Manufacturers In The Courts: June 2010

A Publication of the National Association of Manufacturers
E-mail briefing from the
National Association of Manufacturers
June 2010

The NAM is in the middle of a series of legal actions both supporting and challenging decisions of the Environmental Protection Agency relating to the regulation of greenhouse gases. We support the agency's decision that greenhouse gases emitted by manufacturing facilities are not currently subject to regulation under the Clean Air Act, but we are challenging decisions that impose permitting and control technology requirements starting in 6 months.

This set of regulations will adversely and uniquely burden American manufacturers by forcing them to comply with a set of rules that does not apply to their global competitors.

Outlined below are the latest developments in these and other pieces of litigation in which the NAM is involved.

Decided Cases


Global warming lawsuits are political questions . In May, the NAM filed an amicus brief arguing that litigation over the legal liability for climate change from greenhouse gas emissions is a political question that should be addressed only through the policymaking branches of government. We asked the U.S. Court of Appeals for the Fifth Circuit to reverse a three-judge panel decision that allowed this major public nuisance case, filed by Mississippi residents and property owners, to go forward. The plaintiffs alleged that the emissions from more than 150 energy, utility and manufacturing companies increased global warming and contributed to the severity of damages resulting from Hurricane Katrina. The NAM's brief, our second in the case, argued that the goal of this lawsuit is less to obtain compensation than to achieve the regulation of greenhouse gas emissions through litigation. The case was thrown into limbo when a judge's recusal left the court without a quorum to proceed. 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. The case is expected to be appealed to the Supreme Court. Comer v. Murphy Oil U.S.A. (5th Cir.).

New York's oppressive e-waste law is preempted. Last year, an NAM-led coalition of business groups filed an amicus brief in support of litigation seeking a preliminary injunction against New York City's onerous electronic waste law. The law mandated that manufacturers of computers, monitors, TVs, laptops and other equipment set up door-to-door collection programs and collect a prescribed amount of discarded products every year, or pay a stiff fine. It also imposed retroactive liability for products already sold, and required manufacturers to pick up products made by other manufacturers. Distributors, retailers, consumers and the City of New York are not responsible for sharing in the cost of this waste collection program. The NAM brief warned that the proliferation of state and local statutes such as this law would impose a severe burden on manufacturers in violation of the Commerce Clause. Fortunately, New York State passed a new electronics recycling law in May that preempts all local regulations like New York City's. On June 28, the court approved a settlement agreement dismissing the litigation, and the parties agreed to work together to develop an accessible system to collect used electronics in New York City. Consumer Electronics Association v. City of New York (S.D.N.Y.).

EPA's Unilateral Administrative Orders are constitutional. When the EPA determines that an environmental cleanup is required at a contaminated site, it has three options, one of which is to 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. Last September, the NAM filed a brief arguing that such orders constitute immediate and substantial deprivations of property without any opportunity for a pre-deprivation hearing before a neutral decision-maker. On June 29, 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 and providing companies with a hearing. General Electric Co. v. Jackson (D.C. Cir.).


San Francisco's employer health care mandate is upheld . Last July, the NAM filed a brief urging the Supreme Court to review a decision that allows San Francisco to require private employers to make minimum health care expenditures on behalf of their employees. We argued that the city's employer mandates are preempted by the Employee Retirement Income Security Act (ERISA). The Court declined to hear this appeal on June 28, 2010, leaving the law in place. Golden Gate Rest. Ass'n v. San Francisco (S. Ct.).

Labor Law

Union contract formation and remedies for breach are clarified . In 2009, the NAM urged the U.S. Supreme Court to hear arguments in a case involving union contracts and remedies for breach of contract. The High Court agreed to hear the case, and we filed an additional brief on the merits. One the first issue, the Court ruled that a court, not an arbitrator, should decide if a valid contract exists. With respect to remedies, the Court upheld the Ninth Circuit's decision refusing to find a remedy in Section 301 of the Labor Management Relations Act against an international union for allegedly interfering in the no-strike promise of a local union. Seven Justices left the door open to such a claim if further proceedings fail to provide relief under a different statute. Granite Rock Co. v. International Brotherhood of Teamsters (S. Ct.).

New Cases


Whether greenhouse gas considerations are proper in EPA permitting decisions. Various environmental groups are challenging permits issued for exploratory oil and gas drilling operations in the Chukchi and Beaufort Seas north of Alaska. They argue to the EPA's Environmental Appeals Board that carbon dioxide emitted during exploration is currently subject to regulation, despite EPA's conclusion that greenhouse gases will not be subject to regulation until January, 2011. The NAM brief filed June 25 argues that this type of challenge should be directed to notice-and-comment rulemakings, not raised in the context of permit decisions. In re Shell Gulf of Mexico, Inc. (Environmental Appeals Bd.).

When greenhouse gases become subject to regulation under the Clean Air Act. On June 28, the NAM and 17 other business associations moved to intervene in a lawsuit brought against EPA over the agency's interpretation of when greenhouse gases become subject to regulation under the Clean Air Act. If accepted by a federal court, thousands of business association members could be forced to obtain permits and install costly control technology to try to reduce greenhouse gas emissions. Center for Biological Diversity v. EPA (D.C. Cir.).

Labor Law

Preemption of state immigration verification laws. The NAM is a member of the Human Resource Initiative for a Legal Workforce, which filed a brief last year urging review of an adverse decision involving the Legal Arizona Workers Act. Many states and municipalities have been enacting laws that punish employers who do not follow their procedures for verification of the citizenship of employees. Our brief highlighted the tremendous burden caused by state systems that mandate use of the voluntary federal E-Verify program, and argued that such systems are preempted by the uniform and comprehensive federal system. On June 28, 2010, the Court agreed to review this case, which will be briefed and argued later this year. Chamber of Commerce v. Candelaria (S. Ct.).

Quentin Riegel
Vice President, Litigation & Deputy General Counsel
(202) 637-3058 "¢

National Association of Manufacturers
1331 Pennsylvania Avenue, NW Suite 600
Washington, DC 20004-1790

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