wilderness Society v. U.S. Dep't of the Interior
(N.D.Cal.)
Defending expedited siting of transmission lines in the west
The NAM and other major energy and business trade associations sought to intervene on the side of the Department of Interior, defending a lawsuit brought by 15 environmental groups against the agency’s expedited siting of transmission lines under the Energy Policy Act of 2005. Led by the Wilderness Society, the environmentalists sued in U.S. District Court, Northern District of California, to stop the designation of energy corridors in the western United States, specifically the West-wide Energy Corridors (WWEC). The groups had previously challenged the Department of Energy’s designation of corridors through the administrative process.
On Dec. 17, 2009, the NAM filed a motion to intervene as an intervenor/defendant in the litigation, joined by the Edison Electric Institute, American Public Power Association, National Rural Electric Cooperative Association, American Gas Association, and U.S. Chamber of Commerce. The Environmental Protection Act includes many provisions necessary to expedite development of a modernized electricity grid to meet increased demand, and the NAM endorses policies that will expedite development of a "smart grid," which will save manufacturers money. The NAM supports the identification and designation of corridors across federal lands, and this lawsuit threatened to block or impose additional delays or regulatory constraints on the WWEC.
Our motion to intervene was granted on March 9, 2011. A settlement was reached in this case, and a joint motion to dismiss was granted on 7/11/12. It called for periodic interagency reviews, agency guidance, training and a corridor study to assess whether the corridors are efficient and environmentally sensitive.
Related Documents: NAM Motion to Intervene (December 17, 2009)
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California Chamber of Commerce v. California Air Resources Board
(Superior Court of Sacramento County)
Challenging CARB cap-and-trade auction allowance revenues
In November, 2012, the California Chamber of Commerce filed a lawsuit challenging the legality of the fees charged by the California Air Resources Board (CARB) for the state’s cap-and-trade greenhouse gas program. The NAM moved to intervene in the litigation, focusing not on the legality of the cap-and-trade program itself or the merits of climate change science, but on the extraordinary revenues generated by the auction and reserve sale provisions adopted by CARB.
The effectiveness of the cap-and-trade program comes from the state’s ability to ratchet down greenhouse gas emissions from year to year. CARB may not go beyond this authority to generate a huge income stream for the state. The first quarterly auction of greenhouse gas allowances in November, 2012, raised nearly $289 million for California, substantially more than the $62 million required to implement the law. Moreover, that revenue is projected to increase to as much as $70 billion over the life of the program. In 2015, more than $2 billion is expected to be generated by the program, and most of the funds already collected have been earmarked for housing and transportation projects.
We argued that that income goes far beyond simply paying for the costs of administering the program, and thus exceeded the legal authority of CARB. Alternatively, even if the fees were authorized, they constitute a massive new tax that must have been approved by a 2/3 majority of the California legislature under the state constitution.
On Nov. 12, 2013, the judge ruled that the Air Resources Board was given the discretion to raise revenues by auctioning and selling allowances. The fact that the Board may charge an administrative fee does not prevent it from also auctioning the allowances. The judge also ruled that the revenues were not an unconstitutional tax, although he called that a close question. He analyzed the difference between taxes and government regulatory fees, and found the charges more like traditional regulatory fees. The primary purpose is for regulation, not revenue, the total fees don't exceed the costs of the regulatory activities, and the fees collected are reasonably related to the burden imposed by the greenhouse gas emissions. The court was at a loss to know what the fees will actually be used for, but the law requires that they be used to further the emissions reduction goals of AB 32. It admitted that "since nearly every aspect of life has some impact on GHG emissions, it is difficult to conceive of a regulatory activity that will not have an least some impact on GHG emissions." Thus, the decision gives extremely broad power to the state government to use the funds collected and not have them be considered a tax.
This income scheme will significantly raise energy costs in the state and further harm its competitiveness, without providing any additional environmental benefits, since it will still be affected by GHG emissions from elsewhere around the world.
Related Documents: NAM Reply brief (August 7, 2013) Motion to Intervene (February 15, 2013) Points and Authorities in Support of Complaint (February 15, 2013)
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Comer v. Murphy Oil U.S.A.
(5th Circuit)
Whether effects of global warming give rise to public nuisance suits under state law
This case alleges that the emissions of greenhouse gases from various energy and manufacturing companies led to a stronger Hurricane Katrina than might have otherwise occurred, and the companies should pay the damages. It was dismissed in litigation in 2010 summarized here.
The plaintiffs filed a new suit, and the trial court dismissed it. On appeal to the Fifth Circuit, the NAM and other groups filed an amicus brief opposing any common law cause of action for harms caused by weather events allegedly caused by climate change. The courts are not the place to make policy judgments about emissions policies for individual defendants, becoming a kind of super EPA. All the most recent Supreme Court and appellate court decisions reject this kind of liability, since EPA is already regulating greenhouse gases.
On May 14, 2013 the Fifth Circuit affirmed the district court’s rejection of plaintiffs’ claims based on the doctrine of res judicata, which holds that once a valid judgment decides a case, that decision shall stand. The case followed a complicated procedural history. The trial court decision rejecting the plaintiffs’ claims was up for an en banc rehearing by the Fifth Circuit. However, without a majority of the Circuit’s judges available to hear the case, quorum was not met and the case was not reheard. Plaintiffs then sought a writ of mandamus from the Supreme Court, which was denied. Then the plaintiffs asserted that there was not a final decision on the merits, and therefore that their claim was not barred by res judicata. The Fifth Circuit disagreed and upheld the trial court’s decision to bar the claims. At no point was the trial court’s final judgment disturbed nor was there was a decision on the merits.
Related Documents: NAM brief (September 28, 2012)
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Decker v. Northwest Envtl. Def. Ctr.
(U.S. Supreme Court)
Citizen suits under the Clean Water Act
An environmental group sued some logging companies alleging violations of the Clean Water Act arising from rainwater runoff in logging areas. A statute requires that suits challenging EPA actions be filed within 120 days of the action. On March 20, 2013, the Supreme Court decided that that limitation does not apply to citizen suits seeking to apply permit requirements to forest roads, since another statutory provision allows such suits. The NAM had filed an amicus brief challenging the citizen suit.
Also at issue in the case is the Ninth Circuit’s decision that storm water from logging roads is industrial storm water, in spite of an EPA determination to the contrary. The Court ruled that it was reasonable for EPA to conclude that the water runoff was directly related only to the harvesting of raw materials, rather than to "manufacturing, processing, or raw materials storage areas at an idustrial plant" as defined in the regulation. Thus, the regulation extends only to traditional industrial buildings and not foresting operations.
The decision means that citizen suits can continue to be filed well after regulations are finalized, as long as the suits challenge not the rules themselves, but seek to enforce them under a proper interpretation. The decision also means that EPA's interpretation of a regulation will continue to be given deference by the courts unless it is plainly erroneous or inconsistent with the regulation. This is particularly true where a federal regulation would be duplicative or counterproductive in light of state regulation of the practices at issue.
Related Documents: NAM brief (September 4, 2012)
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Los Angeles County Flood Control Dist. v. Natural Resources Defense Council
(U.S. Supreme Court)
Definition of a "discharge" from an "outfall" under the CWA
Two environmental groups sued a municipality for discharging water that allegedly exceeded water quality standards. However, the discharge was from a concrete flood control system used simply to reroute a river. The Supreme Court decided that water coming from such a source does not constitute a “discharge” under the Clean Water Act (CWA). Limiting the breadth of obligations that might be required of municipalities trying to control floods and stormwater helps keep down costs for everyone within their jurisdictions.
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Luminant Generation Co v. EPA
(U.S. Supreme Court)
Whether EPA may disapprove SIP without finding that it conflicts with an applicable requirement of the Clean Air Act
This case involves an effort by EPA to impose greater Clean Air Act requirements on manufacturers and fuel users. The NAM joined with other groups supporting an appeal by Luminant Generation Co. of an adverse decision from the Fifth Circuit.
The case involves the balance of power between EPA and state environmental enforcement agencies when regulating emissions from industrial process or emission control equipment during startups, shutdowns or malfunctions. During these periods, states commonly allow more lenient treatment of excess emissions from such equipment, but EPA decided to disapprove part of a Texas State Implementation Plan (SIP) that potentially excuses excess emissions during planned equipment maintenance. Companies will not be able to argue affirmative defenses to citations, making them subject to civil penalties and fines.
The dispute centers on whether Section 113 of the Clean Air Act articulates a requirement that provides a basis for EPA to disapprove the Texas plan. Our brief argued that another Section of the Act (Sec. 110) gives EPA the power to disapprove state plans that interfere with any applicable requirement of the Clean Air Act, and the lower court’s decision should be reversed on this point. We also argued that EPA’s action violates the Eighth Amendment by imposing a penalty grossly disproportionate to the offense, as well as the Fifth Amendment’s due process principles, since certain emissions during planned startups and shutdowns are unavoidable. The Texas SIP would have allowed a company to demonstrate that the offense was actually unavoidable, but the EPA action took away that defense.
On 10/7/2013, the Supreme Court declined to review this appeal.
Related Documents: NAM brief (July 24, 2013)
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Mingo Logan Coal Co. v. EPA
(D.C. Circuit)
EPA interference with Clean Water Act permits
Mingo Logan Coal Co. challenged an EPA decision that it argued retroactively changed a Clean Water Act permit issued by the U.S. Army Corps of Engineers four years earlier. This change withdrew certain creeks as disposal sites for dredged material, affecting the validity of a permit that EPA had previously reviewed and assented to, and even though the permit holder was in full compliance with it.
In March, 2012, a federal judge ruled that EPA did not have the power to revoke a valid permit -- only the U.S. Army Corps of Engineers, which issued the permit, has the authority to revoke it. The NAM filed an amicus brief in support of that result in the trial court, and that history is summarized here.
EPA appealed to the D.C. Circuit, and the NAM and other business groups filed a second amicus brief raising concerns about the substantial uncertainty that would be generated were EPA to have the power it claimed. The power to revoke a valid permit by EPA will substantially raise the stakes for any project that requires a Section 404 permit. That will distort the cost-benefit ratio and discourage new investments in any such project. The uncertainty from this looming threat will lead to higher interest rates and fewer investments, affecting downstream benefits such as job creation, housing, commercial space, food, consumer products, libraries and schools.
Unfortunately, the D.C. Circuit reversed the trial court on April 23, 2013. A 3-judge panel ruled that EPA has the final say on discharge site selection under Sec. 404(c) of the Clean Water Act. It can withdraw a specification of a stream as a suitable site for discharging dredged or fill material from a mountain-top mine at any time, including after a permit is issued. The withdrawal amends the terms and conditions specified in the permit. The court sent the case back to the trial court to resolve a remaining challenge -- whether EPA's decision was arbitrary and capricious in violation of the Administrative Procedure Act.
Related Documents: NAM brief (September 19, 2012)
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Mississippi v. EPA
(D.C. Circuit)
Validity of EPA's ozone regulation
The NAM is a member of the Ozone NAAQS Litigation Group, which in 2008 in the U.S. Court of Appeals for the D.C. Circuit challenged the validity of the EPA's final regulation lowering certain ozone limits under the Clean Air Act. The American Lung Association, the Natural Resources Defense Council, and others are also challenging the rule, arguing that the EPA did not follow the advice of their scientific advisers to issue a tougher standard. All the petitions were consolidated under the caption, Mississippi v. EPA.
On 3/19/09, the D.C. Circuit ordered the cases held in abeyance while the new Administration considered whether to change the standards. EPA proposed revisions in January, 2010, for public comment. The NAM filed comments in March (see link below).
On April 4, 2011, the court denied our motion to begin briefing those issues that were not the subject of reconsideration, and refused to order EPA to complete its reconsideration proceeding by the July 29, 2011 date by which EPA indicated it planned to take final action. EPA forwarded a final rule to the Office of Management and Budget in July. Five of the petitioners in this case moved 8/8/11 for a court order directing EPA to complete reconsideration immediately. The NAM coalition opposed this motion because the deadline for EPA to review the 2008 Ozone rule has not yet passed, and it need not act by any specific date. We also asked the court again to renew the briefing on this litigation.
On Sept. 2, President Obama announced that he was requesting that Administrator Jackson withdraw the draft ozone standard at this time. OIRA Administrator Cass Sunstein sent a letter to EPA explaining the reasons that he was sending the proposal back to EPA for reconsideration, including that "a new standard now is not mandatory" and new scientific work is underway and will be based on the best available science. Later that day, EPA filed a notice with the D.C. Circuit saying it "no longer expects that it will take final action to complete its reconsideration of the 2008 ozone NAAQS in the near future." It filed a revised motion to govern further proceedings on Sept. 12, seeking to resume briefing, which the court did.
The Ozone NAAQS Coalition filed its brief on April 17, 2012. Key arguments included: (1) the EPA's finding that increased protection results from a lower standard is insufficient, as a matter of law, to establish that the revision is "requisite" under the statute, (2) new health evidence in 2008 does not materially differ from earlier evidence and does not support revising the standard, (3) the risks now are no greater than they were under the earlier standard, and (4) EPA misrepresented and used selective results from the latest clinical and epidemiological studies.
Our coalition filed a separate brief in July as intervenors in support of EPA defending challenges from environmental groups that the ozone standard is not stringent enough. The NAAQS standard for ozone is now at .075 ppm, and the studies EPA considered in setting this level did not support lowering it below .070 ppm, as demanded by the challengers. A clinical and some epidemiological studies did not produce any statistically significant results for levels below .080 ppm. We also supported EPA's decision regarding exposure and risk assessments.
The NAM filed a reply brief on Aug. 13 reiterating our position that the EPA did not have sufficient evidence in the record to justify its conclusion that the public health risk from ozone was any different in 2008 than it was in 1997 when it set the last ozone standard. It failed to justify why the 1997 standard was no longer “requisite,” as required by the statute, to protect public health with an adequate margin of safety. The agency also failed to rely on air quality criteria that accurately reflect the latest scientific knowledge, and set secondary standards based on the defective primary standard.
The Court issued its decision on July 23, 2013, upholding the primary ozone standard of .075 ppm, but ordering EPA to provide further explanation for its secondary ozone standard, which applies to effects of ozone on such things as animals, vegetation, visibility, property and personal comfort and well-being. With respect to the primary ozone standard, the court applied the usual highly deferential standard of review which courts apply to challenges of regulations. It found that EPA set a standard that is "requisite" to protect the public with an adequate margin of safety, holding that "requisite" protection may change over time with different policy judgments and scientific knowledge. As long as EPA reasonably and rationally explains its actions, the courts will defer to those judgments. The court likewise rejected challenges from environmental groups, saying EPA was in a situation reminiscent of Goldilocks. It upheld the agency's decision, found that it had built in a reasonable margin of safety, and allowed the agency to depart from recommendations of the Clean Air Scientific Advisory Committee because CASAC's opinion was a mix of scientific and policy considerations which EPA could decide differently.
Related Documents: Ozone NAAQS Litigation Group reply brief (August 13, 2012) Ozone NAAQS Litigation Group brief (July 23, 2012) Ozone NAAQS Litigation Group brief (April 17, 2012) NAM Opposition to Motion for Order Directing EPA to Complete Reconsideration (August 10, 2011) NAM Cross-Motion to Resume Briefing (January 10, 2011) Ozone NAAQS Litigation Group petition for review (May 27, 2008)
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Sierra Club v. County of Solano
(Cal. Ct. App.)
County restrictions on solid waste disposal
Solano County, California, voters passed Measure E in 1984, which obstructed regional waste management by drastically limiting the volume of solid waste that could be brought into the county for disposal or recycling. It sets a low limit on waste from other counties in California, and the county stopped enforcing it after receiving legal opinions that it violated the Commerce Clause because it discriminates against and excludes waste by place of origin.
The Sierra Club and other environmental groups sued to enforce Measure E as written. The trial judge rewrote the law to apply only to other California counties, but not to waste generated outside of the state. That ruling was appealed.
The NAM and other organizations filed an amicus brief arguing that protectionist barriers like these have been struck down for decades because they interfere with interstate commerce. Simply limiting the reach of the measure to other California counties does not eliminate this problem. Solano County and thousands of others throughout the nation cannot "stand alone as economic islands around which the free flow of commerce may be diverted. Building a virtual wall around [the county] has a profound impact on the market for solid waste as an article of interstate commerce."
We urged an appeals court in California to reject laws like this that can create a patchwork of discriminatory and protectionist solid waste bans from cities and counties across the country. Allowing bans like this could lead to similar restrictions against many other goods and services, not merely solid waste, and would allow local entities to achieve what the states are prohibited from doing. The impact would be to dramatically undermine a national market of solid waste management and disposal, and could expose billions of dollars of other economic activity to discrimination by thousands of local governments.
On 7/31/2013, the court of appeal reversed the trial court's ruling and dismissed the case as moot, because California had enacted a new law (AB 845) that prohibits restrictions on the importation of solid waste based on the place of origin of the waste.
Related Documents: NAM brief (September 6, 2011)
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Sierra Club v. EPA
(N.D. Cal.)
Intervention in suit that would force EPA to act on ozone
The NAM and 12 other groups moved to intervene in this suit brought by the Sierra Club over EPA's regulation of ozone. The Sierra Club and other environmental groups filed the suit to force EPA to complete its review and revision of the national ambient air quality standards (NAAQS) for ozone. EPA lowered the standard to 75 ppb in March of 2008, and now the environmental groups are trying to force EPA to take steps to finalize an additional lowering of the standard by September, 2014. The Clean Air Act requires EPA to review NAAQS every 5 years and make revisions "as may be appropriate . . . ."
The NAM group moved to intervene to help prevent the adoption of more stringent NAAQS demanded by the environmental groups. Any lowering of the standard will result in additional costly and burdensome control requirements, new emission reduction requirements, and fees, and manufacturers need to have adequate time to develop and present information to EPA concerning the present standard and a possible revision. Forcing EPA to act hurriedly "would frustrate the development of sound scientific support on the need for NAAQS revisions." The proposed timetable would make EPA "finalize its risk assessment and policy
analysis, complete its consultation with CASAC [an advisory committee], publish a proposed rule in the Federal Register, solicit comments, review those comments and respond to them as necessary, send its final rule to
the Office of Management and Budget for mandatory review, and publish the final rule in the
Federal Register, all in the span of one year or less." This would require EPA to truncate the public comment period, to the detriment of the public and the regulated community.
Joining the NAM in the motion to intervene were the American Forest & Paper Association
(“AF&PA”), American Fuel and Petrochemical Manufacturers (“AFPM”), American Iron and
Steel Institute (“AISI”), American Petroleum Institute (“API”), American Wood Council
(“AWC”), Automotive Aftermarket Industry Association (“AAIA”), Brick Industry Association
(“BIA”), Council of Industrial Boiler Owners (“CIBO”), Independent Petroleum Association of
America (“IPAA”), National Mining Association (“NMA”), Treated Wood Council (“TWC”),
and Utility Air Regulatory Group (“UARG”).
On 8/20/13, the environmental groups and EPA jointly asked the court to delay further filings for 3 months while they engage in settlement discussions.
On 10/9/13, the court denied our motion to intervene, concluding "that EPA will represent adequately any interests that Proposed Intervenors might have in setting a rulemaking schedule." The judge declined to recognize that we had a "significant protectable interest" in the litigation because the rulemaking deadlines are statutory and non-discretionary. We continue to be concerned that EPA will be forced to settle its way into a rushed timeline for this regulation.
On April 29, 2014, the court ordered EPA to propose a new standard by December 1, 2014 and to finalize it by October 1, 2015. EPA had wanted an extra 45 days, but that request was denied.
Related Documents: NAM Reply Motion (September 6, 2013) NAM Motion to Intervene (August 16, 2013)
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SIP/FIP Advocacy Group v. EPA
(D.C. Circuit)
Challenging EPA's disapproval of Texas SIP because of greenhouse gases
The NAM is part of the SIP/FIP Advocacy Group, which comprises various national trade associations challenging EPA's efforts to require states to implement its greenhouse gas stationary source regulatory requirements. This suit is in response to EPA's decision, published May 3, 2011, partially disapproving Texas' implementation plan for regulating pollution. EPA rejected part of the Texas plan because it did not address how it would apply to pollutants that become "subject to regulation" in the future, such as greenhouse gases. Because it rejected the Texas plan, EPA moved to implement federal regulation of greenhouse gas emissions in Texas.
The State of Texas and other parties also filed suit against EPA, and our case has been consolidated with those. For further action in this case, click here.
Related Documents: NAM Petition for Review (July 5, 2011)
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SIP/FIP Advocacy Group v. EPA
(D.C. Circuit)
Challenging EPA's SIP Call for regulation of greenhouse gases
In December, 2010, EPA announced its Finding of Substantial Inadequacy and SIP Call Rule for greenhouse gas emissions. It found that the laws of 13 states do not authorize them to regulate GHG emissions as is required as of January 2, 2011, and EPA requires those states to change their laws and submit revised State Implementation Plans (SIPs) for review and approval. In the meantime, EPA will use its own Federal Implemenation Plan (FIP) to regulate GHGs. The affected states are Arkansas, Arizona, parts of California, Connecticut, Florida, Idaho, Kansas, Kentucky, Oregon, Nebraska, Nevada (Clark County), Texas, and Wyoming.
The NAM and other associations that are part of the SIP/FIP Advocacy Group have petitioned two federal appeals courts to review EPA's action. This is another step in our overall challenge to EPA's efforts to regulate greenhouse gases under the Clean Air Act. We filed comments with EPA when this action was proposed, arguing that EPA's own regulations give the states 3 years to comply with the new greenhouse gas requirements, and that the state implementation plans are not "substantially inadequate" to enforce the new requirements.
A similar case was filed in the U.S. Court of Appeals for the Fifth Circuit. It was transferred to the D.C. Circuit. On 7/6/11, the court consolidated the cases into one but denied EPA's request that it be held in abeyance pending resolution of the main challenges to their greenhouse gas regulations.
On 2/8/2012, the SIP/FIP Advocacy Group filed its main brief, arguing that the Clean Air Act requires EPA to give the states 3 years to amend their SIPs to account for greenhouse gases. EPA sought, through unlawful intimidation, to coerce states to consent to GHG regulation immediately to avoid a threatened ban on new-source construction. EPA has never acted outside of these procedures, and it should be required to follow them. Until then, we ask the court to provide that no GHG-emitting sources be subject to any PSD (Prevention of Significant Deterioration) permitting requirements.
On 5/14/2012, NAM filed a reply brief arguing that EPA’s refusal to accept State Implementation Plans is invalid. EPA thinks that states may not issue preconstruction permits addressing greenhouse gases, and that EPA must take over the state's power and issue federal implementation plans. We argued that the states continue to have permitting authority and may take the time allotted by EPA regulations to implement the new greenhouse gas requirements.
On July 26, 2013, the D.C. Circuit ruled 2 to 1 that no party had standing to challenge EPA's actions because any harm was caused by the Clean Air Act and not by EPA's actions. It found that the Act's permitting requirements are self-executing and require permits for each pollutant subject to regulation under the Act even when the applicable SIP has not been updated to include requirements for newly regulated pollutants. The petitioners did not have standing, according to the majority, because a victory for them would leave them worse off than with the rules, because there would be a construction ban in those states without a SIP for greenhouse gases. The court's ruling applies to Texas v. EPA as well.
Related Documents: NAM reply brief (May 14, 2012) NAM brief (February 8, 2012) NAM petition for review (5th Cir.) (February 11, 2011) NAM petition for review (D.C. Cir.) (February 11, 2011)
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SIP/FIP Advocacy Group v. EPA
(5th Circuit)
Challenging EPA's SIP Call for regulation of greenhouse gases
This petition challenges EPA's decision to take over 13 state Clean Air Act implementation plans governing the enforcement of greenhouse gas regulations. For details, see a similar petition in the D.C. Circuit, here.
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Texas v. EPA
(D.C. Circuit)
Challenging EPA's partial takeover of PSD permit authority in Texas
The NAM and four other business organizations filed an amicus brief supporting the State of Texas in its lawsuit seeking an emergency stay of EPA’s decision partially revoking the State’s permitting authority under its Clean Air Act implementation plan. EPA took over the Texas permitting authority without notice-and-comment rulemaking on the premise that without intervention many stationary sources of greenhouse gas emissions in Texas would have to forgo construction and modification in 2011. But there was no construction ban in Texas, and EPA's intervention was not needed to prevent one.
EPA took the action in late December, 2010, after the Texas Clear Air Act implementation plan had been on the books for 18 years. EPA believes that its new greenhouse gas rules require large stationary sources of GHG emissions to obtain PSD (Prevention of Significant Deterioration) permits before beginning construction or undertaking modifications of their facilities. Most states automatically incorporate new EPA pollutants in their state plans, but Texas does not, and EPA believes Texas will not act promptly to do so. Our brief, however, argued that PSD permit requirements are not automatically incorporated into a state's implementation plan. Thus, a court may stay EPA's latest regulatory control tactic without interfering with the continuing process by which Texas issues construction and modification permits for stationary sources of emissions.
On Jan. 12, 2011, the Court granted our motion to file an amicus brief, but denied the motion for a stay. EPA's regulatory action continued in force during the litigation.
On June 18, 2012 the NAM, as part of the SIP/FIP Advocacy Group, filed its main brief to support Texas’ State Implementation Plan (SIP) against the EPA’s actions to deny it. Our brief argued that EPA cannot override the Texas SIP any time it finds fault or shifts its policy direction. EPA should not expand its powers by using legislation that was intended merely to correct clerical or technical errors in prior laws. In addition, the EPA should not have reviewed the SIP, as it was compliant with the Clean Air Act when it was implemented. Finally, we argued that EPA ignored the requirement to give notice and an opportunity to comment on rule changes.
These steps by EPA are causing harm to Texas and manufacturers, as they require businesses to obtain permitting from both the state and the federal government, and have effectively destabilized investments in Texas businesses affected by the standards.
On July 26, 2013, the D.C. Circuit ruled 2 to 1 that no party had standing to challenge EPA's actions because any harm was caused by the Clean Air Act and not by EPA's actions. It found that the Act's permitting requirements are self-executing and require permits for each pollutant subject to regulation under the Act even when the applicable SIP has not been updated to include requirements for newly regulated pollutants. The petitioners did not have standing, according to the majority, because a victory for them would leave them worse off than with the rules, because there would be a construction ban in those states without a SIP for greenhouse gases.
On Sept. 22, 2014, we petitioned the court to rehear this case, arguing that its decision directly conflicted with the Supreme Court's recent decision in UARG v. EPA. The Supreme Court ruled that the Clean Air Act cannot be interpreted to automatically require a source to obtain a PSD permit on the sole basis of its potential greenhouse gas emissions when those emissions became regulated pollutants. Because the requirements are not self-executing, the D.C. Circuit's decision based on that finding are insupportable. EPA could not reject state implementation plans that did not regulate major sources of greenhouse gases because its own regulations were not authorized.
The court ordered responses to the petition for rehearing, which were filed on November 4. On May 4, 2015, the court denied the petitions.
Related Documents: SIP/FIP Advocacy Group petition for rehearing (September 22, 2014) SIP/FIP Advocacy Group reply brief (September 21, 2012) SIP/FIP Advocacy Group brief (June 18, 2012) NAM amicus brief (January 6, 2011)
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U.S. Forest Service v. Pacific Rivers Council
(U.S. Supreme Court)
Challenge to EIS for EPA's forest plan revisions
In March, 2013 the Supreme Court agreed to review a case in which an environmental group challenged the U.S. Forest Service analysis of the environmental impacts of a revision to its forest plan. The forest plan is a policy that by itself is not an agency action, but is used to inform project-specific decision making, which is agency action. The Forest Service prepared an Environmental Impact Statement (EIS) at the time of the revision as required by the National Environmental Policy Act (NEPA). The environmental group alleged that the EIS for the revised forest plan failed to consider the impact of the plan on fish and amphibians in affected aquatic habitat. The court of appeals rejected the environmental group’s allegation that the EIS analysis of effects on amphibians was inadequate, but held that the EIS ultimately did not satisfy NEPA because it contained no discussion of the effects on particular fish species. The court of appeals went on to explain that NEPA requires programmatic and project-specific EISs as soon as it is reasonably possible to do so.
This case presented ripeness and standing issues for the Court to consider. The case may not be ripe because the forest plan by itself was not an agency action. If the Court ruled on the ripeness doctrine, it could have required that the environmental group challenge only project-specific agency actions that present a controversy ripe for judicial resolution, meaning that only the actions informed by the forest plan could be challenged, not the entire forest plan. Such individual project challenges would require significant additional litigation resources from the groups. As for standing, the Court could have considered whether the environmental groups make use of the resources sufficiently to have standing to challenge the forest plan, or alternatively the project-specific actions pursuant to the plan.
The case also raised the question of whether it is possible to evaluate every potential environmental impact from the revision of the forest service plan at the time the amendments were adopted. The relevance of whether all such impacts are reasonably foreseeable at the time of the revision is lessened because any action pursuant to the plan is subject to an EIS before any individual project is allowed to go forward. However, environmental groups are likely to claim “death by a thousand cuts” to the environment if they cannot challenge programs or policies like the forest plan, on the grounds that individual actions may cumulatively have an impact outside of the scope of narrow challenges to project-specific actions.
This case was important for manufacturers and other businesses that rely on permits or licenses from government agencies to pursue their endeavors efficiently and with legal certainty.
On 6/17/13, the Court dismissed the case as moot. No decision on the merits of the appeal was issued.
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Alec L. v. McCarthy
(D.C. Circuit)
Litigation seeking to impose 6% annual reductions in greenhouse gases under "public trust" theory
This is an appeal of a decision dismissing claims by an environmental group that would force the government to impose further greenhouse gas emissions reduction policies under a "public trust" theory. The NAM intervened in the case in the trial court and helped obtain the favorable ruling there.
For a full summary of our arguments in the district court, click here.
In our appeals court brief, joined by various trucking and construction companies and associations, we argue that the public trust doctrine is a state law doctrine and does not implicate a federal question subject to jurisdiction in the federal courts. The case also presents a political question that is not for the courts to decide, putting the courts in the position of adopting air emission standards of general applicability and monitoring compliance. No court has ever used the public trust doctrine to compel a regulatory action by the federal government, much less a sweeping new regulatory agenda of the type sought here. In addition, the parties bringing suit do not have standing, because their alleged injuries are not imminent and particularized, nor are they fairly traceable to the defendants or likely to be lessened by any court order.
The court decided not to hear oral arguments in the case, and on June 5, 2014, affirmed the district court's dismissal of the claims. It found that the plaintiffs did not present a federal question, and that the court therefore did not have jurisdiction to hear the case. There was no federal question because the claims were based on the legal theory of public trust, which is entirely a state law issue.
The NAM intervened in this case to help block this attempt to use the courts to do an end run around the legislative and regulatory processes that govern regulation of emissions from manufacturing plants. This result is an important development in reining in these kinds of aggressive legal theories and litigation tactics.
The plaintiffs appealed to the Supreme Court, which declined to hear the case on 12/8/2014.
Related Documents: NAM Opening Brief (December 23, 2013)
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American Chemistry Council v. EPA
(U.S. Supreme Court)
Whether EPA greenhouse gas regulation for motor vehicles triggers limits on stationary sources of GHG emissions
On April 18, 2013, the NAM and 23 other business organizations appealed to the Supreme Court to review an adverse decision on greenhouse gas regulation from the D.C. Circuit. We asked the Court to review EPA's first-ever regulations of greenhouse gases emitted by stationary sources, such as power plants and factories. The lower court rejected lawsuits from hundreds of organizations who question EPA's authority to issue the rules under the Clean Air Act, as well as the procedures it used in doing so. Our petition was granted and consolidated into Utility Air Regulatory Group v. EPA. On June 23, 2014, the Supreme Court agreed with the NAM and ruled that EPA's regulation went too far. Click here for a more detailed summary of this case.
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American Petroleum Institute v. EPA
(D.C. Circuit)
Challenging EPA greenhouse gas regulation (light-duty vehicles and CAFÉ standards)
The NAM and other organizations filed another petition to review an EPA action that is part of its suite of regulations of greenhouse gases from stationary sources. One of our initial suits in this series challenged the EPA's effort to regulate light-duty vehicles, because the agency used that rule as a predicate for further regulation of manufacturing facilities. We challenged this latest rule, published Oct. 15, 2012, as well. The case was consolidated with Plant Oil Powered Diesel Fuel Systems, Inc. v. EPA (No. 12-1428, D.C. Cir.), but that case was voluntarily dismissed, and our challenge was severed and held in abeyance pending a decision from the Supreme Court in UARG v. EPA. After that ruling, we stipulated a dismissal of this case.
Related Documents: NAM Petition for Review (December 14, 2012)
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Babb v. Lee County Landfill SC, LLC
(D.S. Car.)
Whether common law nuisance claim is preempted by EPA regulation of air emissions
Landowners near a county landfill in South Carolina sued the landfill claiming that odors from the area caused them damage. The landfill argued that the law suit should be dismissed, because emissions from waste disposal facilities are regulated by Clean Air Act permitting requirements.
The NAM and the National Waste & Recycling Association filed an amicus brief supporting this argument. Congress adopted a comprehensive regulatory process that allows federal and state regulators to set emissions requirements for major stationary sources of pollutants, and the facility at issue in this case is so regulated. Court orders that set different emissions requirements would conflict with the Clean Air Act's system, but would also dramatically alter the cooperative federal-state framework established by Congress to address air quality issues. Different court rulings around the country would create a patchwork of standards under the common law of each state, and regulated entities would face a daunting challenge of predicting what standards their facilities must meet. Instead, we argued, the court should find that this kind of state nuisance claim is preempted by the Clean Air Act.
This is another example of a law suit that attempts to use state common law claims to impose more and different air emission requirements on manufacturers or other facility operators already subject to state and federal regulation under the Clean Air Act. The NAM filed a brief in
a similar case in 2013 involving emissions from a plant in Iowa.
The case was
Related Documents: NAM brief (January 31, 2014)
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Center for Biological Diversity v. EPA
(D.C. Circuit)
When greenhouse gases become subject to regulation under the Clean Air Act
The NAM and 17 other business associations moved to intervene in a lawsuit brought by the Center for Biological Diversity (CBD) against the EPA over the agency's interpretation of when greenhouse gases become "subject to regulation" (STR) under the Clean Air Act. CBD is expected to argue that greenhouse gases were already subject to regulation before EPA issued the "Johnson memo" in 2008 and a subsequent STR rule in April, 2010. If such a claim is accepted by a federal court, thousands of members of the business associations could be forced to obtain permits for new or existing facilities and to install costly control technology to try to reduce greenhouse gas emissions.
On July 18, 2014, after the Supreme Court's decision in Utility Air Regulatory Group v. EPA, this case was voluntarily dismissed.
Related Documents: NAM motion to intervene (June 28, 2010)
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CTS Corp. v. Waldburger
(U.S. Supreme Court)
Whether CERCLA preempts state statutes of repose
This case involves the deadline for filing damage suits under CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act. The Supreme Court agreed to review a decision from the Fourth Circuit involving a suit for alleged contamination of the ground and water near an old North Carolina manufacturing plant site once owned by CTS Corporation. The site is subject to clean-up obligations under CERCLA, but this case involves a private suit alleging nuisance under state law. CTS argued that the nuisance claim was barred by North Carolina’s 10-year statute of repose.
CERCLA provides liberal deadlines for filing suit that supersede state statutes of limitations, but says nothing about statutes of repose.
The NAM filed an amicus brief focusing on the history of statutes of repose and the beneficial purposes they serve—particularly in the efforts of states to create, enhance, and protect economic opportunities for their citizens through job growth. We stressed that states across the country have enacted statutes of repose as part of broader efforts to strengthen their economies—an effort that in the current economic environment is all the more important. These statutes simply put an end to perpetual liability that can remain unknown for years and years, after witnesses are gone and memories fade. They provide certainty and finality in commercial transactions, promote judicial economy, and help keep insurance rates down.
On 6/9/2014, the Court ruled 7 to 2 that CERCLA does not preempt state statutes of repose. Such statutes differ from statutes of limitations in that they are designed to put an absolute time limit on a defendant's liability, while statutes of limitations are designed to require plaintiffs to file suit promptly when their claims accrue. Courts may grant exceptions when plaintiffs miss statute of limitations deadlines for various reasons, but not for statutes of repose. Because Congress knew of the differences and did not include statutes of repose in the law at issue, it did not intend to preempt them.
The decision limits long-term liability under CERCLA for pollution that occurred many years ago.
Related Documents: NAM brief (March 3, 2014)
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Freeman v. Grain Processing Corp.
(Iowa Supreme Court)
Whether public nuisance claim is preempted by EPA regulation of factory emissions
Eight residents of Muscatine, Iowa, sued a local corn milling plant alleging trespass, nuisance and negligence from pollutants and odors from the plant. The trial court dismissed the claims as being preempted by the Clean Air Act (CAA), Iowa law, and the political question doctrine. That decision was appealed to the Iowa Supreme Court.
The NAM, along with 5 other manufacturing associations, filed an amicus brief supporting the trial court's decision on preemption and political question. Manufacturers are already subject to a complex system of state and federal regulations, and adding common-law tort liability on top of that will further undermine the ability to create jobs and compete. We argued that courts are not equipped to properly handle cases like this, because they require clear and manageable standards for imposing liability, and such standards involve policy judgments that can only properly be developed by legislative and regulatory bodies with the investigative resources and technical and scientific expertise necessary. In addition, the executive and legislative branches of government are authorized to set and adjust standards and rules to guide the regulated community, and they are much better able to consider the views of many more affected parties, including a variety of scientific and economic experts, to revisit their policy choices on a regular basis, and to develop a consistent policy for everyone, not a piece-meal policy that depends on the court or state in which the case occurs.
On June 13, 2014, the Iowa Supreme Court reversed the trial court decision and found that the CAA does not either expressly or impliedly preempt state emissions laws nor preclude a right of action brought under those laws. The Court also stated that several clauses in the CAA reserve for private citizens the power to bring public nuisance claims. Unless a state law or common law right of action is expressly preempted by federal statute, courts are reluctant to apply the preemption doctrine to state causes of action. The Court also found that the Iowa environmental statute did not preempt the plaintiffs’ claims because it too reserved the right to bring a public nuisance claim. Rejecting the political question argument, the court found that no constitutional controversy existed, tort claims are typically not precluded under the political question doctrine, and resolution of the controversy did not require a policy decision by another branch of government.
Claims based on nuisance theories of liability continue to be somewhat of a wild card for the regulation of plant emissions. Manufacturers continue to seek a rational regulatory system where the rules are clear and the potential liabilities are predictable and manageable.
Related Documents: NAM amicus brief (October 10, 2013)
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GenOn Power Midwest, L.P. v. Bell
(U.S. Supreme Court)
Validity of state tort suits for damages from permitted emissions under Clean Air Act
This is a Clean Air Act preemption case. Some private property owners sued a power company under common law tort claiming damages for nuisance, trespass, negligence and strict liability arising from emissions and particulates from the operation of a coal-fired power plant in Allegheny County, Pennsylvania. The plant had permits from EPA for the emissions, and the lawsuit did not allege any violations of the Clean Air Act. The trial court threw the case out, finding it preempted by the Clean Air Act, but the Third Circuit Court of Appeals reversed, holding that a provision of the Act saves this kind of state lawsuit. The company sought Supreme Court review.
The NAM led a group of 11 other industry associations in filing an amicus brief supporting review. We argued that state common law remedies such as those sought here are irreconcilably inconsistent with the comprehensive system of air pollution control provided by the Clean Air Act. Permits, which are subject to public notice and comment, specify clear emission and operating standards that guarantee certainty, predictability, and evenhandedness to the regulated community. They provide an informed assessment of competing interests. By contrast, common law suits view the issues from a narrower perspective, using vague standards of liability, uneven application between states or even within states, with no guarantee of consistent results even between similar facilities.
Companies must be able to rely on permits for stable business operations, and these kinds of suits are a growing concern. Their effect is to add additional liability for activities that fully comply with federal permit obligations, raising the cost of doing business and threatening jobs and competitiveness.
The Supreme Court denied our appeal on June 2, 2014.
Related Documents: NAM brief (March 26, 2014)
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Grain Processing Corp. v. Freeman
(U.S. Supreme Court)
Whether public nuisance claim is preempted by EPA regulation of factory emissions
The Iowa Supreme Court ruled that a group of Iowa residents could sue a local corn milling plant for trespass, nuisance and negligence from pollutants and odors emanating from the plant, in spite of the fact that the emissions are regulated by the EPA and the company is in full compliance with its permits. That decision was appealed to the U.S. Supreme Court. This case represents a serious emerging problem for manufacturers. The appeal in a similar case was declined by the Court earlier this year.
Our brief, joined by 6 other national associations, urged the Supreme Court to hear this appeal. We argued that this case presents an ideal opportunity to resolve whether public nuisance claims under state law are preempted by the Clean Air Act. There are serious conflicts between the federal courts of appeals and within state courts concerning this preemption issue. The issue is important because public nuisance litigation threatens one of the Clean Air Act's most important methods of pollution control -- permitting. Permits specify clear standards that guarantee certainty, predictability, and evenhandedness to the regulated community, and allowing public nuisance litigation threatens to substitute ad hoc decisions for considered regulatory policy, a result completely at odds with the goals and purposes of the Clean Air Act.
On December 1, 2014, the Court declined to review this appeal.
Related Documents: NAM brief (October 14, 2014)
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Mingo Logan Coal Co. v. EPA
(U.S. Supreme Court)
EPA interference with Clean Water Act permits
The NAM and a group of 18 other national business organizations filed an amicus brief urging the Supreme Court to review a ruling that would give EPA the power to revoke a valid discharge permit issued under the Clean Water Act. The ruling, reversing a trial judge's decision that struck down EPA's attempt to interfere with valid permits, prompted widespread concern in the business community that EPA was arrogating to itself the power to upset long-settled reliance on thousands of permits issued by the U.S. Army Corps of Engineers.
The NAM hoped to convince the Supreme Court of the importance of this case. Our brief focused on the impact of the decision on investment expectations and infrastructure projects. About 60,000 discharge permits are issued every year, representing $220 billion of investment in the U.S. economy, and a 2% risk that EPA could revoke a permit decreases the benefit-cost ratio of a project by 30%. We highlighted a study by Professor David Sunding that even small changes in the possibility of such EPA action "can lead to dramatic redutions in private investment." EPA's move also threatens public sector projects for water, transportation, energy and public infrastructure.
The issue is also critical to state governments, with 27 states filing their own amicus brief supporting Supreme Court review of the case.
Here are links for our summaries of action in this case in the trial court and the appeals court.
On March 25, 2014, the Court declined to hear this appeal.
Related Documents: NAM brief (December 16, 2013)
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National Association of Manufacturers v. EPA
(D.C. Circuit)
Challenging EPA's NAAQS for particulate matter
On March 15, 2013, the NAM filed a petition for the U.S. Court of Appeals to review the EPA's latest regulation of particulate matter. The regulation, published on Jan. 15, lowered the primary annual National Ambient Air Quality Standard for particulate matter from 15 to 12 micrograms per cubic meter. The NAM had urged EPA to retain the existing standard, but the agency opted to move forward with a more aggressive and damaging regulation.
NAM's President and CEO Jay Timmons said that the "new standard will crush manufacturers' plans for growth by restricting counties' ability to issue permits for new facilities, which makes them less attractive for new business. Essentially, existing facilities will have to be shuttered for new facilities to be built in these areas. This is not a conducive way to create jobs."
Our opening brief, filed 8/19/13, focused on whether EPA prejudged the need for the rule and the range of outcomes from the rulemaking process, whether it ignored a substantial body of contrary scientific evidence that does not support lowering the standard, whether its decision to require monitoring devices along roadways was unlawful because it will record maximum rather than ambient particulate matter concentrations, and whether the rule is invalid because EPA failed to provide implementation rules needed to address the legal consequences that flow from it.
The brief recounts the history of EPA's regulation of particulate matter. It notes that promulgation of the rule triggered immediate implementation obligations and started the clock on numerous others, yet many key implementation issues are unresolved. First, EPA has not approved a computer model to demonstrate compliance with the standard, which is typically how companies demonstrate compliance. Second, there are technical problems with the two methods approved by EPA for testing particulate matter emissions that have led EPA to recognize their limitations, indicating that reliable test methods are several years away. Third, EPA has not provided full guidance to the states about how to designate the boundaries of nonattainment areas, which could lead to improper designations and further burdens on manufacturers. Other issues are also highlighted.
On May 9, 2014, the Circuit Court denied NAM’s petitions. On each issue, the court deferred to EPA’s process and decisions. Although we challenged EPA’s lowering of the threshold for particulate matter, the court decided that EPA provided reasonable scientific explanations to justify making the standards more stringent. We also challenged EPA’s elimination of the “spatial averaging” test to determine particulate matter standards. Spatial averaging entails gathering data from several sites within a specified area and then averaging the results to determine the level of emissions in that area. EPA reasoned that spatial averaging would cause certain specific areas within a larger area to be out of compliance. Lastly, the court determined that EPA has the authority to protect air quality, and therefore it may place monitors in all areas, including along heavily traveled metropolitan roads, to accurately determine air quality.
In sum, this decision shows that courts continue to be reluctant to second-guess EPA regulations. Lowering the particulate matter levels will increase costs and harm competitiveness. The court’s unilateral deference to EPA’s justifications for lowering the levels underscores the importance of participation in the rulemaking process to combat future EPA regulations.
Related Documents: NAM brief (August 19, 2013) NAM Statement of Issues (April 17, 2013)
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National Mining Ass'n v. McCarthy
(D.C. Circuit)
Whether EPA guidance document constitutes regulation that must go through notice-and-comment rulemaking
There’s a law that prevents agencies from charging ahead with regulatory changes without seeking input from the public and the regulated community. It’s called the Administrative Procedure Act (APA), and it was designed to require agencies that want to make significant changes to their regulations to publish the proposed changes and answer criticisms on the record.
In 2009, the Environmental Protection Agency announced -- through a series of memoranda and letters -- a new system of review for certain Clean Water Act permits. These permits, called Section 404 permits, are needed by anyone that wants to build or modify a facility or undertake some other construction project that might have an effect on waters subject to federal jurisdiction. EPA later issued lengthy guidance making substantive changes to the requirements for permits for surface coal mining, also without going through notice-and-comment rulemaking.
The National Mining Association sued, and a federal district judge ruled that EPA had overstepped its authority and violated the APA. That ruling has been appealed to the D.C. Circuit, and the NAM and other business organizations filed an amicus brief supporting the trial judge’s decision. The brief described numerous instances where EPA and other regulatory agencies have issued regulatory requirements -- posing as guidance – that should be adopted by notice-and-comment procedures.
On July 11, 2014, the D.C. Circuit reversed, finding that the "Enhanced Coordination Process" and Final Guidance were procedural, not legislative rules, and therefore not subject to the APA. It also ruled that a court challenge was premature because the Final Guidance was not actually final agency action subject to litigation, because it did not subject regulated parties or state enforcement agencies to any requirements or liabilities. The Guidance can be legally ignored. If it is actually used to grant or deny a permit in the future, a law suit might then be appropriate.
The upshot of this ruling is that EPA can create guidance documents that regulated parties can legally ignore, but they do so at the risk of having to litigate over EPA's use of such guidance documents after a permit is denied. Changing regulatory requirements with guidance documents casts American businesses adrift in uncharted territory in terms of regulatory risk and stymies investment and economic growth. Agencies that fail to use proper rulemaking procedures make decisions without the insight, data and information of the regulated public, including the practical implications of alternative policy choices.
Related Documents: NAM brief (July 22, 2013)
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Natural Resources Defense Council v. EPA
(D.C. Circuit)
Portland Cement NESHAP litigation
Several environmental groups sued EPA over its emission standards for hazardous air pollutants from cement plants. They argued that amendments to the standards weaken and delay compliance with an earlier rule, and that the agency must not allow an affirmative defense for manufacturers when malfunctions of industrial equipment occur. The NAM is part of the SSM Coalition, which filed an amicus brief supporting the affirmative defense. The environmental groups wanted a standard that regulated sources, including the best-performing sources, will be unable to meet at times despite their proper design, operation, and maintenance. As a result, manufacturers will face civil penalties for events beyond their control.
EPA took the position that malfunctions must be accounted for in standards which require maximum achievable control technology (MACT). To be achievable, MACT standards must be capable of being met on a regular basis, including under most adverse circumstances which can reasonably be expected to recur, including periods of startup, shutdown, and malfunction. EPA may set different requirements during malfunction events than apply to normal operations of plant equipment.
Our brief argued that an affirmative defense to civil penalties that might arise from a malfunction is required by the Clean Air Act and was properly promulgated by EPA. Without the defense, companies would be subjected to citizen suits, as well as administrative penalties, for events beyond their control.
We also argued that EPA has the authority to adjust the compliance deadline when it modifies a MACT standard. Not allowing this authority would be hugely unfair to regulated sources and would ignore the reality that it can take up to three years or more to design, acquire, install and start up pollution control equipment or modified processes.
On April 18, 2014, the court unanimously ruled that EPA properly adopted the emissions-related provisions in the rule, but that it did not have the statutory authority to create an affirmative defense in civil suits against cement manufacturers where an unavoidable malfunction results in impermissible levels of emissions. It found that EPA reasonably read the statute to allow an increase in the emissions limits for particulate matter from cement-making kilns. It also found that EPA reasonably considered costs to industry with a comparative analysis of cost-effectiveness, rather than, as the environmental groups wanted, consider only whether a standard would be "too expensive for industry to achieve", that is, one that would essentially bankrupt the industry.
The court rejected environmental arguments that the compliance date for emissions of mercury, hydrochloric acid and hydrocarbons should be 2013. Because the standard for particulate matter changed in the new regulation, the court found that it would be irrational and even absurd to have different compliance dates for the different pollutants because of the technology involved. The new compliance date is September 2015.
Finally, it agreed with the environmental groups that EPA did not have the authority to establish an affirmative defense for companies whose emissions exceed the regulatory limits because of unavoidable malfunctions. Instead, private civil suits may be filed by those affected by the emissions, and it is up to the courts to decide whether to award damages. During court proceedings, EPA may seek to intervene, or file an amicus brief, stating its views about whether a company should be liable for such emissions. It is up to the courts to determine the scope of remedies available to plaintiffs, taking into consideration the company's compliance history and good faith efforts to comply, the duration of the violation, and other factors.
Related Documents: SSM Coalition brief (July 30, 2013)
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Oklahoma v. EPA
(U.S. Supreme Court)
EPA power to take over state enforcement on regional haze
The NAM and other groups asked the Supreme Court to review a lower court decision that allows the EPA to take over 14 state enforcement plans under the Clean Air Act with respect to regional haze, and impose Federal Implementation Plans (FIPs). Oklahoma and North Dakota objected to this EPA action, saying that the agency overstepped its statutory authority and the result will be billions of dollars in power plant upgrades that will needlessly boost electric rates by as much as 20 percent.
Our amicus brief supports review, focusing on the fact that the Clean Air Act limits EPA's authority with respect to state implementation plans, instead giving the states primary responsibility for making air quality decisions and limiting EPA's role to the secondary function of determining whether those state plans are "based on a reasoned analysis." This is particularly important regarding state regional haze decisions, which involve aesthetic concerns such as visibility in parks. EPA wanted to impose a control technology that is too costly, and conducted a visibility analysis differently. However, Congress gave the states significant latitute by allowing them to choose the mix of sources that must install controls to attain the national standards.
This litigation reflects a growing pattern of disregard by EPA for the statutory limits on its authority, undermining the balance in the Clean Air Act between federal and state enforcement. Allowing this will only make matters worse -- empowering EPA to take unilateral action without engaging with states to help craft workable standards.
On May 27, 2014, the Court declined to hear this appeal.
Related Documents: NAM brief (March 5, 2014)
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Sierra Club v. EPA
(D.C. Circuit)
Whether carbon dioxide must be considered in EPA PSD permits
In the Deseret Power decision in 2008, the EPA Environmental Appeals Board rejected the Sierra Club's contention that preconstruction permits for new power plants must include "best available control technology" (BACT) for carbon dioxide, but sent the case back to the EPA to reconsider whether to impose the requirement under its discretionary authority, and to develop an adequate record for its decision. It encouraged the EPA to consider whether the issue in this case should be resolved "in the context of an action of nationwide scope, rather than through this specific permitting proceeding."
On Sept. 14, 2010, the court ordered the case held in abeyance pending the outcome of other greenhouse gas cases.
Former EPA Administrator Stephen Johnson issued an interpretative guidance memorandum on Dec. 18, 2008, that concluded that PSD permits (for the Prevention of Significant Deterioration of air quality) do not need to include BACT limits for greenhouse gases. The Sierra Club challenged that guidance, while the NAM and other business organizations supported it.
Our motion to intervene, filed 2/13/09, outlined why this case will have a substantial impact on many manufacturers, and why the EPA, which represents the general public interest, will not adequately represent the interests of the business community.
On Feb. 17, 2009, EPA Administrator Lisa Jackson granted a Sierra Club petition for reconsideration of the Johnson memo, and permitted public comment on the matter. The D.C. Circuit stayed the litigation.
On April 2, 2010, EPA completed its reconsideration of the Johnson memo and published a new "Subject to Regulation" notice that made January 2, 2011 the date on which greenhouse gas emissions were regulated. On June 9, EPA asked the court to hold the case in abeyance while other litigation over its GHG regulation was resolved. The NAM opposed this motion, saying that the issues in this case are being addressed in other greenhouse gas cases, and the environmental groups here should not be allowed to have a second chance to litigate should they lose in those other cases. We also opposed an effort to allow the Center for Biological Diversity to switch its challenge from those cases into this one, as that could create competing panels of judges reviewing the same issues. Ultimately, the case was held in abeyance and finally dismissed in 2014 after the Supreme Court ruled in Utility Air Regulatory Group v. EPA, partially upholding EPA regulation of greenhouse gases, but limited its scope under the PSD program.
Related Documents: NAM Opposition to EPA's Procedural Motion (June 22, 2010) NAM Motion to Intervene (February 13, 2009)
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Utility Air Regulatory Group v. EPA
(U.S. Supreme Court)
Whether EPA greenhouse gas regulation for motor vehicles triggers limits on stationary sources of GHG emissions
On April 18, 2013, the NAM and 23 other business organizations appealed to the Supreme Court to review an adverse decision on greenhouse gas regulation from the D.C. Circuit. We asked the Supreme Court to review EPA's first-ever regulations of greenhouse gases emitted by stationary sources, such as power plants and factories. The lower court rejected lawsuits from hundreds of organizations who questioned EPA's authority to issue the rules under the Clean Air Act, as well as the procedures it used in doing so.
Greenhouse gas regulation is one of the most costly, complex and encompassing energy regulatory issues facing manufacturers and damaging our global competitiveness. EPA’s regulations could eventually force new permitting requirements for more than 6 million stationary sources, including 200,000 manufacturing facilities, 37,000 farms and millions of other sources, such as universities, schools and hospitals – impacting every aspect of our economy.
