Gravel2Gavel Construction & Real Estate Law Blog

On August 8, 2014, the U.S. Court of Appeals for the Eighth Circuit issued a ruling affirming the lower court’s holding that Union Pacific (UP) did not breach the tolling agreement it entered into with ASARCO, LLC while a Freedom of Information Act (FOIA) dispute was being resolved with EPA. At the conclusion of the FOIA matter, UP settled its CERCLA liability for $25 million with EPA at the Omaha, Nebraska Lead CERCLA Site by means of a court-approved consent decree.

ASARCO, as owner and operator of this large lead smelting site, paid $214 million to settle its liability as it emerged from bankruptcy. ASARCO did not file any objections to UP’s separate settlement, but later argued that UP breached its tolling agreement with ASARCO by settling with EPA. However, the courts have now ruled that UP’s settlement with EPA provided UP with statutory protection under CERCLA against any further claims by ASARCO, with the courts noting that the tolling agreement, while it tolled the statutes of limitation, reserved to the parties all other rights and defenses. Accordingly, the separate CERCLA settlement essentially trumped the tolling agreement, which the courts narrowly construed according to Nebraska law.

Interestingly, the Court of Appeals noted that it had resolved an earlier business dispute between the parties regarding the smelter nearly 100 years ago. See American Smelter and Refining Company v. Union Pacific Railroad Company, 256 F.737 (8th Cir. 1919).

The case is ASARCO, LLC v. Union Pacific Railroad Company, No. 13-12830.

In the case of CEnergy-Glenmore Wind Farm #1, LLC, v. Town of Glenmore, decided on August 7, 2014, the U.S. Court of Appeals for the Seventh Circuit affirmed the lower court’s ruling that the Town of Glenmore, Wisconsin’s delay and final rejection of wind farm building permits did not violate CEnery’s constitutional substantive due process rights. The proposal became very controversial, prompting the Town’s Board to rescind its earlier approval of the building permits, and the applicant alleged that it consequently lost a potentially lucrative business opportunity if the wind farms were unable to deliver power to a local utility.

The Court of Appeals held that the Board’s actions “were not arbitrary in the constitutional sense”, and that “popular opposition to a proposed land development plan is a rational and legitimate reason to delay making a decision”. Moreover, the plaintiff had other state law remedies available which it chose not to use, which further weakened its case. Finally, the Court of Appeals noted that if the plaintiff was successful, its success would cost each resident of Glenmore roughly $6000.

Yesterday, Pillsbury attorneys Ken Taber, Paula Weber, Rebecca Carr Rizzo and Stephen Asay published their advisory titled “Ban the Box” Legislation Expands Across the Country Employers Need to Update Employment Applications and Policies. The Advisory discusses the growing national movement to “Ban the Box” – i.e., to prohibit questions about a job applicant’s criminal history on employment applications.

Currently, “Ban the Box” laws are primarily targeted at public employers; however, there are increasing efforts to impose these same restrictions on private employers. New Jersey, Washington, D.C., and San Francisco have become the latest jurisdictions to pass such legislation. Laws prohibiting private employers from seeking certain information regarding criminal convictions are already in place in Hawaii, Illinois, Massachusetts, Minnesota, and Rhode Island, as well as various cities and municipalities, including Baltimore, Philadelphia, and Seattle.

Employers would be well-advised to review and update their employment applications and policies based on these increasingly common restrictions.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Ken Tabor, Paula Weber, Rebecca Carr-Rizzo, or Stephen Asay, the authors of this blog.

In Columbia Riverkeeper, et al. v. U.S. Coast Guard, decided on August 5, 2014, the U.S. Court of Appeals for the Ninth Circuit held that a Coast Guard “Letter of Recommendation” provided to FERC in connection with FERC’s ongoing review of a proposed Oregon LNG terminal project was not a final agency action that was reviewable under the Natural Gas Act. The Letter was issued in 2009 and addressed the suitability of the Columbia River for vessel traffic associated with the facility; it was subjected to unsuccessful administrative appeals within the Coast Guard, after which this challenge was filed in the Ninth Circuit. After reviewing the regulatory apparatus that is used to determine whether a proposed LNG facility can be permitted by FERC, the Court of Appeals held that the Letter does not have any “conclusive legal effect”, and it is therefore not a final agency action triggering judicial review. However, the Court of Appeals noted that the Letter could be an issue when the FERC permit is itself litigated, or if the Coast Guard issues a final order pursuant to its independent legal authority.

The U.S. Court of Appeals for the Fourth Circuit recently reviewed the lower court’s rejection of a series of challenges to an important North Carolina highway transportation project that will repair and restore access to the North Carolina Outer Banks. The case is Defenders of Wildlife, et al., v. North Carolina Department of Transportation, et al., decided August 6, 2014.