EPA’s regulatory decisions produced what it concedes were absurd results. We argued that this was not Congress’s intent when it enacted the Clean Air Act, and that courts must avoid agency interpretations that undermine the purpose of the law.
Moreover, EPA tried to avoid these absurd results by modifying the express statutory thresholds defining who is regulated. Only Congress can make those kinds of changes, and had the agency properly interpreted the statutory requirements from the beginning, it would not be in the position of having to alter the statutory requirements.
The effects of this regulation are immediate, concrete and massive, and will require the installation of “best available control technology”, with total costs estimated by EPA to increase to more than $50 billion per year. This case is of critical importance to manufacturers and our economy.
The Supreme Court agreed to hear our appeal, along with petitions from 5 other groups, limited to the following question: "Whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases."
On June 23, 2014, the Court decided that EPA's regulation went too far. A majority concluded that, while greenhouse gases are within the class of emissions that are included within the broad reach of the Clean Air Act, specific sections of that law limit the EPA's regulatory power. Five Justices found that EPA neither was compelled nor permitted to require PSD (Prevention of Significant Deterioration) permits of companies solely because of their greenhouse gas emissions. They also ruled that EPA did not have the statutory authority to rewrite the unambiguous statutory thresholds, and even if EPA would not enforce its greenhouse gas requirements on smaller emitters, those companies would have remained subject to citizen suits to enjoin construction, modification or operation and to impose civil penalties of up to $37,500 per day of violation.
Seven Justices agreed with the NAM's argument that only companies already subject to permitting under the PSD program will be subject to any permitting requirements relating to greenhouse gases. They agreed that the PSD program was intended for the largest emitters that are already subject to PSD permitting. By limiting EPA's authority in this way, the decision provides substantial regulatory relief for the owners of millions of buildings and plants across the country.
Related Documents: NAM Reply Brief (February 14, 2014) NAM Brief on the Merits (December 9, 2013) NAM Petition (April 18, 2013)
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White Stallion Energy Center, LLC v. EPA
(D.C. Circuit)
Challenging EPA Maximum Achievable Control Technology regulation
This case is about how the EPA establishes standards for maximum achievable control technology (MACT) which is used to minimize the emission of pollutants into the air. It arose in the context of a new regulation on emissions of hazardous air pollutants from electric utilities, as well as industrial-commercial-institutional steam generating units. The 2012 "Utility MACT" regulation adopts a methodology that has broad implications for industries subject to existing MACT standards that may be revised, or new standards yet to be developed.
The NAM filed an amicus brief arguing that the EPA erred in adopting a "pollutant-by-pollutant" approach. Under that approach, the EPA cherry-picks emissions data from multiple sources and sets a MACT floor based on whatever source is deemed the "best" for each individual pollutant. This often means there is a different best performer for each pollutant, and no single source of emissions will be able to achieve the regulatory requirement. The NAM believes that these measurements need to be made from producers operating under practical conditions -- not individually measuring pollutants and not from sources ideally positioned to limit their pollution, as the EPA argues. The EPA's approach is like asking a decathlon champion to be able to win not only the overall decathlon, but all of the individual events as well.
In addition, we argued that the EPA must give meaningful consideration to costs in determining whether a particular standard is achievable. The Clean Air Act requires that the level of pollution reduction that the EPA specifies be achievable, and its methodology will severely curtail or eliminate operations. Some vendors are unwilling to offer guarantees that their pollution control technology will meet the new standards, and financing of new projects is jeopardized.
On 9/12/2012, the court ordered this case to be held in abeyance pending reconsideration of the new source standards now under way at the EPA. The agency stated that it intends to complete the reconsideration by March 2013. It said it would reconsider "measurement issues related to mercury and the data set to which the variability calculation was applied when establishing the new source standards for particulate matter and hydrochloric acid." See 77 Fed. Reg. 45968 (Aug. 2, 2012).
The case was settled in 2014 by stipulated agreement.
Related Documents: NAM brief (August 3, 2012)
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Alabama v. EPA
(D.C. Circuit)
State challenge to greenhouse gas tailoring rule
Various states sued EPA over its tailoring rule, by which the agency rolled out enforcement of greenhouse gas regulations to the largest facilities first, followed by smaller ones later. States must comply with EPA's new regulations. The NAM and 14 other business associations in our coalition filed a motion to intervene in litigation filed by representatives of 8 states challenging EPA's authority. Their lawsuit sought judicial review of EPA's plan to retroactively limit its previous approval of pollution thresholds in State Implementation Plans (SIPs). The states are likely to argue that EPA violated the Clean Air Act by its reinterpretation of existing regulations, which would result in significant additional costs to manufacturers regulated under state programs.
The NAM's intervention in this case is designed to assist the court in understanding the interaction between EPA's requirements, state implementation programs, and emissions permit requirements affecting manufacturers.
The NAM and other organizations also filed a separate petition to review the EPA's tailoring rule. On March 10, 2015, the D.C. Circuit ruled that EPA's rules are vacated in part, consistent with the Supreme Court's ruling in Utility Air Regulatory Grop v. EPA.
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Anadarko Petroleum Corp. v. United States
(U.S. Supreme Court)
Definition of "discharge" under Clean Water Act
This case involves the allocation of responsibility under the Clean Water Act's civil penalties provision between various parties related to the Deepwater Horizon accident in the Gulf of Mexico in 2010. Two defendant companies have asked the Supreme Court to review the Fifth Circuit's interpretation of the term "discharge" in the context of interconnected vessels and facilities through which the discharged oil passed. They argue that the Supreme Court has interpreted the word as "flowing or issuing out," but that the Fifth Circuit adopted a new interpretation of discharge as a "loss" or "absence" of controlled confinement. A petition for rehearing by the full court was denied by a vote of 7 to 6.
The NAM and other groups filed an amicus brief urging the Supreme Court to review this case. We argued that the appeals court ruling was confusing, overbroad, and internally inconsistent, and that ambiguous statutory terms should be interpreted leniently to defendants. Billions of dollars of potential penalties in this case depend on a proper interpretation of the statutory term.
The NAM brief was filed in both the Anadarko case and a similar appeal by BP Exploration and Production Inc. On 6/29/15, the Court declined to hear these appeals.
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Coalition for Responsible Regulation, Inc. v. EPA
(D.C. Circuit)
Greenhouse gas case after decision from Supreme Court
The NAM's successful challenge to EPA's authority to regulate virtually all manufacturers that emit greenhouse gases was sent back from the Supreme Court to the U.S. Court of Appeals for the D.C. Circuit to determine what to do with regulations that are still printed in the Code of Federal Regulations, but that exceed EPA's regulatory authority. All of the parties that challenged EPA's authority, including state governments, industry associations, and public interest groups, filed a motion with the court, as has EPA, recommending what to do next.
EPA's motion proposed that the court declare the "regulations under review are vacated to the extent they require a stationary source to obtain a PSD [or Title V] permit if greenhouse gases are the only pollutant [that would trigger construction or modification review." It also says the court should direct it to rescind or revise the regulations to reflect the Supreme Court's decision. The agency does not believe it should establish a de minimis threshold for greenhouse gas regulation, but instead wants to rely on the 75,000 tons per year threshold currently on the books.
Industry's motion, by contrast, argued that the Court invalidated EPA's regulations to the extent they "treat greenhouse gases as a pollutant for purposes of defining" PSD and Title V applicability. As a result, EPA must vacate those rules, namely the Tailoring Rule, the Timing/Triggering Rule (to the extent EPA relied on it), and other challenged rules it relied on. EPA's interpretation of its authority was neither compelled nor allowed by law, so in effect it must start over. It should also decide on a de minimis threshold for regulation.
Final briefs in response to each motion were filed November 21, 2014.
On April 10, 2015, the court issued an amended order that:
"(1) the regulations under review
(including 40 C.F.R. §§ 51.166(b)(48)(v) and 52.21(b)(49)(v)) be vacated to the extent they
require a stationary source to obtain a PSD permit if greenhouse gases are the only pollutant (i)
that the source emits or has the potential to emit above the applicable major source thresholds, or
(ii) for which there is a significant emissions increase from a modification; (2) the regulations
under review be vacated to the extent they require a stationary source to obtain a title V permit
solely because the source emits or has the potential to emit greenhouse gases above the
applicable major source thresholds; and (3) the regulations under review (in particular 40 C.F.R.
§ 52.22 and 40 C.F.R. §§ 70.12, 71.13) be vacated to the extent they require EPA to consider
further phasing-in the requirements identified in (1) and (2) above, at lower greenhouse gas
emission thresholds."
The court also ordered EPA to rescind or revise the applicable rules "as expeditiously as practicable," and to "consider whether any further revisions to its regulations are appropriate in light of UARG v. EPA . . . and if so, undertake to make such revisions."
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In re Deepwater Horizon
(Texas Supreme Court)
Insurance coverage dispute for BP's pollution-related liability
In an insurance coverage case, a federal court asked the Texas Supreme Court to tell it whether Texas law compels a finding that BP is covered for damages arising from the Deepwater Horizon accident in the Gulf of Mexico. The case involves whether language in an umbrella insurance policy alone determines the extent of BP's coverage as an additional insured.
The NAM filed an amicus brief asking the court to apply traditional contract principles: (1) that the scope of insurance coverage should be determined by the contract and not from external documents unless they are clearly intended to be incorporated into the agreement, and (2) that ambiguous terms should be construed in favor of the insured. Courts should not create a subjective "sophisticated insured" exception to insurance law that has been recognized and applied for more than 125 years. Such an exception would make legal rules change depending on the identity of the party invoking them, would introduce the difficult question of determining who is a sophisticated insured, and would disincentivize insurance companies from making their policies as clear as possible.
The court held in an 8-1 decision that BP was not entitled to this coverage, relying on terms from the drilling contract that were not explicitly incorporated into the insurance policy.
The NAM filed an amicus brief on 4/22/15 supporting BP’s motion for rehearing by the Texas Supreme Court. The NAM’s brief supports BP’s argument that the court should revisit this issue as it has introduced tremendous uncertainty into state insurance law by departing from several long-held principles on insurance law. These principles include: 1) that external terms should only be incorporated into an insurance policy by explicit reference; 2) limitations on insurance coverage must be expressed in clear and unambiguous policy language; 3) the scope of additional insured coverage is determined by the policy and not the underlying contract; and 4) certificates of insurance are informational only and do not confer or abrogate rights.
BP dropped its motion for rehearing on May 27, 2015 after reaching a confidential settlement.
Related Documents: NAM brief (April 22, 2015) NAM brief (March 13, 2014)
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Little v. Louisville Gas & Elec. Co.
(6th Circuit)
Whether common law air pollution claims are preempted by EPA regulation of power plant emissions
Neighbors of a power plant in Louisville sued the company for emitting dust and coal ash from its power generating and sludge processing plants. The suit raised claims under the federal Clean Air Act and Resource Conservation and Recovery Act (RCRA), as well as state-law claims of nuisance, trespass and negligence. The trial judge dismissed most of the claims, but allowed the common-law tort claims to proceed. That decision was appealed.
The NAM and other business groups filed an amicus brief supporting the utility, arguing that state common law air pollution claims are preempted by the Clean Air Act. Such claims directly conflict with the structure and purpose of the Act, and the Supreme Court has already held that similar claims under federal common law are displaced and unavailable. The purpose of the Clean Air Act is to ensure some level of uniformity, certainty and predictability in the application of air emissions standards throughout the United States. Piecemeal litigation that asks a judge to decide what is reasonable directly damages the interests of uniformity and predictability, subjecting companies in full compliance with their operating permits to significant and ongoing risk that they may be sued and held liable for their emissions. Moreover, nuisance law is notoriously vague and amorphous, leaving companies unable to predict whether their operations will be subject to potentially crushing damages liability.
This is another in a series of cases in which plaintiffs are trying to expand legal remedies beyond what Congress has legislated. Regulatory agencies like EPA take into account statutory requirements and consider the views of all affected parties when they impose regulations and permit requirements, and allowing individual judges or juries around the country to come up with their own views of what is a nuisance would seriously interfere with the ability of manufacturers and utilities to provide goods and electricity to their customers.
On November 2, 2015, the Sixth Circuit affirmed the district court’s order and held that such state common law air pollution claims are not preempted by the Clean Air Act. For more information, see the companion Sixth Circuit appeal in Merrick, et al. v. Diageo Americas Supply, Inc.
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Merrick v. Diageo Americas Supply, Inc.
(6th Circuit)
Whether public nuisance claim is preempted by EPA regulation of factory emissions
This case presents another opportunity for the courts to resolve whether public nuisance claims under state law are preempted by the Clean Air Act. There are serious conflicts between the federal courts of appeals and within state courts concerning this preemption issue.
The case arose when private property owners brought claims of nuisance, negligence and trespass based on ethanol emissions from Diageo's whiskey production facilities in Louisville, Kentucky. They allege that ethanol emitted from the facilities cause a fungus to germinate and grow on their property, and they seek damages and emissions controls that exceed those required under the company's Clean Air Act operating permits.
The issue is important because public nuisance litigation threatens one of the Clean Air Act's most important methods of pollution control -- permitting. Permits specify clear standards that guarantee certainty, predictability, and evenhandedness to the regulated community, and allowing public nuisance litigation threatens to substitute ad hoc decisions for considered regulatory policy, a result completely at odds with the goals and purposes of the Clean Air Act.
The NAM and two other business groups filed an amicus brief urging the Sixth Circuit to reject the claims, arguing that they directly conflict with and are preempted by the Clean Air Act. In addition, a provision in the Clean Air Act that allows states to adopt standards for air pollution control allows such controls only when they are established through statute or regulation, not claims under state common law. The goals and policies of the Clean Air Act were intended to establish and enforce uniform standards for air quality, developed by EPA through an extensive regulatory scheme that is fundamentally inconsistent with common law adjudication that would allow for the imposition of liability based on standards developed by a judge or jury and retroactively applied against a facility.
On November 2, 2015, the Sixth Circuit affirmed the district court’s order that such state common law air pollution claims are not preempted by the Clean Air Act. Though it acknowledged the suggestion that it is unduly burdensome for industries to be subject to both federal law and state common law, the court left that concern to Congress.
Related Documents: NAM amicus brief (December 3, 2014)
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Michigan v. EPA
(U.S. Supreme Court)
Consideration of costs in Utility MATS rule
The NAM filed an amicus brief in the Supreme Court supporting a challenge to EPA’s decision not to consider costs in determining whether regulation of hazardous air pollutant (HAP) emissions from electric generating units was appropriate and necessary under Sec. 112 of the Clean Air Act. EPA’s regulation, known as the Utility MATS Rule, will cost more than $9.6 billion annually, according to EPA’s own analysis, and is one of the most expensive regulations ever for power plants. (The NAM’s estimate is $12 billion annually). These costs are passed on to manufacturers and other consumers of electricity, and could endanger the reliability of electricity.
We argued that the regulatory record compiled by EPA reflects little or no public health benefit from the reduction in HAP emissions. A federal appeals court ruled that EPA was allowed to refuse to consider the costs of the rule, despite a statutory requirement that the regulation be “appropriate.” Our brief argues that a rulemaking procedure that does not consider the rule’s substantial cost burden on the regulated community violates the express and intended meaning of this statute, particularly because energy regulation affects all sectors of society and the economy. “A determination of whether regulation is ‘appropriate’ inherently involves a balancing of costs and benefits,” we argued.
We also argued that the regulation is not necessary because other EPA regulations already impose restrictions on hazardous air pollutants, and EPA improperly tried to justify its new HAP regulation by touting the potential for reduction in emissions not regulated under the HAP rules, namely further reductions in particulate matter emissions that EPA would be unable to require directly.
On 6/29/15, by a vote of 5 to 4, the Court rejected EPA's failure to consider costs when determining whether the regulation was "appropriate and necessary." Even though EPA is entitled to considerable deference in its rulemaking powers under the Chevron case, the Court found that the agency's interpretation was not reasonable or even rational. According to the majority, "an agency may not 'entirely fai[l] to consider an important aspect of the problem' when deciding whether regulation is appropriate." The phrase is very broad, and a natural reading of it requires some attention to cost. Considering costs avoids the problem of spending too much on one problem and not having enough to spend on other -- perhaps more serious -- problems. The majority also rejected EPA's argument that it could consider costs when deciding how much to regulate power plants, rather than as a threshold issue in deciding whether to regulate them. The statute requires cost considerations at the first step. But it left it to EPA to decide how to account for cost in making its initial determination, without requiring "a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value." The Court did not address EPA's claim that the regulation provides ancillary benefits that make it cost-effective.
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Murray Energy Corp. v. EPA
(D.C. Circuit)
Challenge to EPA's proposed existing power plant GHG regulation
The NAM and 8 other business associations filed an amicus brief supporting Murray Energy's challenge to EPA's proposed rule to substantially regulate greenhouse gas emissions from existing power plants. According to the EPA, the rule's annual compliance costs will reach at least $7.3 billion by 2030, and manufacturers will see dramatic electricity cost increases and less reliable service as a result.
The NAM amicus brief argued that Section 111(d)(1) of the Clean Air Act prohibits EPA from setting performance standards for sources that are already regulated under Section 112. EPA's interpretation would create double regulation, making power plant operation more expensive and conflicting with the purpose of Section 111(d). The statutory language is not ambiguous, and EPA's interpretation should not be given deference by the courts.
On June 9, 2015, the Court dismissed the challenge because the EPA has not taken final agency action that would allow a court to review it. The criteria under the All Writs Act for issuing an order against EPA's plans are not met, and the fact that some companies may be incurring costs in anticipation of the final rule does not justify court intervention.
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National Association for Surface Finishing v. EPA
(D.C. Circuit)
EPA recalculation of MACT standards
This case involves the statutory obligations of the EPA to set maximum achievable control technology (MACT) standards for emissions under Clean Air Act Sec. 112(d)(6), specifically for chromium electroplating and anodizing operations. EPA is in the early stages of implementing that section, which applies when EPA reviews standards every 8 years. Because this review process applies to many other substances regulated by EPA, the decision in this case will extend far beyond chromium use.
At issue is what the statute requires of EPA when determining whether to tighten an existing standard. The NAM filed an amicus brief arguing that the statute specifically requires EPA to revise a standard, when conducting a technology review, only when "necessary (taking into account developments in practices, processes, and control technologies)." In this case, EPA's approach did not square with the plain statutory requirements, because it identified no "development" in emissions control measures that necessitates the new, more stringent standards it adopted.
We also oppose an effort by environmental groups to have EPA recalculate existing standards using procedures in Sec. 112(d)(2) and (3) for initial MACT standard-setting. Those procedures for new standards are not constrained in the same way that 8-year reviews are. As a result, EPA will lower emissions limits because companies complying with new standards try to build in a compliance margin when they buy new equipment, and that commendable over-performance raises the bar and leads EPA to lower the limits when the standard is reviewed. EPA's longstanding position is that it is not required to re-set the existing MACT standards each time it conducts a Sec. 112(d)(6) review, and that it is not required to use procedures under Sec. 112(d)(2) and (3) for periodic reviews, yet it did so in this case.
On July 21, 2015, a 3-judge panel rejected both industry and environmental group challenges to the review. It declined to require EPA to determine a new MACT floor each time it reviews a MACT rule, as environmental groups had wanted. But it also rejected industry arguments challenging the extent of technological developments that have occurred since the first rule was issued. It found that developments include improvements in performance of some technologies, which EPA found.
Related Documents: NAM brief (June 9, 2014)
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National Association of Clean Water Agencies v. EPA
(D.C. Circuit)
Challenging EPA's Non-Hazardous Secondary Materials Rule
The NAM and other industry organizations filed a petition with a federal appeals court to review a final rule on non-hazardous secondary materials (NHSM) issued by the EPA on February 7, 2013, entitled “Commercial and Industrial Solid Waste Incineration Units: Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste, Final Rule”. The rule was written to identify whether NHSMs are solid waste under the Resource Conservation and Recovery Act when used as fuels or ingredients in combustion units. Further details about the legal claims in this litigation will be filed with the court shortly.
This case was consolidated on June 7, 2013. For more information click here.
Related Documents: Petition for Review (May 7, 2013)
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National Association of Manufacturers v. SEC
(D.C. Circuit)
Appeal of NAM's challenge to SEC rule on Conflict Minerals
This is the appeal of an adverse ruling from the district court judge in our suit challenging the SEC's conflict minerals rule. Click here for details on that ruling.
Our appeal was expedited, and focused on largely the same issues that were before the trial judge. Review was de novo, which means that the appeals court looks at the case fresh, without any presumption that the trial court's ruling is binding on them.
The NAM, joined by the Business Roundtable and the U.S. Chamber of Commerce, argued that the SEC incorrectly interpreted the statute, which requires reporting of certain minerals that "did originate" in and around the Democratic Republic of the Congo (DRC), to cover minerals that "may have originated" there. It also failed to recognize and use its power to establish a reasonable de minimis exception for small amounts of minerals, which could provide substantial relief from the burdensome requirements of the rule for thousands of manufacturers. We also raised an important First Amendment objection to the requirement that companies make misleading and stigmatizing public statements unfairly linking their products to terrible human rights abuses.
We filed our main brief on the merits on Sept. 11, and our reply Nov. 13, 2013. Oral argument was held on Jan. 7, 2014, during which counsel for the SEC faced difficult questioning about the SEC's rule and the First Amendment objections.
On April 14, the court deferred to the SEC on its interpretations of the substantive provisions included in the rule, but overturned the requirement that companies disclose that their products are not "DRC conflict free." The First Amendment prohibits the requirement that companies report to the SEC and post on company web sites the fact that certain manufactured products are not “conflict free”. This constitutes government-compelled speech. It is now up to the SEC to determine what reporting requirement to impose and what to do while it is making that decision, since the first reports under the regulation must be filed by June 2, 2014. If it tries to formulate alternative reporting requirements, it may need to revist the whole public reporting aspect of the rule through a new round of notice-and-comment rulemaking.
On April 29, the NAM, Chamber and Roundtable filed a motion with the SEC to stay the rule or at least filing deadline. The whole point of the rule and the statute was to try to effect social change by shaming companies who cannot label their products as "DRC conflict free," and since the shaming mechanism has been struck down, the remainder of the rule has questionable benefits. Moreover, there are a host of questions without easy answers that must be considered before imposing enormous costs on industry. The SEC will have to determine what type of disclosure should replace the unconstitutional requirement, whether that would require changes to other provisions of the rule, re-analyze the costs and benefits of the rule, and provide for notice-and-comment rulemaking. Finally, requiring some type of truncated report is an approach that will not serve the law's intended purpose and will worsen the massive uncertainty and confusion among those who are subject to the rule.
The same day, Keith Higgins, director of the SEC's Division of Corporation Finance, issued a statement saying that companies will still need to file their first reports by the due date and address those portion of the rule that the court upheld. He added that "No company is required to describe its products as 'DRC conflict free,' having 'not been found to be ‘DRC conflict free,’' or 'DRC conflict undeterminable.' If a company voluntarily elects to describe any of its products as 'DRC conflict free' in its Conflict Minerals Report, it would be permitted to do so provided it had obtained an independent private sector audit (IPSA) as required by the rule. Pending further action, an IPSA will not be required unless a company voluntarily elects to describe a product as 'DRC conflict free' in its Conflict Minerals Report.
We also released a statement April 30 saying in part that "Congress and the SEC need time to evaluate how to amend the statute and/or the rule in light of the court's decision. Given the significant issues involved, we believe that it is in everyone's interest to stay the rule until these issues can be fully analyzed and addressed. Accordingly, we will ask the DC Circuit to grant a full stay of the rule until the implications of the decision are clear to all parties."
On May 2, 2014, the SEC issued a partial stay of the portion of the rule that requires issuers to disclose that any of their products have "not been found to be “DRC conflict free.'" It denied our request that the entire rule be stayed. The Commission did not, however, stay the effective date (June 2) for complying with all the other requirements of the rule. Companies are struggling to determine the meaning of the SEC’s action and what to do. The D.C. Circuit’s decision in our challenge to the rule means that the case will be sent back to the trial judge to determine whether to vacate the rule in its entirety or provide some other remedy.
Because this litigation was ongoing and the SEC had not voluntarily stayed the implementation of the rule, the NAM and other business organizations went back to the D.C. Circuit on May 5 and filed an emergency motion for stay of the rule in its entirety until the trial court has addressed the unresolved questions.
We argued that the rule’s compelled confessions, which have been declared unconstitutional, constitute the entire basis for the rule, imposing astronomical costs on affected companies. It makes no sense to enforce a rule that no longer achieves its goals and that likely will be vacated, and a stay would avoid “forcing companies to implement interim procedures for filing truncated reports under unilateral staff guidance that is subject to change at any time.”
On May 14, the court denied our motion for a stay. Companies must now comply with the modified filing requirements by June 2.
On May 29, both the SEC and Amnesty International asked the D.C. Circuit to hold any further appeals until after it ruled in the American Meat Institute v. USDA case, which it did on July 29. On Aug. 15, Amnesty International supplemented its brief in support of a petition for rehearing en banc, and on Aug. 28, the Court ordered us to file a response. We filed it on Sept. 12, arguing that the standards for rehearing this case have not been met, and that the court's decision in the American Meat Institute case was limited to "purely factual and uncontroversial" disclosures, not disclosures like the ones required by the conflict minerals regulation. The disclosures in this case, according to the judges who ruled on them, require an issuer "to tell consumers that its products are ethically tainted, even if they only indirectly finance armed groups," or even if the issuer is merely unable to determine their origin.
On Nov. 18, the 3-judge panel agreed to rehear this case, and asked for further briefing on the impact of the decision in American Meat Institute v. USDA, as well as the meaning of "purely factual and uncontroversial information" and whether that determination is a question of fact for the court. The SEC filed its brief on December 8, and ours was filed December 29. Oral arguments were not held.
The 3-judge panel finally ruled on Aug. 18, 2015, that the compelled disclosures are unconstitutional. It ruled that the looser standard of review under the Zauderer case does not apply here, because that case involved only voluntary commercial advertising, not government-compelled statements about products. But even if this looser standard of review applied, the government must have a sufficient interest in mandating disclosures, and the rule must be effective in achieving its objectives. Instead, whether the law will decrease the revenue of armed groups in the DRC and diminish the humanitarian crisis there "is entirely unproven and rests on pure speculation." No hearings were held on the impact of the law prior to enactment, and later hearings were inconclusive. This is an insufficient justification to compel speech under the First Amendment.
The majority also analyzed the part of the ruling in the American Meat Institute case and found that determining whether compelled speech is about "purely factual and uncontroversial information" is a puzzling exercise, but that the SEC's requirement to label products as "conflict free" or not is hardly factual and non-ideological. Instead, it ethically taints products and stigmatizes companies in violation of the First Amendment. The SEC and Amnesty International petitioned for rehearing before the full D.C. Circuit court, but that request was denied, and the case was not appealed to the Supreme Court.
Related Documents: NAM's supplemental brief (December 29, 2014) NAM Response to petition for rehearing en banc (September 12, 2014) NAM Emergency Motion for D.C. Cir. stay (May 5, 2014) NAM Motion to SEC for stay (April 29, 2014) NAM Reply Brief (November 13, 2013) NAM Opening Brief (September 11, 2013)
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Solvay USA Inc. v. EPA
(D.C. Circuit)
Challenging EPA's Non-Hazardous Secondary Materials rule
On June 16, 2011, the NAM filed a petition for review of the EPA’s Non-Hazardous Secondary Materials (NHSM) rule under the suite of Boiler MACT rules. The NHSM rule will classify as solid waste certain “secondary” materials that are currently used as a source of energy, such as coal ash or biomass residues from lumber. Solid waste must be burned in boilers regulated under more onerous rules than apply to fuels. The NAM is concerned with several aspects of the rule, including its effect on the use of non-hazardous materials, its presumption that all non-hazardous secondary materials are solid waste, and other provisions.
A list of legal issues in the case was filed, including challenging EPA's presumption that all non-hazardous secondary materials are solid waste, and its definition of "contaminants," "traditional fuels," and "contained gaseous material." Also at issue, among other things, is whether EPA violated the Regulatory Flexibility Act by failing to consider the economic impacts of the rule on small businesses.
In 2013, National Ass'n of Clean Water Agencies v. EPA was consolidated with the NAM suit into Solvay USA Inc. v. EPA. Our main brief on the merits, filed 4/28/2014, raised 4 key challenges to EPA's rule: (1) that EPA improperly decided that transferring alternative fuels to third parties for combustion is a discard and therefore such fuels are solid wastes, (2) that EPA improperly classified as solid waste alternative fuels such as those made from construction and demolition wood, railroad ties, and other treated woods that have heating value, are managed as valuable fuel, and are processed to create new fuel products, (3) that EPA improperly classified as solid waste alternative fuels such as paper recycling residuals, even though the record demonstrates no discard has occurred and the combustion is an integral part of an industrial process or functionally equivalent to a traditional fuel, and (4) that EPA improperly classified as solid waste sewage sludge when combusted even though the Resource Conservation and Recovery Act (RCRA) prohibits such a classification.
The practical effect of EPA's rule is that alternative fuel that could have been productively combusted will be managed as a waste and can only be combusted in a solid waste incinerator under much more expensive rules, leading to an enormous increase in landfill disposal, which has its own set of environmental harms.
Our brief as intervenors was filed Aug. 29, 2014, and emphasized that EPA could find under RCRA that discarded material could be recovered and processed into a non-waste fuel product, and that it could properly classify as non-wastes scrap tires, used oil, pulp and paper residuals, construction and demolition debris and other traditional fuels.
On June 3, 2015, the Court of Appeals denied Solvay’s petition for review as well as those of the environmental groups that challenged the rule. The court reasoned that the argument regarding sewage sludge is foreclosed by RCRA’s plain language and that EPA’s distinction between material burned by the generator and material transferred to a third party is consistent with RCRA and reasonable. It allowed EPA to place the burden on regulated entities to show that its material should not be regulated, because Congress wanted EPA "to err on the side of caution."
The court also rejected an environmental challenge to EPA's treating materials that are indistinguishable from virgin materials as non-waste fuel.
Related Documents: Joint Reply Brief of Industry Petitioners (September 29, 2014) Joint Brief of Industry Intervenor-Respondents (incl. NAM) (August 29, 2014) NAM brief on the merits (April 28, 2014)
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West Virginia v. EPA
(D.C. Circuit)
Challenging EPA's new round of greenhouse gas regulations for utilities
The NAM and 9 other groups filed an amicus brief in a case brought by a coalition of 12 states seeking to hold unlawful a 2011 settlement agreement between the EPA and some environmental groups which committed the agency to propose rules to regulate greenhouse gases from power plants. EPA proposed the rules in 2014, and this challenge began in July. Although the agency has not finalized its rules, this suit challenges the underlying settlement agreement.
The EPA rules impose new compliance costs on utilities that already must bear $9.6 billion per year in costs under the 2012 rule on hazardous air pollutants. Manufacturers of energy inputs will see sales decline precipitously as power plants cut costs or shut down. Manufacturers of all kinds, as purchasers of electricity, will see dramatic cost increases and electric service will become less reliable.
In our amicus brief, we argued that EPA may not regulate power plants under Section 111(d) of the Clean Air Act because power plants are already regulated under Section 112, and the law specifically prohibits dual regulation under both sections. EPA tried to manufacture ambiguity by relying on an acknowledged congressional drafting error. EPA should not be entitled to judicial deference when the statutory language itself is clear.
A similar case, Murray Energy Corp. v. EPA, is also pending in the D.C. Circuit, involving the same questions but challenging the proposed rules directly. We filed an amicus brief in that case on December 22. Oral arguments in both cases were held on April 16, 2015.
On June 9, 2015, the D.C. Circuit rejected West Virginia’s argument concerning the underlying settlement agreement and ruled for the EPA. The court held that West Virginia lacked standing to sue because the settlement agreement only set a timeline for the EPA to decide whether or not to issue a final rule and therefore did not create an injury in fact. Additionally, a suit to challenge such a settlement agreement must be filed within 60 days of the agreement’s publication in the Federal Register rather than more than two years later, as was the case here.
Related Documents: NAM brief (December 10, 2014)
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Alaska Wilderness League v. Jewell
(9th Circuit)
Validity of BOEM permit for exploratory drilling in Chukchi Sea
The NAM filed an amicus brief supporting oil and gas exploratory drilling that complied with the National Environmental Policy Act (NEPA). Environmental groups challenged the issuance of a permit by the Bureau of Ocean Energy Management (BOEM) allowing exploratory drilling by Shell in Alaska. This case is important because attempts to prevent oil and gas exploration significantly impact access to energy sources and stifle job growth. The NAM’s brief argued that the Outer Continental Shelf (OCS) Lands Act was specifically designed to expedite OCS exploration and development and that BOEM properly approved Shell's revised exploration plan pursuant to NEPA. Shell terminated its exploratory efforts, and the court granted the parties' request to dismiss the case as moot.
Related Documents: NAM brief (September 25, 2015)
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American Chemistry Council v. EPA
(D.C. Circuit)
Challenging EPA regulation of boilers for area sources (boiler GACT)
The NAM challenged an Environmental Protection Agency (EPA) final rule on hazardous air pollutants, which imposes burdensome regulatory requirements on boilers, incinerators and process heaters. The rule requires “generally available control technologies” (GACT) or management practices to reduce emissions of hazardous air pollutants, taking into consideration the cost of achieving such reductions. This rule imposes costly compliance requirements on manufacturers subject to the rule. The NAM argued that 1) the EPA did not have sufficient data to property calculate an emissions standard based on the best performing 12% of combustions units as statutorily required but instead used the Upper Prediction Limit (UPL) methodology to estimate the emissions limits based on fewer data points; and 2) by requesting a voluntary remand, the EPA effectively conceded that the methodology used to calculate the UPL standards is flawed. While the court rejected the NAM’s arguments in 2016, it ordered the agency to provide further justification for some of its conclusions.
Related Documents: Brief of Industry Intervenor-Respondents (December 23, 2014) Opening Brief of Industry Petitioners (incl. NAM) (August 26, 2014) NAM Reply Brief in support of motion for affirmative relief (April 17, 2014) NAM motion for affirmative relief (March 13, 2014) Petition for Reconsideration (April 1, 2013)
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American Farm Bureau Federation v. EPA
(U.S. Supreme Court)
EPA micromanagement of state water discharges
The EPA has exerted control over land uses in the Chesapeake Bay watershed by dictating the minute details of what can be discharged into it and reserving to itself authority to approve any future changes necessary to allow for state and local adjustments to the mix of land uses within their jurisdictions. Congress neither envisioned nor authorized this expansion of EPA’s authority in the Clean Water Act.
This micromanagement upends the model Congress intended for the Clean Water Act. Local businesses throughout the Chesapeake Bay watershed must now comply with a regulatory scheme that imposes new federal burdens on businesses and industry formerly regulated by the states, impedes state programs to address state water quality issues, and limits opportunities for growth and innovation. Allowing the EPA’s control to stand would provide the EPA nearly unchecked power over land use decisions affecting local businesses throughout the nation.
The NAM filed an amicus brief urging the Supreme Court to review an adverse decision from the Third Circuit that allows such micromanagement by the EPA. Our brief argued that this overreach is not authorized by the Clean Water Act because it makes individual permit holders responsible for excess effluents from others. It severely constrains companies with discharge permits and delays revisions and approvals, disfavoring innovation and growth and curtailing development.
On Feb. 29, the Court declined to review this appeal.
Related Documents: NAM amicus brief (December 9, 2015)
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American Forest & Paper Ass'n. v. EPA
(D.C. Circuit)
Challenging EPA's CISWI regulations
The NAM challenged the Environmental Protection Agency’s (EPA) new regulations on commercial and industrial solid waste incineration (CISWI) units that impose stricter emissions limits on industrial, commercial and institutional boilers. The new rule amended a rule previously issued in 2011 by placing further restrictions on materials used as fuels or ingredients in combustion units. The regulations will impose additional costs on manufacturers that will now require additional resources to remain compliant with the regulations. The NAM argued that 1) the EPA failed to account for variability in waste materials when classifying best-performing units; 2) the EPA should consider emissions occurring during startups, shutdowns and malfunctions when determining whether emissions limits are achievable; and 3) the EPA does not have legal authority to impose recordkeeping requirements through the CISWI rule on operators who combust non-hazardous secondary materials that are not waste. Although the court rejected the NAM’s arguments, it ordered the agency to provide further justification for some of its conclusions.
Related Documents: NAM Reply Brief in support of motion for affirmative relief (April 17, 2014) NAM motion for affirmative relief (March 13, 2014) NAM Petition for Review (April 29, 2011)
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American Petroleum Institute v. EPA
(D.C. Circuit)
Challenging EPA greenhouse gas regulation (tailoring Step 3)
The NAM challenged an Environmental Protection Agency (EPA) effort to interpret its authority with the “Tailoring Rule,” which attempts to regulate greenhouse gas emissions from stationary sources. After earlier interpretations of the rule caused absurd consequences, the EPA raised thresholds to impact only the largest emitters of greenhouse gases. The rule will impose significant administrative and cost burdens on manufacturers. The NAM argued that 1) the EPA could have adopted a more reasonable interpretation of its power so as to avoid the absurdities the rule attempts to mitigate; 2) although the EPA tried to avoid these absurd results by modifying the express statutory thresholds defining who is regulated, the action is outside of the EPA’s legal authority; and 3) as the rule is at odds with Congress’s intent when it enacted the Clean Air Act, the court must avoid agency interpretations that undermine the purpose of the law. The parties voluntarily dismissed this case in February 2016.
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BCCA Appeal Group, Inc. v. City of Houston
(Texas Supreme Court)
Preemption of Houston's air regulation
The NAM filed an amicus brief urging the Supreme Court of Texas to overturn a lower court ruling that allowed the City of Houston to run its own clean air enforcement office. BCCA Appeal Group, Inc. sued after the City of Houston issued an ordinance allowing criminal prosecutions, without following the procedures required by the Texas Water Code and mandating that all facilities be registered with the city. If upheld, the regulation would have subjected manufacturers to inconsistent enforcement requirements and multiple permit systems at the local level. The NAM’s brief argued that such local enforcement is preempted under provisions of the Texas Constitution by the Texas Clean Air Act. The court agreed with NAM’s arguments that Houston may not subject companies to criminal penalties that conflict with the requirements of the Texas Clean Air Act.
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In re Deepwater Horizon
(5th Circuit)
Standard for punitive damages in Clean Water Act litigation
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit supporting BP’s challenge to a district court’s improper findings of fact and conclusion of law. Under a procedure known as multidistrict litigation (MDL), most cases in federal courts involving the Deepwater Horizon accident were sent to a single district court in Louisiana for consolidated pretrial proceedings. The MDL district court correctly determined that under the Fifth Circuit’s standard BP was not liable for punitive damages but incorrectly opined that BP would be liable in other circuits where some of the cases consolidated in the MDL originated and may ultimately return for trial. That incorrect comment had the potential to undermine the efficiency and fairness established through the MDL procedure and create judicial inefficiencies. The NAM’s brief argued that the MDL judge wrongly opined on the availability of punitive damages under standards applied by other circuits and instead should have focused only on the law of the Fifth Circuit. The case was dismissed by stipulation of the parties.
Related Documents: NAM brief (June 8, 2015)
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JELD-WEN, Inc. v. EPA
(D.C. Circuit)
Challenging EPA regulation of boilers and process heaters (boiler MACT)
The NAM challenged an Environmental Protection Agency (EPA) final rule on hazardous air pollutants, which would impose burdensome regulatory requirements on boilers, incinerators and process heaters. Because the rule requires the “maximum degree of reduction” in emissions of hazardous air pollutants achievable, taking into consideration the cost of achieving such reductions, the rule also requires “maximum achievable control technology” (MACT) for such equipment. This rule is burdensome, will impose additional costs and require additional resources for industrial sectors subject to the rule. The NAM argued that 1) the startup work practices were incorporated into the new rules without giving key stakeholders adequate opportunity to comment; 2) important safety considerations for the regulated community were overlooked in the definitions; 3) the rule failed to take account of the importance of encouraging efficient and cost effective use of resources; 4) the fuel requirements in the rule do not incorporate national goals of safeguarding fuel diversity; and 5) the EPA does not have legal authority to impose the energy assessment requirement. This case was consolidated with U.S. Sugar Corp. v. EPA, a similar challenge to EPA’s boiler MACT regulations, and in 2016, that court rejected all industry arguments, finding that the EPA's approach was reasonable.
Related Documents: Statement of Issues (May 2, 2013) NAM Petition for Review (April 1, 2013)
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Lennox Int'l, Inc. v. U.S. Dep't of Energy
(5th Circuit)
Challenging Dept. of Energy efficiency standards for walk-in coolers and freezers
The NAM filed an amicus brief in a challenge to a new Department of Energy (DOE), energy-efficiency standard for walk-in coolers and freezers. The new standard used a calculation of the “social cost of carbon” when aggregating purported benefits of the standard but was, however, not subjected to peer review, thus calling into question the quality and accuracy of the data used. This issue is important to manufacturers because DOE violated established requirements that influential information used by federal agencies to inform public policy decisions be developed through a transparent process. The NAM’s brief argued that the “social cost of carbon” estimates were developed by an ad-hoc interagency working group operating behind closed doors and outside the purview of notice-and-comment rulemaking or other meaningful public scrutiny. The case settled and was dismissed in 2016.
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National Association of Manufacturers v. EPA
(EPA)
Petition for stay of EPA's Clean Power Plan Rule
The NAM petitioned the Environmental Protection Agency (EPA) to issue an administrative stay to delay the effective date of the Clean Power Plan rule until a court rules on the rule’s legality. The rule, issued as a regulation of greenhouse gases from electric utility generating units, went much further than regulation of electric power plants. If the rule were to take effect, manufacturers would see their costs increase and some trade-exposed industries might be forced to relocate production overseas. The NAM’s petition argued that 1) the rule was already causing irreparable harm by forcing the closure of vast numbers of existing coal-fired generating units, constituting the backbone of the American electric grid; 2) that legal challenges to the rule are likely to prevail in court, since the Clean Air Act expressly forbids EPA from regulating existing fossil fuel-fired generating; and 3) the rule imposed standards of performance for the entire energy sector, rather than only for the individual sources of greenhouse gases from the power plants themselves. Although the EPA denied our petition, the U.S. Supreme Court issued a nationwide stay of the rule on Feb. 9, 2016, until the litigation over the rule is completed. Further developments in this case can be found .
Related Documents: NAM Petition for Administrative Stay (October 23, 2015)
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North Dakota v. Heydinger
(8th Circuit)
Challenge to Minnesota's Next General Energy Act restricting out-of-state electricity
The NAM filed an amicus brief in the U.S. Court of Appeals for the Eight Circuit challenging a Minnesota regulation, the Next Generation Energy Act (NGEA), which would have placed significant burdens on coal-fueled facilities and unlawfully regulated out-of-state commerce. The NGEA, sought to regulate and impose energy and environmental policies on electricity generated in other states by prohibiting importing electricity into Minnesota from any new large energy facility that would contribute to statewide power sector carbon dioxide emissions. If upheld, this matter would have caused uncertainty to manufacturers in the energy sector and others impacted by the NGEA. The NAM’s brief argued that 1) the law would substantially impede the interstate market for electricity in violation of the Commerce Clause; 2) the law could spur other states to adopt similar laws, which could result in a web of inconsistent and clashing local regulations that would destroy the national common market and impose untold costs on manufacturers and other consumers; and 3) the law was unconstitutional because it purported to allow a state to ban imported products based solely on how they were produced in other states. In a win for manufactures, the Eighth Circuit struck down Minnesota's law.
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Pakootas v. Teck Cominco Metals, Ltd.
(9th Circuit)
Expansive interpretation of CERCLA
The NAM filed an amicus brief opposing the expansion of arranger liability under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). This is an appeal from a lower court holding that a Canadian company was liable as an “arranger” of the “disposal” of the hazardous materials under CERCLA after airborne particles from its mining operations landed on the earth and water of the United States. As emissions can travel long distances by air, expanding arranger liability will expose manufacturers to expensive litigation. The NAM’s brief argued that both the plain text of CERCLA and controlling precedent make it clear that the statutory definition of “disposal” is not satisfied by the mere emission of hazardous substances into the air, even if portions of the emissions later come to rest at a facility. In a win for manufacturers, the U.S. Court of Appeals for the Ninth Circuit reversed the trial court’s holding.
Related Documents: NAM amicus brief (August 11, 2015)
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Portland Cement Ass'n v. EPA
(D.C. Circuit)
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U.S. Army Corps of Engineers v. Hawkes Co.
(U.S. Supreme Court)
When courts may review CWA jurisdictional decisions
The NAM filed an amicus brief urging the U.S. Supreme Court to support manufacturers’ rights to respond to jurisdictional decisions that impose additional costs and reduce the feasibility of constructing infrastructure. Under the Clean Water Act (CWA), a manufacturer must obtain a permit from the U.S. Army Corps of Engineers before discharging any dredged or fill material into waters of the United States that are subject to federal regulatory jurisdiction; however, the Corps has broadly construed the CWA to prohibit any productive use, improvement, alteration or repair of property without first obtaining a permit. This case provided the opportunity for manufacturers to request judicial review of Army Corps or Environmental Protection Agency decisions that may exceed those agencies' jurisdiction. The NAM’s brief argued that the regulated community must be afforded an early opportunity to respond to overly aggressive jurisdictional determinations and requested that the court resolve uncertainty over the scope of the CWA. In a win for manufacturers, the Court agreed with the NAM.
Related Documents: NAM brief (March 1, 2016)
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U.S. Sugar Corp. v. EPA
(D.C. Circuit)
Challenging EPA's boiler MACT regulations
The NAM challenged the Environmental Protection Agency’s (EPA), Boiler Maximum Achievable Control Technology (MACT) standard used to regulate emissions of hazardous air pollutants generated by boilers. The challenge came after EPA issued the final MCAT rule; however, the EPA did not have enough data to properly calculate an emissions standard based on the statutory requirement. This decision will impose enormous costs on key industrial sectors. The NAM argued that the EPA exceeded its authority in imposing an energy assessment requirement on portions of the facility that are not part of the defined source category (boilers and process heaters); 2) the emissions limitations are unlawful because they have not been achieved in practice; 3) the standards are not achievable because they were set without accounting for malfunctions; 4) EPA improperly established a numeric emission limitation for organic pollutants rather than a work practice as it has done in a comparable rule; and 5) EPA failed to justify its reversal of previously established health-based limits for hydrogen chloride. In 2016, the court rejected all industry arguments, finding that the EPA's approach was reasonable.
Related Documents: NAM Brief in Response to Environmental Petitioners (December 17, 2014) Opening Brief of Industry Petitioners (August 12, 2014) NAM Reply Brief in Support of Affirmative Relief (April 17, 2014) NAM Petition for Review (April 29, 2011) NAM Petition for Administrative Stay (April 27, 2011)
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West Virginia v. EPA
(U.S. Supreme Court)
Supreme Court grants stay pending litigation of EPA's Clean Power Plan
The NAM filed an application for an immediate stay of the final rule for existing electric utility generating units pending litigation over the rule in the U.S. Court of Appeals for the District of Columbia Circuit. The Environmental Protection Agency’s (EPA) Clean Power Plan attempted to aggressively transform the domestic energy generation industry in violation of the Clean Air Act. If upheld, this rule would have imposed significant regulatory costs on manufacturers, thereby threatening global competitiveness. The NAM’s brief argued that the rule is far in excess of EPA’s statutory authority under the Clean Air Act and would cause irreparable harms to NAM members if a stay was not granted. In a win for manufacturers, the Supreme Court granted the stay.
Related Documents: Coalition Reply Supporting Stay (February 4, 2016) Coalition Application for Stay (January 27, 2016)
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American Petroleum Institute v. EPA
(D.C. Circuit)
Challenging EPA's new rules on definition of solid waste
The NAM challenged two final regulations promulgated by the Environmental Protection Agency (EPA) that define hazardous solid waste and would impose stringent regulatory obligations governing waste generation, treatment, storage, disposal and permitting. The EPA asserted jurisdiction to regulate solid and hazardous waste under the Resource Conservation and Recovery Act (RCRA), which defined “hazardous waste” as “solid waste” that may pose a danger to human health or the environment. The definition is important to manufacturers that reuse materials in the manufacturing process, as well as for disposal and recycling procedures. The NAM sued the EPA to resolve concerns related to new affirmative duties and conditions on in-process materials that are not discarded. The NAM argued that EPA’s attempt to regulate materials that are not yet waste exceeds the agency’s authority. In a win for manufacturers, the court held that that some of the requirements imposed on companies using third-party recyclers exceeded the EPA's statutory authority and improperly presumed that recycled materials were discarded simply because the recyclers did not meet various paperwork requirements.
Related Documents: NAM reply brief (May 19, 2016) Opening brief of industry petitioners (December 9, 2015)
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California Chamber of Commerce v. California Air Resources Board
(California Supreme Court)
Challenging CARB cap-and-trade auction allowance revenues
The NAM asked the California Supreme Court to review a case challenging a greenhouse gas cap-and-trade auction system created by California’s Air Resources Board (CARB) as an unauthorized tax disguised as a regulatory action. This was an appeal of an adverse decision where the lower court held that revenues collected by CARB from California businesses, which must acquire greenhouse gas emissions allowances from the state in order to remain in business, are not taxes subject to Proposition 13. Proposition 13 requires an authorization by two-thirds of the legislature. This decision brings uncertainty to California manufacturers who are now unsure of the application to any other financial exactions. The NAM argued that the California Supreme Court did not apply existing precedent to assess whether a charge imposed for regulatory purposes is a tax, and by rejecting that precedent, the court provided a roadmap for the evasion of Proposition 13. Furthermore, the lower court’s holding defies precedent, the record evidence and common sense, and taken to its logical conclusion, would mean that virtually all taxes are “voluntary.” Unfortunately, the California Supreme Court declined to hear this appeal.
Related Documents: NAM reply brief (June 26, 2017) NAM petition for review (May 16, 2017)
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Chemical Manufacturers Association v. EPA
(U.S. District Court for the District of Columbia)
Superfund
This suit, filed by the NAM, CMA, American Automobile Manufacturers Association, American Petroleum Institute, Electronics Industry Association, and the Chamber of Commerce of the United States, challenges an EPA policy that allows municipalities to avoid some liability for Superfund cleanup costs. It affects all companies at "co-disposal" Superfund sites (with both industrial and municipal wastes), by allowing municipalities to escape liability by paying a fixed price for cleanup costs. The suit was dismissed by U.S. District Court for the District of Columbia for lack of jurisdiction (EPA's policy was not "final agency action") on 11/16/98. A similar suit filed in the D.C. Circuit was stipulated for dismissal on 7/2/98 by the EPA.
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Constitution Pipeline Co. v. New York State Dep't of Envtl. Conservation
(2nd Circuit)
Supporting FERC approval of pipelines
The NAM filed an amicus brief in the U.S. Court of Appeals for the Second Circuit supporting Constitutional Pipeline in an energy infrastructure litigation suit after New York state denied a permit for construction of a natural gas pipeline through part of the state, although the Federal Energy Regulatory Commission (FERC) approved the project. The Clean Water Act permit was denied after extensive environmental, safety and economic review, and approval by FERC. This litigation is important to manufacturers because state intervention can impede the efficient, transparent and predictable approval of natural gas pipelines even when those projects have been approved by other agencies. The NAM’s brief argued that FERC conducted a thorough review process that assessed the environmental impact of the pipeline as required by the National Environmental Policy Act and the Natural Gas Act and that although states should play an important role in the pipeline approval process, states should not be permitted to override FERC’s assessment of a pipeline’s benefits and environmental impact. Unfortunately, the court rejected the arguments and deferred to the judgment of state officials.
Related Documents: NAM brief (July 19, 2016)
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Ohio Valley Env'l Coalition, Inc. v. Fola Coal Co.
(4th Circuit)
Effect of water quality standards on existing CWA permit shield
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit arguing that courts should not apply new conditions to an existing National Pollution Discharge Elimination System (NPDES) water discharge permit when the regulatory agency has already considered those conditions and did not require them in the permit. Although West Virginia’s permit included boilerplate language that prohibited discharges that cause violations of state water quality standards, the district court used the boilerplate language to convert those water quality standards into enforceable effluent limits in the permit. That decision is important as NAM members who hold these permits with similar boilerplate language may now be subjected to civil and criminal penalties and injunctive action. The NAM’s brief argued that Fola was entitled to protection from the permit and that the district court’s interpretation usurps the state’s authority to establish water quality standards. Unfortunately, the Fourth Circuit did not agree with NAM’s arguments, leaving current permit holders liable for discharges that are otherwise permitted at the time of issuance.
Related Documents: NAM amicus brief (April 20, 2016)
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Orange Cty. Water Dist. v. Sabic Innovative Plastics US, LLC
(California Supreme Court)
Erroneous expansion of California Superfund liability
The NAM filed an amicus brief urging California’s Supreme Court to review a series of cases that grant a private right of action to impose liability for environmental remediation, regardless of prior remediation efforts and regulatory action. Historically, California businesses were able to rely on state agency direction when remediating contaminated sites, potentially obtaining a “No Further Action” letter that signified the sites were safe for productive economic use; businesses would only face liability for additional remediation in exceedingly rare cases. Private liability for environmental remediation undermines the relationship between businesses and regulators and discourages proactive remediation efforts. The NAM’s brief explained that these cases will discourage both voluntary remediation and swift compliance with regulators’ Remedial Action Plans, which runs counter to the interest of California citizens and discourages cooperation between businesses and regulators. Unfortunately, the California Supreme court denied review.
Related Documents: NAM letter (October 13, 2017)
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Sciscoe v. Enbridge Gathering (North Texas), L.P.
(Texas Supreme Court)
Preemption of tort claims for permitted emissions
The NAM submitted an amicus letter urging the Texas Supreme Court to grant review of a lower court decision that did not clarify whether the Federal Clean Air Act and the Texas Clean Air Act preempt state tort law claims for damages. The issue stemmed from an earlier claim where residents near natural gas compressor stations and a metering station sued alleging that the facilities interfered with their rights by generating noise and fumes. If tort law claims like these are not preempted by the federal or state Clean Air Act, manufacturers would be exposed to massive additional liability. The NAM argued that both the Federal Clean Air Act and the Texas Clean Air Act preempt state tort claims for damages against facilities lawfully operating under the regulations. The matter remains unsettled as the court dismissed petitioners appeal on other grounds.
Related Documents: NAM brief (November 9, 2015)
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Sierra Club v. EPA
(D.C. Circuit)
Defending EPA's sulfur dioxide regulation against accelerated enforcement
The NAM intervened in a suit brought by the Sierra Club and Natural Resources Defense Council against the EPA for its regulation on sulfur dioxide (SO2). The regulation, published August 5, 2013, designated 29 areas as “nonattainment” for SO2 based on recorded air quality monitoring data, and the EPA announced its intention to address the rest of the country in separate regulations in the future. The modeling predictions urged by the Sierra Club would allow areas to be designated as nonattainment when in fact they are not. That would increase the number of such areas, and manufacturers would have to spend billions of dollars to achieve far greater emission reductions than would be required if designations were based on actual air quality monitoring data. The NAM intervened to help secure a more positive regulation for manufacturers. A district court approved a consent decree requiring the EPA to include any areas with stationary sources that emitted more than 16,000 tons of SO2 in 2012 and extending the timeline for the EPA to promulgate a new rule. The deadline is now December 31, 2020, which will allow for real-life modeling data to be used instead of the Sierra Club's recommendation of computer modeling. This is a favorable outcome for manufacturers. The consent decree was appealed to the U.S. Court of Appeals for the Ninth Circuit, which affirmed the district court’s approval.
Related Documents: Motion to Intervene (November 4, 2013)
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Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers
(D.D.C.)
Continuing to delay pipelines is unnecessary and harmful
The NAM filed an amicus brief supporting the continuance of Dakota Access Pipeline (DAPL) operations. The litigation arose from alleged deficiencies in National Environmental Policy Act review, assessment and analysis following a procedural error in the U.S. Army Corps’ Environmental Assessment. This issue is important to manufacturing as halting DAPL would significantly impede access to crude oil on which manufacturers heavily rely. The NAM’s brief argued that halting operations due to a procedural error is not an appropriate remedy but would instead produce serious and irreparable harm including harm to energy businesses, states benefiting from DAPL operations and individuals employed through DAPL. The court agreed with the NAM’s arguments that the pipeline should be permitted to continue operations while the U.S. Army Corps of Engineers conducted further NEPA review.
Related Documents: NAM brief (July 17, 2017)
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TransCanada Keystone XL Pipeline, LP v. Kerry
(S.D. Texas)
Challenge to Executive authority to block Keystone XL Pipeline
The NAM filed an amicus brief in support of TransCanada’s challenge to the Obama Administration’s disapproval of a cross-border permit for the Keystone XL pipeline. The denial violates the separation of powers and would directly affect U.S. trade with other nations. The NAM’s brief argued that the president’s justification for denial was not based on national security but was instead intended to regulate foreign commerce, which is an impermissible exercise of the foreign affairs power to usurp Congress’s authority over foreign commerce. This matter was dismissed as moot when the new administration granted the pipeline permit.
Related Documents: NAM amicus brief (May 9, 2016)
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Airborn, Inc. v. OSHA
(8th Circuit)
Challenging OSHA's beryllium standard
The NAM and other associations and companies involved in the manufacture or use of beryllium filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit seeking an administrative stay of U.S. Occupational Safety and Health Administration’s (OSHA) new rule regulating beryllium and to reopen the rulemaking record. Beryllium is critical to some manufacturing processes and products, and OSHA did not adequately address industry’s concerns about overly restrictive provisions of the new rule.The NAM requested that the effective date of the standards be delayed for six months, and that OSHA re-open the rulemaking record to allow comment on the substantial changes made between issuance of the proposed rule and adoption of the final rules, and to allow the new Secretary of Labor to take office and have adequate time to consider the standards in accordance with a new policy to freeze and review all holdover regulations. OSHA agreed to undertake a new rulemaking to propose and implement sweeping changes to the regulation that will benefit companies that manufacture and use beryllium.
Related Documents: NAM Motion (June 23, 2017)
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Chamber of Commerce v. EPA
(10th Circuit)
Jurisdictional issue in challenge to Waters of the US rule
The NAM filed an amicus brief in the U.S. Court of Appeals for the Tenth Circuit in an appeal to a court ruling which held that challenges to the EPA’s rule establishing jurisdiction over waters of the United States should be heard in appellate courts, rather than in district courts. Federal law specifies that, while most lawsuits are filed in trial courts, a few types of suits must be filed directly in the federal courts of appeals; however, the statute that provides appellate jurisdiction for certain challenges to EPA regulations does not apply to this challenge. Resolving this procedural issue is an important first step in resolving substantive arguments by many states and members of the business community against EPA’s decision to assert jurisdiction over many areas of the country previously not under their jurisdiction. The NAM’s brief argued that the district court erred when it deferred to the U.S. Court of Appeals for the Sixth Circuit’s jurisdictional decision and that the district court, in fact, had jurisdiction over plaintiffs’ complaint. On January 22, 2018, the Supreme Court ruled unanimously in favor of the NAM's position in a case that determined that district courts, rather than appellate courts, should be the first courts to hear challenges to the new regulation defining the waters of the United States.
Related Documents: NAM brief (July 8, 2016)
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Constitution Pipeline Company v. New York
(U.S. Supreme Court)
State veto authority over interstate natural gas pipelines
The NAM filed an amicus brief in the U.S. Supreme Court in support of Constitution Pipeline Company’s authority to construct a new natural gas pipeline from Pennsylvania to New York State. New York rejected the proposed pipeline because the state disagreed with the pipeline’s proposed route. Because routing decisions for natural gas pipelines are within the power of the Federal Energy Regulatory Commission, New York’s denial improperly encroached on FERC’s siting authority. The NAM’s brief argued that the Supreme Court should hear this case because New York’s rejection violates the law and would harm manufacturers and other users of natural gas. Unfortunately, the Court denied certiorari.
Related Documents: NAM Brief (February 20, 2018)
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Georgia v. McCarthy
(11th Circuit)
Which court has jurisdiction to decide Waters of the US challenges?
This is one of several cases filed in various courts challenging the EPA's new rule regarding the scope of its jurisdiction over land in the United States that is subject to permitting requirements of the Clean Water Act. The issue on appeal before the 11th Circuit is whether a federal appeals court has jurisdiction to hear challenges to the rule in the first instance.
The NAM and others in a coalition of organizations challenging the EPA rule argued that nothing in the Clean Water Act says that our challenge should go first to the appeals court. Rather, we argued that a federal district court is the proper forum for filing suit. Only a few exceptions are written into the Clean Air Act, and none of them applies in the challenge to the waters rule.
The court ruled on August 16, 2017, to stay the case pending the outcome of the Sixth Circuit's jurisdictional determination. On January 22, 2018, the U.S. Supreme Court ruled that jurisdiction over the various WOTUS challenges belong in the district courts. The 11th Circuit thereafter remanded the case back to the district court.
Related Documents: NAM amicus brief (September 21, 2015)
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Hawaii Wildlife Fund v. County of Maui
(9th Circuit)
Opposing conduit theory under Clean Water Act
The NAM filed an amicus brief in the Ninth Circuit to oppose a district court decision that broadly interpreted the scope of liability under the Clean Water Act. The district court adopted a liability theory, the "conduit theory," which stated that any pollutants released to dry land or underground that might seep into groundwater then to nearby surface waters are an illegal "discharge" under the Clean Water Act (CWA). That ruling could impose incalculable liability risk on manufacturers and other regulated industries. The NAM’s brief argued that the CWA clearly distinguishes between point sources and nonpoint sources, and the conduit theory impermissibly extends the EPA's authority. Unfortunately, the Ninth Circuit affirmed the district court’s ruling.
Related Documents: NAM amicus brief (March 28, 2016)
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Kentucky Waterways Alliance v. Kentucky Utilities Co.
(6th Circuit)
"Conduit theory" of liability under the Clean Water Act
The NAM filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit to oppose lawsuits by environmental plaintiff groups that sought to massively expand manufacturers’ liability under the Clean Water Act. In a lawsuit against electric generation facilities, the plaintiffs argued that federal jurisdiction applies to all groundwater throughout the United States (in addition to certain categories of surface waters). If that theory of jurisdiction prevails, manufacturers could be subject to massive and unpredictable liability for any impacts their operations may have on groundwater. The NAM’s amicus brief argued against this overbroad theory of liability. The Sixth Circuit ruled against the plaintiffs and in favor of manufacturers by rejecting the plaintiffs’ claims and holding that the Clean Water Act does not apply to discharges to groundwater.
Related Documents: NAM brief (May 4, 2018)
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Monsanto Co. v. Office of Envtl. Health Hazard Assessment
(California Supreme Court)
Constitutional problems for Prop 65 chemical listings
The NAM filed an amicus brief in support of Monsanto urging the California Supreme Court to grant review of this case to address the serious constitutional questions presented by California’s Proposition 65, which maintains a list of chemicals that can potentially cause cancer, birth defects and other reproductive harm. If a product contains or produces any of the chemicals on that list, manufacturers are required to place a warning label on that product before it may be sold in California. In addition, Proposition 65 requires that a chemical be automatically listed if the International Agency for Research on Cancer (IARC) classifies it as carcinogenic. What chemicals are listed is important because of the costs borne by manufacturers and the public by the listing of a chemical under Proposition 65. The NAM’s brief argued that substances listed under Proposition 65 should be based on sound and generally-accepted science and that delegating that authority to IARC is unconstitutional. Unfortunately, the California Supreme Court denied review of this case.
Related Documents: NAM brief (June 28, 2018)
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Murray Energy Corp. v. EPA
(6th Circuit)
Rule broadening definition of "waters of the United States"
The NAM intervened in a group of consolidated cases challenging a final rule from the EPA defining its jurisdiction over navigable “Waters of the United States” under the Clean Water Act (CWA). Federal law specifies that, while most lawsuits are filed in federal district courts, some suits must be filed directly in the federal courts of appeals. The statute that provides appellate jurisdiction for certain challenges to EPA regulations does not apply to the WOTUS challenge, though the EPA argued that it did. Prompt resolution of this jurisdictional issue was important so that the WOTUS case could proceed expeditiously through the courts. The NAM’s brief explained that certain legal challenges, such as this issue, belong in the federal district courts and argued that this is not the type of appeal from agency rulemakings under the CWA that is limited to the federal appeals courts by statute. On January 22, 2018, the Supreme Court held that jurisdiction properly belongs in the federal district courts.
Related Documents: Industry brief on the merits (November 1, 2016)
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National Association of Manufacturers v. U.S. Dep't of Defense
(U.S. Supreme Court)
Appeal of Waters of the United States (WOTUS) jurisdictional issue
The MCLA secured a 9–0 victory in the U.S. Supreme Court that resolved a procedural obstacle that had delayed the appropriate federal court from considering legal challenges to the Environmental Protection Agency’s (EPA) 2015 “Waters of the United States” (WOTUS) Rule. This legal win cleared the path for the MCLA’s lawsuit to invalidate the rule to proceed in federal district court, where the U.S. District Court for the Southern District of Texas ultimately invalidated the rule and remanded it back to the EPA for reproposal.
Related Documents: NAM merits reply brief (September 11, 2017) NAM merits brief (April 27, 2017)
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Natural Resources Defense Council v. EPA
(2nd Circuit)
Supporting EPA in NRDC challenge to TSCA Section 5
The NAM intervened in a lawsuit in the U.S. Court of Appeals for the Second Circuit to support the EPA’s new regulations on chemicals under the updated Toxic Substances Control Act (TSCA). The Natural Resources Defense Council (NRDC) claimed that the new standards put consumers at risk of harmful exposure. In this case, NRDC challenged Section 5 of TSCA, which deals with the risk assessment standard for significant new use rules (SNURs) for chemicals. This challenge could have been harmful to manufacturers by potentially hindering approvals of new uses of chemicals. The NAM intervened to support EPA and attacked NRDC’s standing to bring the case. The NAM argued that the proposed rule is not subject to challenge, is consistent with TSCA and would protect human health and the environment. Soon after the NAM filed its principal brief in the case, NRDC moved to dismiss its case with prejudice, which the court granted.
Related Documents: NAM response (August 28, 2018) NAM intervenor brief (August 14, 2018) NAM Motion (February 5, 2018)
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Sierra Club v. EPA
(D.C. Circuit)
Boiler MACT reconsideration rule
The NAM intervened in a case before the U.S. Court of Appeals for the D.C. Circuit involving a 2015 EPA Rule regarding environmental restrictions on industrial boilers. The rule requires maximum achievable control technology (MACT) for equipment to reduce emissions of hazardous air pollutants, taking into consideration the cost of achieving such reductions. There are two primary issues in the case: (1) whether the EPA properly established a minimum standard level of 130 parts per million (ppm) of carbon monoxide for certain boiler emissions and; (2) whether the EPA reasonably established work practice standards for periods of startup and shutdown where it is impracticable to determine compliance with numerical standards during those periods. Manufacturers would bear a large burden and financial hardship if the Sierra Club prevailed in its challenge to this rule. Our brief argued that EPA properly justified setting the limit at 130 ppm for carbon monoxide as a proxy for hazardous air pollutants The court held that the 130 ppm limit is reasonable and also held that the rule’s flexibility on emissions during startup and shutdown of the boilers is reasonable and consistent with the Clean Air Act. The plaintiffs filed a petition for rehearing with the court, which the NAM opposed, and the court denied the rehearing request.
Related Documents: NAM Petition (June 5, 2018) NAM intervenor brief (November 16, 2016) NAM motion to intervene (February 18, 2016)
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Tennessee Clean Water Network v. Tennessee Valley Authority
(6th Circuit)
Conduit theory of liability for pollutants
The NAM filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit to oppose lawsuits by environmental plaintiff groups that sought to massively expand manufacturers’ liability under the Clean Water Act. In a lawsuit against electric generation facilities, the plaintiffs argued that federal jurisdiction applies to all groundwater throughout the United States (in addition to certain categories of surface waters). If that theory of jurisdiction prevails, manufacturers could be subject to massive and unpredictable liability for any impacts their operations may have on groundwater. The NAM’s amicus brief argued against this overbroad theory of liability. The Sixth Circuit ruled against the plaintiffs and in favor of manufacturers by rejecting the plaintiffs’ claims and holding that the Clean Water Act does not apply to discharges to groundwater.
Related Documents: NAM brief (February 7, 2018)
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Upstate Forever v. Kinder Morgan
(4th Circuit)
"Conduit theory" of liability under the Clean Water Act
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit to support Kinder Morgan’s request for a rehearing of a lawsuit by environmental plaintiff groups that sought to expand the scope of liability under the Clean Water Act. The case involved a pipeline release of gasoline to dry land, which then allegedly migrated through groundwater to a nearby stream. The plaintiffs alleged that the gasoline seepage to the stream violated the Clean Water Act. This case is significant for manufacturers because the plaintiffs’ theory would impose massive liability for any pollution to dry land (no matter how insignificant) that migrates through groundwater to nearby surface waters. The plaintiffs lost in federal district court but prevailed on appeal to the Fourth Circuit. The NAM’s brief explained how the Fourth Circuit’s decision conflicts with Supreme Court and appellate court precedent. The Fourth Circuit denied the petitions for rehearing and rehearing en banc.
Related Documents: NAM brief (May 3, 2018)
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Weyerhaeuser v. U.S. Fish and Wildlife Service
(U.S. Supreme Court)
Government overreach under the Endangered Species Act
The NAM filed an amicus brief in the U.S. Supreme Court to oppose government overreach under the Endangered Species Act (ESA) that restricts land use in the name of helping an endangered species that does not even live on the land. The U.S. Fish and Wildlife Service (FWS) declared 1,544 acres of private property in Louisiana as “critical habitat” for the dusky gopher frog, which does not live on that property and could not even survive there under current conditions. Such designations can significantly harm manufacturers and other landowners by severely restricting land use activities and driving up permitting costs and delays. The NAM’s brief in support of the landowner argued that FWS exceeded its statutory authority under the ESA and highlighted how FWS’s actions imposed significant harm and business uncertainty on manufacturers. The Supreme Court issued a largely favorable decision for manufacturers and remanded to the lower court the question of whether the property at issue even qualifies as habitat for the frog (a question that suggests the answer is “no”) and ruled that an agency’s critical habitat designation is subject to judicial review.
Related Documents: NAM brief (April 30, 2018)
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American Farm Bureau Federation v. EPA
(S.D. Texas)
Challenging Waters of the United States regulation
The NAM and 13 other organizations sued the EPA and the U.S. Army Corps of Engineers in 2016 to challenge the agencies’ 2015 rule defining the scope of jurisdictional “Waters of the United States” under the Clean Water Act (2015 WOTUS rule). The 2015 WOTUS rule exerts jurisdiction over a staggering range of waters and dry landscape features -- large and small; permanent, intermittent, or ephemeral; flowing or stagnant; natural or manmade; and interstate or intrastate. The NAM’s complaint argues that the rule exceeds the Clean Water Act and the United States Constitution.
The 2015 WOTUS rule defines which waters and land areas require a permit under the Clean Water Act for discharges of pollutants to those areas. The rule’s definitions and prohibitions are complex and vague, and often require case-by-case determinations by the agencies. Manufacturers will be required to undertake expensive and laborious efforts to determine whether landscape features on their property are jurisdictional. Penalties for unpermitted discharges (which can include simply moving dirt or mud without a permit) are tens of thousands of dollars per day, per violation.
The U.S. Court of Appeals for the Sixth Circuit initially asserted jurisdiction to hear the various legal challenges to the 2015 WOTUS rule. Due to questions about that Court’s authority to decide these cases, however, the NAM asked the United States Supreme Court to rule that federal district courts in fact are the proper venue for challenges to the 2015 WOTUS rule. In a unanimous decision issued on January 22, 2018, the Supreme Court ruled in the NAM’s favor, declaring that challenges to jurisdictional rules under the Clean Water Act must proceed in the federal district courts. That decision gave manufacturers and other regulated industries long-needed clarity on judicial resolution of rulemakings under the Clean Water Act. That clarity will expedite future litigation under the Clean Water Act.
While that procedural wrangling unfolded, the agencies began the regulatory process of rescinding the 2015 WOTUS rule and replacing it with a new jurisdictional rule. To ensure that the 2015 WOTUS rule does not come back into effect while the agencies complete their rule replacement process, the agencies issued a rule on February 6, 2018, that delays the effectiveness of the 2015 WOTUS rule until February 2020. In August 2018, a federal court enjoined that rule, which bring the 2015 WOTUS rule back into effect in the 26 states not already subject to a stay of the rule.
On October 18, 2018, the NAM filed our motion for summary judgment, which seeks to invalidate the 2015 WOTUS rule in its entirety. Our brief argues that the rule violates federal law and the U.S. Constitution, and should be invalidated in its entirety.
In a major win for manufacturers, on May 28, 2019, the court ruled that the EPA violated the law by issuing the rule without adequate notice and opportunity to comment on the proposed rule. The court remanded the rule to the agency to re-propose the rule and provide adequate opportunity to comment.
Related Documents: Motion for Reconsideration (July 25, 2019) NAM Reply (December 3, 2018) NAM Reply (November 7, 2018) NAM Motion (October 18, 2018) NAM Motion (February 7, 2018) NAM Opposition to Motion to Dismiss (May 13, 2016)
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Appalachian Voices v. FERC
(D.C. Circuit)
Federal review of new energy infrastructure projects
The NAM filed an amicus brief in support of the Mountain Valley Pipeline, a major new natural gas transmission pipeline to bring natural gas from the Marcellus shale region to manufacturers, electricity generators, and other consumers in the eastern United States. The U.S. Federal Energy Regulatory Commission (FERC) approved the pipeline under Section 7 of the Natural Gas Act. Environmental groups sued to challenge that authorization, arguing that FERC's environmental review under the National Environmental Policy Act (NEPA) should have quantified the greenhouse gas emissions impacts of all possible downstream uses of the natural gas. If courts interpret NEPA as imposing that requirement, the approval process for major energy infrastructure projects will only become more complex, delayed, and uncertain as FERC undertakes a speculative GHG analysis that environmental groups would inevitably challenge in court to delay project commencement. The NAM's amicus brief argued that NEPA does not compel a GHG analysis for every new energy infrastructure project, and that FERC properly exercised its discretion in determining that GHG emissions are not indirect effects of its approval of the Mountain Valley Pipeline. On February 19, 2019, the U.S. Court of Appeals for the D.C. Circuit upheld FERC's approval, concluding that FERC's consideration of the potential emissions impacts was reasonable under NEPA.
Related Documents: NAM brief (November 27, 2018)
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California Communities Against Toxics v. EPA
(D.C. Circuit)
Streamlined air permitting under the Clean Air Act
The NAM filed an amicus brief to defend the EPA’s withdrawal of a prior EPA policy known as "once in, always in" that imposed unreasonable and unlawful regulatory burdens on manufacturers under the Clean Air Act. In January of 2018, the EPA issued a guidance memorandum withdrawing the prior policy for the classification of major sources of hazardous air pollutants under section 112 of the Clean Air Act. With the new guidance, sources of hazardous air pollutants previously classified as “major sources” may be reclassified as “area” sources when the facility limits its potential to emit below major source thresholds. The new policy promotes regulatory clarity and reduces burdens for manufacturers while continuing to ensure stringent and effective controls on hazardous air pollutants. Environmental groups sued to challenge the policy change. The NAM filed an amicus brief in support of the EPA. Our brief explains how the policy change will continue to preserve air quality while removing unlawful and excessive regulatory burdens on manufacturers. In a win for manufacturers, on August 20, 2019, the court dismissed the challenge, finding the guidance was not final agency action subject to judicial review.
Related Documents: NAM brief (January 14, 2019)
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California Communities Against Toxics v. EPA
(D.C. Circuit)
Hazardous waste recycling
The NAM intervened in a lawsuit by environmental groups that seeks to constrain manufacturers' ability to recycle hazardous waste. The plaintiffs challenged a 2018 rule by the U.S. Environmental Protection Agency (EPA) that removed significant burdens on manufacturers to recycle hazardous waste under the federal Resource Conservation and Recovery Act (RCRA). Those burdens had been removed in the 2018 rule as a result of successful NAM litigation in 2017 that challenged an earlier EPA regulation that unreasonably burdened manufacturers. Hazardous waste recycling is important to many segments of the manufacturing industry because it allows companies to reuse or repurpose chemicals, minerals, or other products that otherwise would require disposal (typically at significant expense). By intervening on behalf of EPA, the NAM sought to preserve the 2018 rule and to bring the voice of manufacturers to the litigation. On July 2, 2019, the D.C. Circuit, in a unanimous ruling, rejected the plaintiffs’ challenge. This ruling preserves a safe and cost-effective means for companies to recycle hazardous waste.
Related Documents: NAM Motion (July 12, 2018)
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Center For Biological Diversity v. EPA
(5th Circuit)
Protecting offshore energy development
The NAM filed an amicus brief opposing environmental groups' efforts to invalidate a critical Clean Water Act permit for offshore oil and natural gas development. The case involves EPA's reissuance of a regional general permit under the Clean Water Act that authorizes certain pollutant discharges from offshore oil and natural gas platforms in the Gulf of Mexico. EPA's environmental review in support of that permit adopted a recent environmental analysis of the Gulf of Mexico by another federal agency. The plaintiffs argue that federal law required EPA to perform a separate and redundant environmental review. If their argument prevails, EPA would be required to undertake time-consuming environmental reviews for a range of new energy infrastructure projects and any other economic activity that could impact the environment. Those delays would in turn delay new projects. In support of the defendant EPA, the NAM filed an amicus brief that highlights the importance of oil and natural gas development to the national economy and energy security and argues that EPA's adoption of the related environmental review is lawful, appropriate, and consistent with past practice. In a win for manufacturers, on August 30, 2019, the court dismissed the plaintiff's claims for lack of standing.
Related Documents: NAM brief (September 28, 2018) NAM brief (August 23, 2018)
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Cowpasture River Preservation Ass'n v. U.S. Forest Service
(4th Circuit)
Unreasonable pipeline permitting restrictions
The NAM filed an amicus brief in support of en banc review by the U.S. Court of Appeals for the Fourth Circuit to reverse a panel holding that invalidated a federal permit for a major natural gas transmission pipeline that crosses U.S. Forest Service lands. An environmental group sued the U.S. Forest Service to invalidate its permit allowing the Atlantic Coast Pipeline to cross beneath the Appalachian Trail hiking route. A panel of the Fourth Circuit held that the Mineral Leasing Act does not allow agencies to grant rights-of-way for pipelines to cross any stretch of the Appalachian Trail; rather, such approvals must come from a majority vote of the U.S. congress. This holding effectively converts the Appalachian Trail into a 2,200-mile barrier to pipeline construction from Maine to Georgia. The court’s reasoning could also be applied to any one of the dozens of pipelines that currently cross beneath the trail because such pipelines require periodic permit renewals. In support of the intervenor Atlantic Coast Pipeline’s petition for en banc review by the Fourth Circuit, the NAM filed an amicus brief that explained the legal flaws in the panel’s reasoning and highlighted the important benefits that pipelines provide for manufacturers and the national economy. On February 25, 2019, the Fourth Circuit denied en banc review.
Related Documents: NAM brief (February 19, 2019)
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Environmental Defense Fund v. EPA
(D.C. Circuit)
TSCA inventory reset intervention
The MCLA intervened in a lawsuit by environmental groups that seeks to overturn an EPA rule implementing the Toxic Substances Control Act (TSCA). The rule, “TSCA Inventory Notification (Active-Inactive) Requirements,” governs the process whereby the EPA must update the list of chemicals used in commerce in the United States. The EPA’s final rule allowed companies to keep certain information about the chemical free from public disclosure on confidentiality grounds. An environmental group sued to challenge the rule, arguing that the EPA failed to comply with various procedural requirements in promulgating the rule and that the rule unlawfully shields information from public disclosure. The confidentiality of chemical information is critically important to chemical manufacturers. To help defend the rule, the MCLA intervened in the case. On June 26, 2019, the D.C. Circuit Court of Appeals rejected all but one of the plaintiffs’ claims. It broadly upheld the confidentiality aspects of the rule of greatest concern to chemical manufacturers. Given the EPA’s relatively minor procedural misstep on only one aspect of the rule, the court allowed the rule to continue in force while the EPA addresses the procedural error.
Related Documents: NAM intervenor brief (May 31, 2018) Motion to Intervene (October 2, 2017)
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Georgia v. Wheeler
(S.D. Ga.)
Challenge to WOTUS rule
In 2015, a coalition of states led by Georgia sued the U.S. Environmental Protection Agency (EPA) to challenge an EPA regulation governing jurisdictional "Waters of the United States" (WOTUS) under the Clean Water Act. Soon after Georgia filed suit, the court stayed the litigation while a separate federal appellate court asserted jurisdiction to resolve the case. In January of 2018, the U.S. Supreme Court ruled that challenges to the WOTUS rule should be heard in federal district courts. The Georgia district court thereafter reopened the case to allow Georgia's suit to proceed.
The NAM's litigation coalition moved to intervene in the case to bring the voice of manufacturers to the case. The 2015 WOTUS rule defines which waters and land areas require a permit under the Clean Water Act for discharges of pollutants to those areas. The rule’s definitions and prohibitions are complex and vague, and often require case-by-case determinations by the agencies. Manufacturers will be required to undertake expensive and laborious efforts to determine whether landscape features on their property are jurisdictional. Penalties for unpermitted discharges (which can include simply moving dirt or mud without a permit) are tens of thousands of dollars per day, per violation.
On July 10, 2018, the Court granted the NAM's intervention. On August 31, 2018, the NAM filed its motion for summary judgment with the court, and on September 26, 2018, filed a motion for a nationwide injunction against the rule. In a major win for manufacturers, the court on August 21, 2019, invalidated the rule on procedural and substantive grounds, including that the regulation seeks to impose federal jurisdiction beyond the limits imposed by the Clean Water Act.
Related Documents: NAM brief (December 24, 2018) NAM Motion (September 26, 2018) NAM Motion (August 31, 2018) NAM Complaint (June 29, 2018) NAM Motion (June 29, 2018)
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In re: PennEast Pipeline Company LLC
(3rd Circuit)
State interference with energy development
The NAM filed an amicus brief to oppose New Jersey’s efforts to stop construction of a major new proposed natural gas pipeline to deliver natural gas from Pennsylvania to the eastern United States. The proposed PennEast Pipeline is natural gas transmission pipeline to bring abundant and low-cost natural gas from northeastern Pennsylvania to manufacturers, power generators, and other customers in New Jersey and throughout the eastern United States. The state of New Jersey resisted the pipeline's exercise of eminent domain under the federal Natural Gas Act, arguing that the 11th Amendment to the U.S. Constitution prohibits federal courts from effectuating the eminent domain over lands in which the state has a property interest (such as a conservation easement). If New Jersey's argument prevails, it would give that state and others a unilateral veto over federally approved natural gas transmission pipelines. Those vetoes would restrict future pipeline infrastructure development, leading to lower availability of natural gas and increased costs to manufacturers for natural gas, electricity, and other products derived from natural gas. The NAM's amicus brief explains the practical implications of New Jersey's argument and argues why the 11th Amendment does not support the state's interpretation. In a troubling decision for manufacturers, the Third Circuit on September 10, 2019, held that New Jersey's sovereign immunity bars eminent domain proceedings against New Jersey under the Natural Gas Act. On October 29, 2019, our coalition petitioned the court for rehearing and rehearing en banc, in which we highlighted the 3rd Circuit's significant disruption of new energy infrastructure development and why the full 3rd Circuit court should hear the case en banc. Unfortunately, the court denied en banc review.
Related Documents: NAM brief (October 29, 2019) NAM brief (May 15, 2019)
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Lighthouse Resources Inc. v. Inslee
(W.D. Wash.)
State interference with free trade
The NAM filed an amicus brief in a case involving the state of Washington’s authority to prohibit certain exports from Washington’s coastal ports. Washington state denied several environmental permits necessary to construct a new coal export terminal near Longview, Washington. The denials were improperly based on climate concerns about the use of coal for electricity generation in foreign countries. The state’s actions have dangerous implications for the power of individual states to interfere with interstate and international trade. The NAM’s amicus brief argued that this interference is unconstitutional and harms the national economy. Unfortunately, the district court rejected the plaintiffs' claims. The plaintiff appealed to the 9th Circuit, where the NAM filed another amicus brief on their behalf.
Related Documents: NAM brief (March 11, 2019) NAM brief (May 3, 2018)
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Martinez v. Colo. Oil & Gas Conservation Comm'n
(Colorado Supreme Court)
Colorado oil and gas permits
In April of 2018, the NAM filed an amicus brief that asked the Colorado Supreme Court to reverse an appellate ruling that required the Colorado Oil and Gas Conservation Commission (COGCC) to consider a rulemaking request that would have effectively banned oil and natural gas development in Colorado. A group of Colorado residents filed the rulemaking proposal for the purpose of restricting fossil fuel development, and hydraulic fracturing in particular. On January 14, 2019, the Colorado Supreme Court ruled that the COGCC properly rejected the rulemaking proposal. This ruling benefits energy producers and manufacturers in Colorado and beyond by ensuring the continued supply of abundant and cost-effective energy.
Related Documents: NAM brief (April 2, 2018) NAM brief (May 18, 2017)
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Murray Energy Corp. v. EPA
(D.C. Circuit)
Challenging 2015 ozone standard
In 2015 the NAM sued the U.S. Environmental Protection Agency to challenge its final rule lowering the ozone National Ambient Air Quality Standard (NAAQS) from 75 to 70 parts per billion. The rule could be one of the most expensive in history and burden manufacturers by limiting their air emissions and ability to grow and expand operations. The NAM seeks to invalidate the standard and secure an instruction from the court to raise the standard. The court stayed litigation in April 2017 to allow the new presidential administration to determine whether to revise the standard. On August 1, 2018, EPA announced that it would not revise the standard but instead expedite the consideration and issuance of the 2020 NAAQS standard. In August of 2019, the D.C. Circuit upheld the 2015 ozone NAAQS standard of 70 ppb against claims by environmental groups that the standard is too lax, but also rejected arguments by the NAM and other industry groups and states that the standard is too strict and fails to properly account for background sources of ozone. This ruling avoids the serious economic consequences that would have come with the court mandating a lower standard.
Related Documents: Opposition Motion to Intervene (July 17, 2017) Industry Reply Brief (September 14, 2016) Intervenor Brief (August 17, 2016) Opening Brief (April 22, 2016)
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Natural Resources Defense Council v. EPA
(D.C. Circuit)
Defending regulatory clarity for Clean Air Act permits
The NAM intervened in a legal challenge by environmental groups to a policy by the U.S. Environmental Protection Agency that clarifies manufacturers' permitting obligations under the Clean Air Act. The lawsuit seeks to invalidate an EPA interpretive memorandum that identifies factors to guide a facility’s determination of whether separate physical or operational changes to the facility constitute a single project” under the EPA’s New Source Review (NSR) permitting program. Determining the extent of a project under NSR is important for many manufacturers because combining several pollution sources at a facility can trigger NSR permitting requirements that mandate expensive air pollution control technologies. The NAM intervened as a defendant on behalf of the EPA to help defend the interpretation and preserve regulatory clarity for manufacturers. On June 25, 2019, the environmental plaintiffs moved to dismiss their case. Although their dismissal motion did not state the reasons, we infer that our intervention arguments might have caused them to realize the weakness of their case.
Related Documents: NAM Motion (February 13, 2019)
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Otsego 2000 v. FERC
(D.C. Circuit)
Greenhouse gas analysis of pipelines
The NAM filed an amicus brief to argue that the Federal Energy Regulatory Commission (FERC), when reviewing a pipeline company’s permit application for a new pipeline infrastructure project, does not have a categorical obligation under federal law to forecast the speculative greenhouse gas impacts of possible uses of the natural gas by unknown and unknowable customers of the natural gas. The case arises from FERC’s approval of upgrades to an existing natural gas pipeline in New York state. In reviewing the environmental impacts of those upgrades under the National Environmental Policy Act (NEPA), FERC declined to undertake a speculative analysis of the greenhouse gas impacts of the possible uses of the natural gas by the ultimate customers of the gas. An environmental group sued FERC to challenge that determination. In FERC’s defense, the NAM filed an amicus brief to support FERC’s approach of determining on a case-by-case basis whether a greenhouse gas analysis is appropriate for a particular energy infrastructure project. This approach is important to manufacturers because it avoids prolonged and speculative environmental reviews that opposition groups can use as a basis to challenge and delay new energy infrastructure development. On May 9, 2019, the court found the plaintiffs lacked standing and therefore dismissed the case.
Related Documents: NAM brief (February 1, 2019)
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Puget Soundkeeper Alliance v. Wheeler
(W.D. Wash.)
Challenge to delayed implementation of EPA's 2015 "Waters of the U.S." rule and waste treatment exclusion
The NAM intervened in a legal challenge by environmental groups to the EPA’s delayed implementation of the 2015 rule governing jurisdictional “Waters of the United States” (WOTUS) under the Clean Water Act, and to that rule’s jurisdictional exception for waste treatment systems. After a change in presidential administrations in early 2017, the EPA delayed the effective date of the 2015 WOTUS rule until February 2020. The purpose of that delay was to preserve the pre-rule status quo while the EPA proposes and finalizes a replacement WOTUS rule. A coalition of environmental groups sued to challenge that delay. On November 26, 2018, the court found that the delay failed to comply with applicable procedural requirements. The court invalidated the delay rule, thereby causing the 2015 WOTUS rule to come back into effect.
After this procedural win, the environmental plaintiffs then turned their attention to the merits of the 2015 WOTUS rule. In May of 2019, the plaintiffs filed a motion for summary judgment to seek to invalidate the 2015 WOTUS rule’s exception of waste treatment systems from Clean Water Act jurisdiction. Waste treatment systems are essential elements of various industrial operations. They are used in mining, power generation, pulp and paper mills, manufacturing, infrastructure, and a host of other activities. Waste treatment systems prevent pollution by treating, settling, retaining, or removing pollutants before being discharged into rivers, lakes, streams, or other waters. The NAM’s litigation coalition filed a motion opposing the plaintiffs’ summary judgment motion. In our brief we explained the environmental benefits of waste treatment systems and the Clean Water Act’s express allowance and process for creating and issuing permits for those systems. We also attacked the plaintiffs’ standing to bring the challenge.
In a great win for manufacturers, the court on November 25, 2019, dismissed the plaintiffs' case for lack of standing.
Related Documents: NAM brief (May 29, 2019) NAM Motion (June 28, 2018)
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South Carolina Coastal Conservation League v. Wheeler
(D.S. Car.)
Applicability of "Waters of the United States" rule
On February 6, 2018, the EPA issued a final rule that adds an applicability date of February 6, 2020, to the EPA’s 2015 rule governing jurisdictional "Waters of the United States" under the Clean Water Act (2015 WOTUS rule). A coalition of environmental groups sued EPA to challenge the rule, arguing that EPA lacks the statutory authority to impose an applicability date. The applicability date rule is important to manufacturers because it precludes application of the 2015 WOTUS rule while EPA develops and issues a sensible replacement WOTUS rule. The 2015 WOTUS rule asserts federal jurisdiction over millions of acres of landscape features throughout the United States, triggering permitting requirements that will slow development and increase permitting costs on manufacturers. The rule’s vague and ambiguous terms also create confusion and increase the risk of inadvertent violations. The NAM intervened in the litigation to help EPA defend the applicability date rule to allow EPA the necessary time to develop and issue a new WOTUS rule. On August 16, 2018, the court ruled in the plaintiffs' favor, finding that EPA violated the Administrative Procedure Act by failing to request and consider comments on the flaws of the 2015 WOTUS rule and by refusing to consider the substantive implications of suspending the rule.
Related Documents: NAM brief (July 6, 2018)
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West Virginia v. EPA
(D.C. Circuit)
Challenging EPA's Clean Power Plan
In 2015, the NAM challenged the EPA’s Clean Power Plan, a rule that went beyond the EPA’s legal authority to regulate carbon dioxide emissions under the Clean Air Act. Before the rule became effective, the U.S. Supreme Court stayed the rule pending the resolution of the litigation. Then, in 2017, the D.C. Circuit held the litigation itself in abeyance to allow the incoming administration to decide whether to rescind or revise the rule. The EPA proposed a replacement rule—the Affordable Clean Energy Rule—in August 2018. A final rule issued in June 2019. With the Clean Power Plan rule replaced by the Affordable Clean Energy Rule, the parties moved to dismiss the case. On September 17, 2019, the court dismissed the case as moot.
Related Documents: NAM reply brief (April 22, 2016) NAM merits brief on core legal issues (February 19, 2016)
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Atlantic Coast Pipeline, LLC v. Cowpasture River Preservation Ass'n
(U.S. Supreme Court)
Unreasonable pipeline permitting restrictions
The NAM filed an amicus brief in support of a petition for certiorari seeking U.S. Supreme Court review and reversal of a 4th Circuit holding that invalidated a federal permit for a major natural gas transmission pipeline that crosses U.S. Forest Service lands. An environmental group sued the U.S. Forest Service to invalidate its permit allowing the Atlantic Coast Pipeline to cross beneath the Appalachian Trail hiking route. A panel of the Fourth Circuit held that the Mineral Leasing Act does not allow agencies to grant rights-of-way for pipelines to cross any stretch of the Appalachian Trail; rather, such approvals must come from a majority vote of the U.S. congress. This holding effectively converts the Appalachian Trail into a 2,200-mile barrier to pipeline construction from Maine to Georgia. The court’s reasoning could also be applied to any one of the dozens of pipelines that currently cross beneath the trail because such pipelines require periodic permit renewals. In support of the pipeline’s petition for Supreme Court review, the NAM filed an amicus brief that explained the legal flaws in the panel’s reasoning and highlighted the important benefits that pipelines provide for manufacturers and the national economy. On October 4, 2019, the court granted review for the 2019-2020 term, and on December 9, 2019, the NAM filed a coalition amicus brief on the merits in support of the pipeline. On June 15, 2020, the Court agreed, reversing the Fourth Circuit and upholding the longstanding precedent allowing infrastructure crossings of the Appalachian Trail.
Related Documents: NAM brief (December 9, 2019) NAM brief (July 26, 2019)
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Atlantic Richfield Co. v. Christian
(U.S. Supreme Court)
Preemption of private restoration plans by CERCLA
In May of 2018, the NAM filed an amicus brief to urge the U.S. Supreme Court to review and reverse a Montana Supreme Court decision that undermines the predictability of EPA’s environmental remediation orders. The case arises under the federal Comprehensive Environmental Response, Compensation, and Liability Act (known as “CERCLA” or “Superfund”). Under CERCLA, EPA has the authority to order comprehensive clean up orders for sites containing hazardous wastes. Those orders preempt state and individual efforts to impose remediation requirements. The Montana Supreme Court nonetheless allowed nearby landowners to seek compensation for a remediation plan that conflicts with the EPA’s cleanup order. If not overturned, that decision will undermine the certainty and predictability for manufacturers that own Superfund sites. In support of a petition for review by the U.S. Supreme Court, the NAM filed an amicus brief that explains how the Montana Supreme Court’s decision frustrates environmental remediation. On June 10, 2019, the Court granted review of the case for the Court’s 2019-2020 term. On August 28, 2019, the NAM filed an amicus brief on the merits that supports Atlantic Richfield's arguments on the merits. And on April 20, 2020, the Court held that the landowners needed EPA approval to take remedial action to ensure “a single EPA-led cleanup effort rather than tens of thousands of competing individual ones.” Although the opinion leaves open future state lawsuits related to Superfund sites, the need to obtain prior EPA approval presents a significant obstacle to such challenges—and provides meaningful certainty for manufacturers.
Related Documents: NAM brief (August 28, 2019) NAM brief (May 31, 2018)
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County of Maui, Hawaii v. Hawaii Wildlife Fund
(U.S. Supreme Court)
Scope of Clean Water Act jurisdiction
The U.S. Supreme Court should rule that the federal Clean Water Act does not regulate groundwater because the Act by its terms applies only to surface waters and would conflict with other environmental laws specifically tailored to protect groundwater. The U.S. Court of Appeals for the Ninth Circuit held in 2018 that groundwater is jurisdictional under the Clean Water Act, reasoning that groundwater can serve as a conduit to jurisdictional surface waters. Under this "conduit theory" of jurisdiction, certain industrial activities on dry land could give rise to lawsuits alleging such activities polluted nearby surface waters through groundwater connections. On appeal to the U.S. Supreme Court, the NAM’s amicus brief argued that this broad interpretation goes far beyond the scope and intent of the Clean Water Act, interferes with other environmental statutes focused on groundwater protection, would be impossible to implement, and would impose incalculable liability risk on manufacturers and other regulated industries. Unfortunately, in a 6-3 decision, the Court held on April 23, 2020 that the CWA does regulate groundwater "if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters."
Related Documents: NAM Brief (May 16, 2019)
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Meritor, Inc. v. EPA
(D.C. Circuit)
Superfund vapor intrusion mitigation
The NAM filed an amicus brief in the U.S. Court of Appeals for the DC Circuit challenging the Environmental Protection Agency’s (EPA) decision to place an industrial site on the National Priorities List (NPL) under the Superfund program. The NPL is a list of contaminated sites that EPA has determined have the highest priority for investigation and possible cleanup. The site at issue in this case was placed on the list based solely on subsurface intrusion, also known as “vapor intrusion,” without considering the site’s sub-slab depressurization system used to mitigate vapor intrusion. If upheld, the EPA’s decision to exclude the mitigation system would undermine the efforts of manufacturers who have proactively installed and operated these systems. The NAM’s brief argued that the EPA arbitrarily and unlawfully failed to take into account the active mitigation system and used a residential rather than industrial exposure benchmark. Unfortunately, on July 28, 2020, the court declined to review EPA's decision.
Related Documents: NAM brief (April 8, 2019)
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New York v. EPA
(D.C. Circuit)
Defending current Clean Air Act permits for hundreds of manufacturers
The NAM intervened on behalf of the EPA to defend the EPA’s decision not to impose new Clean Air Act emissions limitations on hundreds of manufacturing facilities throughout the Midwest. In 2018, New York petitioned the EPA to force nine nearby states to impose stringent new air emissions restrictions on manufacturers and other facilities within their borders. The NAM filed coalition comments with the EPA that explained why the EPA should reject the petition, which it did in October of 2019. New York then sued the EPA to overturn the rejection. The NAM -- together with other impacted trade associations and individual companies -- intervened in the case to defend the EPA’s decision and to represent the interests of manufacturers in the litigation, filing an initial proof brief in the D.C. Circuit Court of Appeals on March 5, 2020. Unfortunately, on July 14, 2020, the court vacated EPA's decision and remanded the petition back to EPA for further proceedings.
Related Documents: NAM brief (March 5, 2020)
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Oakland Bulk & Oversized Terminal, LLC v. City of Oakland
(9th Circuit)
Opposing local interference with energy exports
The NAM filed an amicus brief to defend energy producers against efforts by municipalities to ban energy exports from costal ports. In 2016, the city of Oakland, California, passed an ordinance that restricted the construction of a proposed new coal export terminal along the San Francisco Bay. The public explanation for the ordinance was the protection of local health and safety, but the actual rationale for the ban is the city’s ideological objection to the exportation of American coal to global markets. If allowed to stand, this action has dangerous implications for the power of individual cities to interfere with interstate and international trade. The NAM's amicus brief highlights how such restrictions can harm manufacturers and argues that this interference violates the U.S. Constitution. On May 26, 2020, the court held that city's ordinance was invalid, but declined to reach the constitutional arguments.
Related Documents: NAM brief (February 15, 2019)
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Tex. Ass'n of Mfrs. v. CPSC
(5th Circuit)
Challenge to CPSC phthalates rule
On 12/14/17, the NAM and American Chemistry Council, along with local Texas groups, filed a challenge in the Fifth Circuit Court of Appeals to the Consumer Product Safety Commission’s (CPSC) final rule on phthalates, which restricts the phthalate DINP. The CPSC’s decision to restrict DINP was misguided, scientifically inaccurate and the result of a deeply flawed process that fabricated rationales for a predetermined outcome. The Commission should have relied on scientifically reasonable statistics when assessing the exposure data, which demonstrate the cumulative risk of exposure to these phthalates is actually well below any level of concern – even for sensitive populations. DINP, as currently used in commercial and consumer products, does not pose a risk to human health at typical exposure levels. The CPSC’s unfounded decision here could be a slippery slope to restrict other chemicals that special interests find objectionable.
On 2/5/18, the NAM filed a response to the CPSC's motion to dismiss. The NAM's filed its opening brief on 8/20/18 and its reply brief on 12/3/18. On March 1, 2021, a unanimous three-judge panel held that CPSC violated the Administrative Procedure Act by (1) not allowing sufficient opportunity for notice and comment when it shifted its justification for the rule from relying upon an HI=1 at the 95th percentile to relying on spot samples of actual women; and (2) CPSC failed to adequately consider costs and benefits when it continued the interim prohibition on DINP. The Court remanded the rule without vacatur to CPSC to address these shortcomings.
Related Documents: Opinion (March 2, 2021) NAM reply brief (December 3, 2018) NAM opening brief (August 20, 2018) NAM response (February 5, 2018) NAM petition for review (December 14, 2017)
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Troy Corporation v. EPA
(D.C. Circuit)
Scope of CERCLA listings
The NAM filed an amicus brief on behalf of Troy Corporation to argue that the EPA’s listing of sites under the Comprehensive Environmental Response, Compensation, and Liability Act should accurately reflect the site’s potential environmental risks and not rely on artificial and inaccurate rules of thumb. The EPA added a creek that runs through and adjacent to Troy Corporation’s manufacturing facility in Newark, NJ to CERCLA’s National Priority List. The listing was based in significant part on the EPA’s assessment that the creek had the potential to contaminate a fishing pier located 13 miles away. That assessment was based solely on regulatory assumptions that Troy rebutted in regulatory comments. In response to those comments, EPA responded that it is entitled to rely on the bright line presumptions in the regulation and need not demonstrate any actual risk of contamination. If such a position is upheld, many manufacturing sites could be listed as “priority” CERCLA sites when they have no actual potential to cause such environmental harm. The NAM’s amicus brief argues that this approach to listing sites violates CERCLA and could adversely impact many manufacturers. Unfortunately, on November 13, 2020, the court denied Troy's petition for review.
Related Documents: NAM brief (October 25, 2019)
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New Mexico v. Sterigenics
(N.M. State Trial Ct.)
Public Nuisance Suit Seeks to Undermine Ethylene Oxide Regulations
The NAM filed an amicus brief urging a New Mexico trial court to exercise its discretion, under the doctrine of primary jurisdiction, to dismiss a public nuisance lawsuit brought under the name of the state’s Attorney General that would create a parallel and deeply problematic regulatory regime for medical product sterilization facilities that use ethylene oxide. The facility at issue is already subject to comprehensive regulations and permit conditions developed by the U.S. EPA and the New Mexico Environment Department, but the AG’s suit, led by a prominent national plaintiffs’ law firm, would seek to rewrite those rules to essentially shut down the facility unless it pays up to satisfy the state and its outside law firm. The NAM’s brief argues that allowing ethylene oxide use, management, and emission standards to be fashioned and hammered out in a tort case by a local jury applying malleable public nuisance standards is not in the best interests of health care, sound science, or sensible regulation. Unfortunately, on June 29, 2021, the court allowed the case to proceed.
Related Documents: NAM brief (June 4, 2021)
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Sierra Club v. EPA
(D.C. Circuit)
Defending Clean Air Act trading program for ozone NAAQS
The NAM filed an amicus brief to support EPA’s defense of a trading program for ozone NAAQS pollutants. The Clean Air Act (CAA) requires EPA to establish national ambient air quality standards for six pollutants, including ozone. A 2018 EPA rule allowed companies to trade ozone pollutants with other emitters to meet federal emissions requirements. An environmental group sued to challenge the rule, arguing that the trading program is not allowed by the CAA. NAM members that seek to expand or build a new facility in many areas of the country can benefit greatly from this trading program. Pollutant trading programs like this provide a market-based solution that companies can use to grow their operations while reducing harmful air emissions in the aggregate. The NAM’s amicus brief explains the important and effective role of emissions trading and why such a program complies with the CAA. Unfortunately, on January 29, 2021, the court held that as a matter of statutory construction, the CAA prohibits the program.
Related Documents: D.C. Cir. Opinion (January 29, 2021) NAM brief (November 8, 2019)
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United States v. Ameren
(8th Circuit)
Clean Air Act permits for generator repairs
The NAM filed an amicus brief to seek to overturn a district court ruling that erroneously penalized an electric generating facility under the Clean Air Act and improperly imposed additional penalties on a separate and unrelated generation facility. Electric utility company Ameren undertook needed repairs to a coal-fired electric generation unit. The EPA then sued Ameren, claiming that the repairs failed to comply with the Act’s New Source Review provisions, which require permits for “major modifications” to generating units. A federal district court judge agreed with the EPA. For a remedy, the judge ordered Ameren to obtain the permit and ordered a decrease in emissions at a separate Ameren electric generating unit. On appeal to the 8th Circuit, the NAM filed an amicus brief that highlights the problematic consequences of this decision on generators and other facilities that require Clean Air Act permits. Unfortunately, on August 20, 2021, the court affirmed the lower court's liability determination as to one facility and reversed as to the unrelated facility.
Related Documents: NAM Brief (January 30, 2020)
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United States v. Denka Performance Elastomer LLC
(E.D. La.)
Preserving the chemical risk assessment process
On August 14, 2023, the NAM requested permission to file an amicus brief in an enforcement action the EPA commenced in the Eastern District of Louisiana under the Clean Air Act to compel Denka Performance Elastomer to limit its chloroprene emissions or cease production of the chemical. Chloroprene is a chemical used to manufacture synthetic rubber. The EPA brought this action, based on its Integrated Risk Information System (IRIS) value for chloroprene and view that the IRIS value demonstrates that the emissions from Denka’s plant exceeding that value present an imminent risk of harm to the public.
We argue in our brief that IRIS values are neither statutes nor regulations and therefore the values are an improper basis for an enforcement action. IRIS simply assists the EPA in developing its emissions standards and other related rules under the Clean Air Act to assess the possible health effects of chemical exposure; IRIS does not definitely measure adverse effects of exposure. If the use of IRIS values for an enforcement action is condoned, companies could be subject to liability for their chemical emissions levels even if compliant with statutes, regulations and permit requirements.
Unfortunately, on August 16, 2023, the district court denied our motion for leave to file an amicus brief.
Related Documents: NAM brief (August 14, 2023)
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Air-Conditioning, Heating & Refrigeration Institute, et al. v. U.S. EPA
(D.C. Circuit)
Emergency Compliance Relief for PIP (3:1) rule
The NAM joined with partner organizations to bring a prophylactic challenge to a final rule regulating PIP (3:1)—a persistent, bio-accumulative chemical that is ubiquitous in manufacturing operations and supply chains—under the Toxic Substances Control Act. The rule called for the prohibition of PIP (3:1) on an aggressive timeline that would have severely impacted supply chains for a wide variety of electronics, from cell phones, to robotics used to manufacture semiconductors, to equipment used to move COVID-19 vaccines and keep them at the appropriate temperature. After the NAM coalition files it petition in the D.C. Circuit raising these compliance issues, the EPA agreed to seek additional public input on the rule for a period of 60 days, with a special focus on alternative exposure reduction measures for certain products. The agency also issued a issued a rare “No Action Assurance” to notify regulated industry that it would not enforce the rule for 180 days pending next steps in the rulemaking process to provide longer-term relief. The case is currently in abeyance pending the new rulemaking.
Related Documents: NAM comments (May 17, 2021) NAM Petition for Review (March 4, 2021)
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American Chemistry Council v. EPA
(D.C. Circuit)
Risk Management Program litigation
In 2017, the MCLA sued the EPA to challenge the agency’s rule governing risk
management plans for chemical facilities and oil refineries. The rule imposed costly and burdensome requirements on facilities that handle hazardous substances without improving worker or community safety. The court stayed the litigation after the EPA delayed enforcement of the rule and proposed a substantive replacement. The EPA then issued a final rule in 2019. The litigation remains stayed pending further orders from the court.
Related Documents: Petition for review (March 13, 2017) Petition to EPA for reconsideration (February 28, 2017)
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Baker v. Saint-Gobain Performance Plastics Corp.
(2nd Circuit)
Medical monitoring and economic loss claims in class action lawsuit
A group of individual plaintiffs brought a class action lawsuit against defendant Saint-Gobain Performance Plastics Corp., alleging that Saint-Gobain released perfluorooctanoic acid (PFOA) into groundwater that seeped into the plaintiffs' nearby land. The plaintiffs argued that they are entitled to financial damages to pay for ongoing medical health monitoring because of their alleged exposure to PFOA, and to compensate them for lower property values allegedly caused by the contamination. Saint-Gobain moved to dismiss the complaint because New York law does not recognize claims for medical monitoring absent any evidence of physical harm and does not recognize diminution of property value due to alleged groundwater contamination. The district court denied the motion to dismiss but certified immediate appellate review by the United States Court of Appeals for the Second Circuit. The NAM filed an amicus brief on behalf of Saint-Gobain to ensure that the law limiting medical monitoring and diminution-of-value claims remains appropriately balanced and favorable to manufacturers. Without appropriate limitations on these types of claims, manufacturers would be subject to massive and unwarranted increases in liability exposure.