Following its review of a long and complex administrative record, the Court of Appeals upheld the lower court’s dismissal of the plaintiffs’ National Environmental Policy Act (NEPA) challenge to the complicated project, but ordered to court to conduct additional inquiries into the defendants’ argument that the “joint planning exception” known as a “Section 4(f)” exception, was warranted. The “Section 4(f) exception” is a shorthand reference to a provision of the transportation laws administered by the Federal Highway Administration that affect the use of federal transportation funds in a designated wildlife area.

The Court of Appeals acknowledged that additional hearings may require the lower court to conduct “an odyssey into the facts of the condemnation proceedings [that preceded the refuge designation] and pertinent North Carolina property law”, and it provided a roadmap for this inquiry. The opinion of the Court of Appeals is a very useful explication of these complicated laws and policies.

On July 9, 2014, Pennsylvania Governor Tom Corbett signed into law Senate Bill 145 (aka “Act 117”), amending Pennsylvania’s Mechanics’ Lien Law of 1963. Act 117 is effective September 7, 2014.

Among other things, Act 117 provides that, any lien obtained under the Act by a contractor or subcontractor is subordinate to “[a]n open-end mortgage as defined in 42 Pa.C.S. § 8143(f) (relating to open-end mortgages), where at least sixty percent (60%) of the proceeds are intended to pay or are used to pay all or part of the costs of construction.” This change responded to the May 9, 2012 Pennsylvania Superior Court case of Commerce Bank v. Kessler, in which the court interpreted the “all or part of” language in the existing mechanic’s lien laws to mean that the mechanics lien would be subordinate only if all of the proceeds from the mortgage were used to pay the cost of completing erection, construction, alteration or repair of the mortgaged premises subject to the open-end mortgage.

Subcontractors should also note that a subcontractor does not have the right to a mechanic’s lien with respect to an improvement to a residential property if:

(1) the owner or tenant paid the full contract price to the contractor;

(2) the property is or is intended to be used as the residence of the owner or subsequent to occupation by the owner, a tenant of the owner; and

(3) the residential property is a single townhouse or a building that consists of one or two dwelling units used, intended or designed to be built, used, rented or leased for living purposes. For the purposes of this paragraph, the term “townhouse” shall mean a single-family dwelling unit constructed in a group of three or more attached units in which each unit extends from foundation to roof with a yard or public way on at least two sides.

Act 117 adds a definition for “costs of construction.” It includes “all costs, expenses and reimbursements pertaining to erection, construction, alteration,repair, mandated off-site improvements, government impact fees and other construction-related costs, including, but not limited to, costs, expenses and reimbursements in the nature of taxes, insurance, bonding, inspections, surveys, testing, permits, legal fees, architect fees, engineering fees, consulting fees, accounting fees, management fees, utility fees, tenant improvements, leasing commissions, payment of prior filed or recorded liens or mortgages , including mechanics liens, municipal claims, mortgage origination fees and commissions, finance costs, closing fees, recording fees, title insurance or escrow fees, or any similar or comparable costs, expenses or reimbursements related to an improvement, made or intended to be made, to the property.” A “reimbursement” includes any such disbursements made to the borrower, any person acting for the benefit or on behalf of the borrower, or to an affiliate of the borrower.

Photo: David Hill, Mountain Laurel, Kalmia latifolia – Creative Commons

On August 6, Illinois Governor Pat Quinn signed into law House Bill 5622, a bill amending the state Wage Payment and Collection Act, 820 Ill. Comp. Stat. §§ 115, et seq., and barring employers from making the use of payroll cards a condition of employment and preserving workers’ right to demand more traditional forms of wage payment, such as paper checks and direct deposits into a bank account. The new law becomes effective January 1, 2015.

The new law requires, among other things, an employer using a payroll card to pay an employee’s wages to meet the following requirements:

(1) The employer shall not make receipt of wages by payroll card a condition of employment or a condition for the receipt of any benefit or other form of remuneration for any employee.

(2) The employer shall not initiate payment of wages to the employee by electronic fund transfer to a payroll card account unless: (A) the employer provides the employee with a clear and conspicuous written disclosure notifying the employee that payment by payroll card is voluntary, listing the other method or methods of payment offered by the employer in accordance with Section 4, and explaining the terms and conditions of the payroll card account option, including: (i) an itemized list of all fees that may be deducted from the employee’s payroll card account by the employer or payroll card issuer; (ii) a notice that third parties may assess transaction fees in addition to the fees assessed by the employee’s payroll card issuer; and (iii) an explanation of how the employee may obtain, at no cost, the employee’s net wages, check the account balance, and request to receive paper or electronic transaction histories, as provided in item (3); (B) the employer also offers the employee another method or methods of payment in compliance with Section 4; and (C) the employer obtains the employee’s voluntary written or electronic consent to receive the wages by payroll card.