Related Documents: NAM brief (March 1, 2018)
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City and County of San Francisco v. EPA
(U.S. Supreme Court)
Challenging General NPDES Permit Prohibitions to Protect CWA Permit Shield
On February 12, 2024, the NAM filed an amicus brief asking the U.S. Supreme Court to address whether the Clean Water Act allows the EPA to include generic (and vague) prohibitions in National Pollutant Discharge Elimination System permits that subject permitholders to enforcement for exceedances of water quality standards. A NPDES permit is required to discharge a pollutant through a “point source” into “a water of the United States.” In this case, San Franscisco v. EPA, the 9th Circuit affirmed EPA’s use of a generic prohibition in San Francisco’s NPDES permit for a water treatment facility—stating that water discharge “shall not cause or contribute to the violation of any applicable water quality standard.” This ruling directly conflicts with 2nd Circuit precedent deeming generic prohibitions impermissible and could impact manufacturers’ ability to assert the permit shield defense—a defense that provides protection from liability if a manufacturer is operating under a valid permit and its facility discharges waste in accordance with the permit. Permit operators need specific guidance as to allowable discharges in accordance with the permit.
Our brief urges the Supreme Court to review this case to resolve the circuit split and highlights the key role of the permit shield defense in guarding against citizen suits and unforeseen enforcement actions.
Related Documents: NAM brief (February 12, 2024)
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Commonwealth of Kentucky v. EPA
(D.C. Circuit)
Challenging PM 2.5 NAAQS
On March 6, 2024, the NAM joined a coalition of other major business trade associations to file suit in the D.C. Circuit to challenge the Environmental Protection Agency’s misguided final rule lowering the National Ambient Air Quality Standards for fine particulate matter (PM2.5) to 9 micrograms per cubic meter. The Clear Air Act requires manufacturers to obtain preconstruction permits for new and modified emissions sources obtainable only after showing that emissions from the proposed new source will not cause or contribute to a PM 2.5 NAAQS violation. The Clean Air Act also requires the EPA to review the NAAQS every five years to determine whether the PM2.5 standard should be retained or revised. In December 2020, following a complete review of the PM NAAQS, the EPA decided to retain the PM2.5 standard of 12 micrograms per cubic meter. But in June 2021, the agency announced it would reconsider that decision. The EPA ultimately issued the revised standard in an out-of-cycle reconsideration becoming the first administration to redo a promulgated NAAQS. The standard stands to impede economic development in much of the country due to many manufacturers’ inability to establish that a proposed new construction or modified emission source will not cause or contribute to a PM 2.5 NAAQS violation. The NAM therefore sued to protect manufacturers’ ability to obtain permits, expand facilities and pursue long-term investment plans, and defend our country’s competitive advantage.
Related Documents: Petition for Review (March 4, 2024)
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County of San Mateo v. Chevron Corp.
(9th Circuit)
Public nuisance cases seeking to drive national energy policy on climate change.
The NAM filed an amicus brief in support of rehearing en banc by the 9th Circuit in one of over two dozen public nuisance cases seeking to drive national energy policy on climate change. This case is part of a coordinated, national litigation campaign filed in carefully chosen states and federal circuits by agenda-driven lawyers and activists. The issue presented is whether putative state-law tort claims alleging harm from global climate change are removable because they arise under federal law. In April 2022, the 9th Circuit rejected federal-question jurisdiction and all other bases for subject matter jurisdiction and remand the case to state court. In support of rehearing, the NAM filed an amicus brief arguing that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws.
Unfortunately, on June 27, 2022, the 9th Circuit denied the petition for rehearing.
Related Documents: NAM brief (May 27, 2022)
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Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corp.
(5th Circuit)
Citizen suit interference with environmental regulation
In 2015, the NAM filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit supporting a federal judge’s decision not to impose excessive penalties on ExxonMobil for various permit violations. On remand to the district court, the groups reduced their requested penalties from $642 million to about $40 million, and the district judge awarded them about $20 million, prompting Exxon’s appeal back to the Fifth Circuit. In 2018 and 2021, the NAM filed additional amicus briefs arguing that the Constitution and Clean Air Act limit citizen suits under the Clean Air Act and asking the Fifth Circuit to enforce the constitutional line that limits federal courts to deciding discrete cases and controversies and prevents them from acting as regulators or policymakers.
Unfortunately, on August 30, 2022, the Fifth Circuit affirmed the district court's latest decision imposing a $14.25M penalty on defendant-appellants (for 3,651 purported violations). On, October 20, 2022, the NAM filed an amicus brief in support of Exxon’s petition for the 5th Circuit to rehear en banc its appeal challenging the district court’s penalty award.
Happily, on February 17, 2023, the 5th Circuit granted the petition for rehearing en banc and vacated the panel decision. On March 27, 2023, the NAM filed an amicus brief asking the full 5th Circuit to reverse the panel’s decision to enforce the limits of federal courts’ jurisdiction. This case is important to manufacturers because courts should exercise discretion in determining civil penalties to prevent creating perverse incentives for plaintiffs.
Related Documents: NAM En Banc brief (March 27, 2023) Per Curiam Order (February 17, 2023) NAM brief in support of Exxon’s petition for rehearing en banc (October 20, 2022) Decision on Exxon’s second appeal (August 30, 2022) NAM brief in support of Exxon’s second appeal (July 14, 2021) NAM brief in support of Exxon’s first appeal (January 19, 2018) NAM brief in support of the district court’s initial decision (September 17, 2015)
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Environmental Comm. of the Fla. Elec. Power Coord. Grp. v. EPA
(D.C. Circuit)
Challenging the EPA's effort to amend state plans regarding emissions during startups, shutdowns and malfunctions
The NAM sued the EPA in 2015 to challenge the EPA’s declaration that 36 states’ state implementation plans (SIPs) under the Clean Air Act are invalid because they allow air emissions in excess of permit limits during startup, shutdown or equipment malfunctions. That flexibility is important to manufacturers that might temporarily exceed permit limits for reasons beyond their control. The litigation has been held in abeyance since April 2017 while the EPA considers whether to revise or rescind the rule.
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Environmental Defense Fund v. EPA
(D.C. Circuit)
Air permitting streamlining
On June 25, 2018, the NAM moved to intervene in a case involving permitting requirements for manufacturers under the Clean Air Act. Environmental groups sued to challenge a guidance document from the U.S. Environmental Protection Agency (EPA) that streamlines Clean Air Act permits under the New Source Review program for facilities that expand or modify their operations. If the plaintiffs' claims are successful, facility modifications could be significantly delayed and rendered more expensive. The NAM's motion asks the court to allow the NAM to become a co-defendant in the case with EPA to bring the voice of manufacturers in defense of the EPA's sensible policy.
On July 13, 2018, the court held the case in abeyance pending the completion of an EPA rulemaking to implement the terms of the guidance document. The litigation is expected to reactivate when the final rule issues.
Related Documents: NAM Motion to Intervene (June 25, 2018) NAM brief (May 31, 2018)
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Lighthouse Resources, Inc. v. Inslee
(9th Circuit)
Local interference with free trade
The NAM filed an amicus brief in a case involving the state of Washington’s authority to prohibit certain exports from Washington’s coastal ports. Washington state denied several environmental permits necessary to construct a new coal export terminal near Longview, Washington. The denials were improperly based on concerns about the use of coal for electricity generation in foreign countries. The state’s actions have dangerous implications for the power of individual states to interfere with interstate and international trade. A federal district court rejected the plaintiffs’ claims. On appeal to the 9th Circuit, the NAM’s amicus brief explained how state and local interference with foreign trade undermines a uniform foreign policy and is harmful to the national economy. Moreover, we argued that Washington’s actions violate the foreign commerce clause and that allowing the state’s actions to stand would give a green light to state and local interference with foreign trade policy.
Related Documents: NAM brief (November 6, 2019)
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Natural Resources Defense Council v. Wheeler
(S.D.N.Y.)
Applicability of "Waters of the United States" rule
On February 6, 2018, the EPA issued a final rule that adds an applicability date of February 6, 2020, to the EPA’s 2015 rule governing jurisdictional “Waters of the United States” under the Clean Water Act (2015 WOTUS rule). A coalition of environmental groups sued EPA to challenge the rule, arguing that EPA lacks the statutory authority to impose an applicability date. The applicability date rule is important to manufacturers because it precludes application of the 2015 WOTUS rule while EPA develops and issues a sensible replacement WOTUS rule. The 2015 WOTUS rule asserts federal jurisdiction over millions of acres of landscape features throughout the United States, triggering permitting requirements that will slow development and increase permitting costs on manufacturers. The rule’s vague and ambiguous terms also create confusion and increase the risk of inadvertent violations. The NAM intervened in the litigation to help EPA defend the applicability date rule to allow EPA the necessary time to develop and issue a new WOTUS rule.
Related Documents: NAM brief (June 29, 2018)
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North Dakota v. EPA
(D.N.D.)
Challenge to "Waters of the United States" rule
Upon promulgation of the EPA's 2015 rule defining jurisdictional "Waters of the United States" (WOTUS) under the Clean Water Act, a coalition of states led by North Dakota sued the EPA in federal district court in North Dakota to challenge the rule. The states then moved for preliminary injunction against the rule, which the court granted within the territorial boundaries of the plaintiff states (North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, New Mexico, Nevada, South Dakota, and Wyoming). Soon thereafter, however, the U.S. Court of Appeals for the Sixth Circuit claimed authority to consider all challenges to the WOTUS rule—to the exclusion of the North Dakota district court and several other district courts in which lawsuits had been filed, including an NAM coalition lawsuit in the U.S. District Court for the Southern District of Texas. In January 2018, however, the U.S. Supreme Court ruled that the Sixth Circuit lacked jurisdiction to consider the various WOTUS challenges. This reactivated the North Dakota case, allowing the court to proceed to the states’ merits challenges to the 2015 rule. On June 8, 2018, the NAM filed an amicus brief on behalf of the states that explains how the rule was promulgated without required procedure and how the rule violates the Clean Water Act and the U.S. Constitution.
Related Documents: NAM brief (June 8, 2018)
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North Dakota v. EPA
(D.C. Circuit)
Challenging the EPA's denial of reconsideration of Clean Power Plan
On 2/16/17, the NAM and other associations moved to intervene in a case brought by North Dakota challenging the EPA's latest action on its Clean Power Plan (CPP). The agency rejected a petition to reconsider the rule, and that decision is now being challenged in court. The case is likely to be affected by the court's soon-to-be-issued ruling in our main challenge to the CPP rule, since the procedural and substantive defects in the petition for reconsideration overlap significantly with the issues raised in the case already before the court. A motion to hold the case in abeyance pending EPA reconsideration was granted, and the case remains in abeyance.
Related Documents: Motion to Intervene (February 16, 2017)
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North Dakota v. EPA
(D.C. Circuit)
EPA’s New Source Performance Standards (NSPS) for greenhouse gases from electric utilities
The NAM sought review in the U.S. Court of Appeals for the D.C. Circuit of the Environmental Protection Agency’s (EPA) 2015 Clean Power Plan rule governing New Source Performance Standards (NSPS) for greenhouse gases from electric utilities. The rule is an attempt to address emissions from new, modified and reconstructed electric generating units. This case is important for manufacturers because EPA should not rely on policy preferences rather than the rule of law.
The NAM sued the EPA with a broad industry coalition to challenge the NSPS rule. We seek to invalidate the rule to pave the way for a sensible alternative. Our briefs argue that the rule is unlawful because EPA’s conclusions are arbitrary and capricious, not supported by substantial evidence, and fail to make the requisite endangerment findings. In 2017, the D.C. Circuit held the rule in abeyance while the current administration considers whether to revise or rescind the rule.
Related Documents: Brief on the merits (October 13, 2016) Preliminary statement of issues (January 25, 2016)
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Oklahoma v. EPA
(10th Circuit)
Challenge to 2015 "Waters of the U.S. Rule"
Oklahoma and a coalition of business groups sued to challenge the EPA's 2015 rule governing jurisdictional "Waters of the United States" under the Clean Water Act. The rule adversely impacts manufacturers by asserting federal jurisdiction and permitting requirements over millions of acres of dry land throughout the country and by imposing unclear rules on land development. Oklahoma sought a preliminary injunction to stop the rule. A district court denied that injunction, and Oklahoma appealed. In support of their appeal, the NAM filed a coalition amicus brief that explains the impact of the rule on manufacturers and other sectors of the economy and supports an injunction in Oklahoma.
Related Documents: NAM brief (August 16, 2019)
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Portland Pipe Line Corporation v. City of South Portland
(1st Circuit)
Local interference with energy exports
The NAM filed an amicus brief in the U.S. Court of Appeals for the First Circuit to overturn the city of South Portland, Maine’s ban on crude oil exports from the city’s harbor. The city council claimed it enacted the ban for health and safety reasons, but various public statements revealed a political opposition to the planned transportation of Canadian crude oil by pipeline to the harbor for export. The pipeline owner sued the city, arguing the ban violates the U.S. constitution’s commerce clause. A federal district court sided with the city. If such local energy export bans are allowed to stand, energy production and transportation would be restricted, shutting some products out of some markets, and increasing energy prices for many manufacturers. On appeal to the First Circuit, the NAM’s amicus brief explains the importance of the free trade of energy for manufacturers and argues that the city’s interference with free trade violates the U.S. constitution. On January 10, 2020, the court "sidestepped" the federal constitutional questions and certified three questions to Maine’s high court concerning potential preemption of the ordinance by state law.
Related Documents: NAM brief (February 19, 2019)
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Sierra Club v. EPA
(D.C. Circuit)
Challenge to affirmative defense for equipment malfunctions
In June, 2014, the Sierra Club challenged 9 EPA Clean Air Act rules in court, alleging that provisions in each rule are no longer valid as a result of a decision in April by the U.S. Court of Appeals for the D.C. Circuit. The provisions at issue allows companies an affirmative defense to civil penalties for exceeding emissions limits that are caused by malfunctions. A company must prove that the malfunction was sudden, infrequent, not reasonably preventable and not caused by poor maintenance or careless operation, and that it took steps to correct the malfunction and minimize resulting emissions.
In April, the court decided in Natural Resources Defense Council v. EPA to vacate portions of a Portland cement industry rule pertaining to the affirmative defense, finding that the EPA lacked the authority to create a defense applicable in federal court. This Sierra Club suit attempts to remove the defense from 9 other rules in which it arises, involving various industries and kinds of equipment. Challenges to regulations must be brought within 60 days of their promulgation unless the petition "is based solely on grounds arising after such sixtieth day . . . ." The suit claims that the NRDC case decision constitutes grounds arising after the rules were promulgated.
In July, the NAM and 13 other business associations filed a motion to intervene in the suit. Manufacturers will be negatively impacted if the suit is successful, since it could make them liable for permit violations arising from unavoidable equipment malfunctions. That liability can arise both from EPA citations and from citizen suits around the country.
The rules at issue govern chemical manufacturing, pulp and paper mills, steel pickling, marine tank vessel loading operations, industrial steam-generating units, nitric acid plants and others.
On July 25, the court ordered the case held in abeyance while the EPA decided on a pending administrative petition from the Sierra Club to revise the rules. The EPA granted the petition, and on December 17, 2014, the court held this case in abeyance until the EPA completes the rules revision process. As of July 30, 2019, the EPA has not yet completed its administrative process.
Related Documents: NAM Motion to Intervene (July 17, 2014)
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South Carolina Coastal Conservation League v. Wheeler
(D.S. Car.)
Defending EPA's rescission of the 2015 "Waters of the United States" rule
The MCLA intervened in an environmental group’s legal challenge to the EPA’s rescission of the prior administration’s 2015 “Waters of the United States” rule. The EPA rescinded the 2015 rule because the rule’s lack of clarity resulted in regulatory uncertainty and confusion. Additionally, because some federal courts invalidated the 2015 rule in some parts of the country and not others, manufacturers faced a regulatory patchwork that made compliance across different states very difficult. The EPA’s rescission of the 2015 rule restored regulatory consistency and clarity. A coalition of environmental groups sued to challenge the rescission, arguing that the EPA exceeded its authority in doing so. The NAM and other leading industry trade associations intervened in the case to help defend the rule and to represent the interests of our members in the litigation.
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State of New York v. Wheeler
(S.D.N.Y.)
Applicability of "Waters of the United States" rule
On February 6, 2018, the EPA issued a final rule that adds an applicability date of February 6, 2020, to the EPA’s 2015 rule governing jurisdictional “Waters of the United States” under the Clean Water Act (2015 WOTUS rule). A group of states led by New York sued EPA to challenge the rule, arguing that EPA lacks the statutory authority to impose an applicability date. The applicability date rule is important to manufacturers because it precludes application of the 2015 WOTUS rule while EPA develops and issues a sensible replacement WOTUS rule. The 2015 WOTUS rule asserts federal jurisdiction over millions of acres of landscape features throughout the United States, triggering permitting requirements that will slow development and increase permitting costs on manufacturers. The rule’s vague and ambiguous terms also create confusion and increase the risk of inadvertent violations. The NAM intervened in the litigation to help EPA defend the applicability date rule to allow EPA the necessary time to develop and issue a new WOTUS rule.
Related Documents: NAM brief (June 28, 2018)
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NLRB v. CNN America, Inc.
(D.C. Circuit)
Joint employer status
The NAM filed an amicus brief opposing an expansion of employer liability for companies that share control over certain employees. In this case, the National Labor Relations Board (NLRB) departed from precedent and imposed new “indirect” control factors into its analysis of CNN’s status as a joint employer, which could challenge traditional business relationships and expose manufacturers to additional liability. The NAM’s brief argued that the new control factors would create a standard that would impose significant burdens and uncertainties in business relationships. In a win for manufacturers, the court noted that the NLRB had not explained how CNN satisfied the traditional “direct and immediate” test for determining joint-employer status and remanded the case.
Related Documents: NAM amicus brief (February 2, 2016)
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Auer v. Robbins
(U.S. Supreme Court)
Pay docking
In this case, a group of St. Louis police sergeants sued their police commissioenrs for overtime pay under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. Sec. 207, which requires employers to pay overtime to employees who work more than forty hours per week. The police commissioners argued that the sergeants were "bona fide executive, administrative, or professional" employees exempted from FLSA overtime pay requirements by 29 U.S.C. Sec. 213(a)(1). Under the Secretary of Labor's regulations implementing this exemption, employees who were paid a specified minimum amount ($250.00 per week) on a "salary basis" fall within this exemption as long as their compensation is not "subject to" being reduced "because of variations in the quality or quantity of the work performed." The police sergeants claimed that they did not meet these requirements because, under the terms of a Police Department Manual that applied to all employees, their compensation theoretically could be reduced for a variety of disciplinary infractions, some of which related to the "quality or quantity" of their work. Both the District Court and the Eighth Circuit agreed with the police commissioners, holding that the Secretary's salary-basis test was satisfied.The Supreme Court affirmed on 2/19/97. Justice Scalia, writing for a unanimous court, held as follows: First, the Secretary's "salary-basis" test, with its exception for disciplinary deductions, reflects a permissible reading of the FLSA as it applies to public employees. Neither the absence of other, non-salary reduction means of discipline, nor the peculiar needs of law enforcement organizations, rendered the Secretary's interpretation obviously unreasonable as applied to public sector employees. In light of the Secretary's broad authority to "defin[e] and delimi[t]" the exemption's scope, the Secretary's salary-basis test and exemption for disciplinary deductions are clearly permissible. Second, the Secretary's interpretation that the salary-basis test is met whenever an employee's compensation cannot "as a practical matter" be adjusted in ways that are inconsistent with the test is reasonable. Since the Secretary's interpretation of the salary-basis test fits well within the key language of the exemption -- that the employee's compensation not be "subject to" disciplinary reduction -- the Secretary's interpretation is not "plainly erroneous," and is thus entitled to deference. Third, relying on the plain language of the Secretary's implementing regulations, the Court held that employers may preserve the exempt status of employees whose pay has been improperly deducted as long as the employer reimburses those employees, and so long as the deductions were either inadvertent or made for reasons other than lack of work. Manufacturers that consider certain executive, administrative or professional employees exempt from the FLSA should make sure that those employees' salaries are not subject to disciplinary reduction relating to the quality or quantity of their work.
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California v. Dillingham Construction, N.A. Inc.
(U.S. Supreme Court)
State apprenticeship law
The Employee Retirement Income Security Act of 1974 (ERISA) preempts any state law that "relate[s] to" a benefits plan covered by the Act. 29 U.S.C. Sec. 1002(1). In a host of cases beginning shortly after the enactment of ERISA, the Supreme Court construed this pre-emption provision expansively. Two years ago, however, in New York State Conference of Blue Cross and Blue Shield Plans v. Travelers Ins., 115 S. Ct. 1671 (1995), the Court appeared to rein in the preemption clause, suggesting that in areas of traditional state regulation the pre-emption clause applies only where its application would further the purposes of ERISA. In Dillingham, a unanimous court confirmed this change in direction.At issue in Dillingham was a California prevailing wage law. Under that law, state public contractors are required to pay their workers prevailing local wages unless those workers are enrolled in a state-approved apprenticeship program. Arguing that such apprenticeship programs are ERISA-covered benefits plans, a contractor asserted that the prevailing wage law "relate[s] to" ERISA-covered plans and is therefore pre-empted by the Act. The Ninth Circuit agreed, and in Dillingham the Supreme Court reversed. The Court began by noting that a law relates to a covered benefit plan under ERISA's pre-emption clause if it has a "connection with or a reference to such a plan." The Court then found that California's prevailing wage law does not make reference to an ERISA plan under the clause because the effect of the law is not limited to ERISA-covered benefit plans. Specifically, the prevailing wage law applies to apprenticeship plans funded out of an employer's general assets and therefore not subject to ERISA. The Court also found that the prevailing wage law lacks a sufficient connection with ERISA-covered plans to trigger pre-emption because the law simply provides employers with an economic incentive to obtain state approval for their apprenticeship plans. Relying on Travelers, the Court held that a law which only "alters the incentives, but does not dictate the choices, facing ERISA plans" is not sufficiently connected to an ERISA plan to trigger pre-emption. Consequently, as Justice Scalia observed in his concurrence, it appears that at least in areas of traditional state regulation pre-emption under ERISA will be no broader than in other areas of the law. The NAM filed an amicus brief opposing the ultimate result in this case.
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Robinson v. Shell Oil Co.
(U.S. Supreme Court)
Legal protection for former employees
This employment discrimination case turned on whether the term "employees" specified in Section 704(a) of Title VII of the Civil Rights Act of 1964 includes former employees. The majority of circuits had broadly interpreted "employee" to include former employees "as long as the alleged discrimination is related to or arises out of the employment relationship." The en banc Fourth Circuit, however held that the plain language of the provision excluded former employees and upheld the district court's determination that former employees may not bring suit under Section 704(a) for retaliation occurring after termination of their employment.The Supreme Court reversed on 2/18/97, holding that former employees are included with Section 704(a)'s protection. In an opinion delivered by Justice Thomas, a unanimous Court held that "employees" as used in Section 704(a) was ambiguous as to whether it included former employees. The Court reasoned that the broader context and purpose of Title VII supported an expansive interpretation of "employees" and that exclusion of former employees would undermine the effectiveness of the statute by allowing the threat of post employment retaliation to deter employees from filing complaints with the EEOC.
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Walters v. Metropolitan Education Enterprises Inc.
(U.S. Supreme Court)
Definition of "employer"
These cases involved the determination of the term "employer" under Title VII of the Civil Rights Act of 1964. Title VII defines an employer as someone who "has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." If the employer has fewer than 15 employees, Title VII does not apply to the employer's actions. The question presented by this case was, in essence, how to count employees.
The petitioners (the EEOC and an individual plaintiff) claimed that an employer "has" an employee whenever the employer has an employment relationship with that employee in a particular week. Because this method focuses on whether the employer had 15 or more persons on the payroll in a given week, this was referred to in the courts as the "payroll method" of counting employees. The respondent advocated a narrower interpretation, focusing on whether the employee was actually performing work for the employer on a given day, a standard that would exclude part-time employees. The Court unanimously held on 1/14/97 that the ordinary meaning of this provision of Title VII was more consistent with the "payroll method." The Court concluded that the phrase "for each working day" was intended to make clear that employees who leave employment in the middle of the calendar week are not counted toward the statutory minimum number of employees. Thus, the Act applies to any employer who has an employment relationship with 15 or more employees in each of twenty or more calendar weeks in the current or preceding calendar year.
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Air Line Pilots Association v. Miller
(U.S. Supreme Court)
Exhaustion of administrative remedies not required when challenging union dues assessments for political purposes
Over the last two decades, the Supreme Court has twice considered the legal implications of "agency shops," that is, a workplace in which all employees, whether union members or not, are required to pay union dues. First, in Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977), the Court held that, while non-union employees in an agency shop may be required to bear their share of a union's collective bargaining costs, the First Amendment prohibits the use of their dues on political advertisements and other speech with which the non-union employees may disagree. Second, in Chicago Teachers Unions Local No. 1 v. Hudson, 475 U.S. 292 (1986), the Supreme Court developed concrete guidelines for implementing this prohibition on forced speech including the requirement that unions enjoying an agency shop arrangement offer a neutral decision maker to resolve any disputes over the calculation of collective bargaining expenses.
In this case, the Supreme Court will consider whether non-union employees can be forced to exhaust their remedies under procedures adopted in compliance with Hudson. The union here adopted an arbitrator as its neutral decision maker, and, when non-union employees refused to submit a challenge to the union's calculation of its collective bargaining costs before filing suit in federal court, the union claimed that the employees' challenge was barred by their failure to exhaust administrative remedies. Noting that the employees had never agreed to the arbitration procedure, the D.C. Circuit rejected the union's claim. The four other courts of appeals to consider this question were split evenly over its resolution.
The Supreme Court affirmed the D.C. Circuit on May 26, 1998, by a vote of 7-2. Justice Ginsburg's opinion held that, unless they agree to the procedure, agency-fee objectors may not be required to exhaust an arbitration remedy before bringing their claims in federal court."
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Allentown Mack Sales and Service, Inc. v. NLRB
(U.S. Supreme Court)
Polling when union majority status is in doubt
The Supreme Court, in a 5-4 decision on 1/26/98, held that an NLRB standard, under which an employer must have a "good faith reasonable doubt" about a union’s majority support before conducting an internal polling of employee support for that union, is rational and consistent with the National Labor Relations Act. An employer who believes that an incumbent union no longer enjoys the support of a majority of its employees has three options: (i) to request a formal, Board-supervised election; (ii) to withdraw recognition from the union and to refuse to bargain; (iii) or to conduct an internal poll of employee support for the union. The Board has held that the latter two options constitute unfair labor practices, unless the employer can show that it had a "good faith reasonable doubt" about the union's majority support.
The employer in this case argued that it is irrational to require the "good faith reasonable doubt" showing to justify a poll because that same showing would justify an outright withdrawal of recognition. According to the employer, this would leave the employer with no legal incentive to poll. The Court rejected this argument, concluding that it falsely assumed that every employer would want to withdraw recognition once presented with enough evidence of lack of union support to defend against an unfair-labor-practice. On the specific facts, however, the Court reversed the Board's finding that Allentown lacked the required reasonable doubt as not supported by substantial evidence on the record as a whole.
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Board of Education of the Township of Piscataway v. Taxman
(U.S. Supreme Court)
Racial discrimination to promote diversity
This case was settled on November 21, 1998. The issues that were not resolved by the Supreme Court are described below.
In this case, which received widespread publicity because the Department of Justice changed its position during the litigation, the United States and Sharon Taxman initially sued her former employer, the Board of Education, under Title VII. They alleged that the Board's use of race as a factor in selecting which of two equally qualified employees to lay off violated federal law prohibiting an employer from discriminating against an individual with respect to her employment conditions on the basis of her race.
In 1989 because of budgetary constraints, the Board of Education was forced to lay off one teacher in the Business Department at Piscataway High School. Under New Jersey law, teachers were to be released in reverse order of their tenure with the Board deciding which of two equally tenured teachers to release. Forced to choose between two equally tenured, qualified, and able business teachers, the Board of Education retained a minority faculty member instead of Ms. Taxman, who is white. The Board admittedly made this choice solely to maintain a diversity among the faculty of the High School's Business Department.
A divided Third Circuit held that the Board's decision violated Title VII. Relying on the Supreme Court's decision in United Steel Workers v. Weber, the court of appeals concluded that the Board's decision violated Title VII because it did not further the purposes of the civil rights legislation and unnecessarily trammeled the interests of a white employee. With respect to Title VII's purpose, the Third Circuit noted that the Act was designed to "end discrimination" and to "remedy the segregation and under representation of minorities that discrimination has caused" in the workplace. Consequently, the Board's decision to use race as a factor to promote diversity rather than remedy prior discrimination was inconsistent with the remedial nature of this legislation. Further, the court of appeals noted that even if the Board's goal of racial diversity was appropriate under Title VII, that goal could not be pursued at the expense of a person's job.
Questions presented:
- Does Title VII of the Civil Rights Act of 1964, as amended, permit employers to take race into account for purposes other than remedying past discrimination?
- If so, is fostering diversity among a high school faculty a lawful purpose?
- Assuming a lawful purpose, does consideration of race in a layoff decision invariably violate the rights of affected non-minority employees?
- May a district court award full backpay to a Title VII plaintiff who stands no more than an even chance of securing, or retaining, employment?
Lower court opinion: 91 F.3d 1547 (3d Cir.)
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Burlington Industries, Inc. v. Ellerth
(U.S. Supreme Court)
Liability for quid pro quo sexual harassment without effect on job
In this case, the Supreme Court addressed the circumstances under which an employer could be held liable for sexual harassment where an employee refused unwelcome sexual advances from her supervisor, suffered no adverse job consequences, and where the employer was not negligent or otherwise at fault for the supervisor’s actions. The plaintiff alleged that her supervisor made repeated sexually offensive comments and had intimated that she would not do well at the company unless she submitted to his advances. Although the plaintiff did not submit, she was nonetheless promoted, and she resigned without ever attempting to invoke the company’s policies against sexual harassment.
The Court noted that under Title VII, an individual can claim sexual harassment based either upon a hostile work environment, or "quid pro quo" harassment. Because this case involved unfulfilled job threats, the Court accepted the trial court’s finding that it was a hostile work environment claim. The Court then turned to basic agency principles to formulate a rule to govern when employers may be held vicariously liable for hostile work environment sexual harassment.
The Court concluded that employers will be liable for actionable hostile environments created by any supervisor with immediate authority over the employee. In cases where no tangible employment action is taken, the defending employer may raise an affirmative defense to liability or damages, consisting of two elements: (1) that the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior; and (2) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. No affirmative defense is available if the supervisor’s harassment culminated in a tangible employment action.
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Caterpillar, Inc. v. UAW
(U.S. Supreme Court)
Paying union grievance official when he no longer works for the company
This case involves the interpretation of § 302 of the Labor Management Relations Act ("LMRA"), which forbids an employer to pay union officials who represent its employees, but exempts such payments where the union representative is a current or former employee and is being compensated "for, or by reason of," that employment. 29 U.S.C. § 186(c).
Caterpillar is a manufacturer and distributor of heavy equipment. Under a collective bargaining agreement with the United Auto Workers ("UAW"), union grievance chairpersons could devote their entire work week to union business without losing company-paid wages or benefits. Once the collective bargaining agreement expired, however, Caterpillar informed the union that the company questioned the legality of these payments under the LMRA and therefore would cease paying the grievance chairmen. Thereafter, the UAW filed an unfair labor charge with the NLRB, prompting Caterpillar to file a federal suit seeking a declaratory judgment that such payments violate § 302 of the LMRA.
The district court held that Caterpillar's payments to the union's grievance chairmen violated § 302, and the union appealed. A divided Third Circuit, sitting en banc, overruled its own precedent and became the first court of appeals to extend § 302's exemption to union officials who no longer perform any work for the employer. The court observed that although such payments were not compensation for hours worked in the past, they were — by virtue of their inclusion in the collective bargaining agreement — compensation "by reason of" that service and were, thus, consistent with § 302.
Question presented:
…Whether section 302(c)(1) permits an employer to pay or agree to pay the current wages of full-time union officials who are former employees of the employer but who no longer perform any work for the employer.
Lower court opinion: 107 F.3d 1052 (3d Cir.) Status: Oral argument January 20, 1998. The case was dismissed on March 23, 1998 without a decision.
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Faragher v. City of Boca Raton
(U.S. Supreme Court)
Employer liability for sexually harassing acts of supervisor
When is an employer liable for the acts of supervisory employees in a hostile work environment sexual harassment claim? In a 7-2 decision on 6/26/98, the Supreme Court held that an employer may be held liable for discrimination caused by a supervisor, subject to an affirmative defense that would look to the reasonableness of the employer’s and the victim’s conduct.Plaintiff, a lifeguard employed by the City, sued her supervisors and the City for hostile work environment sexual harassment. The district court found for the plaintiff, holding the City liable because it had constructive knowledge of the harassment and because the supervisor was the City’s agent. In an en banc opinion, the Court of Appeals for the Eleventh Circuit reversed the district court's judgment for the plaintiff. The Supreme Court reversed the decision of the Court of Appeals, and ordered judgment for the lifeguard. Speaking through Justice Souter, the Court ruled that an employer is subject to vicarious liability for hostile work environment sexual harassment perpetrated by a supervisor. Where no tangible employment action has been taken, the employer may assert an affirmative defense consisting of two elements: (1) that the employer exercised reasonable care to prevent and promptly correct sexual harassment in the workplace, and (2) that the employee unreasonably failed to avoid the harm by taking advantage of preventive measures established by the employer. The employer may not avail itself of this defense where the supervisory harassment resulted in an adverse employment decision. The NAM filed an amicus brief 1/28/98 in support of Boca Raton, arguing that an employer should not be liable for a hostile workplace environment unless it should have known about or failed to respond reasonably to incidents of sexual harassment. The Court has now held that the employer may be held liable for the acts of a supervisor regardless of whether the employer should have known about them. The new affirmative defense for companies thus becomes crucial to defending these cases.
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Oncale v. Sundowner Offshore Service, Inc.
(U.S. Supreme Court)
Same-sex discrimination
In this case, the Supreme Court held that same-sex sexual harassment may constitute illegal sexual discrimination.
Joseph Oncale brought suit against his former employer, Sundowner Offshore Services, Inc., and several male employees of Sundowner under Title VII of the Civil Right Act of 1964. Oncale alleged that while employed for Sundowner he was on several occasions subjected to sex-related humiliating actions, including a physical sexual assault and the threat of homosexual rape. The United States District Court for the Eastern District of Louisiana rejected Oncale's claims, holding that as a matter of law a male had no cause of action for harassment by other males. The Fifth Circuit affirmed.
A unanimous Supreme Court reversed. Speaking through Justice Scalia, the Court stated that "same-sex harassment claims" can be covered by Title VII. Earlier decisions that illegal discrimination "includes sexual harassment must extend to sexual harassment of any kind that meets the statutory requirements." In reaching this conclusion, the Court stressed two significant limitations upon Title VII. First, while Title VII expressly prohibits "discrimination . . . because of sex," not all sexual harassment constitutes discrimination. "The critical issue . . . is whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members of the other sex are not exposed." Discrimination may be inferred from a variety of evidentiary routes, including evidence of motivation and direct comparative evidence of how the alleged harasser treated members of both sexes in a mixed-sex workplace.
Second, Title VII "does not reach genuine but innocuous differences in the ways men and women routinely interact with members of the same sex and of the opposite sex." While Title VII prohibits the creation of "an objectively hostile or abusive work environment," there is no statutory prohibition against ordinary "horseplay," "flirtation," "teasing," or "roughhousing." The question of whether a particular act could be considered "severely hostile or abusive" from the perspective of a reasonable person in the plaintiff’s perspective could vary from one situation to the next. Answering this key question requires examination of the social context, including the "surrounding circumstances, expectations, and relationships."
Justice Thomas wrote a brief concurring opinion to stress that in every sexual harassment case, Title VII requires proof of "discrimination ‘because of … sex.’"
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Oubre v. Entergy Operations, Inc.
(U.S. Supreme Court)
Keeping severance payment does not constitute valid release of ADEA claims
The Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 621 et seq., imposes specific requirements for releases of age discrimination claims that are often executed when an older employer is terminated. Among other things, the Act requires that older workers signing such releases be given enough time to consider their options, that they have seven days after execution to change their minds, and that the releases specifically mention the Age Discrimination in Employment Act. See 29 U.S.C. § 626(f). In this case, the release signed by the plaintiff admittedly did not comply with these requirements. The defendant claimed, however, that the plaintiff was nonetheless bound by it because she had ratified the release by retaining the monies received in exchange for the release.
By a six-to-three vote, the Supreme Court ruled 1/26/98 that the OWBPA permits the employees suit. Writing for the majority, Justice Kennedy noted that there was some authority suggesting that at common law a plaintiff's failure to return money received in exchange for a defective release ratified the release or equitably estopped the plaintiff from repudiating it. The majority found, however, that the common law was irrelevant because the OWBPA "sets up its own regime for assessing the effect of ADEA waivers, separate and apart from contract law." The majority also found that the common law rule, deeming a release ratified by the failure to return monies received, would frustrate the operation of the OWBPA because many discharged employees lack the means to return the monies received by them.
Justice Breyer and O'Connor concurred to point out that, in their view, a release that fails to satisfy the strictures of the OWBPA is voidable, rather than void. Under this view, an employee might choose to accept a release that fails to satisfy the OWBPA. The two justices also observed that nothing in the statute prevented an employer from seeking restitution, recoupment or set-off against an employee retaining monies received in exchange for a release. Three members of the Court – Chief Justice Rehnquist and Justices Scalia and Thomas – dissented on the ground that the OWBPA should be interpreted to comply with the common law.
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Textron Lycoming Reciprocating Engine Division, Avco Corp. v. UAW
(U.S. Supreme Court)
Validity of suits to void labor contracts prior to breach
In a unanimous decision, the Supreme Court held that federal courts generally do not have jurisdiction over suits seeking to invalidate collective bargaining agreements. Section 301 of the National Labor Relations Act grants federal courts jurisdiction over "[s]uits for violation of contracts between an employer and a labor organization." 29 U.S.C. § 185(a). Although several federal courts of appeals had found that Section 301confers jurisdiction over all contract-related claims, the Court unequivocally held that Section 301 confers jurisdiction only over suits claiming that a contract has been violated. The Supreme Court also rejected the suggestion that federal jurisdiction could be based upon the Declaratory Judgment Act. This part of the Court's decision, however, was more equivocal: while the decision left open the possibility that suits anticipating violations of labor contracts might be brought, it also raised questions concerning the appropriateness of anticipatory suits in general.
In this case, the UAW alleged that it had been induced to enter into a collective bargaining agreement by fraudulent representations, and it sought a declaration that the agreement was voidable at the UAW's option as well as both punitive and actual damages. In an opinion written by Justice Scalia, the Court held that a suit such as this one seeking to invalidate a labor contract was not "for violation" of a labor contract within the meaning of Section 301. "Suits for violation" of labor contracts, the Court reasoned, are "suits filed because a contract has been violated." The validity of a contract may, of course, be adjudicated in federal court in the course of deciding whether the contract has been violated. This power is, however, ancillary to, and not independent of, the power to adjudicate "[s]uits for violation of contracts."
The Supreme Court also held that the UAW's claim was not saved by the fact that it sought a declaratory judgment. The UAW argued that its request for declaratory relief was in anticipation of a suit by the petitioner Textron Lycoming seeking to enforce the collective bargaining agreement, that Section 301 would confer jurisdiction over such a suit, and that jurisdiction could therefore be premised upon the anticipated coercive suit. Although the Supreme Court had previously stated that jurisdiction over declaratory judgment actions may be based upon the coercive suit that might have been brought by the declaratory judgment defendant, it questioned whether federal jurisdiction over a nonfederal defense may be based upon an anticipated claim, particularly under Section 301. The Court found, however, that there was no need to resolve this issue because there was no actual case or controversy over the voidability of the agreement. In a concurrence, Justice Breyer suggested that the federal courts could consider a declaratory judgment suit seeking to invalidate a contract would be proper so long as there was an imminent threat of a suit to enforce the contract.
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Albertsons, Inc. v. Kirkinburg
(U.S. Supreme Court)
Disabilities under ADA
On January 8, 1999, the Supreme Court granted certiorari to determine whether a monocular driver of a commercial vehicle, who fails to meet the minimum federal vision requirements, is "disabled" and "otherwise qualified" under the ADA. In addition, the Court will decide if an employer must adopt an experimental vision waiver program as a means of "reasonable accommodation.”
This case involves a truck driver who claimed that the Albertson’s supermarket chain violated the ADA when it fired him after he failed a vision test. Kirkingburg, who has monocular vision, has been a commercial truck driver since 1979 with a good driving record when he was hired in 1990 by Albertson's supermarket. Prior to being hired, Kirkingburg performed well on a 16-mile road test administered by the company and was certified by a company physician that he met federal Department of Transportation vision standards. He was recertified after several months on the job.
In 1991, Kirkingburg suffered a non-driving injury and was off the job for almost a year. When he returned to work and took a new vision test, a company physician refused to certify that he met the DOT vision standard. Kirkingburg told the company that he applied for a waiver of the regular vision requirement under the Federal Highway Administration's vision waiver program established to bring DOT standards in compliance with the ADA. Albertson's told him that it would not accept the waiver and fired him in 1992 for failing to meet the vision standard. Albertson's refused to reconsider hiring Kirkingburg after he received the waiver.
The trial court ruled for the employer. The Ninth Circuit Court of Appeals reversed, stating that Kirkingburg suffers from a disability and he is therefore protected under the ADA. The court further held that the company cannot selectively adopt and reject federal safety regulations when the effect of its policy is to discriminate against otherwise qualified drivers with disabilities.
The Supreme Court reversed, ruling on 6/22/99 that an employer is entitled to require as a job qualification that an employee meet the standards of an applicable federal safety regulation that tends to exclude the disabled. The ADA does not require an employer to defend itself against participating in an experimental federal waiver program.
The Court ruled that an ADA plaintiff must show that he or she was "substantially impaired" in a major life activity, not just that there was a significant difference. In addition, mitigating factors must be taken into account.
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Associated Builders & Contractors v. Southern Nevada Water Authority
(Nevada Supreme Court)
Project labor agreements
The Nevada Supreme Court ruled 6/7/99 that a project labor agreement requirement in bid specifications for a reservoir project outside Las Vegas did not violate state competitive bidding law. The NAM filed an amicus brief supporting ABC's argument, since such agreements force companies to impose unwanted union agreements on their employees if they want to work on state public works projects. This reduces the number of companies that bid on government contracts, and raises costs to the state.
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Associated Builders & Contractors v. Metropolitan Water District
(California Supreme Court)
Project labor agreements
The NAM supported this challenge to California project labor agreements for state construction projects. Project labor agreements promote favoritism and undermine competitive bidding laws to the detriment of taxpayers and non-union companies that want to bid on state government contracts. The appeal was dismissed and remanded on 11/20/99.
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Cleveland v. Policy Management Systems Corp.
(U.S. Supreme Court)
Effect of disability under Social Security Act on ADA claim
The U.S. Supreme Court unanimously ruled that receipt of Social Security Disability Insurance (SSDI) benefits does not automatically estop the recipient from pursuing an ADA claim. The Court further stated that in order to survive a defendant's motion for summary judgment, the plaintiff must explain why her SSDI contention is consistent with her ADA claim that she can "perform the essential functions" of her previous job.
The Fifth Circuit ruled that an employee will find rough sailing in court when she claims she is a "qualified individual with a disability" under the Americans With Disabilities Act (ADA) after she has applied for and received social security disability benefits based on a total disability and inability to work. The court ruled that such a plaintiff must overcome a presumption that her total disability disqualifies her from suing under the ADA. The Supreme Court decided that this presumption is inappropriate.
Many ADA suits are dismissed because plaintiffs make claims under social security and workers' compensation laws, and then try to claim an ability to work under the ADA requirements. Consequently, this case will have a substantial impact on such cases in the future.
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Connecticut Associated Builders & Contractors v. Anson
(Connecticut Supreme Court)
Project labor agreements
On November 4, 1999, the Connecticut Supreme Court affirmed a Superior Court ruling that greatly impairs the ability of injured parties to challenge unlawful government action in the competitive bidding process. The NAM had filed an amicus brief on February 11, 1999, urging the court to reverse the holding.Both the State Department of Public Works and the City of Hartford imposed new bid specifications on public works projects that would require all successful bidders to sign a labor agreement with a designated union as a condition of performing work on the projects. The Superior Court dismissed challenges filed by general contractors, subcontractors, and an association of contractors who have been deterred from bidding by the union-only requirements. The Superior Court held that notwithstanding the injury suffered by the plaintiffs as a result of the alleged unlawful favoritism in the competitive bid process, they have no standing to sue. The NAM believes that government agencies should not dictate the labor relations of contractors as a condition of awarding government contracts under competitive bidding laws.
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Haddle v. Garrison
(U.S. Supreme Court)
Employer liability for deterring employees from testifying in court
In this civil rights case, the Supreme Court ruled 12/14/98 that the loss of "at will" employment is a compensable injury under 42 U.S.C. § 1985(2), which provides a private cause of action for injuries arising from attempts to deter a witness from testifying in court. Haddle, a former at-will employee of a home health care company, claimed that Garrison and others had conspired to have him fired from his job to keep him from testifying as a witness in a Medicaid-fraud trial. The Eleventh Circuit, like the district court, held that the loss of at-will employment is not a compensable injury under § 1985(2) since an at-will employee has no constitutionally protected property interest in continued employment. The Supreme Court reversed and held that a constitutionally protected interest in continued employment is not a prerequisite to a claim for damages under § 1985(2).
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In re Vizcaino
(9th Circuit)
Temporary leased employees
The NAM on 6/2/99 urged the Ninth Circuit to rehear a panel decision calling temporary leased workers "employees" for purposes of eligibility for Microsoft’s stock option plan. The panel decision allows a dual employer situation, potentially allowing duplicative benefits and creating confusion and disrupting temporary staffing services, especially in high tech industries. On June 24, the Ninth Circuit rejected the appeal and sent the case back for further proceedings.
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Kolstad v. American Dental Association
(U.S. Supreme Court)
Punitive damages under Title VII
In one of the most awaited decisions of the Term, the Supreme Court considered the standard for awarding punitive damages in Title VII actions. The Civil Rights Act of 1991 authorizes punitive damages whenever a defendant is found to have engaged in intentional discrimination with "malice or reckless indifference to [the plaintiff’s] federally protected rights." 28 U.S.C. § 1981a.
The Court 6/22/99 rejected the requirement suggested by the D.C. Circuit in the decision below that there be egregious misconduct. Finding the common-law basis for this requirement uncertain, the Supreme Court held that a culpable mental state is the only special requirement for imposing punitive damages under Title VII in cases where intentional discrimination is found.
The majority went out of its way, however, to stress that the culpable mental state of even high-level employees will not always be imputable to their employers, who alone are suable under Title VII. Instead, the Court held that for purposes of punitive damages the mental state of employees may only be imputed to their employers under the relatively restrictive common-law agency principles. Furthermore, noting Title VII’s policy in favor of promoting voluntary compliance programs and polices, the Court interpreted the common-law rule to protect employers that make good-faith efforts to comply with Title VII.
As a consequence, even though the Court’s opinion in Kolstad rejected the egregious conduct requirement, it provides ample protection against punitive damages for employers who act in good faith, especially when they adopt bona fide compliance programs and policies.
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Marquez v. Screen Actors Guild, Inc.
(U.S. Supreme Court)
Union security clauses
The Supreme Court held 11/3/1999 that a union does not breach its duty of fair representation by negotiating a union security clause that tracks the language of section 8(a)(3) of the National Labor Relations Act (NLRA) without explaining in the agreement the Supreme Court's interpretations of section 8(a)(3). The petitioner had complained that a union security clause in a collective bargaining agreement negotiated by the Screen Actors Guild (SAG) should have explained that the Court's decisions in NLRB v. General Motors Corp., 373 U.S. 734 (1963), and Communications Workers v. Beck, 487 U.S. 735 (1988), permit "unions and employers to require only that employees pay the fees and dues necessary to support the union's activities as the employees' bargaining representative." The Court held that the SAG's conduct was neither arbitrary nor in bad faith since the language of section 8(a)(3) contains "terms of art" that "encompass the rights that we announced in General Motors and Beck." It opined that requiring unions to spell out all of the "intricate rights and duties associated with a legal term of art" in these clauses would convert contracts into "massive and unwieldy treatises" with "no discernible benefit." Justices Kennedy and Thomas concurred to express their view that the Court's opinion does not immunize agreements where the section 8(a)(3) shorthand is inserted with the intent or effect of deceiving employees.
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Murphy v. United Parcel Service, Inc.
(U.S. Supreme Court)
Disabilities under ADA
On March 24, 1999, the NAM filed an amicus brief urging the Supreme Court to maintain the fair standards of the ADA and to prevent the expansion of the term "disabled" to cover individuals with controllable medical conditions. The NAM argued that employees may not claim the special protections of the ADA when their medication allows them to live normal lives.In this case, Murphy has had high blood pressure most of his life but medication controls his condition. In August 1994, Murphy applied for a position as a mechanic for UPS. All mechanic applicants must obtain a Department of Transportation health card. At the time of his medical exam, Murphy's blood pressure met the DOT standards. He was issued a health card, and UPS hired him. In September 1994, a company nurse reviewed his file and determined that his blood pressure did not meet DOT requirements for commercial drivers. UPS decided that the card was issued in error and Murphy was fired. The trial court ruled in favor of UPS, holding that Murphy is not an individual with a disability. The court stated that the determination of whether an individual's impairment substantially limits a major life activity should take into consideration mitigating or corrective measures utilized by the individual. The Tenth Circuit affirmed, and so did the Supreme Court. On 6/22/99, it held that the determination of whether a person with a physical or mental impairment is "disabled" under the Americans with Disabilities Act (ADA) must be made with reference to measures — such as medication, medical devices, or assistive devices — that mitigate the person’s impairment. The Court also held that a person is "regarded as" disabled under the ADA only if the employer mistakenly believes that the person’s actual, nonlimiting impairment substantially limits one or more major life activities. Therefore, ADA plaintiffs who claim that an employer regards them as substantially limited in the major life activity of working must, at a minimum, allege an inability to work in a broad class of jobs. The Court’s decision is a tremendous victory for employers facing the specter of ADA liability.
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Sutton v. United Airlines, Inc.
(U.S. Supreme Court)
Disabilities under ADA
On January 8, 1999, the Supreme Court granted certiorari in this case to determine whether a person with a physical or mental impairment under the Americans with Disabilities Act can be excluded from protection under the Act if her impairment can be corrected. In June it ruled that she could be excluded.
Plaintiffs are twin sisters who are commercial airline pilots for regional commuter airlines. The twin sisters applied to be pilots for United Airlines but were told by the airline that their uncorrected vision disqualified them from pilot positions. United refused to hire the twins because they failed to meet the requirement that all pilot applicants have uncorrected vision of 20/100. Their uncorrected vision in the right eye is 20/200 and 20/400 in the left eye.
The trial court ruled that the twins are not protected under the ADA because their poor vision is 20/20 in both eyes when they wear glasses or contact lenses. The Tenth Circuit affirmed, holding that the plaintiffs cannot present any set of facts showing that their vision, when viewed with mitigation or corrective measures, substantially limits a major life activity.
The Supreme Court ruled that the plaintiffs had failed to allege that they were actually disabled, since their vision was 20/20 or better with corrective lenses. The Court also held that a person is "regarded as" disabled under the ADA only if the employer mistakenly believes that the person’s actual, nonlimiting impairment substantially limits one or more major life activities. Therefore, ADA plaintiffs who claim that an employer regards them as substantially limited in the major life activity of working must, at a minimum, allege an inability to work in a broad class of jobs.
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TNS, Inc. v. Oil, Chemical and Atomic Workers International Union
(NLRB)
Recusal
The NAM urged that NLRB Chairman Gould be recused from participating in this case because of his public pronouncements in opposition to legal precedents permitting employers to hire permanent replacements for economic strikers. A decision in this case on 9/30/99 made the recusal motion moot, since Chairman Gould was no longer on the Board
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United States v. Haggar Apparel Co.
(U.S. Supreme Court)
Deference to Treasury Dept. regulations under Tariff Act
The Supreme Court ruled 4/21/99 that Treasury Department regulations interpreting the Tarriff Act are entitled to deference under Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). The Court reversed the ruling and rejected the reasoning of the Federal Circuit which had found that Chevron deference was inappropriate because the governing statute, 28 U.S.C. § 2643(b), instructs the Court of International Trade to "reach the correct decision." The Court remanded to the Federal Circuit for a determination whether, under Chevron, 19 C.F.R. 10.16(c) reasonably interprets the statutory phrase "operations incidental to the assembly process" in Subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States to exclude the "permapressing" of items of clothing assembled abroad.
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Wright v. Universal Maritime Service Corp.
(U.S. Supreme Court)
Arbitration not required before litigation of ADA claims
This case involves the enforcement of the ADA. The Supreme Court ruled 11/16/98 that an arbitration provision in a collective bargaining agreement does not require employees to arbitrate claims arising under federal anti-discrimination statutes where the arbitration provision does not clearly and unmistakably waive the employees' right to litigate such claims in federal court.
In this case, Wright sued his employer under the ADA in federal district court. The employer successfully moved to dismiss the case on the grounds that Wright had failed to exhaust his remedies (arbitration) under the collective bargaining agreement. However, the Supreme Court held that Wright was not required to arbitrate his ADA claim, because the collective bargaining agreement did not clearly require arbitration of claims arising under federal anti-discrimination statutes. The Court further noted that even a sufficiently clear waiver might not be enforceable, but declined to resolve that issue.
NAM Comment: The NAM filed an amicus brief on June 29, 1998, supporting Universal Maritime. We argued that arbitration is a well-established, vital aspect of a broad range of legal relationships, and that arbitration provisions in collective bargaining agreements should be enforced. While this decision is a temporary setback for having these issues resolved through arbitration, companies can include more express language in collective bargaining agreements that clearly encompass the resolution of statutory claims, and we will await another Supreme Court case to resolve whether such provisions will be enforced by the courts.
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Gemini, Inc. v. Thorson
(8th Circuit)
FMLA coverage
The NAM’s amicus brief failed to convince the Eighth Circuit to reject a Department of Labor regulation that allows the common cold, flu and other minor ailments to qualify as "serious health condition[s]" under the Family & Medical Leave Act. Case decided on 3/3/00.
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Local 702, IBEW v. NLRB
(D.C. Circuit)
Company lockout of union engaged in inside-game tactics
On 10/15/99, the NAM filed a brief supporting the NLRB’s decision allowing a company to lock out employees who engage in inside-game tactics. The D.C. Circuit ruled 5/9/00 to uphold the company’s lockout.Union employees use "inside game" tactics to win bargaining-table concessions, slowing down the work pace, refusing to work overtime, asking for minute instructions from supervisors, filing mass charges with government agencies, calling in sick, or otherwise impeding or disrupting operations without actually going on strike. By taking the strike inside, union employees continue to be paid. The company in this case faced this situation and locked them out. The U.S. Court of Appeals for the D.C. Circuit affirmed an NLRB decision in favor of the company, Central Illinois Public Service Co. (CIPSCO). The court and the Board allow companies to lock out such employees, as a legitimate countervailing economic weapon. According to the court, lockouts are not "inherently destructive of employee rights," and the employer had a "legitimate and substantial business justification" for the lockout. A lockout is a reasonable tool to help bring about a resolution of collective bargaining negotiations, and there was no evidence of anti-union animus on the part of the employer.
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UAW v. Chelsea Inds., Inc.
(NLRB)
Withdrawal of recognition of union
The NAM joined the U.S. Chamber of Commerce in filing a brief 5/18/98 opposing an NLRB proposal that would require elections whenever employees want to decertify their union as their authorized collective bargaining representative. In Chelsea, the Board ruled that an employer may not rely on signatures from a majority of workers to decertify a union, if the signatures were received during the first year of the union's representation of the employees. In Levitz, the Board ruled that an employer may not withdraw recognition from a union unless the union "has actually lost the support of the majority of the bargaining unit employees." It also ruled that an employer needs uncertainty, but not disbelief, as to a union's continuing majority status in order to seek a Board-conducted election by its employees. Also filed under as UFCW v. Levitz Furniture Co.
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UFCWU v. Levitz Furniture Co.
(NLRB)
Withdrawal of recognition of union
The NAM joined the U.S. Chamber of Commerce in filing a brief 5/18/98 opposing an NLRB proposal that would require elections whenever employees want to decertify their union as their authorized collective bargaining representative. In Chelsea, the Board ruled that an employer may not rely on signatures from a majority of workers to decertify a union, if the signatures were received during the first year of the union's representation of the employees. In Levitz, the Board ruled that an employer may not withdraw recognition from a union unless the union "has actually lost the support of the majority of the bargaining unit employees." It also ruled that an employer needs uncertainty, but not disbelief, as to a union's continuing majority status in order to seek a Board-conducted election by its employees.
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United States Bakery, Inc. v. Schneider
(U.S. Supreme Court)
Preemption of state overtime claim
This case involves federal preemption of claims by union employees that they are entitled to overtime pay under state law for work they did under a collective bargaining agreement. The NAM filed an amicus brief 3/1/2000 urging the court to reverse a Washington Supreme Court decision that would allow a class action, worth at least $40 million in this case, to proceed on the theory that baker-salespersons are not "outside salespersons" under state law. The NAM’s brief cites federal precedent that local claims involving the interpretation of collective bargaining agreements are preempted. The Supreme Court declined to review the case.
The case has implications for any unionized company with an agreement that defines, either explicitly or implicitly, certain employees as exempt or not exempt from the overtime laws. Preemption applies whenever the remedies sought, such as overtime pay, depend on or are inextricably intertwined with an interpretation of the provisions of the collective bargaining agreement.
If a company and a union agree to classify certain employees as salespersons, union employees should not be able to enjoy the benefits of the contract, then sue later, claiming they didn't like the contract.
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Epilepsy Foundation v. NLRB
(D.C. Circuit)
Investigatory interviews
On 11/2/01, the D.C. Circuit ruled that the NLRB acts legally when it requires that employees in non-union workplaces be given the right to have a co-worker or other individual with them during an investigatory interview by an employer. Section 7 of the National Labor Relations Act protects the right of an employee to engage in concerted activities for the purpose of mutual aid or protection, and having a co-worker present during an investigatory interview is justifiable to ensure that the employer "does not initiate or continue a practice of imposing punishment unjustly." However, the court refused to apply the NLRB's revised interpretation retroactively in this case. It will be applied in future cases.The NAM and other groups filed an amicus brief on 5/15/01 objecting to the extension of so-called Weingarten rights of union employees to non-union workers, arguing that an individual non-union employee's representative does not represent the interests of the entire workplace.
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Green Tree Financial Corp. v. Randolph
(U.S. Supreme Court)
Arbitration of consumer sale may be enforceable even without knowing specific costs in advance
Randolph financed the purchase of her mobile home through Green Tree Financial Corporation. Randolph sued Green Tree alleging that it had violated the Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and the Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691-1691f, by requiring Randolph to arbitrate her statutory causes of action. The Eleventh Circuit held that the district court’s order compelling arbitration was appealable and that the arbitration agreement was unenforceable because Randolph’s ability to vindicate her statutory rights would be undone by steep arbitration costs.The Supreme Court held 5 to 4 on 12/11/00 that an arbitration agreement is not rendered unenforceable because it does not identify who will pay the costs of an arbitration or how much those costs might be: "The risk that Randolph will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement." The Court left open the question whether an arbitration agreement would be enforceable if large arbitration costs in fact precluded a claimant from vindicating federal statutory rights. Resolving a circuit split, the Court also held unanimously that a district court’s order compelling arbitration and dismissing with prejudice the underlying claims is a final decision with respect to an arbitration and thus immediately appealable under the Federal Arbitration Act. This case is important because it affirms that arbitration clauses in consumer contracts, employment agreements, and other transactions involving parties with unequal financial resources are not per se unenforceable because those clauses are silent on who shall pay the costs of arbitration. It leaves open, however, the question of what costs may be imposed in such cases.
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NLRB v. Kentucky River Community Care, Inc.
(U.S. Supreme Court)
Some nurses are supervisors under NLRA
In a partial victory for the NLRB, the Supreme Court 5/29/01 affirmed the Board’s rule that the burden of proving that an employee is a "supervisor" for purposes of the National Labor Relations Act falls on the party making the claim. Accordingly, the Court affirmed that the Board had properly placed the burden of proof on the operator of a mental health care facility, where the operator had claimed that its six registered nurses were supervisors and should therefore be excluded from an employee bargaining unit. Nevertheless, the Board failed to win the Court’s approval for its decision to reject the employer’s offer of proof. Under the National Labor Relations Act, an employee is a supervisor if his or her exercise of authority over other employees requires the use of "independent judgment." According to the Board’s interpretation of the Act, however, employees do not use independent judgment when they exercise "ordinary professional or technical judgment in directing less-skilled employees to deliver services in accordance with employer-specified standards." The Court rejected that interpretation, finding no justification for its categorical exclusion of employees who would otherwise fall within the Act’s definition of a "supervisor.”This decision will broaden the class of individuals that the NLRB must recognize as supervisors under the NLRA.
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PGA Tour, Inc. v. Martin
(U.S. Supreme Court)
PGA rules must yield to golfer under ADA
The Supreme Court held 5/29/01 that Title III of the Americans With Disabilities Act (ADA) covers professional golf tournaments, and thus regulates the rules by which such tournaments are organized and conducted. In this case, the PGA had refused to allow Casey Martin, who suffers from a rare circulatory disease in his leg, to use a golf cart during tournaments. Although the PGA conceded that allowing Martin to use a cart was both a reasonable and necessary accommodation, it argued that doing so would fundamentally alter the nature of the tournaments in which he sought to play. Rejecting that argument, the Court concluded that the PGA’s "walking rule" was not an "essential attribute" of the game of golf. And, noting that the ADA requires evaluation of the disabled person’s needs on an individualized basis, the Court held that in light of Martin’s particular medical condition, allowing him to use a cart would not fundamentally alter the nature of the PGA’s tournaments.
Note that the decision interprets Title III of the ADA relating to public accommodations, while Title I covers employers generally, and has a defense based on "undue hardship of the operation of the business." These provisions use different language, and the Title III defense that a service or facility would be "fundamentally altered" is not at issue in most cases against manufacturers. However, the Court's willingness to second-guess the judgment of the PGA in this context shows how the ADA may be used to interfere with reasonable decisions of employers in other contexts.
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Pollard v. E.I. DuPont de Nemours and Co.
(U.S. Supreme Court)
No statutory caps on front-pay damages
The Supreme Court on 6/4/01 held that an award of "front pay," (i.e., money awarded an employee for lost compensation during the period between judgment and the reinstatement of the employee’s job, or in lieu of such reinstatement) is not an element of compensatory damages under Title VII, and thus not subject to a $300,000 damages cap imposed by 42 U.S.C. § 1981a(b)(3). One important effect of the Court’s holding will be to prevent employees asserting front pay claims from having the right to proceed before a jury. The case is important to employers subject to federal employment discrimination laws.
NAM Comment: Plaintiffs in civil rights cases have an obligation to mitigate damages if they feel they can no longer work for their previous employer because of discrimination. As a result, the size of front-pay damages may not be nearly as great as potential punitive damages against employers that are found liable. Nevertheless, there are some instances where front-pay awards have been sizeable, and now it is clear that plaintiffs may seek both front pay damages without a cap and other compensatory and punitive damages with a cap.
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The Park Associates, Inc. v. NLRB
(D.C. Circuit)
Successorship bargaining issues
The NAM joined in an amicus brief urging the D.C. Circuit to reverse a recent 2 to 1 NLRB ruling. The ruling required the new owner of a company to bargain with the union that represented the employees of the company before it was sold, in spite of the fact that a majority of the employees signed a petition to decertify the union as their representative. The decision undermines employee freedom of choice, forcing upon them an artificial and unwanted relationship which could give rise to industrial strife and tension. The NAM, joining with the Master Printers of America, the Center on National Labor Policy, Inc., and Associated Builders and Contractors, Inc., argues that the National Labor Relations Act gives an employer the right not to recognize a union when it has a good faith doubt that the union represents a majority of its employees.
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Adarand Constructors, Inc. v. Mineta
(U.S. Supreme Court)
Court declines to review validity of race-conscious federal contracting procedures
The Supreme Court granted certiorari 3/26/01 to determine whether federal subcontracting procurement procedures using race-conscious presumptions violate the Equal Protection Clause. Following the Supreme Court’s decision in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995), which held that such procedures are to be reviewed under the demanding "strict scrutiny" standard, the Tenth Circuit held that the government’s revised procedures satisfy that standard, accepting the government’s evidentiary showing that the measures are necessary to remediate the effects of past discrimination in government contracting markets. The case is of importance to businesses bidding for federal subcontracting, but on 11/27/01, the Court dismissed the writ of cert. as improvidently granted. It will not decide the issue.Lower Court Opinion: 228 F.3d 1147 (10th Cir. 2000)
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BE&K Construction Co. v. NLRB
(U.S. Supreme Court)
NLRA's policy to penalize employers that unsuccessfully sue unions
The Supreme Court held 6/24/02 that the National Labor Relations Board (“Board”) may not sanction an employer that brought an unsuccessful suit against a union unless the Board first finds, at a minimum, that the suit was brought for the purpose of “impos[ing] the costs of the litigation process” on the union, “regardless of the outcome, in retaliation for NLRA protected activity.” In reaching this holding, the Court rejected the Board’s view that the Board may sanction an employer for committing an unfair labor practice if (1) a court earlier found an employer’s suit unmeritorious, and (2) the Board subsequently finds that the “suit is one ‘brought with a motive to interfere with the exercise of protected” union activity.’” The Court reasoned that “the Board’s definition broadly covers a substantial amount of genuine petitioning,” such as when an employer files “suit to stop conduct by a union that [the employer] reasonably believes is illegal under federal law, even though the conduct would otherwise be protected under the [National Labor Relations Act].” From there, the Court concluded that the Board’s definition of retaliation cuts into the First Amendment right to petition the government and, therefore, violates the Constitution. In casting about for a permissible definition of retaliation, the Court stated that “evidence of antiunion animus” is insufficient “to infer retaliatory motive” because, as a practical matter, most “[d]isputes between adverse parties generate” ill will. Rather, the Court made clear that the touchstone for prohibited retaliatory suits is whether the suit was brought simply to “impose the costs of the litigation process” on the union. This case is particularly important to employers that may want to challenge labor-union activities directed at them in response to an employer-union dispute.
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Chevron U.S.A., Inc. v. Echazabal
(U.S. Supreme Court)
ADA coverage for conditions affected by certain work
The Supreme Court ruled 9-0 on 6/10/02 to uphold an EEOC regulation permitting an employer to defend against an ADA claim by showing that the worker’s disability on the job would prose a direct threat to his, rather than a co-worker’s, health. This means that an individual with a disability cannot use the ADA to require an employer to provide a reasonable accommodation to work in a location that may be hazardous to him. Instead, the employer can refuse to put the person in harm’s way.Two points are clear from the Court’s ruling. First, the EEOC has the authority to fill in gaps that Congress left in the statute when the ADA was passed. In this case, the EEOC properly interpreted a broadly worded employer defense to include situations that are hazardous to the affected employee himself. Second, the Court recognized that employers are in a very difficult position when trying to comply with the employee accommodation requirements of the ADA and the safety and health requirements of the Occupational Safety and Health Act (OSH Act). It found that the EEOC could reasonably resolve this conflict by refusing to hold the employer liable for acting to protect employees from hazards that the employees themselves are willing to risk. This decision is an important victory for all companies subject to the ADA. It gives employers a path with some breathing room between government demands for maximum workplace safety and competing demands by employees who are willing to risk their lives on jobs that others can do more safely. It highlights a fundamental question that will continue to cause conflict. To what degree are we willing to sacrifice an individual’s need for a job to prevent injuries to that person in the workplace? This will not open the floodgates for companies to refuse to hire individuals based on broad types of conditions. Companies must make individual determinations in each case to conclude that a particular workplace is not suitable for a particular employee’s condition. They must consider reasonable medical judgments based on “the most current medical assessment of the individual’s present ability to safely perform the essential functions of the job," and must consider "the imminence of the risk and the severity of the harm portended." Thus, there will continue to be cases where these choices are evaluated by the courts.
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Edelman v. Lynchburg College
(U.S. Supreme Court)
EEOC claims
The Supreme Court held 3/19/02 that claimants filing a discrimination charge with the EEOC are not required to verify the charge allegation during the applicable filing period, but instead verify the allegations after the expiration of the filing period. The Court held that an EEOC regulation permitting the "relation-back" of a verification of an otherwise timely charge was an "unassailable" interpretation of § 706(b) of Title VII. The Court reasoned that the filing deadline and verification requirement are separate, distinct, and intended to achieve "two quite different objectives." This decision is important to all employers subject to the federal employment discrimination laws.
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Equal Equipment Opportunity Commission v. Waffle House, Inc.
(U.S. Supreme Court)
EEOC suit is independent of arbitration
The Supreme Court held on 1/15/02 that an agreement between an employer and its employees requiring the arbitration of employment-related disputes does not prevent the EEOC from seeking judicial relief on behalf of an individual employee under the Americans with Disabilities Act ("ADA"). The Court noted that the ADA empowers the EEOC to exercise the same enforcement powers, seek the same remedies, and employ the same procedures as are set forth in Title VII of the Civil Rights Act of 1964. Since 1991, the EEOC has been able to pursue reinstatement, backpay, and compensatory or punitive damages on behalf of individual employees under Title VII. Accordingly, the EEOC may pursue those same remedies on behalf of individual employees under the ADA.The Court rejected the suggestion that the Federal Arbitration Act's policy favoring the arbitration agreements limits the scope of the EEOC's powers under the ADA. The Federal Arbitration Act requires the courts to treat arbitration agreements as they would other contracts, but it does not expand the reach of such agreements. Because the EEOC was not a party to the arbitration agreement between the respondent and its employees, the Court concluded that the EEOC was not bound by that agreement.
This case is of interest to any employer that has entered into arbitration agreements with its employees.
While the Court’s decision is an understandable reading of the EEOC’s power, it illustrates the conflict between that power and the Federal Arbitration Act, which was enacted to allow parties to settle disputes by themselves. It is obviously unfair for an employee to agree to arbitrate employment disputes, and then to turn around and bring in the EEOC to sue the employer. Now that employers know what the rule is, they will be less certain that arbitration clauses will be as effective as had been hoped. Employees now have two opportunities to make a claim against an employer: if they fail to convince the EEOC to intervene on their behalf, they can still proceed with arbitration on their own. And if the EEOC intervenes, a company must face the power of the federal government.
Nevertheless, we expect that companies will continue to use arbitration extensively, in part because it is quicker and simpler for both sides, and in part because EEOC suits have traditionally represented a relatively small fraction of all employment related litigation.
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Hoffman Plastic Compound v. NLRB
(U.S. Supreme Court)
NLRB back-pay remedy for illegal alien
The Supreme Court held 3/27/02 that federal immigration policy, as expressed in the Immigration Reform and Control Act of 1986 (IRCA), forecloses awards of backpay to illegal aliens. Chief Justice Rehnquist, writing for the Court, noted that while the National Labor Relations Board enjoys considerable discretion in fashioning remedies for violations of the nation’s labor laws, that discretion is limited not only by the labor laws themselves, but also by other federal statutes and policies. Combating the employment of illegal aliens is one such policy – a policy that Congress elevated to a central role in immigration law when it enacted IRCA. Granting backpay to an illegal alien, as the Board did in this case, runs directly counter to that policy. Justice Breyer, joined by Justices Stevens, Souter, and Ginsburg, dissented, emphasizing that backpay serves important remedial purposes, such as deterrence of labor law violations. Furthermore, he contended, by rendering the labor laws toothless in cases involving illegal aliens, the Court’s decision creates an incentive for employers to hire illegals, and thus thwarts immigration policy. This case is important to all employers.
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Mulder v. NLRB
(U.S. Supreme Court)
Using compulsory union dues for organizing another company
The NAM and Associated Builders & Contractors filed an amicus brief supporting a petition for cert. in this case involving union dues. We argue that employees may not be required to pay portion of union dues for organizing a competitor’s business, since such expenditures by unions are not germane to collective bargaining and violate prohibitions in the 1988 Beck case.
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National Railroad Passenger Corp. v. Morgan
(U.S. Supreme Court)
Title VII statute of limitations
The Supreme Court, in a splintered decision, decided 6/10/02 that the statute of limitations for employment discrimination suits depends on the type of discrimination alleged. Plaintiffs alleging that a discrete act by an employer constitutes unlawful discrimination must file a charge with the EEOC within 180 or 300 days of the act (depending on the state), while plaintiffs alleging a hostile work environment may charge that a series of acts prior to that time are illegal, as long as one occurred within the 180- to 300-day time window.
Hostile work environment claims are treated differently because they involve repeated conduct that may occur over a period of days or even years. They involve an analysis of all the circumstances of the allegedly offensive workplace, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating, and whether it unreasonably interferes with an employee's work performance. All that the Court requires is that some act contributing to the claim fall within the statutory period. The Court tempered its broad interpretation of the time window for hostile work environment claims by emphasizing that an employer can raise fairness issues relating to a plaintiff's tardiness in filing suit.
Significantly, the Court left open “the timely filing question with respect to ‘pattern-or-practice’ claims brought by private litigants”—an issue arising typically in the class or collective action context.
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Ragsdale v. Wolverine Worldwide, Inc.
(U.S. Supreme Court)
FMLA notification requirements
The Supreme Court held 5 to 4 on 3/19/02 that 29 C.F.R. § 825.700(a), a Department of Labor regulation purporting to implement the Family and Medical Leave Act (“FMLA”), exceeds the Secretary of Labor’s authority under the Act. The FMLA guarantees eligible employees twelve weeks of leave in a one-year period to attend to family health problems or the birth or adoption of a child. Under 29 C.F.R. § 825.700(a), employers were required specifically to inform employees when their leave is considered FMLA time, or else the leave did not count against the FMLA entitlement. The Court held that this regulation is a categorical penalty on employers that is incompatible with the FMLA’s comprehensive remedial scheme. It wrongly presumes that all employees are harmed by an employer’s failure to provide notice, alters the employee’s burden of proof under the Act, and punishes employers that allow employees to take more leave than the FMLA requires. This case is important to all business covered by the FMLA.
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Swierkiewicz v. Sorema N.A.
(U.S. Supreme Court)
Specificity of discrimination complaint
The Supreme Court on 2/26/02 unanimously held that an employment discrimination complaint is not required to allege facts constituting a prima facie case of discrimination under the framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). That framework, the Court noted, establishes an evidentiary standard, not a pleading requirement. Before discovery, the nature of the required prima facie case may be difficult to determine, and discovery could reveal direct evidence of discrimination that would render McDonnell Douglas altogether inapplicable. Further, requiring a heightened pleading standard is inconsistent with Federal Rule of Civil Procedure 8(a)(2), which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” This decision is important to any employer subject to federal employment discrimination statutes.
The Second Circuit had ruled that merely stating that the employee was Hungarian in a workplace predominantly comprising French workers was a complaint with insufficient specificity to put his employer on notice of his discrimination claims. The court also ruled that an allegation that the company president wanted to "energize" his department was insufficient to raise an inference of age discrimination. The High Court reversed this ruling.
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Tamko Roofing Products v. United Steelworkers
(U.S. Supreme Court)
Arbitration
The NAM filed an amicus brief urging the Supreme Court to review an 11th Circuit ruling that allowed a labor arbitrator to reinstate an employee who had been fired for racially harassing a third-party worker. The arbitrator ruled that since there was no written policy prohibiting racial harassment of outsiders, an employee could not be fired for doing so. This decision undermines an employer's ability to comply with antidiscrimination laws.
Our brief argued that the case involves situations where collective bargaining agreements are in effect. Employers needs to be able to root out racial harassment, and arbitrators should respect not only the at-will employment doctrine but also the business judgment rule. Employment policies need not memorialize in writing every conceivable standard of behavior, including compliance with the thousands of laws and regulations that apply to personal behavior of employees. Unfortunately, the Court on 2/19/02 declined to hear the appeal.
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TNS, Inc. v. NLRB
(6th Circuit)
Walk-offs in hazardous conditions
The NAM filed an amicus brief 6/13/00 asking a federal appeals court to overturn an NLRB decision that allows employees to walk off the job anytime they may feel they're being exposed to dangerous working conditions--without regard to factual evidence.The court was to decide two key issues: 1) who decides what are abnormally dangerous working conditions; and 2) if employees walk off, can the company hire permanent replacements? The NAM argued that there must in fact be "abnormally dangerous" workplace conditions before employees may walk out. Federal, state and local safety and health agencies that monitor workplace conditions--not the NLRB--should make that decision. On 7/10/02, the court upheld the NLRB's legal rulings but vacated on factual grounds and because the case was not resolved in a reasonable time.
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Toyota Motor Manufacturing, Kentucky, Inc. v. Williams
(U.S. Supreme Court)
Scope of ADA coverage
The Supreme Court unanimously ruled on 1/8/02 that an individual cannot establish the existence of a disability under the Americans with Disabilities Act by simply showing that she is restricted from performing certain elements of a single job.
The plaintiff in this case had carpal tunnel syndrome and tendinitis, and the lower court had found that Williams could be considered disabled due to her inability to perform certain manual tasks associated with her job. On appeal, the Supreme Court ruled that the inability to perform a single job - or, as here, elements of a single job - cannot be the basis for finding a disability. Rather, there must be "an impairment that prevents or severely restricts the individual from doing activities that are of central importance to most people's daily lives. The impairment's impact must also be permanent or long-term."
Moreover, the Court said that an individual can't prove a disability merely by submitting evidence of a medical diagnosis of an impairment. Instead, there must be evidence that the limitation caused by their impairment in terms of their own experience is substantial. Each person must show that central activities in his or her daily life are severely restricted.
On March 5, the NAM filed an amicus brief in the Supreme Court supporting Toyota’s petition to review this case. The brief, written by Peter Susser and Joseph Schuler at Littler Mendelson, highlights the erroneous result and the serious consequences for manufacturers if it is allowed to stand. The petition for cert. was granted, and the NAM filed a brief on the merits on 6/28/01, along with the Equal Employment Advisory Council.
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US Airways, Inc. v. Barnett
(U.S. Supreme Court)
ADA and seniority
The Court narrowly reversed the lower court ruling, finding that a bona fide seniority system generally need not be disrupted to provide a reasonable accommodation to a qualified employee under the ADA.
The Ninth Circuit had ruled that companies must engage in an interactive process when determining an employee's qualification for a reasonable accommodation under the Americans with Disabilities Act. In this case, a disabled employee received a transfer to an easier job in the mail room, but was bumped from that job when two other employees with greater seniority applied for jobs there. The Supreme Court decided that the ADA does not require an employer to reassign a disabled employee to a different position as a "reasonable accommodation" where another employee was entitled to hold the position under the employer's bona fide and established seniority system. Decided 4/29/02.
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Washington Employers Concerned About Regulating Ergonomics v. Washington Dept. of Labor and Industries
(Thurston County Superior Court)
Ergonomics regulation challenge
The NAM has joined with WE CARE, a broad-based coalition of 230 private and public employers and other organizations, to sue the State of Washington over its new ergonomics standards, which are to become effective July 1, 2002. The suit charges that the rule requires "unnecessary, scientifically unsupported and economically irrational modifications" to the workplace, and that the state's actions are unauthorized, procedurally defective and arbitrary and capricious. The suit asks that the rule be declared invalid.Ruling from the bench, the judge threw out a large business coalition suit, including the Association of Washington Business and the NAM, that challenged Washington State's new ergonomics regulation. The court rejected challenges involving cost/benefit analysis, timeliness, statutory authority, the validity of the evidence supporting the rule, and the sufficiency of the implementation plan.
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Breuer v. Jim’s Concrete of Brevard, Inc.
(U.S. Supreme Court)
Removal of FLSA cases from state to federal court
The Supreme Court unanimously held 5/19/03 that the provision of the Fair Labor Standards Act of 1938 ("FLSA") providing that suit "may be maintained...in any Federal or State court of competent jurisdiction" does not bar removal of an FLSA action from state to federal court. The federal removal statute, 28 U.S.C. § 1441(a), provides that if an action over which the federal district courts have original jurisdiction is brought in state court, it may be removed by the defendant to federal district court "[e]xcept as otherwise expressly provided by Act of Congress." The Supreme Court held that there was no question that this FLSA suit could have been brought initially in federal district court. And 29 U.S.C. § 216(b)’s "may be maintained" language is ambiguous, and thus does not "expressly" prohibit removal. This case is important to all entities that are or may become involved in litigation brought in state court under the FLSA.
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Desert Palace, Inc. v. Costa
(U.S. Supreme Court)
Direct evidence not required in mixed motives cases
The Supreme Court 6/9/03 held unanimously that a plaintiff need not present direct evidence of discrimination in order to obtain a “mixed-motive” jury instruction under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (the “Act”). In a “mixed-motive” case, both legitimate and illegitimate reasons motivated the employment decision at issue. Under the Act, “an unlawful employment practice is established” if the plaintiff demonstrates that his or her race, color, religion, sex, or national origin was a “motivating factor,” but an employer can limit the available remedies by demonstrating that it “would have taken the same action in the absence of the impermissible motivating factor.” The Court emphasized the fact that, in defining the term “demonstrates” to mean satisfaction of “the burdens of production and persuasion,” the Act does not include language that would require these burdens to be met by direct evidence or some other heightened showing. The Court reasoned that, in the face of the statute’s silence, it would be inappropriate to depart from the conventional rule of civil litigation that requires a plaintiff to prove his case by a preponderance of the evidence, using direct or circumstantial evidence. This decision, which rejects the heightened evidentiary burden previously recognized by several courts of appeals, is important to all employers covered by Title VII and similar statutes.
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Grutter v. Bollinger
(U.S. Supreme Court)
Equal protection
In a 5-4 decision in Grutter, the Supreme Court 6/23/03 upheld the University of Michigan Law School’s admissions policy that allowed race to be considered as one of many factors in an individualized admissions process. Endorsing Justice Powell’s concurring opinion in Regents of the University of California v. Bakke, 438 U.S. 265 (1978), the Court first held that “student body diversity is a compelling state interest that can justify the use of race in university admissions.” Distinguishing this case from its companion, Gratz, the Court then held that the law school’s program, which centered on using race as a “plus” factor in an individualized process to achieve a “critical mass” of underrepresented minorities was constitutional because it “bears the hallmarks of a narrowly tailored plan.” Finally, the Court noted that because “the number of minority applicants with high grades and test scores has indeed increased” in the 25 years since “Justice Powell first approved the use of race to further an interest in student body diversity in the context of public higher education,” it “expect[ed] that 25 years from now, the use of racial preferences will no longer be necessary to further” that interest.In Gratz, the Supreme Court held 6-3 that the University of Michigan’s use of racial preferences in its undergraduate admissions violates the Equal Protection Clause of the Fourteenth Amendment, Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d), and 42 U.S.C. § 1981. The Court first noted that, as set forth in Grutter, the use of race in admissions can be a compelling interest capable of supporting narrowly-tailored means. However, the Court held that “the University’s policy, which automatically distributes 20 points, or one-fifth of the points needed to guarantee admission, to every single ‘underrepresented minority’ applicant solely because of race,” is not narrowly tailored to achieve the University’s asserted compelling interest in diversity. Responding to the University’s contention that more individualized consideration is “impractical” for such a large institution, the Court stated that “the fact that the implementation of a program capable of providing individualized consideration might present administrative challenges does not render constitutional an otherwise problematic system.” These cases are significant to all institutions of higher education. They are also important to employers and government contractors whose personnel and other decisions are subject to equal protection and similar civil rights requirements. A group of large employers supported the school's affirmative action program because it encouraged diversity in the student body, which makes a more diverse pool of potential workers from which to choose. See also case #02-516 Gratz v. Bollinger
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State ex rel. Diehl v. O'Malley
(Missouri Supreme Court)
Jury trial in employment discrimination case
The NAM filed a joint amicus brief with Associated Industries of Missouri, the Greater Kansas City Chamber of Commerce, the Missouri Bankers Association, and the Missouri Chamber of Commerce and Industry urging the Missouri Supreme Court to affirm ruling that state’s Human Rights Act on employment discrimination provides trial by judge, not by jury. We argued that the Act is clear on its face, and is supported by legislative history and the Missouri Constitution. Allowing jury trials in such cases would burden small manufacturers, clog the courts and lead to venue shopping.On 1/28/03, the Missouri court held there is a right to trial by jury for money damages.
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Washington Employers Concerned About Regulating Ergonomics v. Washington Dept. of Labor and Industries
(Washington State Supreme Court)
Ergonomics regulation
The NAM joined with hundreds of companies and other associations in a brief 11/13/02 on the appeal of an adverse ruling in a case where the business community challenged the validity of Washington's new ergonomics regulation. The brief argues in part that the issuance of the rule violated the Regulatory Reform Act of 1995 by not having a cost-benefit analysis prior to adoption, that the eventual cost-benefit analysis was poor, and that the Department exceeded its statutory authority in attempting to regulate simple physical activity in the workplace.On 11/4/03, Washington voters approved the ballot initiative rescinding the Washington State ergonomics rule. The initiative would also bar the state from adopting another ergonomics rule unless a federal standard is put in place. The overreaching ergo regulation would have required all employers (private and public) to identify jobs likely to cause "work-related musculoskeletal disorders." Employers then would have been required to do whatever was "technologically or economically feasible" to eliminate ergonomic hazards. This state regulation was as bad as the old Clinton federal ergonomics regulation.
A big congratulations to the Washington State business community--especially the NAM ’s state affiliate, The Association of Washington Business-- for its part in rescinding the regulation. This is a very big victory for all of the business community especially manufacturers. It is also a substantial loss for the unions because future adoption of comprehensive, but misguided, ergonomics rules at the state level will be even more difficult.
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Barnhart v. Thomas
(U.S. Supreme Court)
Social Security eligibility
The Supreme Court 11/12/03 upheld the Social Security Administration’s determination that a claimant is not disabled -- and therefore ineligible for disability insurance benefits and Supplemental Security Income -- if the claimant is able to perform her previous work, regardless of whether that previous work exists in significant numbers in the national economy. The Court held that the SSA’s interpretation of 42 U.S.C. § 423(d)(2)(A) was a reasonable one, and therefore entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). This case is important to any business that provides disability benefits and is entitled to a set-off when an employee becomes eligible for Social Security benefits.
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Cavin v. Honda of America, Inc.
(6th Circuit)
FMLA notice requirements
The NAM and the Equal Employment Advisory Council filed an amicus brief 10/23/03 supporting Honda's petition to rehear a Sixth Circuit decision that restricts that company from adopting formal reporting requirements for employees that want to avail themselves of time off under the Family and Medical Leave Act (FMLA). We argue that the court should reassess a 3-judge panel's ruling that allowed an FMLA suit to proceed. The court ruled that Honda's procedures were too strict and that it was sufficient that the employee gave "timely verbal or other notice" that he was going to miss work for reasons that satisfy the requirements for FMLA leave. We argue that companies are allowed to enforce reasonable notice procedures, that written notices need only be waived for medical emergencies, that restricted compliance requirements will discourage more generous leave benefits, and that other circuit courts are in conflict with the Sixth Circuit. Review denied 2/04.
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Gratz v. Bollinger
(U.S. Supreme Court)
Equal protection
In a 5-4 decision in Grutter, the Supreme Court 6/23/03 upheld the University of Michigan Law School’s admissions policy that allowed race to be considered as one of many factors in an individualized admissions process. Endorsing Justice Powell’s concurring opinion in Regents of the University of California v. Bakke, 438 U.S. 265 (1978), the Court first held that “student body diversity is a compelling state interest that can justify the use of race in university admissions.” Distinguishing this case from its companion, Gratz, the Court then held that the law school’s program, which centered on using race as a “plus” factor in an individualized process to achieve a “critical mass” of underrepresented minorities was constitutional because it “bears the hallmarks of a narrowly tailored plan.” Finally, the Court noted that because “the number of minority applicants with high grades and test scores has indeed increased” in the 25 years since “Justice Powell first approved the use of race to further an interest in student body diversity in the context of public higher education,” it “expect[ed] that 25 years from now, the use of racial preferences will no longer be necessary to further” that interest.In Gratz, the Supreme Court held 6-3 that the University of Michigan’s use of racial preferences in its undergraduate admissions violates the Equal Protection Clause of the Fourteenth Amendment, Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d), and 42 U.S.C. § 1981. The Court first noted that, as set forth in Grutter, the use of race in admissions can be a compelling interest capable of supporting narrowly-tailored means. However, the Court held that “the University’s policy, which automatically distributes 20 points, or one-fifth of the points needed to guarantee admission, to every single ‘underrepresented minority’ applicant solely because of race,” is not narrowly tailored to achieve the University’s asserted compelling interest in diversity. Responding to the University’s contention that more individualized consideration is “impractical” for such a large institution, the Court stated that “the fact that the implementation of a program capable of providing individualized consideration might present administrative challenges does not render constitutional an otherwise problematic system.” These cases are significant to all institutions of higher education. They are also important to employers and government contractors whose personnel and other decisions are subject to equal protection and similar civil rights requirements. A group of large employers supported the school's affirmative action program because it encouraged diversity in the student body, which makes a more diverse pool of potential workers from which to choose. See also case #02-241, Grutter v. Bollinger
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IBEW, Wal-Mart Stores, Inc. & IBM Corp.
(NLRB)
Right to have representative in investigatory interview of non-union employee
IBEW, Wal-Mart Stores, Inc. & IBM Corp. The NAM and other business groups urged the NLRB to reinstitute its position prior to the Epilepsy Foundation case (2000) that non-union employees do not have statutory right to have a third-party representative with them during an investigatory interview by their employer. On 6/15/04, the NLRB agreed. Because employers are subject to increasing legal obligations regarding employment discrimination, financial fraud and heightened security concerns, the Board found sufficient justification for adopting a policy that gives greater weight to the employer's right to conduct investigations than to an employee's right to have a co-worker present during a confidential interview. We were concerned that third party presence in such investigations will hinder getting at the truth and maintaining confidentiality. Employers are under substantial legal and moral pressure to fully and adequately address sexual or racial discrimination, financial malfeasance, simple theft or violence, job-impairing drug use, or terrorism and other homeland security issues. The NAM joined with the EEAC, Associated Builders & Contractors, the U.S. Chamber of Commerce, the Society for Human Resource Management and the International Mass Retail Association in the amicus brief in this case.
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In re California Assembly Bill 1889
(NLRB)
Seeking injunction against state contractor labor relations restraints
The NAM and 4 other business groups 6/28/02 urged the NLRB to sue California to enjoin the enforcement of that state’s Assembly Bill 1889, which is now law and is being enforced. We feel strongly that the National Labor Relations Act preempts the law, which pervasively regulates the labor relations activities of private sector recipients of state funds, lessors of state property, and anyone else doing business with California. It prohibits employers from using state funds and state property for a wide variety of otherwise legitimate labor relations activities, while allowing union-friendly activities such as recognizing a union without a secret ballot representation election. Before the NLRB could act, a federal court enjoined the provisions at issue. The 9th Circuit affirmed on 4/2/04 in a case captioned Chamber of Commerce v. Lockyear.
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Jones v. R.R. Donnelley & Sons Co.
(U.S. Supreme Court)
§ 1981 statute of limitations
The Supreme Court unanimously held 5/4/04 that the four-year statute of limitations set forth in 28 U.S.C. § 1658 applies to a civil action brought under 42 U.S.C. § 1981(b). Section 1981(b), created by the Civil Rights Act of 1991, expanded protection of the right to “make and enforce contracts” by defining this phrase to include “the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” 28 U.S.C. § 1658 creates a default four-year statute of limitations for civil actions arising under a federal statute enacted after December 1, 1990. Although Section 1981 was enacted long before December 1, 1990, the addition of subsection (b) occurred after that date. The Supreme Court held that the four-year limitations period applied, explaining that a cause of action “aris[es] under” an Act of Congress enacted after December 1, 1990, and therefore is governed by Section 1658’s 4-year statute of limitations, “if the plaintiff’s claim against the defendant was made possible by a post-1990 enactment.” This case is important to all entities that are or may become involved in litigation under 42 U.S.C. § 1981(b) or other federal statutes amended after December 1, 1990.
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Pennsylvania State Police v. Suders
(U.S. Supreme Court)
Whether sexual harassment is actionable without "tangible employment action"
The Supreme Court 6/14/04 clarified the circumstances under which employers may assert affirmative defenses to Title VII-based claims that a hostile work environment created by a supervisor culminated in constructive discharge. The Court held that , to establish “constructive discharge,” a plaintiff must show that her work environment was so intolerable that her resignation qualified as a fitting response. If “constructive discharge” is established, the employer may, consistent with the Court’s 1998 decisions in Ellerth and Faragher, assert affirmative defenses that: (i) the employer exercised reasonable care to prevent and correct the harassment, and (ii) the plaintiff unreasonably failed to take advantage of any employer-provided or other opportunities to correct or avoid harm. If, however, the plaintiff resigned in reasonable response to official employer actions changing her employment status − such as humiliating demotions, cuts in pay, or transfers − then the employer may not assert these affirmative defenses. This decision is important for all employers subject to Title VII.
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Raytheon Company v. Hernandez
(U.S. Supreme Court)
ADA eligibility
On 12/2/03, the Supreme Court decided 7 to 0 that an employer may, without violating the Americans with Disabilities Act (“ADA”), maintain a policy against rehiring former employees terminated for violating workplace conduct rules, such as testing positive for cocaine. The Ninth Circuit had held that such a policy “violates the ADA, as applied to employees with the disability of drug addiction whose only work-related offense was testing positive for drug use but are now rehabilitated.” The Supreme Court ruled that the company's "no-hire policy is a quintessential legitimate, nondiscriminatory reason for refusing to rehire an employee who was terminated for violating workplace conduct rules." The policy was litigated under a disparate treatment analysis. As long as the employer could show a legitimate, nondiscriminatory reason for the refusal to hire, and the employee could not show that the decision was actually made on the basis of his disability, the employer wins. Unresolved was whether the employee would win under a disparate impact theory -- that is, whether the employer's no-hire policy falls more harshly on people protected by the ADA than on others. This theory was not raised in a timely manner in the litigation.
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Yates v. Hendon
(U.S. Supreme Court)
Single employer ERISA plans
The Supreme Court held 3/2/04 that a sole proprietor or sole shareholder of a business may qualify as a “participant” in a pension plan covered by the Employee Retirement Income Security Act of 1974 (“ERISA”). ERISA’s “text contains multiple indications that Congress intended working owners to qualify as plan participants.” Moreover, the Court reasoned, “Congress’ aim is advanced” by this reading: “The working employer’s opportunity personally to participate and gain ERISA coverage serves as an incentive to the creation of plans that will benefit employer and non-owner employees alike.” Accordingly, the Court held that “[i]f the plan covers one or more employees other than the business owner and his or her spouse, the working owner may participate on equal terms with other plan participants.” This case is important to all single-owner businesses that maintain ERISA plans.
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IBP, Inc. v. Alvarez
(U.S. Supreme Court)
Pay for changing clothes
The Supreme Court 11/8/05 held that under the Fair Labor Standards Act (“FLSA”) and Portal-to-Portal Act, employers must compensate their employees for pre- and post-shift time spent donning or doffing employer-required clothing or equipment and time spent walking between such clothing and equipment stations and the employees’ work areas; compensation for time spent waiting at clothing and equipment stations is not required, however. Regulations promulgated under the Portal-to-Portal Act adopted the “continuous workday rule,” which provides that an employee’s compensable “workday” includes all time from commencement to completion of the employee’s “principal activity or activities.” The Portal-to-Portal Act nevertheless excepts from the FLSA’s coverage time spent on activities “preliminary or postliminary” to the employee’s principal activity. Justice Stevens, writing for a unanimous Court, reiterated the Court’s earlier holding that donning or doffing required equipment constitutes an “integral and indispensable part of the [employee’s] principal activities” and therefore is a compensable part of the workday. Moreover, under the continuous workday rule, time then spent walking between the clothing or equipment station and the employee’s work area also necessarily constitutes part of the compensable workday. Time spent simply waiting to don the first piece of clothing or equipment does not qualify as an “integral or indispensable part of the principal activity,” however, and therefore is not required to be compensated. The decision in these consolidated cases is important to any business whose employees must pick up and/or wear certain clothing or equipment in order to perform their jobs.The NAM, the American Chicken Council and the American Meat Institute filed an amicus brief urging the Supreme Court to review the IBP case. On 8/1/05, the NAM joined with the U.S. Chamber of Commerce, the Society for Human Resources Management and the Association of International Automobile Manufacturers in a brief on the merits. See also Case #04-66, Tum v. Barber Foods.
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Tum v. Barber Foods, Inc.
(U.S. Supreme Court)
Pay for changing clothes
The Supreme Court 11/8/05 held that under the Fair Labor Standards Act (“FLSA”) and Portal-to-Portal Act, employers must compensate their employees for pre- and post-shift time spent donning or doffing employer-required clothing or equipment and time spent walking between such clothing and equipment stations and the employees’ work areas; compensation for time spent waiting at clothing and equipment stations is not required, however. Regulations promulgated under the Portal-to-Portal Act adopted the “continuous workday rule,” which provides that an employee’s compensable “workday” includes all time from commencement to completion of the employee’s “principal activity or activities.” The Portal-to-Portal Act nevertheless excepts from the FLSA’s coverage time spent on activities “preliminary or postliminary” to the employee’s principal activity. Justice Stevens, writing for a unanimous Court, reiterated the Court’s earlier holding that donning or doffing required equipment constitutes an “integral and indispensable part of the [employee’s] principal activities” and therefore is a compensable part of the workday. Moreover, under the continuous workday rule, time then spent walking between the clothing or equipment station and the employee’s work area also necessarily constitutes part of the compensable workday. Time spent simply waiting to don the first piece of clothing or equipment does not qualify as an “integral or indispensable part of the principal activity,” however, and therefore is not required to be compensated. The decision in these consolidated cases is important to any business whose employees must pick up and/or wear certain clothing or equipment in order to perform their jobs.The NAM, the American Chicken Council and the American Meat Institute filed an amicus brief urging the Supreme Court to review the IBP case. On 8/1/05, the NAM joined with the U.S. Chamber of Commerce, the Society for Human Resources Management and the Association of International Automobile Manufacturers in a brief on the merits. See also Case #03-1238, IBP v. Alvarez
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Arbaugh v. Y & H Corp.
(U.S. Supreme Court)
Definition of an employer
The Supreme Court unanimously held 2/22/06 that satisfaction of the numerosity component of Title VII’s definition of “employer” is an element of a plaintiff’s claim for relief, not a prerequisite to federal subject-matter jurisdiction. Section 701(b) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e(b), limits the definition of “employer” to those having “fifteen or more employees.” The lower courts in this case held that the numerosity requirement is jurisdictional and thus required dismissal even though it had not been raised by the defendant until after a jury verdict for the plaintiff. Reversing, the Supreme Court analyzed the text and structure of Title VII’s jurisdictional provision, 42 U.S.C. § 2000e-5(f)(3), together with 28 U.S.C. § 1331, the general statute that confers federal-question jurisdiction. The Court concluded that the numerosity requirement contained in Title VII’s definition of “employer” is not a threshold jurisdictional requirement akin to the monetary floor clearly specified for diversity actions in 28 U.S.C. § 1332. In doing so, the Court articulated a bright-line rule: if Congress does not definitively state that a threshold limitation on the scope of a statute is jurisdictional in nature, the courts must treat the restriction as nonjurisdictional. The Court’s decision is important to employers with fewer than fifteen employees and to any business that may be involved in litigation under federal statutes with specifically limited scope.Decision Below: 380 F.3d 219 (5th Cir. 2004)
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Burlington N. and Santa Fe R.R. Co. v. United States
(U.S. Supreme Court)
Employment discrimination
The Supreme Court 6/22/06 decided that the anti-retaliation provision in Title VII of the Civil Rights Act of 1964 is not limited to protecting employees from retaliatory action taken by employers that relates to employment or occurs in the workplace. Rather, the provision covers any material action taken by the employer that would likely discourage a reasonable worker from making or supporting a charge of employment discrimination. The Court determined that a plain reading of Title VII indicated that Congress intended to provide employees broad protection from employer retaliation. Specifically, the Court pointed out that unlike the language of the substantive anti-discrimination provision, which limits its scope to actions that affect employment or alter the conditions of the workplace, the wording of the anti-retaliation provision contains no such qualifiers. Congress’s unqualified prohibition against retaliation was a recognition, the Court stated, that employers can effectively retaliate against employees outside of the workplace and in ways that do not relate directly to employment. But the Court was also careful to emphasize that the anti-retaliation provision does not cover petty slights or minor annoyances experienced by an employee who reports discriminatory behavior, but only materially adverse actions. Furthermore, the Court held that a finding of materiality must be based on the perspective of a reasonable worker, rather than on a particular employee’s subjective feelings. This case is of importance to every business covered by Title VII.Decision Below: 364 F.3d 789 (6th Cir. 2004) (en banc)
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Domino’s Pizza v. McDonald
(U.S. Supreme Court)
Race discrimination in contracts
The Supreme Court decided 2/22/06 that a shareholder of a corporation cannot bring a claim under Section 1 of the Civil Rights Act of 1866, 42 U.S.C. § 1981, which prohibits discrimination in the making and enforcement of contracts, if the shareholder has no rights under the contract that he claims the defendant’s discrimination impaired. In this case, the plaintiff was the president and sole shareholder of a corporation that entered into a set of contracts with the defendant for the construction of four restaurants. The plaintiff sued, claiming violation of Section 1981, when the defendant terminated these contracts allegedly because the plaintiff is African American. In an opinion authored by Justice Scalia, the Supreme Court today held, based on the language of Section 1981, that a claimant can sue only for discrimination that impairs a contractual relationship if the claimant actually has rights under the contract at issue. In this case, the Court indicated, the plaintiff has no claim because the shareholder of a corporation has no rights and is exposed to no liability under a corporation’s contracts. This case is of interest to any business that forms contractual relationships because it limits the class of plaintiffs who can claim racial discrimination in the making and enforcement of contracts.Decision Below: 107 Fed. App. 18 (9th Cir. 2004)
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Olivo v. ExxonMobil Corp.
(New Jersey Supreme Court)
Liability for second-hand exposure
The NAM joined with six other groups in an amicus brief 12/12/05 urging the New Jersey Supreme Court to reject a theory of liability that would hold a company liable for second-hand exposure to a hazard in the workplace. The court, however, ruled 4/24/06 that the company owed a duty to protect against foreseeable harm to an employee’s wife (who laundered his work clothes). The court sent the case back for further proceedings on the extent of the duty owed to the worker and whether the company had satisfied the duty. It also left open the possibility that the company could be exonerated if the hazard-incident-to-work exception applies.The wife of a contractor allegedly was harmed by asbestos brought home by her husband from work. Her husband worked as a union pipe welder at over fifty worksites during his 37-year career, sometimes being exposed to asbestos insulation and carrying it home on his clothing. Sixteen years after his retirement, she was diagnosed with mesothelioma. Her husband sued 30 companies over her illness.
Whether a landowner or employer is liable to third parties for second-hand exposure to hazardous substances brought home from work is an aggressive new position that plaintiffs are pressing in the courts. Two state courts have recently refused to create this new liability. Our brief highlighted the fact that liability to remote parties is a policy issue for the legislature, and that extending it in a case like this is not appropriate because of difficult questions relating to causation, control and limitless liability.
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Sereboff v. Mid Atlantic Medical Services, Inc.
(U.S. Supreme Court)
Recovering health care expenses advanced to employees
The Supreme Court held 5/15/06 that section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), authorizes an action by a plan fiduciary against a beneficiary to recover specifically identified funds where the beneficiary has recovered for its injuries from a third party. According to the terms of the ERISA plan administered by Respondent, Mid Atlantic Medical Services, a plan beneficiary is required to reimburse Mid Atlantic for benefits paid by the plan if the beneficiary subsequently recovers from a third-party tortfeasor, as Petitioners, the Sereboffs, did. After Mid Atlantic had claimed a lien on the expected proceeds from the Sereboffs’ tort suit, it brought an action under section 502(a)(3) of ERISA to recover approximately $75,000 in medical expenses that it had paid on the Sereboffs’ behalf. The district court approved a stipulation by the parties creating a separate account to segregate the amount sought by Mid Atlantic from the remainder of the Sereboffs’ recovery. Rejecting the Sereboffs’ argument that Mid Atlantic’s claim was really a legal claim for damages, the Supreme Court held that Mid Atlantic’s claim was “equitable” within the meaning of section 502(a)(3) because Mid Atlantic “sought its recovery through a constructive trust or equitable lien on a specifically identified trust, not from the Sereboffs’ assets generally.” In so holding, the Court relied on precedent “from the days of the divided bench” to determine “those categories of relief that were typically available in equity.” This decision is important to any business that maintains an ERISA plan.Decision Below: 407 F.3d 212 (4th Cir. 2005)
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BCI Coca-Cola Bottling Co. v. EEOC
(U.S. Supreme Court)
Cat's paw liability for discrimination
Employers can protect themselves against liability for unlawful discrimination by their representatives if they have procedures in place, and use them, to provide employees with procedural protections. This case involves a supervisor's discriminatory act that led to a subordinate's termination, carried out by the human resources department.
The issue on appeal was whether the employer is automatically liable for discrimination if the supervisor exerted some influence over the formal decision to take a discriminatory employment action, or whether the supervisor must be shown to have been the one principally responsible for the adverse action. The Tenth Circuit here took a middle ground approach, finding liability if the supervisor was part of the causal link to the termination, but allowing the company to absolve itself of liability if it conducted an independent investigation of the allegations against the terminated employee and came to the same conclusion.
This case involves what is being called "cat's paw" liability, where one person (the supervisor) uses another (a human resources manager) to achieve an end. The decision would have helped flesh out the procedures that employers should implement to avoid unintended discriminatory acts, but the Court dismissed the case on 4/12/07 without a decision.
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Dana Corp. and Metaldyne Corp.
(NLRB)
Secret ballot elections regarding union representation
The NAM and 18 other associations filed a brief at the National Labor Relations Board urging the Board to allow secret ballot elections when there is doubt about whether the employees actually authorized a union to represent them. The cases arose where the companies had agreed to neutrality agreements with the UAW, whereby the companies would not communicate information to employees, or lawfully express views, arguments and opinions which the union perceived as critical of the union. The union then obtained signatures from a majority of the employees authorizing them to represent the employees, but the validity of that majority was subsequently challenged. This neutrality agreement/card-check procedure has proven significantly more effective for union organizing than other methods.
The NAM argued that in this situation the NLRB's procedures should allow for a secret ballot to accurately and definitively determine whether the union enjoys majority support, rather than require employees to have to wait until a contract is negotiated and run its course before being allowed to have an election. The NAM joined with Associated Builders and Contractors, the National Restaurant Association, Printing Industries of America, the Society of Human Resource Managers, and 14 NAM-member employer association groups around the country in the brief.
On Sept. 29, 2007, the NLRB agreed by a vote of 3 to 2. It ruled that employees must have 45 days after their employer recognizes a union based on card-check authorizations to file a petition to decertify the union or to support an election petition from another union. The Board underscored the preferred method of having a secret election to determine the majority status of a union. The majority found that card-check procedures are much less reliable as indicators of employee free choice on union representation than secret elections. To have an election, an employee petition must be supported by 30% or more of the unit employees eligible to vote. The new rule will be applied prospectively only, so the decertification petitions involving the two companies in this case were dismissed.
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Ledbetter v. Goodyear Tire & Rubber Co.
(U.S. Supreme Court)
Statute of limitations in employment discrimination suits
The Supreme Court issued a 5 to 4 decision on 5/29/2007 addressing the time for filing a claim alleging discrimination in pay under Title VII of the 1964 Civil Rights Act. It ruled that even though the unequal pay may be received with each new paycheck, the statute of limitations on filing a claim begins to run when the alleged illegal pay discrimination first occurred.
Lilly Ledbetter, a female tire plant employee, sued her employer, Goodyear, for allegedly paying her a smaller salary than it paid her male co-workers. In accordance with the statute of limitations, Ledbetter filed her charge with the Equal Employment Opportunity Commission (EEOC) within 180 days of her most recent allegedly discriminatory annual employee evaluation. But at trial she was permitted to introduce evidence of many years’ worth of annual employee evaluations and respective raises to show that she had been continually subject to disparate pay because of her sex. The Eleventh Circuit held that this was improper because “in the search for an improperly motivated, affirmative decision directly affecting the employee’s pay, the employee may reach outside the limitations period created by her EEOC charge no further [than] the last such decision immediately preceding the start of the limitations period.”
The Supreme Court ruled that an employee must file a charge with the EEOC within 180 days after the alleged unlawful employment practice occurred. The majority differentiated between acts that are intentionally discriminatory, such as pay decisions, and acts that are nondiscriminatory and that entail adverse effects resulting from the past discrimination. Even if a past discriminatory act has current effects, a charge must be filed within 180 days of the discriminatory act, not its effects.
The majority also differentiated this case from cases where an employer uses a discriminatory pay structure. In that circumstance, each paycheck constitutes a new discriminatory act, but there is no general rule that a regular paycheck triggers a new period in which to charge discrimination for conduct that occurred long ago.