(3) A payroll card program offered by the employer shall provide the employee with: (A) at least one method of withdrawing the employee’s full net wages from the payroll card once per pay period, but not less than twice per month, at no cost to the employee, at a location readily available to the employee; (B) at the employee’s request, one transaction history, which the employee may request to receive in paper or electronic form, each month that includes all deposits, withdrawals, deductions, or charges by any entity from or to the employee’s payroll card account at no cost to the employee; and (C) unlimited telephone access to obtain the payroll card account balance on the payroll card at any time without incurring a fee.

(4) An employer may not use a payroll card program that charges fees for point of sale transactions, the application, initiation, loading of wages by the employer, or participation in the payroll card program. Fees for account inactivity may be assessed following one year of inactivity. The payroll card program must offer the employee a declined transaction, at no cost to the employee, twice per month. Commercially reasonable fees, limited to cover the costs to process declined transactions, may be assessed on subsequent declined transactions within that particular month.

(5) The payroll card or payroll card account may not be linked to any form of credit including, but not limited to, overdraft fees or overdraft service fees, a loan against future pay, or a cash advance on future pay or work not yet performed.

(6) An employee paid wages by payroll card may request to be paid wages by another method of payment provided by the employer in accordance with Section 4. Following the request, the employer shall, within 2 pay periods, begin payment to the employee by the allowable method requested by the employee.

(7) A payroll card program offered by an employer shall provide the employee with protections from unauthorized use of the payroll card in accordance with State and federal law concerning electronic fund transfers.

(8) The employer’s obligations under this Section shall cease 60 days after the employer-employee relationship has ended and the employee has been paid the employee’s full and final wages.

(9) Within 30 days of the termination of the employer-employee relationship, the employer shall notify the employee that the terms and conditions of the account may change if the employee chooses to continue a relationship with the payroll card issuer.

Additional Source: Illinois Department of Labor, Electronic Payroll Debit/Credit Cards for Payment of Wages; Hawaii Issues Amended Notice Re: Use of Payroll Debit Cards

Over a strong dissent, the U. S. Court of Appeals for the Ninth Circuit rejected the lower court’s approval of several proposed de minimis consent decree settlements. The Arizona Department of Environmental Quality (ADEQ) had negotiated these settlements with a number of potentially responsible parties (“PRPs”) at the Broadway-Patano Landfill, a former hazardous waste site located in Tucson, Arizona; the site is being cleaned up at an expected cost of $75 million. Several parties claiming to be de minimis PRPs approached the ADEQ seeking early settlements of their alleged liability. Their allocations at the site ranged from 0.01% to 0.2% of the overall liability, and the ADEQ’s review of the record agreed with these conclusions. A proposed Consent Decree was filed with the U.S. District Court for Arizona. Although opposed by many intervenors, the court approved the Consent Decree. An appeal followed; the case is State of Arizona v. Raytheon, et. al., decided August 1, 2014.

The Court of Appeals held that the lower court was obliged to independently scrutinize the terms of the settlement, and that it had erroneously deferred to the ADEQ’s judgment that these settlements were in the public interest. In its decision, the lower court noted that the allocation was based on a record consisting of 800 witness interviews, and a 100,000 page record, and it did not feel compelled to second guess the ADEQ. The Court of Appeals held that no special deference was owed to a state agency interpreting a federal statute such as CERCLA. The dissent argued that the majority will now require the lower court to “wade deep into the abyss of liability allocation” and gauge the accuracy of the state agency’s decision which will require expertise that most courts do not possess. In addition, the majority did not acknowledge the significant role the states play in the CERCLA cleanup process. The majority, in a footnote, criticizes the dissent for engaging in a de novo review of the evidence by concluding that there was evidentiary support for the settlements. The dissent, for its part, rejected this criticism.

Today, Pillsbury attorneys Jerry Jacobs, Julia Judish, and Dawn (Crowell) Murphy issued their advisory titled The ADA and Private Professional Certification. Their Advisory discusses Title III of the Americans with Disabilities Act (ADA), as amended, which mandates that private entities offering examinations or courses related to certain applications, licensing, certification, or credentialing ensure that such exams and courses are accessible to individuals with disabilities or offer alternative accessible arrangements. They encourage those involved with any aspect of credentialing examinations to pay careful attention to what aids or accommodations must be offered by law.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Jerry Jacobs, Julia Judish, or Dawn (Crowell) Murphy, the authors of this blog.