This is a significant decision that helps insure that complaints about workplace discrimination are handled promptly, as Congress intended.
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Long Island Care at Home, Ltd. v. Coke
(U.S. Supreme Court)
Deference to agency interpretations
How powerful are government departments when it comes to interpreting the laws they are charged with administering? Typically, courts defer to departmental interpretations that are issued through notice and comment rulemaking, or that are based on particular expertise that the department has because it deals with the subject so extensively. In this case, however, the Department of Labor's interpretation of minimum wage and overtime requirements for "companion services" provided by an agency were not entitled to deference, according to the Second Circuit, because it was inconsistent with some congressional purposes in the law, with other regulations, with past interpretations, and was not sufficiently explained.
On June 11, 2007, the Supreme Court unanimously reversed. It ruled that Congress expressly left several unanswered issues for the Department of Labor to resolve, and the Department did so with notice-and-comment rulemaking. Because the Department's interpretation was reasonable and the final regulation was the "logical outgrowth" of the proposed regulation, the Court accepted it.
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Norfolk Southern Railway Co. v. Sorrell
(U.S. Supreme Court)
Causation standard under FELA
The Supreme Court granted certiorari 5/15/06 to determine whether the causation standard for employee contributory negligence under the Federal Employers Liability Act (“FELA”) differs from the causation standard for railroad negligence. Under FELA, 45 U.S.C. §§ 51-60, state courts have jurisdiction over personal injury claims brought by railroad employees against their employer, but those courts must apply the common law “as established and applied in the federal courts.” The trial court in the case below applied the jury instructions approved by the Missouri Supreme Court, which provide different substantive standards of causation for determining a defendant-railroad’s negligence than a plaintiff-employee’s contributory negligence. The Missouri Court of Appeals affirmed solely on the ground that the jury instructions approved by the Missouri Supreme Court were binding. In contrast, the Third, Fifth, and Sixth Circuits and the Oregon Supreme Court all have held that FELA’s causation standards for negligence and contributory negligence are the same. Likewise, the model jury instructions in the Fifth, Eighth, Ninth, and Eleventh Circuits also employ the same standard for negligence and contributory negligence. This case is important to any individual or business that may be subject to litigation under FELA.
On Jan. 10, 2007, the Court unanimously decided that FELA requires Missouri to use the same causation standards for negligence and contributory negligence. Since there is no express statutory basis for applying different standards, the common law rule of a uniform causation standard applies. What that standard is has been left to further litigation.
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Taylor v. Progress Energy, Inc.
(4th Circuit)
Release of FMLA claims
The NAM filed a motion 8/3/05 to join in an industry amicus brief in this case involving an employee’s voluntary release of rights under the Family and Medical Leave Act (FMLA). The plaintiff was paid more than $12,000 as part of an enhanced severance benefits package during a reduction in force, in return for a release of all legal claims relating to her employment. She then sued, claiming the release was ineffective for FMLA claims. A 3-judge panel of the U.S. Court of Appeals for the Fourth Circuit interpreted a Department of Labor (DOL) regulation as requiring DOL or court approval for all waivers, and the employer sought rehearing on this issue by the full court.The industry brief, filed by the Equal Employment Advisory Council, the U.S. Chamber of Commerce, and the Society for Human Resource Management, argued that employees should be able to voluntarily release claims they may have against their employer under the FMLA without having that release approved by the Department of Labor or a court. The DOL regulation should be declared invalid if it requires supervision of releases. Another court, the 5th Circuit, has ruled that the regulation only applies to releases of future FMLA claims, but the 4th Circuit has created a difficult conflict that threatens to make it virtually impossible for employers to obtain an enforceable general release without litigation, since DOL lacks any vehicle for supervising the hundreds of thousands of releases signed every year. The NAM needed to file a motion to join the brief because of an unusual Fourth Circuit rule that requires trade associations to disclose their membership lists to the court. To protect the confidentiality of our membership list, we moved to waive the rule and join the brief, but the motion was denied 8/9/05.
The court decided to rehear this case, but affirmed its first ruling on 7/3/07.
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Arizona Contractors Ass'n. v. Napolitano
(U.S. District Court for Arizona)
Exclusive federal jurisdiction over immigration
The NAM is part of a coalition of business entities that filed a joint brief on 9/14/07, urging a federal district court to declare that an Arizona immigration law is preempted by federal law.
Passed in July, Arizona’s House Bill 2779 requires employers to use a voluntary federal government-administered electronic verification system, commonly known as the “Basic Pilot,” to verify work eligibility of all employees. Our brief argued that federal immigration law preempted the new Arizona law, because the state law conflicted with federal law and with congressional intent. Deference to Congress, which has plenary authority in this field, is essential to ensuring a consistent national immigration policy and avoiding local policies that frustrate Congress’ objectives. Additionally, state immigration laws impose inconsistent requirements on and create substantial confusion for employers who conduct business in multiple jurisdictions, with conflicting state laws occasionally making it impossible for employers to comply with all of the laws simultaneously.
In addition to Arizona, Arkansas, Colorado, Georgia, Illinois, Iowa, Louisiana, Massachusetts, Nebraska, Nevada, New Hampshire. Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, and West Virginia all have passed legislation addressing the general issue of immigration control at the worksite, but with each state enacting its own unique requirements.
On February 7, 2008, the district court upheld the Legal Arizona Workers Act, holding that its licensing sanctions did not make employers "conform to a stricter standard of conduct than federal law." The court also held that the Act provided employers with procedural due process for their claims to be heard.
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CBOCS West, Inc. v. Humphries
(U.S. Supreme Court)
Retaliation claims under the Civil Rights Act
The Civil Rights Act of 1991 prohibits discrimination in the making and enforcement of contracts. The Supreme Court ruled 5/27/08 that that law allows retaliation claims by employees who allege that discrimination led to their termination. Here, a restaurant manager claimed he was fired in retaliation for complaining about racially discriminatory treatment of another employee, but his employer claimed he was fired for leaving the restaurant safe open.
The Supreme Court held that although the Act does not specifically provide for race retaliation claims, employer conduct after the formation of a contract is subject to Section 1981 because Congress amended the law in 1991. Courts have interpreted Section 1982 to allow suits for retaliation, and Sections 1981 and 1982 have long been interpreted alike.
Employers will face a somewhat expanded scope of potential liability in discrimination cases, both from the ruling that retaliation is actionable and from the additional benefits that plaintiffs have under Sec. 1981 compared to Title VII of the Civil Rights Act, namely a longer statute of limitations, no requirement that EEOC administrative remedies be pursued, and no damages caps.
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Chamber of Commerce v. Brown
(U.S. Supreme Court)
Preemption of federal labor law
The Supreme Court ruled 6/19/2008 that a California law that prohibits employers who receive more than $10,000 in state funds annually from using those funds to “assist, promote, or deter union organizing” is preempted by the National Labor Relations Act (NLRA). The NRLA provides that companies’ anti-labor speech cannot be considered evidence of an unfair labor practice so long as it does not threaten or coerce workers. The Chamber argued that California’s law violated the NLRA’s safe harbor for anti-union speech, and is therefore preempted. The Court agreed, finding that noncoercive speech is fully protected by the NLRA. Congress intended to leave unregulated uninhibited, robust and wide-open debate on labor disputes.
The impact of the Supreme Court’s decision in this case could be significant for state government contractors, as more than a dozen states were considering adopting laws similar to California’s.
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Huber v. Wal-Mart Stores, Inc.
(U.S. Supreme Court)
Reasonable accommodation under the ADA
Seventeen years after it was passed, the Americans With Disabilities Act continues to generate litigation over fundamental questions it left unresolved. One involves the requirements for providing a reasonable accommodation to a disabled worker. In this case, the plaintiff became disabled and could no longer perform the essential elements of her job. She sought another vacant job, and her employer considered her application equally with other candidates. Since others were better qualified, she did not get the transfer, but instead was given a less favorable job.
The Eighth Circuit ruled that the employer's procedure treated candidates equally, and that the plaintiff was not entitled to the vacant job when that reassignment would violate a legitimate nondiscriminatory policy of the employer to hire the most qualified candidate.
The company provided a reasonable accommodation to the plaintiff by finding her another job. It may not have been the best alternative for her, but the law only requires a reasonable accommodation.
The Supreme Court initially agreed to hear this appeal, but the parties settled and the case was dismissed without a ruling.
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Illinois Bell Tel. Co. v. IBEW, Local 21
(U.S. Supreme Court)
Whether recognition clause justifies arbitration of disputes not specified in collective bargaining agreement
This case arises from a dispute between AT&T's subsidiary, Illinois Bell Telephone Co., and its union, the IBEW, which sought to compel arbitration concerning new "performance guidelines" the company implemented for sales staff. The applicable collective bargaining agreement limits arbitration to matters involving the interpretation and application of the agreement's terms or provisions, and it says nothing about the arbitrability of performance guidelines. The Seventh Circuit nevertheless ruled that the guidelines were arbitrable, basing its decision solely on the fact that the agreement contained a recognition clause, i.e., standard language found in virtually every labor agreement in the country which says that the union is recognized as the exclusive bargaining agent for the defined bargaining unit of employees.
The NAM joined with the Council on Labor Law Equality to support Illinois Bell's appeal of this case to the Supreme Court. We urged the Court to take the case, arguing that the lower court's decision converts virtually any company action that is contrary to a union's interests into a violation of a boilerplate recognition clause. Arbitration should only be required where the parties have agreed to it, and courts should decide whether the parties have done so.
On March 17, the Court refused to hear this appeal. This precedent improperly introduces a judicially imposed form of 'interest arbitration' over a limitless set of issues arising under labor agreements that do not authorize such arbitration.
Related Documents: NAM brief (January 2, 2008)
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Meacham v. Knolls Atomic Power Lab.
(U.S. Supreme Court)
Burden of proof in disparate impact suits under the ADEA
Under the Age Discrimination in Employment Act (ADEA), employers may not discriminate against employees 40 years of age or older based on age. However, employers may “take any action otherwise prohibited where the differentiation is based on reasonable factors other than age.” In the mid-90s, Knolls Atomic Power Lab instituted an involuntary workforce reduction, determining which employees to dismiss based primarily on three factors — performance, flexibility, and criticality of skills. Even though years of service also factored into the determination, 30 of the 31 employees terminated were over the age of 40. Subsequently, 26 of the dismissed workers filed suit, alleging age discrimination in violation of the ADEA.
At trial, a jury rendered a verdict in favor of the former employees, based on the employer’s failure to monitor the discretionary process in deciding who should be terminated, which resulted in an unlawful disparate impact on older workers. Although the Second Circuit initially affirmed the verdict, its decision was vacated and remanded as a result of the Supreme Court’s decision in Smith v. City of Jackson, 544 U.S. 228 (2005). In that case, the Court held that in disparate impact suits filed under the ADEA, employers must be given the opportunity to show that their actions were reasonable. On remand, the Second Circuit reversed its earlier ruling, concluding that the employees had the burden of demonstrating the employer’s discretionary termination process was unreasonable and that they failed to carry this burden.
The Supreme Court ruled on 6/19/08 that the employer bears the burden of production and the burden of persuasion under the ADEA in establishing that it acted in reliance on “reasonable factors other than age” in a disparate impact case. This is an affirmative defense that, like other affirmative defenses, the employer must prove. Because this is a disparate impact case, involving alleged discrimination that results in a workplace disparity based on statistical evidence, plaintiffs must still point to a specific employment practice that caused the disparity. The case was sent back to the lower courts to determine whether the employer proved its defense.
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Noe v. PolyOne Corp.
(6th Circuit)
Lifetime vesting of retiree health care benefits
The NAM and 4 other organizations filed an amicus brief 4/9 urging all the judges on the U.S. Court of Appeals for the Sixth Circuit to review a ruling by three of their members that threatens to impose huge health care liabilities on manufacturers. At issue is whether a union contract implies lifetime health care for retirees if the contract does not specify that health benefits are provided for the length of the contract only. We argue that in the non-union context, courts do not presume that retiree health care benefits are vested for life without a clear intent by the employer to do so, and there is no reason to apply a different presumption in the union context.
The Sixth Circuit is the only federal appeals court to cling to the so-called Yard-Man inference that retiree health benefits vest. This conflicts with the goal of federal labor policy to provide some degree of uniformity around the country, and encourages lawsuits in the Sixth Circuit.
The petition for rehearing was denied on June 2, 2008.
Related Documents: NAM Brief (April 9, 2008)
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14 Penn Plaza LLC v. Pyett
(U.S. Supreme Court)
Whether arbitration clause in collective bargaining agreement is enforceable
Members of the Service Employees International Union who had worked as night security guards for 14 Penn Plaza were replaced in August 2003, when 14 Penn Plaza contracted with another firm to provide security for the building. Claiming that they were the building’s only employees over 50 years old, the union members filed an age discrimination suit against 14 Penn Plaza under the Age Discrimination in Employment Act (ADEA). 14 Penn Plaza filed a motion to compel arbitration under the union members’ collective bargaining agreement, which clearly required that discrimination claims be resolved via arbitration.
The district court denied 14 Penn Plaza’s motion to compel arbitration and the Second Circuit affirmed, holding that a “mandatory arbitration agreement purporting to waive a covered worker’s right to a federal forum with respect to statutory rights is unenforceable,” even when such an agreement had been freely negotiated by a union.
On April 1, the Supreme Court held that an arbitration clause contained in a collective bargaining agreement is enforceable. The Court reasoned that because the arbitration clause was freely negotiated and “clearly and unmistakably” required that ADEA claims be resolved by arbitration, it had no legal basis to strike down the provision. An earlier decision allowed arbitration of ADEA rights for individuals, and the Supreme Court has now applied this principle to collective bargaining agreements, as long as the waiver of the right to sue for ADEA violations is clearly expressed. The decision is important because it applies the right to arbitrate ADEA disputes broadly to employer agreements with individuals and unions alike.
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Crawford v. Metropolitan Gov't of Nashville
(U.S. Supreme Court)
Retaliation claims under the
Civil Rights Act
In 2002, local Tennessee school officials conducted an internal investigation into charges of sexual misconduct by the school district’s employee relations director, Gene Hughes. During the investigation, Vicky Crawford, a payroll supervisor, reported that she witnessed and had been the victim of sexual harassment by Hughes. The investigation did not result in any disciplinary action or EEOC charge against Hughes. Six months later, Crawford was fired for alleged embezzlement and drug use, along with two other employees who had participated in the investigation.
Crawford filed a charge of discrimination with the EEOC, alleging that she had been fired in retaliation for what she told investigators about Hughes. Crawford later brought her suit in federal court, asserting that her employer’s actions violated Title VII of the Civil Rights Act, which forbids retaliation against an employee because the employee has participated in an investigation, proceeding, or hearing “under this subchapter” (known as the “participation clause”).
The district court granted summary judgment for the employer, holding that employees are not protected under Title VII’s anti-retaliation provision when participating in an employer’s internal investigation. The Sixth Circuit affirmed, holding that “participation in an internal investigation” initiated by the employer, “in the absence of any pending EEOC charge,” is not a “protected activity” under Title VII’s participation clause. The court also reasoned that extending Title VII’s protections to internal investigations may deter employers from undertaking such investigations.
The Supreme Court will now decide whether Title VII’s anti-retaliation provision protects employees from being terminated when they allege misconduct by another employee during their employer’s internal investigation of discrimination. This is a tricky situation because allowing retaliation suits prior to formal charges at the EEOC will increase litigation, but not allowing them will encourage employees to file charges under the EEOC’s procedures.
On 1/26/09, the Supreme Court unanimously reversed, holding that Title VII's anti-retaliation provision protects employees from being terminated when they allege misconduct by another employee during their employer's internal investigation of discrimination. The Court stated that when "an employee communicates to her employer a belief that the employer has engaged in … a form of employment discrimination, that communication virtually always constitutes the employee's opposition to the activity." In his concurring opinion, Justice Alito remarked that this holding did not address "opinions" that were not communicated directly to the employer but instead were informally communicated to co-workers, thereby suggesting that such opinions would not be protected by the anti-retaliation provision.
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Locke v. Karass
(U.S. Supreme Court)
Whether union can charge nonmembers for litigation expenses of national affiliate
The Supreme Court has held that unions can collect service fees from nonmembers to cover expenses for collective bargaining and contract administration, but cannot collect service fees from nonmembers to support political or ideological expression. In this case, the Maine State Employees Association (MSEA), the exclusive bargaining agent for certain state employees, paid a portion of the service fees collected from nonmembers to its national affiliate, the Service Employees International Union (SEIU), who in turn used part of it to pay for litigation activities undertaken by SEIU throughout the country.
The nonmembers challenged on First Amendment grounds the portion of the service fee attributable to SEIU's litigation costs. The federal district court held that collecting the service fee was not unconstitutional, because the union adequately explained the basis for the fee, provided the employees an opportunity to challenge the fee in impartial arbitration, and provided for escrow of disputed amounts.
The First Circuit held that MSEA may lawfully collect service fees from nonmembers for this "extra-unit litigation" because it is related to the union's collective bargaining duties. The Supreme Court agreed to decide whether a union serving as the exclusive bargaining agent for state employees can charge nonmembers for litigation expenses incurred by its national affiliate.
On Jan. 21, 2009, the Court allowed the union's charge for national litigation expenses as long as (1) the litigation is of a kind that would be chargeable if it were local (appropriately related to collective bargaining rather than political activities), and (2) the charge is reciprocal (other locals contribute similarly).
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Ricci v. DeStefano
(U.S. Supreme Court)
Standards for discarding employment test results with disparate racial impact
This controversial 5 to 4 decision involves whether New Haven could properly discard promotion test results that they believed could have led to a racial discrimination suit by blacks. The majority ruled that the city could not reject the test results unless it could demonstrate a strong basis in evidence that it would have been liable under the disparate impact provisions of Title VII of the Civil Rights Act. The Court found that if it had certified the test results, black plaintiffs may have been able to show a prima facie case of disparate impact, but the city could have rebutted that case by showing that the test was job-related and consistent with business necessity and there was no alternative with a less disparate impact.
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Thompson v. North American Stainless, LP
(6th Circuit)
Whether Title VII covers third-party retaliation claims
Title VII of the Civil Rights Act of 1964 protects employees from retaliation by their employers after complaining about discrimination in the workplace. This case involves not the employee who complained, but her fiance, who was terminated from his job. He claimed the termination was in retaliation for his fiancee's complaint, while the company cites performance-related problems. The company also argued that the plain language of the statute provides claims only to those who make a charge or otherwise participate in an investigation, proceeding or hearing.
A 3-judge panel of the Sixth Circuit ruled that a fiance or other person that is closely related or associated with those who are directly involved in protected activity may sue if there is a "causal connection between the protected activity and adverse employment action." The trial judge had ruled that the plaintiff had presented no evidence that he had participated in any protected activity.
The NAM filed an amicus brief urging the full complement of Sixth Circuit judges to uphold the trial judge, arguing that the statute is clear on its face and already protects those who "oppose discriminatory employment practices" or "participate" in equal employment proceedings. A rule that permits third-party retaliation claims would increase even more dramatically retaliation charges, which are the fastest-growing category of charges filed under Title VII, and would put employers in the untenable position of having to speculate about possible relationships an employee may have that could give rise to potential liability each time they contemplate disciplinary or other action against that employee.
This case presents a clear example of judges reading statutes in a way to achieve a policy objective rather than to enforce the text as written. A strong dissent by one judge in this case warns against legislating from the bench.
On June 5, 2009, the full Sixth Circuit ruled that "the authorized class of claimants [in third-party retaliation cases] is limited to persons who have personally engaged in protected activity by opposing a practice, making a charge, or assisting or participating in an investigation." The majority affirmed dismissal of the case against the company, finding the language in the anti-retaliation provision plain on its face. Congress did not provide a cause of action by those who do not personally oppose an unlawful employment practice, make a charge, testify, assist or participate in an investigation. The text of the statute should not be disregarded in favor of arguable public policy preferences.
The Supreme Court agreed on 6/29/2010 to hear this case on appeal.
Related Documents: NAM Brief (October 10, 2008)
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Baker v. American Horticulture Supply, Inc.
(California Supreme Court)
Interpreting California's Independent Wholesale Sales Representatives Act
On Aug. 20, 2010, the NAM and the California Manufacturers and Technology Association filed an amicus letter urging the California Supreme Court to review a state appellate decision that subjects manufacturers to treble damages liability for inadvertent violations of a state statute that prescribes various formalities for contracts with sales representatives. The Independent Wholesale Sales Representative Act, Cal. Civ. Code Sec. 1738.13, requires, among other things, that contracts specify the rate and method by which commissions are computed, the precise geographical area covered, and that sales representatives sign a written receipt acknowledging that he or she has received a copy of the contract. "Willful" violations are subject to treble damages, but the statute does not specify the level of damages that are available for non-willful violations. In this case, a California appellate court ruled that this legislative oversight would be corrected by allowing suits for single damages where a party does not act willfully, but it also adopted a loose standard of willfulness that could make most suits by sales representatives subject to treble damages.
Our amicus letter urged the California Supreme Court to review this decision. The lower court's ruling threatens to "open the floodgates of litigation against manufacturers doing business in California who inadvertently run afoul of the Act . . . No matter how innocuous the violation." In addition, by lowering the threshold for recovery of treble damages, the opinion "creates a trap for unwary manufacturers who do not know about technical requirements of the Act." The result is bad for manufacturers doing business in California.
The California court declined to review this appeal.
Related Documents: NAM amicus letter (August 20, 2010)
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Chamber of Commerce v. Edmondson
(10th Circuit)
Preemption of state immigration verification requirements
The NAM is a member of the Human Resource Initiative for a Legal Workforce, which filed an amicus brief on 10/23/08 in the 10th Circuit in a case involving an Oklahoma law that requires every business that has a contract or subcontract with a public employer to use the federal Status Verification System to verify the employment authorization status of all new employees. The law also makes it illegal to fire a U.S. citizen or permanent resident alien while retaining in a similar job an employee who is an illegal alien. Employers using the federal system are exempt from liability, investigation or suit under this section; those who do not are at risk of litigation.
The problem is that Oklahoma is one of a growing number of states and municipalities that have passed or are considering such laws, but their enforcement schemes are different, making it increasingly difficult for an employer doing business in multiple states to navigate the conflicting requirements. The laws impose a wide variety of inconsistent verification requirements, squarely conflicting with the intent of Congress to create a nationally uniform and comprehensive federal system for regulating the employment of alien workers.
Our amicus brief enumerated the serious flaws that exist with the federal verification system, specifically the experimental Basic Pilot Program known as E-Verify. Studies have pointed out the errors in the system, including 17.8 million records that contain discrepancies related to name, date of birth or citizenship status. The GAO reported that the government is not equipped to manage a significant expansion of E-Verify users. Employers have complained of multiple problems and delays, prompting Illinois to prohibit employers from using it. Participation in the program is burdensome and costly.
On 2/2/2010, the court ruled that the lawsuit was likely to succeed on the merits regarding Sections 7(C) and 9 and that the trial court properly issued an injunction against enforcement of the law. The court also found that Section 7(B) of the law is not impliedly preempted by federal law. Section 7(C) prohibits discharging an employee who is a U.S. citizen while still employing employees who are unauthorized aliens, and Section 9 requires verification of employment authorization.. Section 7(B) applies to state government contractors.
Related Documents: Human Resource Initiative's Brief (October 23, 2008)
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EEOC v. Kronos Inc.
(3rd Circuit)
Breadth of EEOC administrative subpoenas
How broad is the EEOC's administrative subpoena authority? That agency urged the courts to allow it to seek information from companies and third party testing firms that goes far beyond the bounds of an individual complaint. The EEOC wants to search for systemic discrimination by employers or the third parties they hire to do personality tests or other tests prior to employment. However, the courts are not all so expansive.
The defendant in this case, Kronos, won before a federal judge. The EEOC appealed to the Third Circuit. The NAM and others filed an amicus brief arguing that the EEOC’s tactics in this case exceed its statutory authority. Pursuing unbridled fishing expeditions in search of a big system case diverts valuable resources from investigating actual, live charges. The statute granting the EEOC investigatory powers is limited to investigations relating to the specific charge that an individual files.
Also on appeal was a district court order protecting the confidentiality of personality test information disclosed to the lawyers during discovery. We argued that validated employment tests are important hiring tools whose integrity could be compromised by even a minor breach of confidentiality.
On Sept. 7, 2010, the Third Circuit reversed in part, allowing the EEOC authority to expand an investigation of a single complaint into a broader investigation involving hiring practices in general and other job positions. It allowed a broadening of the time period to be examined and allowed the EEOC to look at the effect of the company's use of an employment assessment in hiring nationwide. According to the Third Circuit, the EEOC's power to investigate "encompasses not only the factual allegations contained in the charge, but also any information that is relevant to the charge." The court also ruled that while the EEOC may expand its investigation to include various legal theories of disability discrimination, it may not expand its investigation to seek out racial discrimination that is wholly unrelated to the original charge. Only "reasonable" expansion of the investigation is allowed.
The court sent the confidentiality issue back to the trial court for further explanation.
Related Documents: NAM brief (December 14, 2009)
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Granite Rock Co. v. International Brotherhood of Teamsters
(U.S. Supreme Court)
Union contract formation and remedies for breach
After Granite Rock reached an agreement with the union representing one of its facilities, and the workers ratified the agreement, the union sought an additional contract provision that would absolve the international union of any liability for damages arising from its activities at other Granite Rock facilities. The company refused to make the additional concession, and the union went on strike. When Granite Rock sued for breach of the no-strike clause, two issues wound up on appeal to the Supreme Court.
The first involved whether a court or an arbitrator should decide whether there was in fact a valid contract. The NAM filed an amicus brief May 1, 2009, urging the Supreme Court to hear the appeal and apply existing law that federal courts have the authority to determine the existence of a collective bargaining agreement. In its ruling on June 24, 2010, the Court agreed. Whether a collective barganing agreement has been created is an issue to be decided by a court, not an arbitrator, according to the 7-2 majority.
Also at issue in the case was whether there is any remedy under Section 301 of the Labor Management Relations Act against the international union for allegedly interfering in the contractual obligations of the local. The NAM supported review of the Ninth Circuit decision, which said the international union was immune from suit even if it compelled its affiliated union to refuse to honor its previous commitment to Granite Rock. We argued that many unionized employers will face the prospect of internationally sanctioned strikes that violate local bargaining agreements but that cannot be remedied. It is very common for international unions to retain control over the bargaining process even though they do not sign the final agreement, and the Ninth Circuit's narrow interpretation conflicted with other federal court rulings and ignored the realities of the relationship between local unions and their international controllers. On this issue, the Supreme Court ruled unanimously that the Ninth Circuit did not err in rejecting Granite Rocks' request for a remedy under Section 301, but 7 Justices left the door open to such a claim if further proceedings in this case fail to provide relief under a different statute. It is possible that the Court could recognize a claim under Section 301 if no other remedies are available.
Related Documents: NAM brief on the merits (September 3, 2009) NAM brief on the petition (May 1, 2009)
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Lewis v. City of Chicago
(U.S. Supreme Court)
Filing deadline for EEOC charges
Before an employee may file a suit against an employer for discrimination, the employee must file a charge with the EEOC "within 300 days after the unlawful employment practice occurred." This case, brought under Title VII of the Civil Rights Act, involved whether the 300-day period begins when the employer announced the results of a discriminatory hiring test, or whether it begins again each time the employer makes a hiring decision based on the results of the test. On 5/24/10, the Court ruled unanimously that the employment practice that allegedly was discriminatory was the selection of firefighter hires on the basis of an old test. Thus, each new decision based on old test results constitutes a new employment practice that starts the 300-day time limit for filing suit.
This outcome could substantially lengthen the time during which employers are exposed to liability from tests or other employment practices that are nondiscriminatory of their face but that may have a discriminatory impact.
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New Process Steel, L.P. v. NLRB
(U.S. Supreme Court)
NLRB quorum requirement
The National Labor Relations Board had only 2 members beginning on December 31, 2007, even though 5 were authorized and the Board allows 2 members to decide cases when a quorum of 3 exists. The Seventh Circuit upheld a decision by the 2-member board, but the D.C. Circuit, on the same day, ruled that the Board must have at least 3 sitting members. Several hundred decisions by the 2-member Board were affected. This dilemma was caused when President Bush's recess appointments were blocked by Senate Democrats.
On 5/24/10, the Supreme Court ruled 5 to 4 that the National Labor Relations Act requires that there be at least 3 members on the Board in order to exercise the delegated authority of the Board. Section 3(b) requires delegation to at least 3 members. Their membership must be maintained for this delegation to continue to be valid. Since the decision, the NLRB has been revisiting many of the decisions that were thrown into doubt.
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Chamber of Commerce v. Whiting
(U.S. Supreme Court)
Preemption of state immigration verification requirements
The NAM is a member of the Human Resource Initiative for a Legal Workforce, which filed an amicus brief on 8/27/2009 urging the Supreme Court to review an adverse decision from the Ninth Circuit in a case involving the Legal Arizona Workers Act. That state law requires businesses to use a particular employment verification program, E-Verify, that Congress decided should be voluntary, not mandatory. It also imposes penalties beyond those prescribed by federal law.
The problem is that Arizona is one of a large number of states and municipalities that have recently passed or are considering such laws, but their enforcement schemes are different, making it increasingly difficult for an employer doing business in multiple states to navigate the conflicting requirements. The laws impose a wide variety of inconsistent verification requirements, squarely conflicting with the intent of Congress to create a nationally uniform and comprehensive federal system that limits the imposition of undue burdens on businesses.
Our amicus brief enumerated the serious flaws that exist with the federal verification system. Studies have pointed out the errors in the system, including 17.8 million records that contain discrepancies related to name, date of birth or citizenship status. We also provided compelling evidence about the different penalties and enforcement schemes embodied in various laws around the country, and the burdensome and costly effect these will have on business.
On May 26, 2011, the Supreme Court, over dissents from Justices Breyer, Ginsburg & Sotomayor, affirmed the lower court's decision. It found that the Arizona law falls well within the confines of the authority Congress chose to leave to the states and is not expressly preempted. Federal law does not prohibit state licensing law restrictions, but it does prohibit civil or criminal sanctions.
A plurality of the Court found that the Arizona law is not impliedly preempted by federal law, because Congress expressly allowed the states to pursue sanctions through licensing laws, and because the state law uses federal definitions and verification information.
The Court also found that mandating the use of the federal E-Verify program is not preempted. Federal law limits what the federal government can do with E-Verify, but does not prevent states from participating in it. The Court found that the consequences to an employer that does not use the E-Verify system to verify the employment eligibility of an employee are simply that the employer forfeits an otherwise available rebuttable presumption of compliance with the state law.
Related Documents: NAM brief (August 27, 2009)
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EEOC v. Schwan's Home Service
(8th Circuit)
Breadth of EEOC subpoena authority
The NAM joined with the Equal Employment Advisory Council and the U.S. Chamber of Commerce in an amicus brief urging the Eighth Circuit to overturn a trial court ruling that authorized the EEOC to enforce an administrative subpoena that is not based on a valid charge of discrimination, and that broadly seeks information through a subpoena enforcement action that is not relevant to the charging party’s claims.
A single employee complained to the EEOC about alleged sexual harassment and retaliation under Title VII of the Civil Rights Act of 1964, but the company says she did not meet the performance requirements of the general manager position she sought. The EEOC sought a variety of information and documents from the company based on amended allegations that included a charge of class-wide discrimination.
Our brief argued that the new allegations fail to provide a “clear and concise statement of the facts” constituting the alleged violation and would authorize an open-ended audit of all of the company’s employment practices, in violation of statutory language designed to prevent the exercise of unconstrained investigative authority.
We also argued that the individual did not herself claim to be aggrieved by class-wide hiring discrimination, an essential element to an EEOC investigation in this case. The EEOC’s subpoena must be limited to the charges made and supported with facts by the complaining party.
On July 13, 2011, the Eight Circuit affirmed the district court's order enforcing the EEOC's broad subpoena. It found that the charging party had complied with all the statutory requirements, and the charge did not need more than an unsubstantiated belief that discrimination had occurred. It also found that the subpoena generally related to the charge of potential systemic gender discrimination. The ruling validates broad subpoena power at the EEOC, based on unsubstantiated claims.
Related Documents: NAM brief (November 10, 2010)
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Harris v. Superior Court
(California Supreme Court)
Classifying employees under California's administrative exemption
The NAM filed an amicus letter urging the California Supreme Court to review a lower court ruling that throws into question whether employers can classify many different kinds of employees as exempt from the minimum wage and overtime provisions of California law under the "administrative" exemption. Administrative personnel are exempt from the wage and hour laws, but defining who is administrative is the heart of this case.
Our letter points out that the lower court's ruling will affect many more jobs than just the insurance claims adjusters that are the plaintiffs, and that the California Supreme Court should try to help ensure that state and federal interpretations are consistent and predictable.
Also, the test used by the court of appeal ignores the fact that employees do not necessarily need to “participate in the formulation of management policies or in the operation of the business as a whole” to be doing work “directly related to management policies or general business operations” and thus be covered by the administrative exemption. Employees need only affect policy or have the responsibility to carry out policy to be doing work “directly related” to management policies or to general business operations.
On Dec. 29, 2011, the California Supreme Court reversed the lower court and sent the case back to them to apply a legal standard outlined in its decision. According to the court, "The essence of our holding is that, in resolving whether work qualifies as administrative, courts must consider the particular facts before them and apply the language of the statutes and wage orders at issue."
Related Documents: NAM Amicus Letter (October 11, 2007)
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In re Specialty Healthcare and Rehabilitation Center v. .
(NLRB)
Defining scope of bargaining units
This case involves how to define a bargaining unit at a company. The United Steelworkers attempted to organize and represent a group of certified nursing assistants at a nursing home, while the employer contended that the appropriate unit includes all nonprofessional service and maintenance employees. The NLRB’s regional director ruled for the union. When issues like this are appealed, the NLRB decides them on a case-by-case basis, and it asked for input on how to determine the appropriate employees to include in each bargaining unit. In nursing homes and other nonacute health care facilities, the Board considers “community of interests” factors and background information about the workplace in determining the bargaining unit, and it asked for the views of interested parties on this question, not only for nursing homes but also for all industries. It planned to issue rules governing appropriate units via this litigation, rather than by a rulemaking process.
The Coalition for a Democratic Workplace, of which the NAM is a member, filed an amicus brief March 8, 2011, focusing on the Board’s broader question of whether employees performing the “same job at a single facility is presumptively appropriate” as the bargaining unit. Our brief urged the Board not to tackle this question in the context of the nursing home case, but if it did, to continue to use the “community of interest” test that has guided employers and labor organizations for decades. If the Board were to adopt a standard that allows very small bargaining units, employers would be burdened with negotiating and administering a number of different contracts covering only a few of its employees. The Board should not attempt to establish a comprehensive approach to bargaining unit designations by adjudicating a nursing home dispute; rather, it should use the rulemaking process with public hearings.
In addition, the proliferation of units limits the rights of employees by creating barriers in the workplace, creating the risk of balkanizing the workforce and making employee advancement more difficult. A bargaining unit should include employees who have a community of interest that is sufficiently distinct from those excluded from the unit.
On August 30, 2011, the Board released a 3-1 ruling that the group of certified nursing assistants was the appropriate bargaining unit, and did not need to include all other nonprofessional service and maintenance employees of the workplace. It did so by applying a community-of-interest approach, adding that the burden is on the employer to prove that employees not included in the group seeking recognition "share an overwhelming community of interest with the included employees." This means that the factors used in determining whether members of groups share a community of interest must "overlap almost completely." The majority adopted this formulation to provide employers and employees with a clear standard to reduce litigation and produce more predictable and consistent results.
The National Labor Relations Act creates a set of presumptively appropriate bargaining units encompassing "the employer unit, craft unit, plant unit, or subdivision thereof." If the employees choose to define a bargaining unit in a way that is "appropriate," their decision will be upheld by the Board. This means that small bargaining units will be allowed as long as members in that unit share a community of interest, and the majority even stated that a unit is not "inappropriate simply because it is small."
NLRB Member Hayes dissented, arguing that the decision "fundamentally changes the standard for determining whether a petitioned-for unit is appropriate in any industry subject to the Board's jurisdiction," and warning about proliferation of bargaining units. He said that the majority's community-of-interest test effectively gives controlling weight to whatever unit a union has been able to organize. Rather, he would require a showing that a group's interests "are sufficiently distinct from those of other employees to warrant the establishment of a separate unit." Thus, the decision "encourages unions to engage in incremental organizing in the smallest units possible." He concluded by saying that the majority's opinion in this case and their proposed snap elections and limited Board review means that unions will organize in units as small as possible and it will be "virtually impossible for an employer to oppose the organizing effect either by campaign persuasion or through Board litigation."
The rule created in this case was overturned in December 2017 in a case called PCC Structurals, Inc.
Related Documents: CDW amicus brief (March 8, 2011)
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Kasten v. Saint-Gobain Performance Plastics Corp.
(U.S. Supreme Court)
Whether oral complaints are covered by anti-retaliation provisions of FLSA
An employee orally complained about the placement of a time clock during a period of months in which he was receiving increasing discipline for time-clock violations. When he was terminated after the fourth offense, he sued his employer, alleging a violation of the anti-retaliation provision in the Fair Labor Standards Act. That provision makes it unlawful for an employer to terminate an employee because such employee has "filed any complaint . . . ." under the Act.
The Seventh Circuit, along with a majority of other federal appeals courts, ruled that this law covers employees who have filed written complaints, not just made oral statements. On March 22, 2011, the Supreme Court reversed, deciding that the statute also covers employees who do not put their claims in writing. It interpreted "filing" a complaint broadly to encourage "those who would find it difficult to reduce their complaints to writing, particularly the illiterate, less educated, or overworked workers who were most in need of the Act's help at the time of passage[.]"
This interpretation could open up a tremendous volume of lawsuits following termination decisions. In August, 2010, the NAM joined with the Equal Employment Advisory Council and the NFIB in an amicus brief arguing that the Fair Labor Standards Act provision is clear and narrower than similar provisions under other federal civil rights statutes which prohibit retaliation based on an individual's mere opposition to an employment practice. Extending the FLSA to verbal complaints would undermine the ability of employers to effectively manage their workforces and enforce legitimate workplace rules.
Requiring written complaints of potential violations "not only would facilitate swift resolution of the dispute, but also would discourage employees from making false or frivolous complaints that stem more from idle 'grumblings' than from legitimate workplace concerns." Written complaints are fully protected against retaliation and can be properly addressed by management.
The Court's new interpretation providing special status to employees making oral complaints makes employers face more difficult problems when addressing poor performance or disciplinary situations. It can be difficult to tell when an employee is making a statement that constitutes "filing a complaint," but the Court adopted the following test to make that decision: "To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection. This standard can be met, however, by oral complaints, as well as by written ones." This issue is likely to be one of those raised in future cases fleshing out this decision.
Related Documents: NAM brief (August 23, 2010)
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Kraft Foods Global, Inc. v. Spoerle
(U.S. Supreme Court)
Preemption of state wage law on donning and doffing
This law suit is about compensation for time spent putting on and taking off steel-toed boots, hard hats, smocks and hair nets when working at a meat processing plant. In collective bargaining, the union agreed to exclude such "donning and doffing" time from hours worked in return for a higher wage rate. Federal law allows such a tradeoff. Wisconsin law does not.
The Seventh Circuit ruled that a collective bargaining agreement cannot override the state law, and the company must pay for the donning and doffing time at the higher compensation rate. This decision was appealed to the Supreme Court. The NAM filed an amicus brief urging review, arguing that the decision was of national significance and interfered with long-standing collective bargaining agreements and customs and practices in various industries. In addition, the provision at issue was specifically addressed by Congress, and federal law should preempt inconsistent state laws in this area. Unfortunately, on Jan. 10, 2011, the Court declined to review it.
Related Documents: NAM brief (December 2, 2010)
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Lamons Gasket Co. v. .
(NLRB)
Secret ballot elections regarding union certification
Forty-one associations joined the NAM in an amicus brief submitted to the National Labor Relations Board in response to the Board's request for advice on its 2007 decision in the Dana Corp. case. There, the Board ruled 3 to 2 that employees must have 45 days after their employer recognizes a union based on card-check authorizations to file a petition to decertify the union or to support an election petition from another union. The Board underscored the preferred method of having a secret election to determine the majority status of a union. The majority found that card-check procedures are much less reliable as indicators of employee free choice on union representation than secret elections.
The current Board reversed that ruling. On August 30, it ruled 3-1 that only a small percentage of card-signing union authorizations are ultimately overturned with a secret ballot, calling those cases "buyer's remorse." It also held that requiring employers to post a notice informing employees of their right to seek a decertification election after a card-check procedure "actually placed the Board's thumb decidedly on one side of what should be a neutral scale" by requiring a notice of only two of their many rights under the law.
Our amicus brief argued that Dana should not be overruled. Individual free choice regarding whether to be represented at all by a third party is a necessary precondition to any collective negotiation. "In nearly 25 percent of the 54 Dana elections conducted by the Board, employees exercising free choice voted to reject the employer’s initial, voluntary recognition."
We also argued that without a card-check review process in the form of a secret election, "employees are left . . . with the likelihood of peer pressure and/or coercion, lack of information, no measurement of unit-wide employee sentiment at the same point in time, and no assurance that the alleged, resulting majority is an accurate reflection of free choice."
One member of the NLRB dissented from the Lamons Gasket ruling. He said that the majority's decision was "a purely ideological policy choice, lacking any real empirical support and uninformed by agency expertise." He said that the law only imposes an election bar after a valid Board election, not after a voluntary recognition of a union by an employer. He also pointed out that there is no doubt but that a Board-supervised election "provides a more reliable basis for determining employee sentiment than an informal card designation procedure where group pressures may induce an otherwise recalcitrant employee, to go along with his fellow workers." A reversal rate of 25% against the incumbent recognized union is "substantial and supports the need for retention of a notice requirement and brief open period."
The NAM is also a member of the Coalition for a Democratic Workplace, which filed a separate brief.
Related Documents: NAM brief (November 1, 2010)
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Staub v. Proctor Hospital
(U.S. Supreme Court)
Cat's paw theory of liability for employment discrimination under USERRA
The Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), prohibits discrimination based on an employee’s membership in the armed services. This case involves an employee who was discharged allegedly because of his association with the military. Normally an employer is liable when an employment decision is made with an animus against the protected employee. But in this case the decisionmaker had no such animus, and the Seventh Circuit ruled that the animus of another employee could not be imputed to the employer if the employer conducts a separate investigation into the facts relevant to the decision.
On March 1, 2011, the Supreme Court decided that an employer will be held liable for the discriminatory animus of an employee who affects an employment decision, even if that employee did not make the ultimate employment decision. The case involves the "cat's paw" theory of liability, where the company's decisionmaker is overly influenced by an employee with an improper motive. The term is derived from a fable about a monkey who persuaded a cat to pull chestnuts out of the fire, burning the cat's paw and giving the monkey the chestnuts.
Here, the Court found that where a management official expresses a discriminatory animus against an employee, and that employee is ultimately fired by another company official partially on the basis of that animus, the company may be liable for discrimination. According to the Court, "[I]f a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA." The Supreme Court sent the case back to the lower courts to determine whether the jury instruction given constituted an error big enough to retry the case.
The decision poses particular difficulties for employers who wish to overcome the impact of a rogue supervisor's discriminatory actions. An employer must take steps to ensure that such actions are not the proximate cause of any adverse employment action against an employee.
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Thompson v. North American Stainless, LP
(U.S. Supreme Court)
Whether Title VII covers third-party retaliation claims
Title VII of the Civil Rights Act of 1964 protects employees from retaliation by their employers after complaining about discrimination in the workplace. This case involves not the employee who complained, but her fiance, who was terminated from his job. He claimed the termination was in retaliation for his fiancee's complaint, while the company cites performance-related problems. The company also argued that the plain language of the statute provides claims only to those who make a charge or otherwise participate in an investigation, proceeding or hearing.
A 3-judge panel of the Sixth Circuit ruled that a fiance or other person that is closely related or associated with those who are directly involved in protected activity may sue if there is a "causal connection between the protected activity and adverse employment action." The trial judge had ruled that the plaintiff had presented no evidence that he had participated in any protected activity.
The NAM filed an amicus brief in the Sixth Circuit (see summary here) and in the Supreme Court. We argued that the statute is clear on its face and protects only those who personally “opposed” a discriminatory employment practice or personally “made a charge, testified, assisted, or participated” in a Title VII proceeding.
A rule that permits third-party retaliation claims would increase even more dramatically retaliation charges, which are the fastest-growing category of charges filed under Title VII, and would put employers in the untenable position of having to speculate about possible relationships an employee may have that could give rise to potential liability each time they contemplate disciplinary or other action against that employee.
On Jan. 24, 2011, the Supreme Court unanimously reversed the lower court (Justice Kagan did not participate), ruling that the antiretaliation provision in Title VII must be construed to cover a broad range of employer conduct. It prohibits an employer from action that might dissuade a reasonable worker from making or support a discrimination charge. The test must be applied in an objective fashion, and in this case, a reasonable worker might be dissuaded from engaging in a protected activity if she knew that her fiance would be fired. The Court refused to identify a fixed class of relationships that are protected against reprisals, instead ruling that the standard for judging harm must be "objective."
In addition, the Court slightly narrowed the universe of potential plaintiffs -- it is not enough that a plaintiff have some injury caused by the company and remediable by a court. Instead, a plaintiff must be within the "zone of interests" sought to be protected by the statutory provision. Thus, a statute protecting employees covers an employee who is the fiance of another employee intended to be harmed by the employer. The fiance was not an accidental victim of the retaliation, but rather a person with the zone of interests protected by the statute, and he therefore had standing to sue. This result will be difficult to apply in many situations, and more litigation over the breadth of third-party retaliation rights can be expected.
Related Documents: NAM amicus brief (October 29, 2010)
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Brinker Rest. Corp. v. Superior Court
(California Supreme Court)
Mandated lunch and rest breaks
The NAM and 9 other associations and companies filed an amicus brief 8/18/2009 urging the California Supreme Court to uphold a lower court ruling that an employer's duty to "provide" meal periods is a duty to make meal periods available, not a duty to ensure meal periods are actually taken, and that statistical evidence concerning actual breaks is irrelevant to determining whether an employer afforded the opportunity to take a break. The statute is clear on its face that employers need to "provide" a lunch break, meaning to make it available.
Our brief warned that reversing this ruling would have negative consequences for employees: (1) employees nearing the end of a 6-hour shift would have to take a 30-minute meal period before returning to work for a few more minutes, (2) employees would be subject to discipline if they are late to clock out for a meal or early to clock in, and (3) employees would be unable to work through a meal period to end the workday 30 minutes earlier. The brief expanded upon adverse consequences in the restaurant, retail, waste management, construction, agricultural, temporary staffing and hospitality industries.
On 4/12/2012, the California Supreme Court generally upheld the lower court, ruling that (1) an employer need only provide a reasonable opportunity to take the 30-minute lunch break, not ensure that employees use it, (2) meal periods must start after no more than five hours of work, (3) rest breaks are required according to a clarified formula, and (4) a class of employees making off-the-clock claims could not be certified as a class action because there was no substantial evidence of a uniform company policy pressuring employees to work off the clock.
This California law has been the basis for thousands of class action suits involving lunch breaks, rest breaks and off-the-clock work. The court's decision is a very important new ruling to help manufacturers with employees in California to understand the requirements and to establish compliant workplace policies.
Related Documents: NAM brief (August 18, 2009)
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Chamber of Commerce v. NLRB
(D.D.C.)
Challenging NLRB's ambush elections rule
This lawsuit challenged the NLRB's ambush election rule, issued in December, 2011, which effectively shortened the amount of time in which union certification elections take place and could allow votes to occur in as little as 20 days. The Coalition for a Democratic Workplace, of which the NAM is a leading member, immediately filed a legal challenge to this rule in federal court in Washington, D.C.
The final rule, effective April 30, 2012, is harmful to employers. Specifically, it alters what types of pre-election hearings can be held (such as who is even eligible to vote in the election) and what types of appeals can be filed prior to an election. If certain matters can be discussed only after an election is held, these matters will often become moot, leaving the employer with no voice to be heard prior to the election. The rule also appears to shorten the time between a petition for certification being filed and the election being held. If most pre-election matters will be deferred until after the election, the election itself could take place very quickly.
The complaint sought to enjoin the NLRB from enforcing the final rule. It charged that the rule violates the statutory requirement that the NLRB must hold pre-election evidentiary hearings if there are questions concerning whether representation exists. The rule also eliminates a party's right to seek Board review of a regional director's pre-election rulings until after an election, thus depriving employees of the fullest freedom in exercising their rights as required by the law. Other claims raised fundamental concerns that the Board's action impinges on the freedom of speech by employers, that it did not provide an adequate opportunity for comments, and violated the Regulatory Flexibility Act.
On Feb. 3, 2012, the CDW filed a motion for summary judgment, arguing that employees need at least 30 days to decide how to vote in NLRB elections. Even former Senator and President John F. Kennedy emphasized the need for this time to "safeguard against rushing employees into an election where they are unfamiliar with the issues."
On April 27, the Chamber and CDW filed a motion for a temporary stay of NLRB action pending judicial review to allow the court time to decide the issues in the case before the rule goes into effect. The next day, the judge denied the motion, saying that the plaintiffs will not suffer irreparable injury because the court will issue its opinion on the merits by May 15, "which date will precede any potential election under the new rule."
True to his word, Judge Boasberg ruled on May 14, denying the NLRB's motion for summary judgment and granting the plaintiffs'. He ruled that the vote to adopt the rule did not have a quorum. The vote was 2-0, with the third member of the NRLB not voting, and the judge found that the vote of two members in an online voting situation is "simply not enough." The third member "need not necessarily have voted, but he had to at least show up." More is required than just being a member of the Board in order to establish a 3-person quorum. He must "participate" in the decision, although he need not vote to be counted in determining a quorum. In the context of electronic voting, he had to affirmatively express an intent to abstain, or acknowledge receipt of the notification about the vote, but that did not happen. It was as if he had failed to attend the vote at all.
The ruling leaves open the possibility that members of the NLRB could simply not participate in votes in order to prevent the Board from having a quorum. This could slow down the rulemaking and adjudicatory process at the agency. The court did not reach any of the other procedural and substantive challenges to the ambush election rule, and those issues may have to be litigated later, if the Board reissues the rule with a proper quorum.
On June 11, 2012, the NLRB filed a motion to alter or amend the judgment, arguing that Member Hayes was in fact present in the Board's electronic voting room. This motion was denied on July 27.
Related Documents: Memo in Support of Motion for Summary Judgment (February 3, 2012)
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Christopher v. SmithKline Beecham Corp.
(U.S. Supreme Court)
Pharmaceutical salesmen qualify as "outside salesmen" and are exempt from overtime pay
The Supreme Court held July 18, 2012, that pharmaceutical “detailers” (as they are known in the industry) qualify as outside salesmen when they act to promote drugs to doctors, and are therefore exempt from requirements for overtime pay. The Department of Labor argued that the detailers were not actually salesmen (and therefore entitled to overtime pay) because they did not transfer title of the property, in this case the prescription drugs. The Court rejected this argument and found that the law at issue allowed transfers of title to be considered in qualifying salesmen, but it did not require it. The majority found unpersuasive the Department’s attempt to adopt its policy through a series of amicus briefs rather than using a more deliberate process involving public comment. Using the traditional tools for determining who is an outside salesman, the Court found considerable language in the Department’s regulations supporting its conclusion that these were outside salesmen.
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National Association of Manufacturers v. NLRB
(U.S. District Court for the District of Columbia)
Challenging NLRB's requirement to post provisions of NLRA
The NAM filed this suit challenging a regulation issued by the National Labor Relations Board that requires employers to post in their workplaces a notice of the right of employees to organize into unions, bargain collectively, discuss wages, benefits and working conditions, jointly complain, strike and picket, or choose not to do any of these activities. The required notice also lists all the things an employer or a union may not do under the law.
The regulation requires posting in "conspicuous places" as well as where other notices to employees are customarily posted, and on electronic sites if the employer customarily communicates with its employees about personnel rules or policies by such means. In addition, if 20% or more of an employer's workforce is not proficient in English and speaks a language other than English, the employer must post the notice in the language employees speak. Special requirements apply to different segments of the workforce that speak different languages. The NLRB listed this rule as "major," estimating a total compliance cost of $386.4 million for some 6 million employers nationwide.
The NAM raised 4 issues in our complaint. First, we alleged that the National Labor Relations Act (NLRA) does not expressly grant the Board the authority to promulgate a rule requiring employers to post a notification of employee rights under the NLRA. Second, the Board's authority under the NLRA is triggered when a representation petition or an unfair labor charge is filed, not before. Third, the rule purports to establish a new unfair labor practice -- i.e., failing to post the required notice -- without the statutory authority to do so. And fourth, the new regulation authorizes the Board to allow any employee to file unfair labor practice charges long after the 6-month statute of limitations has expired. We argued that the NLRA does not authorize the Board to waive the statute of limitations except for members of the armed forces whose service interferes with their ability to file charges on time.
The NAM asked the court to declare the notice posting requirement null and void. Failure to post the notice could result in the Board finding that an employer engaged in an unfair labor practice by interfering with, restraining or coercing employees in the exercise of their rights. It could also result in waiver of the statute of limitations for employee complaints about other unfair labor practices, or could be used as evidence against an employer in any case in which unlawful motive is an issue.
On Sept. 28, the NAM and co-plaintiff Coalition for a Democratic Workplace, filed a motion for a preliminary injunction and an expedited hearing. We hoped to have the court rule before the effective date of the regulation, or enjoin NLRB implementation and enforcement of the rule indefinitely. We hoped to avoid a situation where companies needed to implement the rule by November 14, its original effective date, only to find that the rule was issued unlawfully.
On Oct. 5, the NLRB announced that it would voluntarily delay implementation of the posting requirement until January 31, 2012., and after oral arguments on December 19 in which the judge sought a further extension, the Board postponed the effective date again, until April 30, 2012.
On March 2, Judge Amy Jackson ruled that the NLRB has broad authority to issue rules, and the notice posting provision was valid. However, the Board did not have the authority to impose the penalties for noncompliance, namely making failure to post an unfair labor practice and suspending the statute of limitations for employees that want to file suit for unfair labor practices years after they occur. However, the NLRB may find the failure to post the required notices to be an unfair labor practice, or to toll the statute of limitations, in case-by-case decisions. Failure to post the notices could in some cases result in findings that an employer intended to improperly influence employees from exercising their rights, or could make it easier for the Board to allow an employee to file charges after the statute of limitations has run out.
The court rejected the NAM's First Amendment arguments, and found that the enforcement provisions were severable from the posting requirement, thus allowing the posting requirement to continue to stand even though a portion of the regulation was found to be invalid.
On March 5, the NAM and others filed a notice of appeal. All are challenging the adverse decisions on the posting requirement, and all but the NAM are challenging the validity of the recess appointment of some of the current Board members who were appointed by President Obama while the Senate was still meeting regularly in pro forma sessions.
Related Documents: NAM Notice of Appeal (March 5, 2012) NAM Reply brief (November 22, 2011) NAM Motion for Preliminary Injunction (September 28, 2011) NAM Complaint (September 8, 2011)
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Sandifer v. United States Steel Corp.
(7th Circuit)
Whether changing clothes is a principal activity that starts the work day
The NAM, the American Meat Institute and the Society for Human Resource Management filed a joint brief in a federal appeals court arguing that courts should respect collective bargaining decisions relating to whether clothes-changing activities are excluded from the compensable workday.
The case involves whether to compensate time spent walking from a locker room to a work station. In some industries, this is a substantial issue. Here, an employer and union agreed that the activities of donning, doffing and washing (clothes-changing activities) were to be excluded from the work day. The company argued these same activities are not “principal activities” that start or end the continuous workday, and thus no additional compensation, including overtime, is required. Various union-represented employees sued to have this travel time compensated, and the trial court held open the possibility.
Our amicus brief argued that courts should defer to the collective bargaining process. Congress has repeatedly emphasized the need for courts and governmental entities to defer to the sanctity of the collective bargaining process to protect the interests of both employees and employers, by giving them the flexibility to resolve the challenges of their specific industry as they deem best. The Portal-to-Portal Act was adopted to rein in litigation that was forcing employers to pay for unbargained-for wages relating to clothes-changing activities. Moreover, until last year, the Department of Labor has long advocated that where a collective bargaining agreement excludes clothes-changing activities from the start of the workday, travel time would be non-compensable.
The trial court wrongly left open the possibility that clothes changing could be a principal activity that starts the work day, but that decision undermines the collective bargaining process and deprives employers and employees of the latitude that Congress intended. Unions negotiate other benefits, such as higher rates of pay for time actually worked, in exchange for not counting travel time as compensable. Paying for travel time rewards employees who are inefficient when using it, at the expense of those who are more efficient. The law was enacted to avoid situations where courts could override collective bargaining terms through litigation, and was designed to keep the Department of Labor from stepping in and changing expectations, potentially resulting in the award of many years of back pay. Instead, in a time of economic crisis, we should be focusing on strengthening relationships between employers and their unions, not making it more expensive for employers to maintain their present workforces.
On 5/8/12, the Seventh Circuit ruled that the workers here changed into "clothes" as defined in the Fair Labor Standards Act (FLSA), and that activity was covered by the collective bargaining agreement and not subject to compensation under the FLSA. In addition, the court found that if the union and employer agree that such activity is not compensable, then it cannot be a "principal activity" under the statute that would start the clock for the workday. According to the court, "Not all requirements imposed on employees constitute employment." The court also refused to defer to the position of the Department of Labor in this case, because the Department's position has shifted from one administration to another, and they did not offer any useful knowledge that might help the court decide the case. The opinion is filled with straightforward, common-sense, practical and economic-based reasons why clothes-changing provisions in collective bargaining agreements should be enforced as written.
Interesting note: The court denied our request to file this amicus brief, so we filed an additional motion urging reconsideration, which was also denied. The Seventh Circuit has recently taken a more restrictive attitude toward briefs from groups that are affected by litigation but that are not parties to the litigation. At the same time, it used the fact that no union filed an amicus brief to support its view that the employee claims in this case would not help unions.
Related Documents: NAM brief (August 29, 2011)
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Chamber of Commerce v. NLRB
(D.C. Circuit)
Challenging NLRB's ambush elections rule
The NLRB has appealed a decision of a federal judge who ruled that it did not have a quorum when it promulgated its “ambush election” rule in 2011. The Coalition for a Democratic Workplace, of which the NAM is a leading member, challenged the rule. Click here for a summary of the proceedings in the trial court.
The NLRB filed its main brief on Nov. 16, and the Chamber and CDW filed their brief on Dec. 31, 2012. Oral arguments were scheduled before Judges Henderson, Brown and Kavanaugh, but the arguments were postponed and the case was held in abeyance pending resolution of the Noel Canning decision on whether the recess appointments to the Board were constitutional.
In December of 2013, the NLRB voluntarily dismissed its appeal in Chamber of Commerce v. NLRB, the case in which the U.S. District Court for the District of Columbia found the Board’s expedited representation election rule invalid because the Board lacked a quorum when it issued the rule in December 2011.
Related Documents: Chamber and CDW brief (December 31, 2012)
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D.R. Horton, Inc. v. NLRB
(5th Circuit)
Validity of class-action waivers in employment agreements
The Fifth Circuit Court of Appeals rejected the D.R. Horton, Inc. decision from the National Labor Relations Board (NLRB).
The Supreme Court and the federal courts of appeals have issued numerous decisions endorsing the use of arbitration agreements and class action waivers to limit abusive litigation against employers. However, in January 2012, in D.R. Horton, the NLRB ruled for the first time that the National Labor Relations Act (NLRA) bans employers from including class action waivers in their employment arbitration agreements. D.R. Horton appealed the NLRB's decision to the Fifth Circuit. In its opinion, that court rejected the NLRB's interpretation of the NLRA as giving employees a non-waivable right to pursue class actions against their employers.
The NAM filed an amicus brief June 6, 2012 noting that such agreements help reduce business costs, and that the Board does not have the authority to regulate the individual contracts dealing with rights not covered by the National Labor Relations Act (NLRA).
On December 3, 2013, the Fifth Circuit held that the NLRB's decision in D.R. Horton violated the Federal Arbitration Act (FAA). That statute generally requires courts to enforce arbitration agreements according to their terms, subject to limited exceptions. The court held that no exceptions applied in this case.
First, the court held that the FAA's "savings clause" did not cover the NLRB's decision. That "savings clause" allows courts to refuse to enforce arbitration agreements on the same grounds that apply to any other contract. Second, the court held that the NLRA did not contain any congressional command overriding the FAA. The court noted as a general rule that a claim under another federal statute may be subject to arbitration unless Congress has overridden the FAA's general mandate that arbitration agreements be enforced. Finally, the Fifth Circuit also noted that three other federal courts of appeal have rejected the argument that class action waivers in employment arbitration agreements violate the NLRA and have stated that they would not defer to the NLRB's decision in D.R. Horton.
On a separate issue, the Fifth Circuit found that D.R. Horton's arbitration agreement did not make sufficiently clear that employees retained a right to file unfair labor practice charges with the NLRB. The court noted that an arbitration agreement may not prohibit employees from filing unfair labor practice charges. It further observed that even if an agreement does not expressly ban the filing of such charges, it may nevertheless violate the NLRA if "employees would reasonably construe the language" of the agreement as doing so.
This decision affects employers in two practical ways. First, employers have the authority to utilize arbitration agreements with a class action waiver. Second, every employer with an arbitration agreement should evaluate the wording to ensure compliance with the evolving law on the enforceability of such agreements.
For reasons not entirely clear, the NLRB allowed the deadline to pass and opted to not appeal the Fifth Circuit’s decision. As the issue now stands, companies will likely prevail in federal court on the issue, but will still battle the NLRB at the agency level. It is possible that the NLRB refused to appeal the case to the high court because it feared an adverse ruling. If this controversy between agency and federal court continues, the Supreme Court will likely have to review the issue. The NAM will continue to weigh in on this issue and take whatever steps appropriate to prohibit the NLRB from stepping outside its statutory authority.
Related Documents: NAM brief (June 6, 2012)
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Genesis HealthCare Corp. v. Symczyk
(U.S. Supreme Court)
Is a case moot when a defendant offers full value of a plaintiff's claim
This case involves a suit by an individual for back pay. She sued her employer on her own behalf and on behalf of other similarly situated individuals. The employer offered to settle her claim for the full amount, and asked that the case be dismissed because it no longer was a “case or controversy” subject to resolution in court. On 4/16/13, the Supreme Court decided that this kind of suit, often called a collective action under the Fair Labor Standards Act, should be dismissed. The plaintiff had no personal interest in representing other unnamed plaintiffs, and was made completely whole for her own complaint. The case is important for reigning in litigation driven more by lawyers and the parties, and this ruling will help prevent excessive litigation by plaintiffs that lack a personal interest in the outcome.
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Huntington Ingalls Inc. v. NLRB
(4th Circuit)
Defining scope of bargaining units
This is another case in which the NLRB has applied its decision in the Specialty Healthcare case to allow employees to create a bargaining unit that is small and underinclusive. The Board’s decision was appealed to a federal appeals court, and the NAM and other filed an amicus brief arguing that the Specialty Healthcare decision was wrong and violated at least two provisions of the National Labor Relations Act. An employer should not have to bear the burden of demonstrating that a proposed bargaining unit should include additional employees who share “an overwhelming community of interest with the included employees.”
In this case, the company argued that a unit of technical employees working in one department at its shipyard should include all the technical employees at that location. We argued that the Board’s rule eliminates important considerations in determining the breadth of the bargaining unit, and will disrupt the smooth operation of the company processes at a time when American employers face unprecedented economic and competitive pressures. The rule also places too much weight on the grouping selected by the organizing employees, thus effectively violating a statutory provision that the “extent to which the employees have organized shall not be controlling.” In addition, the statute requires the bargaining unit decisions assure employees the fullest freedom in exercising their legal rights, but the Board’s rule failed to consider the rights of employees to refrain from collective activities. By allowing small bargaining units, the Board effectively denies the rights of a majority of the remaining workers to refrain from having union representation in an appropriately defined unit.
This is another example of how the Board’s new ruling fosters disruptions that smaller or multiple bargaining units can have on business operations, stable labor relations, and realistic collective bargaining. A unit determination should reflect an employer’s functional integration and the resulting “community of interests” shared by its employees. Smaller units reduce employer flexibility and employee advancement opportunities as separate units isolate employees in different seniority systems and job classifications.
On 7/17/2013, the Fourth Circuit ruled that the NLRB did not have a quorum to issue the decision in this case, because three recess appointments to the Board were unconstitutional. But it also upheld the selected bargaining unit under the standard that was in place prior to the Specialty Healthcare decision, thus avoiding any decision on the propriety of the standard adopted in that case. Although the employees in this case possessed a sufficiently distinct community of interest to qualify for their own bargaining unit, the court refused to enforce the Board's order because it was not properly constituted. Subsequently, the Board issued another decision in October 2014 that required Huntington Ingalls to bargain with the micro-bargaining units. Huntington Ingalls then filed a petition of review of the Board’s order, claiming that the Board did not have jurisdiction, but the 4th circuit enforced the Board’s order.
Related Documents: NAM brief (October 17, 2012)
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Kindred Nursing Centers East, LLC v. NLRB
(6th Circuit)
Challenging burden on companies to prove "overwhelming community of interest" when contesting bargaining units
The NAM, along with the HR Policy Association and the Society of Human Resource Management, filed an amicus brief 4/23/12 urging the Sixth Circuit to overturn a new NLRB rule that makes it much easier to create exceedingly small collective bargaining units in a workplace. The rule, announced by the NLRB in the Specialty Healthcare case, allows a group of employees to select the bargaining unit they want, and as long as the unit is defined to include those workers who share a “community of interest,” that defined union can only be rejected if an employer can prove that a larger unit is appropriate because the excluded employees share an “overwhelming” community of interest. This burden of proof is extremely difficult to satisfy, and our brief argued that it violates Section 9(c)(5) of the National Labor Relations Act, which limits the Board from granting controlling authority to a union based on the extent to which the employees are organized. Instead, the Board should decide not only that the employees in a proposed unit have a community of interest, but also whether their interests “are sufficiently distinct from those of other employees to warrant the establishment of a separate unit.”
We also noted that Section 9(b) of the Act requires the Board to decide on the appropriateness of a bargaining unit, and we argued that it may not delegate this duty to petitioning employees or unions, because that would undermine its obligation to guarantee all employees – including those excluded from the union’s proposed unit – the fullest freedom in exercising their collective bargaining rights. Otherwise, unions can gerrymander the bargaining units “to their hearts’ content” and leave many employees out of the collective bargaining process.
Furthermore, the Board must act to effectuate the law’s policy of promoting efficient collective bargaining, and the micro-union policy announced in Specialty Healthcare leads to piece-meal unionization and inefficient collective bargaining. Multiple unions may have inconsistent goals, may shut down a plant, affecting other employees, and will create a state of chaos.
Finally, we argued that the NLRB must change its policy through notice-and-comment rulemaking, not by simply announcing its new rules in a decision in one of its many cases. This change is a legislative-type judgment that is generalized and designed to govern all future cases.
On August 15, 2013, the Court of Appeals approved the NLRB’s "overwhelming community of interest test" in bargaining unit determination cases. The court rejected all of the employer's challenges to the Board's decision and found that not only did the Board have considerable discretion under the Act in determining the appropriateness of voting units, but also that the Board, in this case, did not substantially change prior law in the unit determination area. The court also held that the Board's decision in Specialty Healthcare did not violate Section 9(c)(5) of the NLRA, which prohibits the approval of bargaining units on an extent-of-organizing basis.
Related Documents: NAM brief (April 23, 2012)
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National Association of Manufacturers v. NLRB
(D.C. Circuit)
Challenging NLRB's requirement to post provisions of NLRA
The NAM has won a major victory for manufacturers that we have been fighting for since 2011. This win came from the U.S. Court of Appeals for the D.C. Circuit, where we appealed a federal court ruling that upheld the NLRB's regulation that required employers to post in their workplaces a notice of the right of employees to organize into unions, bargain collectively, discuss wages, benefits and working conditions, jointly complain, strike and picket, or choose not to do any of these activities. For details on the district court proceedings, click here.
On 5/22/2012, the NAM filed a brief arguing 3 main issues. First, we challenged the fundamental authority of the Board to issue a posting rule at all. Congress never authorized notice-posting requirements, and rejected an express notice-posting amendment in the National Labor Relations Act (NLRA) while accepting notice-posting requirements in other labor laws.
Second, we again raised the argument that a mandate that private parties post government notices, without a clear statutory basis or compelling governmental interest, violates the First Amendment rights of employers as well as the balance of requirements spelled out in the NLRA.
Third, if the penalties for failing to post the required notice were themselves unlawful, the judge should have thrown out the entire regulation, because the NLRB did not intend for the posting requirement to stand on its own without enforcement teeth. The posting requirement was not severable from the enforcement provisions, and the entire regulation should fall.
We later filed a reply brief arguing that the NLRB failed to establish any statutory authority for the posting requirement. The Board had no authority to impose affirmative duties on employers who are charged with violations of the NLRA. The rule also violated the statutory provision which prohibits the Board from regulating expression that “contains no threat of reprisal or force or promise of benefit,” and violated employers’ First Amendment rights by forcing employers to communicate an unwanted editorial judgment to their employees.
On May 7, 2013, the D.C. Circuit agreed and overturned the NLRB regulation. It found that the rule's requirement that employers post a Government message requires an act of speech, and Section 8(c) of the Labor Management Relations Act declares that speech "shall not constitute or be evidence of an unfair labor practice under the provisions of this [Act], if such expression contains no threat of reprisal or force or promise of benefit." Thus the rule itself violates Section 8(c) because it makes an employer's failure to post the Board's notice an unfair labor practice.
It also ruled that the Board could not consider noncompliance with the rule to be evidence of antiunion animus, since that is also an unfair labor practice based on protected speech.
Finally, the court ruled that the Board did not have the authority to amend the statute of limitations for filing unfair labor practice charges. Unless Congress intended the statute of limitations to include exceptions, the NLRB cannot create them years after the law was enacted.
Because all three means of enforcing the Board's posting requirement were invalid, the court ruled that the posting requirement itself was invalid, because the NLRB would never have promulgated it in the first place without ways to enforce it. The Board did not want just voluntary compliance.
A concurring opinion from 2 of the 3 judges found that the Board did not have authority under Section 6 of the NLRA to issue the rule because the posting requirement was not necessary to carry out the Board's responsibilities. It may only issue regulations that are necessary to carry out its responsibilities. The law does not impose an obligation on employers to educate its employees on labor relations law. In addition, the NLRB was set up to handle complaints that are filed by others, not promulgate rules that are "so aggressively prophylactic as the posting rule."
On 7/22/13, the NLRB asked the full complement of judges on the D.C. Circuit to rehear this case. The NAM filed a brief in opposition, arguing that the Board failed to identify any conflict between the court's ruling and any other court decision that would warrant further review. We also noted that a majority of the panel that decided the case also ruled that the Board exceeded its statutory authority on other grounds which independently preclude enforcement of the poster rule. On Sept. 4, the court declined to rehear the case. The NLRB had 90 days to appeal to the Supreme Court, but it declined to do so. The D.C. Circuit's ruling is now final.
Related Documents: NAM Opposition to Appeal (August 20, 2013) NAM reply brief (July 11, 2012) NAM opening brief (May 22, 2012) D.C. Circuit's Injunction (April 17, 2012)
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Vance v. Ball State University
(U.S. Supreme Court)
Sexual harassment liability toward supervisors and job directors
Companies are liable when their supervisors engage in sexual harassment. On June 24, 2013, the Supreme Court decided that supervisors includes only those employees who are empowered by their employer to take tangible employment actions against the victim, such as controling employment, discipline and advancement. Co-workers or other employees who are not supervisors but who may control the day-to-day activities of other employees are not supervisors such that the employer would be strictly liable for their actions. However, an employer may be still be liable for such discrimination if it is negligent.
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Banner Health Sys. v. NLRB
(D.C. Circuit)
Challenging NLRB decision undermining confidentiality of investigatory interviews
This case involves an employer who asked employees not to discuss their complaints about co-workers with others while an investigation was ongoing. The NLRB ruled that an employer violates employee union-organizing rights when it has such a blanket policy, and that employers must “first determine whether in any given investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is a need to prevent a cover up.”
The NAM and other business groups submitted an amicus brief in support of the employer, stating that the NLRB was incorrect in its decision because the Board failed to take into account the challenges employers will now face when conducting an investigation. For example, with the Board’s decision an employer may not be able to uncover the entire story because employees will not come forward if they know the investigation is not confidential. Additionally, the amicus brief pointed out the Board ignored its previous decisions on investigations and overturned decades of its own precedent on the matter. The Board’s decision places an enormous burden on employers to justify the confidentiality of their investigations prior to interviewing all the witnesses or even assessing the situation.
The D.C. Circuit sent the case back to the NLRB. In June 2015, the NLRB again ruled the employer’s confidentially policy violated the NLRA, and Banner again appealed to the D.C. Circuit. The NAM also filed an amicus brief in the second appeal.
Related Documents: NAM brief (January 14, 2013)
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Cochran v. Schwan's Home Service Inc.
(California Supreme Court)
Employee reimbursement for a personal item used for work purposes
On September 29th the NAM submitted an amicus letter to the Supreme Court of California supporting Schwan’s Home Service’s Petition for Review in the case of Colin Cochran v. Schwan’s Home Service. The case asks if an employee is owed reimbursement for a personal item used for work purposes even if the employee incurred no additional costs. California Labor Code Section 2802 requires that employers reimburse employees “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” The trial court ruled that calculating compensation for use of personal item at no cost would be too hard to calculate. However, the Court of Appeals (CoA) held that “The answer is that reimbursement is always required.” Nothing in the language of the decision limits the analysis to cell phones, and thus employees could be owed compensation for any number of mundane personal items utilized in a work context, even if the employee suffered no loss or expenditure. We argued that this ruling is so broad as to be completely unworkable, as well as completely unreasonable. Additionally, the Private Attorney General Act allows for civil fines to be levied against an employer for any violation of the Labor Code, thus compounding innocent failures to reimburse into disproportionate and frivolous fines. Thus, the NAM argued that the Supreme Court of California should take the decision up for review.
Related Documents: NAM brief (September 29, 2014)
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In re Purple Communications, Inc.
(NLRB)
Protecting employer email systems
The NAM and our association allies filed an amicus brief with the NLRB arguing that the Board should not create an exception for employer owned email from the longstanding rule that employees generally have no right to use employer-owned property, equipment, or materials for purposes of Section 7 organizing activities, as long as the employer’s restrictions on such usage are not discriminatory. There is no discrimination in keeping the use of employer email systems restricted to legitimate business purposes and there are many alternatives available for these communications.
On December 11, 2014 the NLRB issued a decision the Purple Communications, Inc case. The 3-2 decision overturns the 2007 Register Guard case, and holds that employees now may use email for union-related communications during nonworking time. The NAM filed a brief with the NLRB arguing against this possible outcome.
Related Documents: NAM brief (June 16, 2014)
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Integrity Staffing Solutions, Inc. v. Busk
(U.S. Supreme Court)
Whether security screening time is compensable work
On June 4th the NAM filed an amicus brief in the Supreme Court in Integrity Staffing v. Busk. This case presents the question of whether routine post shift security screenings of employees are compensable under the FLSA. Such screenings are conducted by many employers, as in this case, to help prevent theft. The resolution of this case could also have an effect on the compensability of the entire broad range of pre and post-shift screenings, conducted by employers to ensure the security of employers’ property and the safety of employees and the public. Until the 9th Circuit’s decision, employers have been able to rely on a uniform body of case law holding that security screenings are not compensable under the Portal-to-Portal Act of 1947, 29 U.S.C. §§ 251-262, as applied by this Court and regulations adopted by the Department of Labor.
The Ninth Circuit’s decision undermines the decades-old understanding of the Portal-to-Portal Act as interpreted by the Supreme Court in Steiner and Alvarez and by the Department of Labor. In holding time spent in post-shift security screenings to be compensable, the Ninth Circuit incorrectly applied the well-established “integral and indispensable” test and instead developed a new approach based on its view that the screenings were compulsory and done for the employer’s benefit. In so ruling, the court did away with the requirement under the Portal-to-Portal Act of a close and intertwined relationship between the productive work for which an employee is hired and the activity for which the employee seeks additional compensation. The court’s rule would disrupt established workplace practices imposing an unwieldy test that has already increased litigation. The Solicitor General has also filed an amicus brief in the case supporting the legal arguments raised by Petitioner and the NAM brief.
On December 9, 2014 the U.S. Supreme Court ruled unanimously that the Fair Labor Standards Act (FLSA) does not require employers to compensate employees for the time spent in security checks before and after the work day. The ruling reversed a decision by the U.S. Court of Appeals for the Ninth Circuit and reinforces arguments asserted in the amicus brief filed by the NAM and a coalition of industry groups.
Related Documents: NAM brief (June 4, 2014) NAM brief (November 7, 2013)
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Macy's, Inc.
(NLRB)
Challenge to micro-unions
The NLRB’s Specialty Healthcare decision favoring micro-unions has led to numerous cases involving the definition of a bargaining unit. In Macy’s Inc., the Board’s regional director decided that employees of the fragrance and cosmetic departments at Macy’s could form their own union. The regional director found that the small group of employees was an appropriate unit because they were readily identifiable as a group and shared a community of interest. Moreover, the burden to show that the small unit is inappropriate is on the employer, who would have to demonstrate that a larger unit shares an overwhelming community of interest with the smaller unit. Interestingly, the previous year, the union unsuccessfully tried to organize a wall-to-wall unit in the entire store.
The NAM filed an amicus brief urging the Board to overturn the regional director’s decision. The Board’s policy conflicts with the rights of employees who do not want to form a union by allowing them to be gerrymandered out of the bargaining unit. In effect, if the majority of employees in a facility do not favor forming a bargaining unit, they can be relegated to a minority status when a union selects a gerrymandered unit where it has majority support. The NAM argued that the burden should be shifted to the union to initially demonstrate that the a proposed smaller bargaining unit is constituted on factors other than union support and that the employees are readily identifiable as a group.
Manufacturers are starting to face a multitude of small unionized bargaining units, making management of the workplace much more difficult and harming their ability to compete. This is the fifth case since Specialty Healthcare in which the NAM has sought to change the Board’s policy and encourage the proper definition of bargaining units in manufacturing facilities.
Related Documents: NAM amicus brief (February 27, 2013)
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Neiman Marcus Group, Inc.
(NLRB)
Challenging NLRB's policy promoting micro-unions
A small group of women’s shoe salespeople were handed a decision by an NLRB regional director that allowed them to hold a vote to unionize. The employer appealed, arguing that their group should include many more store employees that have common workplace interests.
The NAM and other business groups filed a brief 6/13/12 arguing that the NLRB’s recent decision in the Specialty Healthcare case improperly allows this kind of micro-union to be formed, and puts an unreasonable burden on employers to show that a large group is more appropriate. The regional director had ruled that the employees at the store may serve different functions and thus vary in skills to the point that they qualify to form multiple unions. The NAM argued that Congress intended that each case be determined on its own, rather than having the NLRB impose a blanket determination for all cases that a proposed group is valid unless the employer can show otherwise.
The brief noted that all employees have a statutorily protected “right to refrain from” unionizing activities, and micro-unions prevent those employees from exercising the right to reject a union.
Furthermore, the Board abused its power by adopting its new standard in the Specialty Healthcare case when it should have gone through formal notice-and-comment rulemaking procedures.
Finally, it is bad policy to favor micro-unions, because they prevent employees from performing varying job functions, thus inhibiting employee skill development. They also lead to “endless multiple negotiations, conflicting union demands and contract obligations, and burdensome administrative duties.” Micro-unions may foster disruptive employee and union rivalry, as well as situations where one small group of employees could shut down an entire location.
Related Documents: NAM brief (June 13, 2012)
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Nestle Dreyer's Ice Cream Co. v. NLRB
(4th Circuit)
Forming micro-unions under a community of interest standard
The NAM filed an amicus brief on July 10, 2012, arguing that the ruling in Specialty Healthcare, which allows very small numbers of employees to form a union, should be overruled because it violates provisions of the National Labor Relations Act (NLRA). That decision creates policy implications that will upset and reduce American investments and competitiveness. We argued that Specialty Healthcare prevents all of the employees from fully controlling the creation of the union. This violation allows micro-unions of as little as 2 employees to circumvent employees who do not wish to unionize. Further, by its ruling in Specialty Healthcare, the NLRB does not determine bargaining units “in each case,” and gives nearly all the control of determining who will be in the union to a very small group. The labor uncertainty from this precedent endangers investment in manufacturing, as employers would be required to deal with multiple and often conflicting unions.
In 2014, the court vacated and remanded the case to the NLRB. The original decision had been made by a Board that was ruled unconstitutional by the Supreme Court in the Noel Canning case. In 2016, the 4th Circuit denied Nestle Dryer’s petition for review, stating the NLRB was correct in allowing a maintenance-only bargaining unit, holding that the maintenance workers shared a community of interest distinct enough from the production workers for them to have their own bargaining unit.
Related Documents: NAM brief (July 10, 2012)
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Thyssenkrupp Waupaca, Inc. v. DeKeyser
(U.S. Supreme Court)
"Nature of the work" requires employees to don, doff and shower on-site
On 8/27/14 the NAM supported review of this case in the Supreme Court. The issue presented revolved around whether the “nature of the work” at Waupaca’s foundries required employees to don, doff and shower on-site. Plaintiffs contended that foundry dust containing silica and other chemicals made the work so hazardous that on-site clothes changing and showering was required by the nature of the work. The district court disagreed and granted summary judgment. The Seventh Circuit reversed, finding that there was a factual dispute over whether the nature of the work required on-site donning, doffing and showering.
This case is very important to manufacturers. The Seventh Circuit’s position takes the determination of health and safety out of the hands of the legislature and places it in the hands of each district court judge across the country. This is not the role the courts should play, and such a perspective creates instability and unpredictability, and increases costs on business and ultimately harms the employees.
The NAM’s brief argued that OSHA had promulgated standards for foundries which do not require on-site clothes changing and showering after work. This bright-line rule has been referenced in the donning and doffing space since roughly 1968. It provides a clear and easily administrable criterion for determining whether time spent changing clothes and showering is compensable under the Fair Labor Standards Act (FLSA). If these activities can be performed offsite, at home or elsewhere, they are not compensable. If courts are going to be allowed to order them to pay for time spent changing clothes and showering when, as here, no federal or state agency requires that this conduct be performed on-site, and no rule of the employer requires that these activities be performed on-site, the impact of such a finding could be devastating. A flood of lawsuits would be filed in the foundry and other manufacturing industries, exposing these employers to huge potential payouts from overtime and require payment for additional hours of work at time and one-half. It is further likely that two to three years of back-pay would be in issue in every case, and all employees during this time period would potentially have a claim under the FLSA or Rule 23, the financial consequences would be staggering.
On November 3, 2014, the Court declined to hear this appeal.
Related Documents: NAM brief (August 27, 2014)
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Baker DC, LLC v. NLRB
(U.S. District Court for the District of Columbia)
Employers harmed by ambush rule
The NAM and coalition associations filed an amicus brief supporting three construction employees from Baker LLC which joined a federal lawsuit challenging the National Labor Relations Board’s (NLRB) Ambush Rule. Baker requested a Temporary Restraining Order (TRO) against implementation of the Rule due to suffering irreparable harm on a variety of grounds including a strong objection to the Rule’s requirement mandating employer’s turn over employees personal information over to organizing officials. However, the court found no showing of irreparable harm on the notice posting requirement, a failure to show that the disclosure requirements caused certain and irreparable harm, and a failure to demonstrate that Baker’s due process rights will be irreparably injured. The judge distinguished the prior notice posting rule and states that the NAM case does not signal a substantial likelihood of success on the merits in this case. The Baker case has been consolidated with NAM’s challenge to the Rule in D.C. District court with a hearing scheduled for May 15.
Related Documents: NAM brief (April 21, 2015)
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In re Browning-Ferris
(NLRB)
What constitutes a "joint-employer"
On April 30, 2014, the Board issued an order granting review of the Acting Regional Director’s Decision and Direction of Election of the current joint-employer standard as articulated in the Board’s decisions in TLI, Inc., 271 NLRB 798 (1984), enfd. mem. 772 F.2d 894 (3d Cir. 1985), and Laerco Transportation, 269 NLRB 324 (1984). “To establish joint employer status there must be a showing that the employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.” In June 2014, the NAM’s Manufacturers’ Center for Legal Action (MCLA) submitted an amicus brief outlining key concerns of manufacturers in changing the definition of joint employer.
On August 27, 2015 in a 3-2 decision, the Board loosened the standard for determining joint employment under the National Labor Relations Act. For the past 30 years, the relevant joint employer inquiry was whether or not an entity exerts a direct and immediate degree of control over another business's employees and their essential terms and conditions of employment. Under the new standard, the Board evaluates whether an entity exercises indirect control over the means or manner of the employees' work and terms of employment, or whether the entity has the potential to exercise such control. This requires a very fact-specific case-by-case inquiry.
The NLRB’s actions challenge the way manufacturers are able to work in the United States, and the NAM continues to advocate and fight for manufacturers on this issue.
Browning-Ferris has appealed the Board's decision to the D.C. Circuit Court of Appeals. The NAM has joined that fight, which can be found here.
Related Documents: NAM brief (June 26, 2014)
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Case New Holland, Inc. v. EEOC
(D.D.C.)
EEOC's authority to send blast emails to company employees
On June 5, 2013, without any finding of discrimination or advance notice to Case New Holland (CNH), the EEOC delivered an email blast to the business email inboxes of 1,169 CNH employees. The blast email advised the employees, well over a hundred of whom were managers, that the EEOC was investigating CNH for age discrimination. It then directed the employees to provide to the government, through a secure Internet site, evidence of discrimination and personal contact information. The EEOC actually admitted, in later correspondence, that its blast email was trolling for class action plaintiffs to sue CNH.
CNH asked for a declaratory judgment finding that the EEOC had overreached its authority under its governing statutes and the United States Constitution. There were five counts in the complaint. The First Count asserted an Administrative Procedure Act (APA) violation because no authorizing rule or regulation permitted the blast email. The Second Count asserted that the blast email was neither “necessary [n]or appropriate,” and thus exceeded the permissible scope of the EEOC’s authority under Section 7(a) of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 626(a). The Third Count alleged that the EEOC failed to comply with its own Compliance Manual’s provisions on the conduct of investigations, again in violation of the APA. The Fourth Count asserted an unreasonable invasion of the CNH computer network and of the privacy interests of CNH employees, in violation of the Fourth Amendment to the Constitution. Lastly, the Fifth Count asserted that the EEOC trespassed on the CNH computer network and, by so doing, effected a taking without compensation in violation of the Fifth Amendment to the Constitution.
The EEOC moved to dismiss the complaint, and on Nov 14, 2013, the NAM filed an amicus brief opposing the motion. Our brief argued that the extensive CNH employee time and property used to complete the EEOC evaluations and interviews constitutes a violation of the Fifth Amendment’s takings clause.
The EEOC took the highly unusual step of filing a reply brief to the NAM amicus brief calling it "unprecedented" and asked for an extension to file their full reply. The substance of the full EEOC reply demonstrates the significance of the NAM argument. On 1/6/14, we responded (see brief below).
On 9/24/14, the judge dismissed the case for lack of jurisdiction based on standing. CNH amended its complaint and filed an appeal, and the judge reinstated the case. CNH voluntarily dismissed the case on 10/28/2015.
Related Documents: NAM reply brief (January 6, 2014) NAM amicus brief (November 14, 2013)
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Chamber of Commerce v. NLRB
(U.S. District Court for the District of Columbia)
Ambush Election Rule
On January 5, 2015 the NAM sued the NLRB in D.C. District Court to stop the agency’s overreach on its “ambush elections” rule issued on December 12, 2014. The coalition brief argues that the Final Rule violates the statutory requirement for an “appropriate hearing” prior to the election, by giving Regional Directors authority to defer litigation of voter eligibility and inclusion issues until after the election. The brief also argues that the Rule is arbitrary and irrational. Specifically, it promotes speed over all other statutory goals, including employer free speech rights and the opportunity for a full and informed debate before the election; requires employers to give out employees’ private phone numbers and personal email addresses. The Board acknowledges that “the privacy, identity theft, and other risks may be greater than the Board has estimated” but nonetheless concludes that these “risks are worth taking.” Finally, the brief argues that the Rule will result in more election-related litigation, not less, even though the stated purpose of the Final Rule is to reduce such litigation.
On February 4, 2015, the NAM filed a motion for summary judgment.
On July 28, 2015, the Court ruled against the NAM's motion.
Related Documents: NAM Opposition to Motion to Dismiss (March 25, 2015) NAM Reply to Motion for Summary Judgment (March 25, 2015) NAM Motion for Summary Judgment (February 24, 2015) NAM complaint (January 5, 2015)
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In re Constellation Brands
(NLRB)
Unlawful application of bargaining unit determination
The NAM filed a letter with the National Labor Relations Board affirming support for Constellation Brands. The NAM’s letter asserted that the Regional Director ignored important factors which influenced unit determinations including the departmental lines drawn by Constellation. NAM members have a vital interest in the Board’s application of Specialty Healthcare in the manufacturing setting. The standard for bargaining-unit determinations applied by the Regional Director in this case, which is an inaccurate application of the already unlawful standard established by the Board in Specialty Healthcare is problematic in all industries covered by the National Labor Relations Act (“Act” or “NLRA”), 29 U.S.C. §§ 151-169 including manufacturing. The NAM letter further asked that the Board grant Constellation’s Request for Review and invite NAM and other interested parties to brief these issues as they relate to manufacturing/production facilities.
Related Documents: NAM letter (February 12, 2015)
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M&G Polymers USA, LLC v. Tackett
(U.S. Supreme Court)
Retiree health-care benefits
On July 24, 2014, the NAM filed an amicus brief urging the Supreme Court to reverse a Sixth Circuit decision ruling that retiree health-care benefits, resulting from silence in collective bargaining agreements, are presumed to be indefinite. This decision undermines Congress’ intent regarding employee retirement health benefits and disrupts judicial precedent in other circuits. NAM’s brief clarified that when Congress passed the Employee Retirement Income Security Act (ERISA), it in no way intended retiree health care benefits to be indefinite. Furthermore, other federal circuits have effectuated Congress’ intent by requiring clear and express language in order for retiree health benefits to be provided indefinitely. Accordingly, the NAM encouraged the Supreme Court to adopt a clear and express rule affirming ERISA and precluding a presumption of indefinite health-care benefits.
On January 26th, 2015, the Supreme Court rendered its opinion in this case holding that to determine whether retiree health-care benefits survive the expiration of a collective bargaining agreement, courts should apply ordinary contract principles. Those principles do not include the Sixth Circuit’s inference that parties to collective bargaining would intend retiree benefits to vest for life.
Related Documents: NAM brief (July 24, 2014)
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National Association of Manufacturers v. Perez
(D.D.C.)
NAM sues OFCCP over its labor rights poster requirement
Continuing the fight against forced speech and aggressive overreach by federal agencies, the NAM and the Virginia Manufacturers Association (VMA) filed a lawsuit 12/18/13 to stop the Office of Federal Contract Compliance Programs (OFCCP) from enforcing its “posting requirement” rule. The OFCCP, an agency within the Department of Labor, enforces rules and regulations imposed on federal contractors.
The OFCCP rule adversely affects thousands of federal contractors and subcontractors by forcing them to promote unionization of their workforces or risk being debarred from federal contracts. Our lawsuit asked the court to strike down the rule on the grounds that poster is compelled speech and violates the First Amendment.
A similar rule put forth by the National Labor Relations Board (NLRB) was struck down earlier in 2013 by a federal appeals court due to a successful lawsuit from the NAM. In that case, the court ruled that similar posters amount to compelled speech and extend beyond the intent of the National Labor Relations Act. Federal contractors deserve the same protection from this aggressive overreach.
The NAM and VMA filed a joint Motion for Summary Judgment in D.C. District Court on 5/1/14. This case arises from a facial challenge brought by Plaintiffs against Defendant’s Final Rule, at 29 CFR Part 471, 75 F.R. 28368 implementing Executive Order 13496 which forces all federal contractors to post a “Notification of Employee Rights Under Federal Labor Laws”, prominently and conspicuously in places of employment. NAM and VMA argue that the Rule must be vacated as it constitutes compelled speech in violation of the First Amendment of the United States Constitution, has been promulgated in excess of Defendants’ statutory authority, is arbitrary and capricious, and is preempted by the NLRA.
On May 7, 2015, the D.C. District Court denied the NAM’s motion for summary judgment and entered judgment for the DOL. The DOL rule requiring contractor posting of NLRA rights statement was upheld by the Court and does not violate the constitutional rights of covered employers.
Related Documents: NAM brief (May 1, 2014) NAM Motion (May 1, 2014) NAM & VMA complaint (December 18, 2013)
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Roundy's Inc.
(NLRB)
Right to exclude nonemployee union handbillers from company property
The NAM and 194 other national, state and local business organizations filed a brief at the NLRB as part of the Coalition for a Democratic Workplace in a case involving access by nonemployee union members to private property for purposes of handbilling. The case arose when union agents engaged in handbilling in front of 26 of the company's stores. The NLRB allowed the picketing where the company did not have a sufficient property interest, but asked for input from the public about 2 other stores where Roundy's property rights were arguably stronger.
The NAM/industry amicus brief argues that the company may allow some handbillers, such as charitable solicitors, but may exclude others from its property. The company should have the right to exclude individuals whose handbilling advocates a boycott or otherwise is detrimental to the company. A company must have some degree of control over the messages it conveys to its customers on its private property, and the courts have upheld this principle. Our brief urged the Board to stop requiring employers to allow nonemployee union agents to trespass on private property for the purpose of harming the employer's business under any circumstances. If any limitation on a company's right to exclude handbillers is allowed, it should recognize the difference between handbillers that are engaged in beneficent activities and those that are engaged in harmful activities.
Related Documents: NAM amicus brief (January 7, 2011)
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Walgreen Co. v. Hinchy
(Indiana Supreme Court)
Indiana court allows for vicarious employer liability for personal employee misconduct
On February 18, 2015 the NAM filed an amicus brief with the Indiana Supreme Court in Hinchy v. Walgreen Co. An appeals court in Indiana adopted a “strict liability” respondeat superior theory, holding businesses liable for the actions of their employees, regardless of whether the employee was acting within what is traditionally considered the “scope of employment,” and regardless of whether the employee had been trained not to engage in the behavior.
The NAM brief sought clarification from the Indiana Supreme Court on when an employer can be held liable for the unlawful actions of an employee, where the employee knowingly violated company policy. Although this particular case arose in the health care context, and could have very significant implications for health care companies, the issue is of interest to all Indiana employers.
Unfortunately, the Court declined to take the case.
Related Documents: NAM brief (February 18, 2015)
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Augustus v. ABM Sec. Serv., Inc.
(California Supreme Court)
Prohibiting on-call rest periods
The NAM filed two amicus briefs with the California Supreme Court, in an employment litigation suit, to defend reasonable rest periods for manufacturing employees under California labor laws. The plaintiff alleged that while on-call rest periods are allowed under California law, an employer cannot satisfy its obligation to relieve employees from duties during rest periods when the employer nonetheless requires its employees to remain on call. This limitation could present manufacturers with operational uncertainty and impose additional costs. The NAM’s briefs argued that: under the plain language of the governing statutes and regulations, employers need not relieve employees of all duty during rest breaks because California wage regulations treat rest breaks differently than meal breaks; and the legislative history of the relevant statutes and regulations confirmed that California law authorizes on-call rest breaks. Unfortunately, the California Supreme Court denied the petition for rehearing.
Related Documents: NAM amicus letter supporting reconsideration (January 12, 2017) NAM amicus brief (November 23, 2015)
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Constellation Brands US Operations, Inc. v. NLRB
(2nd Circuit)
Standard for determining bargaining units
The NAM filed an amicus brief supporting Constellation Brands in a collective bargaining dispute stemming from the application of the National Labor Relations Board’s (NLRB) new Specialty Healthcare doctrine. The NLRB determined that 46 winemaking cellar employees within a completely integrated production facility constituted an appropriate bargaining unit because they were “readily identifiable as a group” that “shared a community of interest.” This litigation is important to manufacturers because under the new standard, employers would have multiple bargaining agreements that make it difficult to address employee concerns and halt operations until those concerns are addressed. The NAM’s brief argued that 1) the NLRB wrongly decided Specialty Healthcare, which should be overruled because the Specialty Healthcare rule grants too much deference to the union’s proposed unit; 2) Specialty Healthcare represents a radical departure from the NRLB’s longstanding precedent and encourages a multiplicity of fractured units within workplaces throughout the country; and 3) in deciding Specialty Healthcare the NLRB violated the Administrative Procedure Act. Although the court upheld the Specialty Healthcare standard, it found the regional director did not apply the standard correctly.
Related Documents: NAM brief (December 16, 2015)
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District of Columbia v. U.S. Dep't of Labor
(D.C. Circuit)
Davis Bacon Act does not apply to private construction projects
The NAM filed an amicus brief in a labor litigation lawsuit to oppose the Department of Labor’s (DOL) application of the Davis-Bacon Act, which requires “prevailing wages” for construction workers on public buildings or public works projects funded by the federal or D.C. government, to a private construction project. This is an appeal after DOL ruled that the City Center DC project was subject to the 1931 Davis-Bacon Act. If left unchecked, the DOL’s attempt to apply the Davis-Bacon Act to the private construction industry would have had a significant and potentially negative impact on private industry, the government and the economy. The NAM’s brief argued that DOL’s application of the Davis-Bacon Act to a private construction project was contrary to the language of the Act and that it was an unprecedented attempt to expand the scope of the Davis-Bacon Act into the private construction industry. The court applied common sense reasoning to reject DOL’s expansion of federal law.
Related Documents: NAM brief (March 11, 2015)
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In re Cooper Tire & Rubber Company
(NLRB)
ALJ rules that racist statements are not grounds for firing
The NAM filed an amicus brief defending employers’ rights to implement and follow anti-discrimination and anti-harassment policies in an employment litigation suit. The litigation arose from Cooper Tire’s discharge of an employee for racist statements made by the employee while on a picket line. Manufacturers have a moral and legal obligation to ensure that employees are free of discrimination and harassment in the workplace. The NAM’s brief argued that 1) the National Labor Relations Act (NLRA) should not protect racist comments, regardless of where or when the comments are made; 2) the National Labor Relations Board (NLRB) cannot force employers to violate other federal statutes through its protection of racist speech used on a picket line; and 3) employers need to be able to rely on and apply their legitimate anti-discrimination and anti-harassment policies. Unfortunately, the NLRB held that although the employee’s “statements most certainly were racist, offensive and reprehensible,” they did not forfeit the protection of the NLRA.
Related Documents: NAM brief (August 20, 2015)
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In re Kellogg Brown & Root, Inc.
(D.C. Circuit)
Privilege for investigations supervised by in-house lawyers
The NAM filed an amicus brief supporting employers’ rights to protect sensitive communications between employees and an employer’s counsel. This case involves an in-house investigation of tips alleging potential False Claims Act violations where, although the company provided 100,000 pages of documents during the discovery phase, the trial judge ordered that 89 documents identified as privileged be disclosed. If upheld, this precedent will penalize companies for adopting internal compliance programs and force companies to either risk a waiver of attorney-client privilege or to forego legal advice. The NAM’s brief argued that 1) a communication with counsel should be protected provided that the predominant or primary purpose of the communication is for securing legal advice; and 2) if these communications were to lose their privilege solely because they were part of a compliance investigation, “required by regulatory law’” many regulatory programs would be frustrated. In 2014, the appellate court overruled the trial court’s decision and ruled that the communications were protected by the attorney-client privilege. The trial court again ruled against the privilege assertions, and the NAM filed a second amicus brief in 2015 supporting mandamus to the appellate court. In a win for manufacturers, the appellate court reversed the district court for a second time.
Related Documents: NAM brief (January 30, 2015) NAM brief (March 19, 2014)
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In re Miller & Anderson
(NLRB)
Defining multi-employer bargaining units
The NAM filed an amicus brief opposing the creation of a joint bargaining unit composed of employees employed solely by one of the entities that comprise a joint employer without the consent of both employers. In this case, a union filed a petition seeking to represent a “multi-employer” bargaining unit consisting of employees from Miller & Anderson and temporary employees from a staffing company. This matter is important to manufacturers because a bargaining model where one entity has no employment relationship with all bargaining unit employees creates conflicting interests that are disruptive to productive bargaining. The NAM’s brief argued that any bargaining unit seeking to include employees employed solely by one of the constituent entities that comprise a joint employer is, of necessity, a multi-employer unit, which requires consent of both employers. The National Labor Relations Board decided that the union was not required to obtain consent from both employers and that it would apply traditional community-of-interest factors to determine if such a joint union is appropriate.
Related Documents: NAM brief (September 18, 2015)
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In re Space Exploration Technologies Corp.
(Dept. of Labor Admin. Rev. Bd.)
Scope of Davis-Bacon Act coverage when government property is involved
The NAM filed an amicus brief supporting Space X in its challenge against an extension of the scope of Davis-Bacon Act coverage. The Department of Labor (DOL) alleged that because the lessor, SpaceX, was located on government property, Space X was therefore subject to the prevailing wage requirements of the Davis-Bacon Act. If left unchecked, the DOL’s attempt to apply the Davis Bacon Act to the private construction industry would have had a significant and potentially negative impact on private industry, the government and the economy. The NAM’s brief argued that the DOL’s application of the rule to a private construction project is contrary to the language of the act and that the DOL’s interpretation was an improper attempt to expand the scope of the Davis-Bacon Act into the private construction industry. The National Labor Relations Board remanded this case to the DOL’s Wage and Hour Division for further proceedings.
Related Documents: NAM brief (February 18, 2014)
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In re The Boeing Company
(NLRB)
Camera-enabled devices in non-restricted areas
The NAM filed an amicus brief with the National Labor Relations Board (NLRB) supporting an employer’s right to properly manage its workforce during employee demonstrations and to adequately safeguard its manufacturing processes. The plaintiffs alleged that Boeing violated the National Labor Relations Act (the Act) by videotaping employee marches within production facilities on four separate occasions and that Boeing violated the Act when it promulgated and maintained a procedure prohibiting use of employees’ personal camera-enabled devices on site without a valid camera permit approved by security. If upheld, this decision would have significantly infringed on an employer’s ability to safeguard proprietary materials and monitor employee safety. The NAM’s brief argued that 1) photographing or videotaping employees on company premises did not violate the Act because Boeing maintained legitimate reasons to observe the marches; and 2) similarly, the restriction of camera enabled devices on company property did not violate the Act because Boeing had a legitimate business need to protect its manufacturing process. The NLRB concluded that Boeing violated the Act by videotaping employee marches but lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices.
Related Documents: NAM brief (June 12, 2014)
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International Union of Painters v. Great Wash Park LLC
(Nevada S. Ct.)
Trespass is not protected union activity
The NAM filed an amicus brief supporting the rights of property owners to access state courts in a dispute regarding third-party trespassers. The owner sought relief from trespass, under state law in a Nevada trial court after the defendants, a labor organization, used projection bombing to beam giant images onto the owner’s property. Effective trespass laws are necessary to protect property owners from trespass. The NAM’s brief argued that 1) the “photobombers” effectively took control of the physical space on which the image was displayed; 2) that state law property claims are not preempted by federal labor laws; 3) labor speech is not privileged over other types of speech; and 4) projection onto private property not only constitutes trespass but also takes property owners’ fundamental ownership rights. Unfortunately, the Nevada Supreme Court declined to hear this appeal.
Related Documents: NAM brief (September 2, 2015)
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Macy's, Inc. v. NLRB
(5th Circuit)
Fifth Circuit case to reverse micro-unit determination
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit supporting Macy’s, Inc., in a collective bargaining dispute. In this case, the National Labor Relations Board applied the Specialty Healthcare standard to conclude that sales employees in the fragrance and cosmetic departments at a Macy’s location were an appropriate bargaining unit. This litigation is important to manufacturers because smaller bargaining units will render it virtually impossible for an employer to oppose the organizing effect and make it more difficult to address employee concerns. The NAM’s brief argued that the application of the Specialty Healthcare doctrine, which reversed 70 years of precedent and instated a new standard for determining a collective bargaining unit, should not apply because the standard is inconsistent with the National Labor Relations Statue and the legislative history. Unfortunately, the court upheld the Specialty Healthcare standard.
Related Documents: NAM brief (April 27, 2015)
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Nestle Dreyer's Ice Cream Co. v. National Labor Relations Board
(4th Circuit)
Overturning the NLRB's "overwhelming community of interest" test for bargaining units
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit supporting Nestle Dreyer's Ice Cream Co. (Dreyer) in a collective bargaining dispute after the lower court held that Dreyer’s technical refusal to bargain violated the National Labor Relations Act (the Act). The litigation followed Dreyer’s refusal to bargain after the National Labor Relations Board’s (NLRB) certification of the petitioned-for unit, which consisted solely of maintenance employees. This case is important because to simply allow the instant certification of a maintenance-only unit would be a disservice to employers, employees and orderly collective bargaining. The NAM’s brief argued that the court should reverse the NLRB’s decision because the NLRB1) erroneously failed to give proper consideration to the bargaining history that included a broader unit of maintenance and production employees; 2) relied on the “overwhelming community of interest” test announced in Specialty Healthcare, which was inconsistent with prior doctrine; and 3) Incorrectly made the extent of organization a controlling factor in unit determination. The court denied Nestle Dryer’s petition for review.
Related Documents: NAM brief (January 13, 2015)
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Tyson Foods, Inc. v. Bouaphakeo
(U.S. Supreme Court)
Uninjured class members should be excluded
The NAM filed an amicus brief with the U.S. Supreme Court in a class action litigation urging the Court to determine whether a certified class may include uninjured claimants. The plaintiffs sued Tyson foods alleging injury and damages under the Fair Labor Standards Act (FLSA) and seeking overtime wages for time spent dressing and removing protective gear; however, the plaintiffs used statistical modeling to create a fictional plaintiff as the basis of class certification. The rise of no injury class plaintiffs is troublesome to manufacturers because it subjects them to increased litigation from plaintiffs who can hide the deficiencies of individual class member claims. The NAM’s brief urged the Supreme Court to set a bright-line rule against the inclusion of uninjured class members and argued that individuals without injuries do not have a claim. The Supreme Court affirmed the lower court’s ruling but did so on narrow grounds and did not reach the issue that was central to the NAM’s amicus brief.
Related Documents: NAM brief (August 14, 2015) NAM brief (April 20, 2015)
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Volkswagen Group of Am., Inc. v. United Auto Workers, Local 42
(NLRB)
Application of Specialty Healthcare to maintenance employee micro unit
The NAM filed an amicus brief with the National Labor Relations Board supporting Volkswagen in a collective bargaining dispute with the United Auto Workers (UAW). The UAW brought the complaint after Volkswagen opposed the creation of a micro-bargaining unit exclusively for maintenance employees. UAW argued that because maintenance employees “share a unique function” they are readily identifiable and therefore should be recognized as a bargaining unit. This litigation is important to manufacturers because multiple bargaining agreements make it difficult to address employee concerns. The NAM’s brief argued that the application of the Specialty Healthcare doctrine, which reversed 70 years of precedent and instated a new standard for determining a collective bargain unit should not apply because the standard is inconsistent with the statute and the legislative history and that the decision in this case fails to even comply with the standard as set forth in Specialty Healthcare. The NLRB rejected Volkswagen’s request for review, but the case was appealed to the U.S. Court of Appeals for the D.C. Circuit, which remanded the case for reconsideration.
Related Documents: NAM brief (December 23, 2015)
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Banner Health Sys. v. NLRB
(D.C. Circuit)
Challenging NLRB decision undermining confidentiality of investigatory interviews
The NAM filed an amicus brief in support of an employer’s right to manage internal company investigations of employee misconduct. This case stemmed from a previous National Labor Relations Board (NLRB) decision where Banner Health Systems instructed employees to maintain confidentiality during ongoing investigations of employee misconduct. This issue is important to manufacturers because their business operations would be disrupted by employees discussing the details of a sensitive internal company investigation. The NAM’s brief argued that the NLRB’s ruling would burden employers by requiring them to justify the need for investigatory confidentiality at a point where such justification would be almost impossible. Although the decision is narrowly tailored, the outcome is a win for manufacturers as the court did not opine on the NLRB’s case-by-case approach to justify employer confidentiality.
Related Documents: NAM amicus brief (January 21, 2016)
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EEOC v. Day & Zimmermann NPS, Inc.
(D. Conn.)
EEOC interference with employer free speech
The NAM filed an amicus brief supporting manufacturers’ employment rights in an Equal Employment Opportunity Commission (EEOC) claim against an employer for retaliation and interference under the Americans with Disabilities Act (ADA) based on a letter sent from the employer to employees identified as witnesses advising the employees of their rights during a disability discrimination investigation. Not only would the EEOC’s interpretation have negatively impacted the employer/employee relationship by making it more difficult for manufacturers to provide information to employees, but the interpretation also violated employers’ constitutional rights to communicate with employees. The NAM’s brief argued that the EEOC’s action was unlawful because the letter did not violate the ADA and that the EEOC interfered with the employer’s First Amendment right to communicate with its employees. The parties settled the case.
Related Documents: NAM brief (October 28, 2016)
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FedEx Home Delivery v. NLRB
(D.C. Circuit)
Delivery service contractors as employees
The NAM filed an amicus brief in support of FedEx’s position that delivery service contractors working for FedEx were independent contractors, not employees of FedEx. The facts of this case were “materially indistinguishable” from a prior case where the U.S. Court of Appeals for the District of Columbia Circuit determined that a group of delivery service contractors were not FedEx employees, but were independent contractors under the National Labor Relations Act. This case is important as worker classification may have broad ramifications affecting the use of independent contractors and partnerships between manufacturers and commercial vehicle drivers are a key asset. The NAM’s brief explained that worker classification issues directly impact all segments of the economy and more directly, the trucking industry. In a win for manufacturers, the court ruled against the plaintiffs.
Related Documents: NAM brief (August 17, 2015)
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International Brotherhood of Boilermakers v. NASSCO Holdings Inc.
(Cal. Ct. App.)
Notice requirements under the California WARN Act
The NAM filed an amicus brief in the California Court of Appeals to challenge the California WARN ACT, which requires employers to provide 60-days’ notice before any “mass layoff, relocation, or termination.” This is an appeal from a lower court decision which held that NASSCO violated the WARN Act when it failed to provide required notice before informing 90 employees that they should not return to work for four to five weeks. California manufacturers, particularly those with cyclical employees or staffing requirements that ebb and flow, need certainty in meeting their staffing needs. The NAM’s brief argued that the court erred by reading “layoff” in the Act to include a furlough — a brief break during which about 90 employees (less than 3% of NASSCO’s workforce) did not earn wages but nevertheless remained as NASSCO employees. Unfortunately, the court did not agree with this view but instead affirmed the lower court’s decision, requiring an employer to provide 60 days’ notice prior to a mass layoff, even if the layoff is not permanent and is for less than six months.
Related Documents: NAM brief (May 1, 2017)
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Mendoza v. Nordstrom, Inc.
(California Supreme Court)
Understanding California's Day-of-Rest law
The NAM filed an amicus brief supporting Nordstrom Inc. in an employment litigation suit to defend reasonable rest periods for manufacturing employees under California labor law. The plaintiff argued that Nordstrom violated California labor laws when the company failed to provide statutorily guaranteed rest days. The issues in this case are 1) whether employees are statutorily required to take a rest on a defined weekly basis, rather than an undefined consecutive period; and 2) whether an employer may permit an employee to independently choose to decline a rest day. This case is important for manufacturers because it implicates employers’ ability to reasonably manage their workforce and allow flexible rest days to accommodate both the needs of the employer and the employee. The NAM’s brief argued that a defined workweek is the proper and most reasonable framework for calculating the required day of rest and the law should be interpreted to encourage employee flexibility and autonomy in scheduling. The court agreed with the NAM’s arguments, which allows manufacturers to continue to provide employees with flexible scheduling options.
Related Documents: NAM brief (November 30, 2015)
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Nevada v. U.S. Dept. of Labor
(5th Circuit)
Appeal of DOL's new overtime rule
The NAM filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit asking the court to uphold a preliminary injunction of a Department of Labor (DOL) overtime rule that would place significant economic burdens on businesses. The overtime rule would have increased the minimum salary exemption thresholds by more than 100% from $23,660 to $47,476 annually. If the injunction was not upheld, more than 4.2 million employees, many of them in manufacturing, would have immediately lost their exempt status causing economic harm to both employers and employees. The NAM’s brief argued that the DOL’s overtime rule is inconsistent with decades of regulations and failed to consider the business community’s legitimate interests. The court granted a motion by the DOL to dismiss the appeal, and the DOL reopened the rulemaking process.
Related Documents: NAM amicus brief (January 24, 2017)
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Plano Chamber of Commerce v. Perez
(E.D. Tex.)
Challenging DOL's new overtime rule
The NAM sued the Department of Labor (DOL) to challenge its overtime rule. The rule was scheduled to become effective on December 1, 2016 and would have increased the minimum salary exemption threshold for executive, administrative or professional employees by more than 100%, from $23,660 to $47,476 annually. This case is important as more than 4.2 million employees, many of them in manufacturing, would have immediately lost their exempt status causing economic harm to both employers and employees. The NAM argued that the rule exceeded the DOL’s authority under the Fair Labor Standards Act, and as such the rule is invalid. In a win for manufacturers, the judge granted summary judgement allowing business to continue to operate without a detrimental impact.
Related Documents: NAM Opposition Motion to Intervene (December 15, 2016) NAM Opposition Motion to Stay (December 15, 2016) NAM Reply Brief (November 21, 2016) NAM Response (October 21, 2016) NAM Motion to Consolidate (October 17, 2016) NAM Summary Judgment Brief (October 14, 2016) NAM Complaint (September 20, 2016)
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The Boeing Company v. National Labor Relations Board
(9th Circuit)
Employee confidentiality in workplace investigations
The NAM filed an amicus brief in the U.S. Court of Appeals for the Ninth Circuit challenging a National Labor Relations Board (NRLB) holding that prohibits employers from recommending employee confidentiality during workplace investigations. The NLRB disapproved of a Boeing form which recommended that employees refrain from discussing a case with any other Boeing employee, other than company representatives investigating the issue or the employee’s union representative. If upheld, this holding would have undermined the ability of employers and employees to engage in confidential workplace investigations for legitimate business purposes. The NAM’s brief explained that the NLRB’s holding infringes on employers’ free speech rights and impedes employers’ abilities to conduct effective workplace investigations. The court remanded the case back to the district court because the NLRB established new rules after the case was filed.
Related Documents: NAM amicus brief (May 23, 2016)
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Volkswagen Group of Am., Inc. v. United Auto Workers, Local 42
(D.C. Circuit)
Application of Specialty Healthcare to maintenance employee union micro unit
The NAM filed an amicus brief in the U.S. Court of Appeals for the D.C. Circuit supporting Volkswagen in a collective bargaining dispute with the United Auto Workers (UAW). The UAW brought the complaint after Volkswagen opposed the creation of a micro-bargaining unit exclusively for maintenance employees; UAW argued that because maintenance employees “share a unique function” they are readily identifiable and therefore should be recognized as a bargaining unit. This litigation is important to manufacturers because micro-bargaining units disrupt highly integrated manufacturing operations. The NAM’s brief argued that the Specialty Healthcare case, which reversed 70 years of precedent and instated a new standard for determining a collective bargain unit, should not apply because that case is inconsistent with the statue and the legislative history. After the National Labor Relations Board (NLRB) issued a revised ruling in another case, the D.C. Circuit remanded this case back to the NLRB for reconsideration.
Related Documents: NAM amicus brief (February 2, 2017)
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Williams v. S.C. (Marshalls of CA)
(California Supreme Court)
Discovery limits under California's Private Attorney General Act
The NAM filed an amicus brief urging the California Supreme Court to uphold longstanding discovery rules and to limit the delegation of state enforcement power to private plaintiffs to protect the public’s interest in an employment litigation case. The plaintiff brought this litigation against Marshalls under California’s Private Attorneys General Act (PAGA), alleging that Marshalls failed to provide its employees with meal and rest breaks or premium pay in lieu thereof, to provide accurate wage statements, to reimburse employees for necessary business-related expenses and to pay all earned wages during employment. Manufacturers need civil litigation and workplaces laws in California that are balanced, reflect sound public policy and respect due process. Allowing private plaintiffs to pursue discovery demands broader than their allegations contributes to the growth of opportunistic lawsuits, which harm manufacturers and California’s economic climate. The NAM’s brief argued that allowing private plaintiffs to leverage PAGA without first laying the factual and legal foundation for their claims goes around longstanding discovery rules, and the delegation of state enforcement power to private plaintiffs must be safeguarded to protect the public’s interest. Unfortunately, the court did not agree with NAM’s arguments.
Related Documents: NAM amicus brief (May 6, 2016)
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Alvarado v. Dart Container Corp.
(California Supreme Court)
Proper formula for computing overtime pay
The NAM filed an amicus brief with the California Supreme Court in support of Dart Container Corp. in its dispute regarding the proper formula for calculating overtime wages. This is an appeal from a lower court decision which held that Dart Container was correct to use the federal overtime formula when it calculated wages because, although the federal law did not preempt state law, there was no valid state law specifying a formula to calculate overtime. Employers should not be penalized because of the ambiguity of state law when trying to pay their employees fairly. The NAM's brief argued that no California law provides guidance to calculate overtime on bonuses, and in the absence of such a law, courts should look to federal regulations for guidance and employers should be able to rely on existing law. Unfortunately, the California Supreme Court held that the lower court erred in finding that there was no state law specifying a formula to calculate overtime.
Related Documents: NAM brief (September 28, 2016)
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Associated Builders & Contractors v. Perez
(E.D. Ark.)
DOL Persuader Rule chills employer and employee communications
The NAM challenged the Department of Labor’s (DOL) Persuader Rule, which required employers, third-party lawyers and other labor consultants to disclose their relationships more frequently than under the 50-year-old "bright line" standard. The new rule required employers to file reports if consultants provided guidance to employers even if the consultants did not contact employees directly. If upheld, the rule would have restricted manufacturers’ ability to communicate with their workforce and would have resulted in employers not seeking counsel for guidance on important employer and employee related questions. The NAM’s brief argued that the Rule was arbitrary and capricious, unconstitutionally overbroad under the First Amendment, vague under the Fifth Amendment and interfered with ethical duties to maintain confidentiality. In July 2018, the DOL officially rescinded the Rule.
Related Documents: NAM Motion to Stay Brief (December 12, 2016) NAM Memorandum (April 2, 2016) NAM Motion (April 1, 2016) NAM Complaint (March 30, 2016)
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Browning-Ferris Indus. v. NLRB
(D.C. Circuit)
What constitutes a "joint-employer"
The NAM filed an amicus brief in the D.C. Circuit supporting Browning-Ferris in its appeal from an adverse decision by the National Labor Relations Board (the Board) in a dispute regarding the legal standard that should apply when determining whether two or more companies are “joint employers” under federal labor law. The Board abandoned its longstanding legal standard for joint employer determinations, replacing it with a new standard that evaluated whether an entity exercised indirect control over the means or manner of the employees’ work and terms of employment, or whether the entity had the potential to exercise such control. If upheld, the new standard would unreasonably expand the companies deemed to be an individual’s employer and impose employment obligations and liabilities on those employers. The NAM’s brief argued that the longstanding “direct control” standard should remain the standard for determining joint employment and that the Board’s loosened standard subjected companies to unmerited liability, without providing the same benefits as the old rule. The D.C. Circuit upheld the Board’s consideration of “reserved right to control” and “indirect control” in the joint-employer inquiry but remanded the case to the NLRB for it to adequately define what constitutes control.
Related Documents: NAM amicus brief (June 14, 2016)
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Cooper Tire & Rubber Co. v. NLRB
(8th Circuit)
Challenging NLRB ruling that racist statements are not grounds for firing
The NAM filed an amicus brief defending an employer’s right to implement and follow anti-discrimination and anti-harassment policies in an employment termination appeal. A National Labor Relations Board (NLRB) decision reinstated a Cooper Tire employee who was fired for using racial epithets toward replacement workers while the employee was on the picket line. Employers have a moral and legal obligation to protect the employees’ right to be free from discrimination and harassment in the workplace. The NAM’s brief urged the court to reverse the NLRB decision and establish that there is no statutory protection for racist or discriminatory statements made on the picket line and that protecting these statements is contrary to federal policies against discrimination and harassment. Unfortunately, the court deferred to the NLRB’s decision because the harassment took place in the context of picket-line activities during a strike.
Related Documents: NAM brief (September 29, 2017)
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DirecTV v. Hall
(U.S. Supreme Court)
Joint employer liability under FLSA
The NAM filed an amicus brief urging the U.S. Supreme Court to review a case addressing standards applicable to joint employment liability under the Fair Labor Standards Act (FLSA). The U.S. Court of Appeals for the Fourth Circuit’s ruling would treat any business as an FLSA joint-employer if the business is “not completely disassociated” from a worker’s direct employer and applies even if a business has no direct relationship with the employee, or if the business has only a limited relationship. That ruling unreasonably expands the scope of companies deemed to be an individual’s employer and imposes employment obligations and liabilities on those employers. The NAM’s brief explained that the Supreme Court should hear the case to bring uniformity to joint employment liability standards and avoid the potential imposition of extensive unanticipated liability on the many employers impacted by this new rule. Although the Supreme Court denied certiorari, the National Labor Relations Board overturned the Browning-Ferris case that initially broadened the definition of a joint employer.
Related Documents: NAM amicus brief (July 6, 2017)
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Emerson Electric Co. v. Superior Court of California
(U.S. Supreme Court)
Federal OSHA preemption of state unfair competition law
The NAM filed an amicus brief in the U.S. Supreme Court supporting Emerson Electric Co.’s request for review of the California Supreme Court’s decision that enforcement actions under California’s Unfair Competition Law (UCL) are not preempted by the federal Occupational Safety and Health Act (OSH Act). The OSH Act subjects employers and employees to one set of workplace safety regulations and imposes uniform health and safety requirements. States may regulate and enforce additional workplace safety only pursuant to a federally approved plan that avoids duplicative and counterproductive regulation. One California county sidestepped an approved state plan to seek additional penalties against Emerson for an alleged workplace violation. That circumvention could set a dangerous precedent for manufacturers by allowing counties to impose duplicative and conflicting workplace requirements on manufacturers. The NAM’s amicus brief argued that the federal OSH Act preempts such conflicting requirements and asked the U.S. Supreme Court to hear and reverse the decision, but the U.S. Supreme Court declined review.
Related Documents: NAM brief (July 27, 2018)
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McAdams v. Marquette University
(Wisconsin Supreme Court)
Right of employers to terminate employees for disruptive conduct
The NAM filed an amicus brief on behalf of Marquette University in a case involving the authority of a private employer to terminate an employee for conduct that violates the employment contract between the employee and employer. The NAM’s brief argued that private employers should remain free to discipline employees for conduct or speech that disrupts or adversely affects the employer’s mission, and where an employment contract establishes a process to resolve disciplinary disputes, courts should not disrupt that process. The Wisconsin Supreme Court ruled 4-2 that Marquette breached its employment contract with the professor by suspending him.
Related Documents: NAM brief (March 21, 2018)
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Newton v. Parker Drilling Management Services, Inc.
(9th Circuit)
Applicability of state employment laws on the outer continental shelf
The NAM filed an amicus brief arguing for en banc review of a decision by a panel of the U.S. Court of Appeals for the Ninth Circuit that held that workers employed on drilling platforms on the outer continental shelf (OCS) may bring claims under state wage and hour laws. The panel’s holding not only sharply departs from the settled expectations of both employers and employees working on OCS platforms, it also creates hundreds of millions of dollars of potential retroactive liability for employers and invites lawsuits in an area long understood to be under exclusive federal authority. The NAM’s brief argued that the panel opinion disrupts existing employer-employee relationships formed in reliance on longstanding interpretations of the Outer Continental Shelf Lands Act and that the decision improperly elevates state law to supremacy over federal law, conflicting with congressional intent and inviting states to frustrate offshore oil and natural gas development. The court denied the petition for rehearing en banc; however, the court issued a stay on the mandate that allows OCS platform workers to bring claims under state law pending the filing of a petition for a writ of certiorari in the U.S. Supreme Court.
Related Documents: NAM brief (April 2, 2018)
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Solus v. Superior Court of California
(California Supreme Court)
Federal OSHA preemption of state unfair competition law
The NAM filed an amicus brief urging the California Superior Court to hold that federal preemption prohibited a district attorney’s action under California’s Unfair Competition Law (UCL). The district attorney sought civil penalties, in addition to those already imposed by the California Division of Occupational Safety and Health, against a manufacturer under the state’s unfair competition law and fair advertising law. This litigation is concerning to manufacturers that are already subjected to federal workplace safety regulations, which impose uniform, deliberate and predictable health and safety requirements, because they would be subjected to duplicative and counterproductive regulation. The NAM’s brief argued that 1) the lawsuit is preempted by federal law, which determines the regulations and enforcement methods for workplace safety standards in California; 2) the UCL is inconsistent with California’s approved penalty structure for workplace safety violations; and 3) the court should require pre-approval under the state plan of unfair competition claims for workplace safety violations. Unfortunately, the California Supreme Court held that the UCL was not preempted by the federal Occupational Safety and Health Act.
Related Documents: NAM brief (May 28, 2015)
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BNSF Railway Co. v. EEOC
(U.S. Supreme Court)
ADA definition of disability for preemployment screenings
The NAM filed an amicus brief with the U.S. Supreme Court urging the court to reject expansion the scope of the Americans with Disabilities Act (ADA) “regarded as” prong of the definition of “disability.” This litigation arises from an Equal Employment Opportunity Commission (EEOC) charge after BNSF withdrew a conditional offer of employment because the company lacked enough information to determine whether an applicant suffered from an impairment that could limit his ability to perform the essential functions of the position. If allowed to stand, the decision would impose significant costs and expose employers to uncontrolled liability. A Supreme Court decision in this case would resolve a circuit split between the Ninth Circuit and other circuits that have considered this question. The NAM’s brief argued that 1) under the Ninth Circuit’s reasoning, an employer that requires an employee to undergo an individualized medical examination “for the purposes of determining whether he has an impairment” will be deemed to per se perceive the employee as having such an impairment and “regard” the employee as disabled; 2) other circuits have rejected this logic; and 3) that the Ninth Circuit’s holding improperly imposes the costs of medical examinations on employers. On November 13, 2019, the Court denied certiorari.
Related Documents: NAM brief (April 3, 2019)
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Boeing v. Int'l Ass'n of Machinists and Aerospace Workers
(NLRB)
Supporting appeal of fractured, small union bargaining unit determination
The NAM filed an amicus brief to support Boeing’s request for the National Labor Relations Board (NLRB) to review its finding that a small group of employees constituted a unit appropriate for collective bargaining. The Boeing Company’s 787 Dreamliner manufacturing facility in South Carolina employs approximately 3,000 production and maintenance employees, who have twice voted against joining a union. The NLRB Regional Director directed the election for a subset of employees at the plant. If the Regional Director’s decision stands, manufacturers could have their workforces artificially fractured into smaller bargaining units in violation of the “community of interest” standard required in making bargaining unit determinations. The NAM’s amicus brief argues that the Regional Director improperly applied a standard that had been overturned and that the fragmented unit creates an artificial barrier that separates employees and departments and frustrates the ability to maintain stable labor relations. On September 9, 2019, the NLRB reversed the regional director's decision, concluding that he misapplied the governing test for whether a subset of employees can bargain separately from the larger workforce.
Related Documents: NAM brief (July 16, 2018)
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Busk v. Integrity Staffing Solutions, Inc.
(U.S. Supreme Court)
Compensation for security screenings
The NAM filed an amicus brief with the U.S. Supreme Court urging review of a lower court decision that Nevada and Arizona employers were obligated to compensate warehouse workers for time spent going through security screenings at the end of the day. That decision identified a federal standard for compensable “work” under the Fair Labor Standards Act independent of the Portal to Portal Act; the court held that Nevada and Arizona did not have to take the Portal to Portal Act into account because neither state adopted the Act. If allowed to stand, that decision would have adverse consequences for businesses who would incur significant liability from the opportunistic plaintiffs’ bar or significant costs in revamping their procedures to try to avoid liability. The NAM’s brief argued that the decision undermines Supreme Court precedent and that it will invite significant financial implications for employers across the country. On October 7, 2019, the court denied certiorari.
Related Documents: NAM brief (April 5, 2019)
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Caesars Entertainment Corp. v. Int'l Union of Painters
(NLRB)
Protection of employer email systems
The NAM filed an amicus brief before the National Labor Relations Board (NLRB) in response to the NLRB’s request for input on whether to reconsider legal precedent that held that employees who have been given access to their employer’s email system for work-related purposes have a presumptive right to use that system for union communications. The NAM’s brief argues that employers should be allowed to safeguard their electronic communications for legitimate business interests, including to minimize distractions in the workplace, to prevent misuses of communications systems, to guard against data security vulnerabilities and to address other liabilities. On December 17, 2019, the NLRB agreed, and reinstated the right of an employer to restrict employee use of its email system as long as it does so on a nondiscriminatory basis.
Related Documents: NAM brief (October 1, 2018)
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Cellco Partnership v. NLRB
(9th Circuit)
Restriction on use of email in employee handbooks
The NAM filed an amicus brief in the U.S. Court of Appeals for the Ninth Circuit supporting employers’ right to limit what information is sent on work emails. The case arises from a decision by the National Labor Relations Board (NLRB) that deems illegal portions of Verizon's workplace Code of Conduct that restricts employee use of company email because the NLRB believes the policies violate employee rights to discuss wages, hours and terms of employment. This case is important because manufacturers need to be able to adopt reasonable workplace regulations. The NAM’s brief argues that the ruling ignores the rights of employers to establish safe and productive workplaces and secure email systems, creates legal and practical problems for employers of all sizes, and infringes First Amendment speech rights. On September 24, 2018, the court held the case in abeyance pending the NLRB's reconsideration of the standard set forth in Purple Communications Inc., 361 N.L.R.B. 1050 (2014), which held that employees who have been given access to their employer’s email system for work-related purposes have a presumptive right to use that system, on nonworking time, for communications protected by NLRA Section 7. On December 17, 2019, the NLRB issued its decision, agreeing with the NAM and reinstating the right of an employer to restrict employee use of its email system as long as it does so on a nondiscriminatory basis.
Related Documents: NAM brief (November 16, 2017)
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Communication Workers v. NLRB
(9th Circuit)
Use of company email by employees
The NAM filed an amicus brief in the U.S. Court of Appeals for the Ninth Circuit supporting restrictions on the use of company email systems by employees. This case arises from a 2014 decision by the National Labor Relations Board (NRLB) that if a company allows employees to use their email system, the employees have a statutory right to use the system on nonworking time for a wide range of messages and companies have limited oversight authority. This is important for manufacturers because the 2014 NLRB decision allows for extensive workplace distractions and personal misuse of business communication systems. The NAM’s brief argues that the ruling creates legal and practical problems for employers of all sizes, is unnecessary in today's world of social media and free email accounts, and infringes First Amendment speech and Fifth Amendment property rights. On September 24, 2018, the court held the case in abeyance pending the Board’s decision in a separate case, Caesars Entertainment Corp. v. Int’l Union of Painters, which similarly involved the NAM as amicus. The Caesars decision, issued on December 17, 2019, followed the NAM's rationale and reinstated the right of an employer to restrict employee use of its email system as long as it does so on a nondiscriminatory basis.
Related Documents: NAM amicus brief (October 10, 2017)
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Marathon v. NLRB
(6th Circuit)
Unreasonable union document requests
The NAM filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit to support Marathon Petroleum in its appeal from a National Labor Relations Board (NRLB) decision that required Marathon to produce documents during a union discussion. The underlying issue is whether “meet and discuss” means “bargain” under labor law. Marathon agreed to meet and discuss over outside contractors but not to bargain. Manufacturers and their employees rely on maintaining a fair and balanced system for economic growth and job creation. The NAM’s brief argues that the NLRB abuses its discretion by finding that Marathon incurred a bargaining obligation by agreeing to meet and discuss with the union. The Sixth Circuit agreed with Marathon, denied enforcement of the NLRB decision and remanded the case to determine if Marathon had any duty to bargain with the union over outside contractors.
Related Documents: NAM brief (December 26, 2018)
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McDonald's v. Serv. Emp.'s Int'l Union
(NLRB)
NLRB preclusion standards
The NAM filed an amicus brief urging the National Labor Relations Board (NLRB) to uphold specific, well-established recusal standards. This case involves the Service Employees International Union’s (SEIU) attempt to force two republican NLRB members to recuse themselves because their former law firms represented clients with similar issues as the issues in this case, even though neither NRLB member nor their former law firms served as counsel for any of the parties in this case. This “issue preclusion” standard advocated by the SEIU is an extraordinary departure from established recusal procedures, is irreconcilable with federal regulations and unmanageable as a practical matter. The NAM’s brief explains why prior recusal standards should be upheld to allow the NLRB to efficiently decide the many matters it confronts without fundamentally altering how it functions. On November 19, 2019, the NLRB issued its Ethics Recusal Report, which largely upholds the prior recusal standards advocated by the NAM and establishes a new filing obligation requiring all parties appearing before the Board to file an organizational disclosure statement. The report also adopts a written Board member disqualification protocol and determines that Board members can challenge the agency’s ethics official recusal determination and insist on participating in a particular case (though this, according to the report, should be very rare). On December 12, 2019, the Board denied the SEIU's recusal motion.
Related Documents: NAM brief (August 28, 2018)
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Nat’l Women’s L. Ctr. v. OMB
(D.D.C.)
EEO-1 Component 2 pay data reporting
The NAM filed an amicus brief urging the U.S. District Court for the District of Columbia to delay the deadline for filing the Revised EEO-1 Report “Component 2” pay data. Because Component 2 significantly expands the data fields employers must submit, employers need sufficient time to revise their systems, implement new procedures and train employees in order to collect the data. Component 2 creates an administrative burden for employers who will now be forced to bear the costs of complying with the requirements. The NAM’s brief argued that the EEOC has previously recognized that changes to EEO-1 require implementation time; 2) employers reasonably relied on EEOC’s direction and did not take the steps need to comply with collection of the data; 3) consistent with these reasons employers should receive sufficient time to prepare for the revised EEO-1; and 4) the data should not be required until EEOC can preserve confidentiality. The court declined to delay the filing deadline.
Related Documents: NAM summation (April 22, 2019) NAM brief (April 4, 2019)
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Nevada v. U.S. Dep’t of Labor
(5th Circuit)
Defending the overtime preliminary injunction from a collateral attack
The NAM filed an amicus brief on behalf of Chipotle Mexican Grill, supporting the nationwide injunction of the overtime rule. The plaintiff in this case filed suit against her employer, Chipotle, alleging violations of the new overtime rule, which had been enjoined by an Eastern District of Texas judge. The judge who issued the nationwide injunction held the plaintiff in contempt. The plaintiff is now appealing the contempt order, arguing that she was not within the judge’s jurisdiction and cannot be held in contempt. If the contempt order is vacated, it would functionally invalidate the nationwide injunction of the overtime rule because it would allow employees to sue employers for non-compliance. The 5th Circuit vacated the contempt order because the court lacked jurisdiction over the plaintiff.
Related Documents: NAM brief (July 13, 2018)
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Parker Drilling Management Services v. Newton
(U.S. Supreme Court)
Employment liability on the outer continental shelf
The NAM filed an amicus brief in the U.S. Supreme Court to overturn an appellate court ruling that workers on offshore drilling platforms may bring state-law labor and employment claims. An employee located on an offshore drilling platform in federal waters on the Outer Continental Shelf sued his employer—an offshore drilling services company—alleging the employer failed to pay the employee for his non-working “standby” time on the platform. The employee argued that California’s labor laws entitled him to payment for the standby time. The drilling company countered that federal labor laws applied because the platform is located on the Outer Continental shelf. A district court ruled that federal law applies, but the U.S. Court of Appeals for the 9th Circuit reversed. The drilling company petitioned the U.S. Supreme Court for review. The NAM filed an amicus brief in support of review. The Court granted review, and on June 10, 2019, concluded that federal labor law applies because the Outer Continental Shelf Lands Act broadly preempts state labor and employment laws. This decision restores certainty for offshore platform owners and operators and removes the specter of hundreds of millions of dollars in unwarranted wage-and-hour liability.
Related Documents: NAM brief (February 27, 2019) NAM brief (October 26, 2018)
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Taylor v. Burlington Northern Santa Fe Railway Co.
(Washington State Supreme Court)
Whether obesity is an impairment under Washington state law
The NAM filed an amicus brief in the Washington State Supreme Court arguing that obesity is not a legally protected disability unless the obesity is the result of a physiological disorder. The U.S. Court of Appeals for the 9th Circuit sent a certified question to the Washington State Supreme Court asking whether obesity is an impairment under Washington law to resolve allegations by a plaintiff that his denial of employment because he was obese constituted discrimination. An adverse ruling on this question could affect employee relations and a wide variety of business interactions negatively and could impose significant costs and uncertainty on Washington businesses. The NAM’s brief argues that defining obesity as a “per se” disability would encompass 40 percent or more of the adult population, would be at odds with legislative intent and would place significant burdens on employers. The court held that obesity is always an “impairment” under Washington law, regardless of whether obesity is related to an underlying medical condition.
Related Documents: NAM brief (January 14, 2019)
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United Nurses & Allied Professionals
(NLRB)
Union dues spent on lobbying
The NAM filed an amicus brief with the National Labor Relations Board arguing against treating lobbying as a core union function and significantly altering the current way employees exercise their rights to object to union dues expenditures for political activities. Mandatory union dues may be used only to support union activities germane to collective bargaining, contract administration and grievance adjustment, and may not be used for political speech that conflicts with the First Amendment rights of the union members who pay dues. This case is important because union dues should not be used to promote political causes to which employee's object. Our brief argued that lobbying is not a core union function, the Supreme Court has already decided the issue and employees should not be compelled to fund these political activities. The NLRB agreed, and on March 1, 2019, issued a decision holding that lobbying activities are not so related to the Union’s representational duties to employees as to justify the compelled financial support of those activities.
Related Documents: NAM brief (February 19, 2013)
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UPS Ground Freight v. NLRB
(D.C. Circuit)
As-applied challenge of the ambush election rule
The NAM filed an amicus brief in support of UPS in the first as-applied challenge of the ambush election rule. In 2014, the National Labor Relations Board (NLRB) issued the election rule, which elevated speed above due process and transparency. Shortly thereafter, because the Election Rule failed to balance other important policy objectives, the NAM brought a facial challenge to the rule in the U.S. District Court for the District of Columbia, which rejected the challenge based on its belief that the rule would be applied in a fair manner. A fair, transparent and thorough election process is important for manufacturing employees to be able to have an informed choice whether they want to be represented by a union. The NAM’s brief argues that this case serves as a prime example of how the rule has been applied to deny employers due process, such as by failing to resolve a voter eligibility issue before the election and denying an appropriate hearing. The D.C. Circuit held that there was no defect in the Board’s decision to certify the Union and consequently denied UPS’s petition for review.
Related Documents: NAM brief (October 22, 2018)
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Zino v. Whirlpool Corp.
(6th Circuit)
Whether collective bargaining agreement entitles retirees to vested healthcare benefits for life.
The NAM filed an amicus brief supporting Whirlpool in this appeal to the Sixth Circuit. The issue is whether a collective bargaining agreement provides health benefits for life absent explicit language that the agreement provides for such benefits. Previously, the Sixth Circuit has provided conflicting holdings in similar cases, at times holding that the collective bargaining agreements do not provide such lifetime benefits and at times reading them into the agreement. However, in Tackett, the Supreme Court held that using ordinary contract principles, parties to collective bargaining agreements would not intend retiree benefits to vest for life if not explicitly stated in the agreement. The NAM encouraged the Sixth Circuit to provide a clear standard that does not conflict with Tackett, which it did by holding on February 15, 2019, that the agreement did not provide lifetime health benefits.
Related Documents: NAM brief (January 12, 2018)
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Franze v. Bimbo Bakeries USA, Inc.
(2nd Circuit)
Defending the independent contractor model
The NAM filed an amicus brief to seek to uphold a district court ruling granting summary judgment for defendant Bimbo Foods Bakeries in a putative class action brought by delivery drivers who allege that the company misclassified them as independent contractors and, as a result, they are entitled to overtime pay and other benefits guaranteed to employees under the Fair Labor Standards Act (FLSA) and related New York state labor laws. A federal district court applied a well-established set of factors to determine whether the drivers were independent contractors or employees including the degree of control exercised by the alleged employer over the drivers, the drivers’ opportunity for profit or loss and their investment in the business, and the degree of skill and independent initiative required to perform the work, among others, ultimately concluding that the drivers were indeed independent contractors. Many manufacturers contract with independent contractors and have a significant interest in the proper interpretation of laws that implicate the distinction between employees and independent contractors. On appeal to the 2nd Circuit, the NAM filed a coalition amicus brief which explains that the independent contractor business model is common across a diverse range of industries and offers significant benefits to businesses and contractors alike. On Sept. 15, 2020, the court affirmed the lower court's summary judgment ruling in favor of the defendant.
Related Documents: NAM brief (February 10, 2020)
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General Motors, LLC and Charles Robinson
(NLRB)
When profane outbursts and offensive statements lose the protection of the NLRA
The NAM filed an amicus brief with the National Labor Relations Board (NLRB) urging the Board to reconsider its standards for determining whether an employee's profane outbursts or offensive statements of a racial or sexual nature lose the protection of the National Labor Relations Act (NLRA). The NLRB invited interested amici to file briefs after prior Board decisions in which extremely profane or racially offensive language was judged not to lose the protection of the NLRA were met with frequent criticism. Those decisions were grossly out of touch with the realities of today's workplace and the interests of employers in ensuring workplaces are free from harassment, discrimination, and bullying. In response to the specific questions posed by the Board, the NAM's brief, filed November 12, 2019, argues that (1) there are instances of employee misconduct that are so egregious that they should automatically result in the forfeit of the NLRA's protection; (2) employers are not required to tolerate insubordination, particularly where racially or sexually charged language is used; (3) the "norms" of the workplace cannot be used as an excuse to protect harassment and incivility; (4) the Board should abandon the standard applied in prior cases to the extent it protects sexual or racially offensive language that would otherwise not be tolerated simply because it occurs in the context of picketing; and (5) the Board should afford great weight to civil rights and antidiscrimination laws, and the requirements they place on employers.
On July 21, 2020, the Board issued a decision holding that the Wright Line, 251 NLRB 1083 (1980) standard applies to abusive conduct cases. Under that standard, the NLRB "General Counsel must make an initial showing that (1) the employee engaged in Section 7 activity, (2) the employer knew of that activity, and (3) the employer had animus against the Section 7 activity[.]" If the General Counsel meets her burden, "the burden of persuasion shifts to the employer to prove it would have taken the same action even in the absence of the Section 7 activity."
Related Documents: Board Decision (July 21, 2020) NAM brief (November 12, 2019)
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Nat’l Women’s L. Ctr. v. OMB
(D.C. Circuit)
EEO-1 Component 2 pay data reporting
The NAM filed an amicus brief urging the U.S. Court of Appeals for the D.C. Circuit to reverse the U.S. District Court for the District of Columbia's refusal to delay the deadline for filing the Revised EEO-1 Report “Component 2” pay data. The district court also should not have crafted its own remedy that ignored the significant deficiencies in the record. Component 2 creates an administrative burden for employers who will now be forced to bear the costs of complying with the requirements. The NAM’s brief argued that the EEOC had previously recognized that changes to EEO-1 require significant time and expense, the record showed questionable public benefits and the data should not be required until EEOC can preserve confidentiality.
Related Documents: NAM brief (August 26, 2019)
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Mountaire Farms, Inc. v. UFCW
(NLRB)
NLRB reconsiders contract bar doctrine
The NAM filed an amicus brief with the National Labor Relations Board (NLRB) urging the Board to rescind or modify the "contract bar doctrine." The doctrine dictates that once a collective bargaining agreement is executed, no representative elections are permitted for that bargaining unit for up to three years. Further, an employee may only file a decertification petition during a narrow (and confusing) 30-day period between 60 and 90 days before the end of the contract. The rule is not found in the National Labor Relations Act (NLRA), but rather is a creature of NLRB case law. Following invitation from the NLRB, the NAM filed a coalition amicus brief recommending that the Board rescind the doctrine because it interferes with the statutory right of employees to choose or refrain from choosing union representation. In the alternative, the Board should limit the duration of the bar period to just one year, instead of three years. Unfortunately, on April 21, 2021, the NLRB decided to retain its longstanding contract-bar doctrine.
Related Documents: NAM brief (October 7, 2020)
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See’s Candies, Inc. v. Superior Court of California, et al.
(Cal. Ct. App.)
Keeping COVID-19 claims derivative to Workers’ Comp Claims out of the Civil Court System
The NAM filed an amicus letter brief asking the Court of Appeal for California’s Second Appellate District to review a trial court order that improperly creates a Covid-19 exception to the longstanding “derivative injury rule.” That rule establishes workers’ compensation as the exclusive remedy for all claims that are derivative of an employee’s covered workplace injury—including claims for injuries sustained by members of the employee’s household. In this case, the court created a new exception to that bright-line rule for injuries from Covid-19 that allegedly derive from employees who contract the virus in the employer’s workplace and then infect their family members.
The NAM’s brief argues that if the trial court’s rule is allowed to stand, it could subject employers to potentially unlimited tort liability for alleged injuries that the Legislature intended to be addressed in the workers’ compensation system. Not only does the decision have the potential to devastate businesses already struggling to recover from the COVID-19 pandemic, it creates a clear conflict with a recent decision by a California federal court holding that such claims are barred by the exclusive remedy provisions of California’s workers’ compensation system. Unfortunately, on December 21, 2021, the court affirmed the trial court order.
Related Documents: Opinion (December 21, 2021) NAM brief (August 30, 2021) NAM brief (May 21, 2021)
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UPMC Presbyterian Shadyside v. NLRB
(3rd Circuit)
Court limits on NLRB's subpoena authority
The NAM filed an amicus brief in the U.S. Court of Appeals for the Third Circuit supporting constitutional protections for employer information. The National Labor Relations Board (NLRB) issued subpoenas requesting information purportedly in connection with an NLRB investigation of unfair labor practices. The district court found that those subpoenas are unprecedented in breadth and unrelated to the underlying charges. Limitations on the NLRB’s authority are important to protect the Constitution’s separation of powers and due process requirements and to protect against abuse of subpoena power. The NAM’s brief argues that the NLRB lacks the authority to compel an employer to produce information because that authority is vested exclusively in Article III courts. The Court later held the case in abeyance so that the parties could finalize the terms of a settlement agreement.
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Keene v. CNA Holdings, LLC
(South Carolina Supreme Court)
Protecting South Carolina's statutory employer doctrine
The NAM called on the South Carolina Supreme Court to reconsider a decision that leaves countless manufacturers and contractors exposed to unexpected tort liability and upsets the statutory scheme and purpose of having workplace injuries addressed through the no-fault workers’ compensation system. In this wrongful death case involving alleged asbestos exposure, the South Carolina Supreme Court defied 80 years of precedent by upholding a $20M jury verdict against CNA Holdings, even though the decedent was a “statutory employee” of CNA, meaning that he was covered by the workers’ compensation system and barred from pursuing a claim through the civil law tort system. Under the statutory employer doctrine—codified in South Carolina’s workers’ compensation statute—a business which subcontracts out work that is important, necessary, essential or integral to the business is treated as the statutory employer of the subcontractor’s employees and thus responsible for providing workers’ compensation insurance for those employees. That is precisely what CNA did in this case, yet the court deprived CNA of the immunity from civil liability that is the benefit of that bargain.
The NAM filed an amicus brief in support of CAN’s petition for rehearing, emphasizing the significant destabilizing impact on the manufacturing sector should the court’s erroneous construction of the “statutory employer doctrine” not be reconsidered. Our brief further argues that the doctrine must be construed in the broadest manner possible in order to extend workers’ compensation coverage to South Carolina workers, as the state legislature intended.
Unfortunately, in April 2022, the court denied rehearing.
Related Documents: NAM brief (November 8, 2021) Notice of Intent to file amicus brief (September 13, 2021)
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Cothron v. White Castle
(Illinois Supreme Court)
Plaintiffs should not be able to recover for “each violation” of the Biometric Information Privacy Act (BIPA)
On March 3, 2022, the NAM filed an amicus brief asking the Illinois Supreme Court to reject an interpretation of the Illinois Biometric Information Privacy Act (BIPA)—one of the most stringent biometric privacy statutes in the country—that allows for a “per-scan” theory of accrual and recovery of statutory liquidated damages. Employers commonly use biometric data, including fingerprints, voice prints, and vein patterns in a person’s palm, for time management, security access, and safety reasons. Passed in 2008, the BIPA contains a comprehensive set of rules for companies collecting biometric data from Illinois residents, with a focus on preventing identity theft through responsible use and handling. The statute creates a private right of action and provides for statutory damages of $1,000 for each negligent violation and $5,000 for each intentional violation, which has led the BIPA to become a trial bar favorite—a whopping 1,450 BIPA class action lawsuits have been filed since 2017.
The question presented in this case is whether BIPA claims “accrue each time a private entity scans a person's biometric identifier and each time a private entity transmits such a scan to a third party, respectively, or only upon the first scan and first transmission.” The NAM’s brief argues that the only reasonable interpretation of a law focused on ensuring notice and consent is that a violation occurs when biometric identifiers or biometric information is first collected or obtained. Given the remedial purposes of the BIPA, any damages resulting from alleged violations of the statute should encourage compliance, but not be punitive in nature. The “per-scan” theory of accrual suggested by the plaintiff here would lead to absurd and unjust results, as a single employee could scan 1,000 times over the course of a year.
Unfortunately, on February 27, 2023, the Illinois Supreme Court held that BIPA’s plain language "shows that a claim accrues under the Act with every scan or transmission of biometric identifiers or biometric information without prior informed consent."
On March 10, 2023, we filed in amicus brief requesting that the Supreme Court of Illinois reconsider its decision because it mistakenly construed BIPA in a way that would lead to the absurd result of astronomical damages awards that could bankrupt businesses, which is consistent with neither legislative intent nor the court’s case law requiring it to construe statutes in a way that prevents such absurd results.
Unfortunately, on July 18, 2023, the Supreme Court of Illionis denied the request for it to reconsider its decision.
Related Documents: NAM Petition for Rehearing (March 10, 2023) Opinion (February 17, 2023) NAM brief (March 3, 2022)
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Kuciemba v. Victory Woodworks
(Supreme Court of California)
Keeping COVID-19 claims derivative to Workers’ Comp
On October 12, 2022, the NAM joined other business groups to file an amicus brief urging the Supreme Court of California to reject claims by non-employees seeking to impose liability on employers for COVID-19 infections they contract from an employee outside the employers’ place of business. In this case, the district court concluded that the derivative liability rule—which establishes workers’ compensation as the exclusive remedy for all claims that are derivative of an employee’s covered workplace injury—barred claims asserted by an employee’s wife based on her allegations that she contracted COVID-19 through direct contact with her husband outside of his workplace. The district court also found that the plaintiff failed to state a claim because an employer’s duty to provide a safe workplace to its employees does not extend to non-employees who contracted COVID-19 away from the workplace. On appeal, the 9th Circuit certified two issues to the Supreme Court of California: (1) does the derivative injury liability doctrine bar a spouse’s claim in this context; and (2) does an employer owe a duty to the households of its employees to exercise reasonable care to prevent the spread of COVID-19?
Our brief argues that recognizing an exemption to the derivative liability injury rule would impermissibly deprive employers of the California Legislature’s careful balance of employer and employee rights and competing interests by subjecting employers to an assortment of claims based solely on a non-employee’s purported contact with an infected employee. Even assuming the derivative liability injury rule was inapplicable, the California Supreme Court should conclude that employers have no duty to protect non-employees from contracting infectious diseases from employees infected in the workplace. The NAM argues that the Court should do so because (1) too many intervening factors render it impossible to foresee whether an employer’s negligence will result in a non-employee contracting COVID-19, a community-transmitted disease, from an employee; (2) employers are unable to control whether COVID-19 is present in the workplace and the costs of imposing a duty on employers is high; and (3) the judicial system would be heavily burdened by trying to address whether an employer’s negligence caused a non-employee harm.
Happily, on July 6, 2023, although the Court concluded that the derivative injury liability doctrine does not bar a spouse’s claim, it refused to recognize that employers owe a duty of care to the households of its employees to prevent the spread of COVID-19.
Related Documents: Opinion (July 6, 2023) NAM brief (October 12, 2022)
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South Carolina State Ports Authority v. NLRB
(4th Circuit)
Protecting the bar against secondary boycotts
On April 7, 2023, the NAM filed an amicus brief urging the Fourth Circuit to reverse an NLRB decision that eviscerates the long-standing prohibition on secondary boycotts. Although the NLRA protects the right to strike or picket a primary employer (an employer with whom a union has a labor dispute), it seeks to keep neutral employers from being dragged into the fray by making it unlawful for a union to coerce a neutral employer to force it to cease doing business with a primary employer.
This case involves the South Carolina State Ports Authority (SCSPA), which has operated the Port of Charleston for the last 50 years by employing state workers to run lift-equipment and members of the International Longshoremen’s Association (ILA) to perform the other longshoreman work there. The SCSPA opened another terminal at the Port in 2022, requiring the same division of labor. ILA subsequently sued the United States Maritime Alliance (USMX)—a multi-employer association of carriers that deliver and pick up containers at the ports—and two of its carrier-members who used the new terminal for $300 million. ILA alleged that the USMX and the two carrier members were violating the parties’ collective bargaining agreement by using state employees to perform port work. USMX, the State of South Carolina and the SCSPA filed unfair labor charges against the union, maintaining that the lawsuit sought to obtain an illegal secondary objective in violation of the NLRA’s secondary boycott provision. The NLRB disagreed and ruled against the plaintiffs in a 2-1 decision, concluding that ILA’s lawsuit had a lawful work-preservation objective. Board member John Ring dissented, reasoning that this is a “classic case of unlawful secondary pressure.
We argue in our amicus brief that the ILA’s lawsuit is a quintessential secondary boycott: ILA is coercing the carriers to stop doing business at the new terminal unless a different party—the SCSPA—accedes to the union’s demands to hire more union workers to perform jobs that union members had never performed at the Port. The NLRB’s decision guts the distinction between work preservation and work acquisition and incorrectly concludes that carriers have control over the work assignments of another entity (the SCSPA). Allowing this decision to stand would turn the NLRA upside down, converting the clear statutory ban on secondary boycott activity into a presumptive authorization. All manufacturers have an interest in limiting this type of coercive and intimidating conduct by unions.
Unfortunately, on July 28, 2023, the Fourth Circuit denied the petition for review.
Related Documents: Opinion (July 28, 2023) NAM brief (April 7, 2023)
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Stericycle, Inc. and Teamsters Local 628
(NLRB)
The NLRB should protect employers' rights to maintain facially neutral workplace rules
On March 7, the NAM filed an amicus brief with the National Labor Relations Board urging the Board to maintain its current standard for determining whether an employer’s facially neutral work rule violates the National Labor Relations Act. In this case, Stericycle, Inc. and Teamsters Local 628, an administrative law judge held that three of Stericycle’s work rules, including a rule that prohibits retaliation against employees who report discrimination or harassment or participate in a discrimination or harassment investigation, violated the NLRA. Work rules encompass a wide variety of policies and employee handbook provisions that advance and protect vitally important interests like attendance, scheduling and time off; non-harassment, non-discrimination, and DE&I; and workplace safety and operating procedures. In 2017, the NLRB adopted a standard for evaluating work rules that properly balances a rule’s potential impact on NLRA-protected rights with the rule’s legitimate justifications. The NLRB recently invited interested amici to file briefs regarding whether that standard should be retained or modified to a more employee-friendly standard.
In response to the specific questions posed by the Board, the NAM's brief argues that any evaluation of work rules, employment policies, and employee handbook provisions should
consider both a rule’s potential “chilling” effect regarding NLRA-protected rights, as well as
legitimate business justifications and the obligations imposed on employers by other laws. If the Board does modify the current standard, it should allow employers to implement standard disclaimer language in their rules, policies, or handbooks, that avoids an interpretation that would unlawfully interfere with protected rights under the NLRA. Further, rules requiring confidentiality in open workplace investigations, non-disparagement rules, and policies barring outside employment should continue to be deemed generally lawful.
Unfortunately, on August 2, 2023, the Board announced a new approach for determining whether an employer’s facially neutral work rule violates the NLRA. Under the Board’s new approach, "[i]f an employee could reasonably interpret a rule to restrict or prohibit Section 7 activity, the General Counsel has satisfied her burden and demonstrated that the rule is presumptively unlawful”" An employer can only "rebut the presumption by proving that the rule advances a legitimate and substantial business interests, and that the employer is unable to advance that interest with a more narrowly tailored rule." The Board remanded the case to the ALJ for further consideration in light of its new standard.
Related Documents: Decision (August 2, 2023) NAM brief (March 7, 2022)
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Arrmaz Prods. And Internat'l Chem. Workers Union
(NLRB)
The NLRB should reject General Counsel Abruzzo’s effort to imposep “make-whole” relief for an employer’s refusal to bargain
On August 26, the NAM filed an amicus brief urging the National Labor Relations Board to reject General Counsel Jennifer Abruzzo’s radical proposal to overturn longstanding and established precedent by awarding prospective, compensatory make-whole relief for the period when an employer refuses to bargain while challenging a union’s certification in court. The traditional remedy for cases where an employer unlawfully refuses to bargain with the chosen bargaining representative of its employees is a bargaining order whereby the NLRB commands the employer to stop its unlawful refusal and bargain with the representative. Over 50 years ago, in Ex-Cell-O Corp., the Board explicitly rejected make-whole relief—in that case raises for employees—as too speculative. The Board concluded that compelling employers “to accede to terms never mutually established by the parties” would violate the plain language of the National Labor Relations Act and Supreme Court precedent.
In this case, Arrmaz Prods. And Internat’l Chem. Workers Union, GC Abruzzo asked the Board to “make the bargaining unit employees whole for the lost opportunity to engage in collective bargaining” during the period when the employer refuses to bargain in order to test the union’s certification in the courts.” As the NAM’s brief explains, this inherently speculative and arbitrary remedy would chill the protected rights of every employer to petition a court to review certification of a union as the exclusive representative of the employer’s employees. Further, section 8(d) of the National Labor Relations Act flatly states that the obligation to bargain collectively “does not compel either party to agree to a proposal or require the making of a concession.” Here, the proposed make-whole remedy cannot be calculated without presuming an agreement that the Board is not entitled to presume or to compel. Employers and employees alike rely on the Board to maintain labor relations stability. Such reliance interests are severely undermined when longstanding and established precedents are overturned without adequate justification, as is threatened in this case.
On December 8, 2022, the Board held that respondent ArrMaz Products, Inc. violated the National Labor Relations Act by refusing "to recognize and bargain with the Union as the exclusive collective-bargaining representative of the employees in the appropriate unit." The Board did not address make-whole relief. The Board has severed this issue and plans to issue a supplemental decision regarding a make-whole remedy at a later date.
Related Documents: NAM brief (August 26, 2022)
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Ralphs Grocery Co. and Terri Brown
(NLRB)
Arbitration agreements do not interfere with employees’ rights under the National Labor Relations Act
On March 21, 2022, the NAM filed an amicus brief urging the National Labor Relations Board to adhere to U.S. Supreme Court and Board precedent by preserving the validity of employment arbitration agreements. In Epic Systems v. Lewis, the Supreme Court held that the Federal Arbitration Act prevents the NLRB from challenging enforcement of arbitration agreements between employers and employees. Building on that holding, the NLRB ruled in 2020 that an arbitration agreement explicitly and prominently assures employees that their right to file charges with the Board does not interfere with employee rights under the National Labor Relations Act.
Despite this clear precedent, the current NLRB is seeking to abrogate its prior holdings and reconsider whether arbitration agreements interfere with employees’ right to file Board charges or otherwise access the Board’s processes. The NAM filed an amicus brief urging the Court to adhere to its current standard. Our brief highlights the Court’s holding in Epic Systems—that Congress does not alter the fundamental details of one statutory scheme (the FAA) through vague pronouncements in another (the NLRA). Any action by the Board to overrule its prior precedent and impose liability on an employer for enforcing its arbitration agreement would violate the FAA and lead to another confrontation with the Supreme Court. Many NAM members rely on lawful, voluntary arbitration agreements with their employees to reduce litigation costs and reach timely resolution of employment disputes through neutral fact finding and decision making, consistent with the FAA.
Related Documents: NAM Brief (March 21, 2022)
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South Carolina State Ports Authority v. NLRB
(4th Circuit)
Protecting the bar against secondary boycotts
On October 30, 2023, the NAM filed an amicus brief urging the U.S. Supreme Court to review the 4th Circuit’s refusal to reverse a National Labor Relations Board decision that eviscerates the long-standing prohibition on secondary boycotts (where a union coerces a neutral employer to cease doing business with an employer with whom a union has a labor dispute). In this case, the South Carolina State Ports Authority operates the Port of Charleston by employing state workers to run lift-equipment and having International Longshoremen’s Association members perform the other longshoreman work there. After SCSPA opened another terminal at the port in 2022 and attempted to use the same division of labor, ILA sued the United States Maritime Alliance (USMX), a multi-employer association of carriers that deliver and pick up containers at the ports, and two of its carrier-members, alleging that they were violating the parties’ collective bargaining agreement by using state employees to perform port work. USMX, the State of South Carolina and SCSPA countered by filing unfair labor charges, maintaining that the lawsuit sought to obtain an illegal secondary objective in violation of the NLRA’s secondary boycott provision. The NLRB disagreed and the 4th Circuit refused to reverse the NLRB’s decision on appeal.
We argue in our amicus brief that the union’s actions in this case constitute a quintessential secondary boycott: the union is coercing neutral parties (the carriers) to stop doing business at a port unless a different party—the South Carolina State Ports Authority—accedes to the union’s demands. All manufacturers have an interest in limiting this type of coercive and intimidating conduct by unions.
Unfortunately, on February 20, 2024, the U.S. Supreme Court declined to hear the case.
Related Documents: NAM brief (October 30, 2023)
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Starbucks v. McKinney
(U.S. Supreme Court)
Pushing back against lower standard for NLRB to obtain preliminary relief
On November 6, 2023, the NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a lower court decision granting preliminary relief in favor of a union—including forcing the employer to reinstate terminated employees—while the Board’s adjudication process remains ongoing. Under the National Labor Relations Act, federal district courts are empowered to grant preliminary relief at the NLRB’s request while an NLRB adjudication remains pending. In this case, the 6th Circuit affirmed a district court’s grant of preliminary relief—which is considered an extraordinary remedy reserved for extreme cases—under an unduly permissive standard. Specifically, the 6th Circuit, along with the 3rd, 5th, 10th and 11th Circuits, has held that the NLRB is entitled to preliminary relief upon a showing of reasonable cause to believe that the unfair labor practice alleged has occurred and that preliminary relief is just and proper. By contrast, other circuit courts have applied the traditional, and more stringent, four factor test to determine whether the NLRB is entitled to preliminary relief. Under that test, the NLRB must establish that (1) that it is likely to succeed on the merits of its claim, (2) that it is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in its favor, and (4) that an injunction is in the public interest.
We argue in our amicus brief that the Court should grant Starbuck’s petition to resolve the circuit split and that the 6th Circuit’s lenient standard places unreasonable burdens on employers subject to unfair labor practice proceedings.
Happily, on January 12, 2024, the Court granted the petition.
Related Documents: NAM brief (February 28, 2024) NAM brief (November 6, 2023)
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