Congress: one possibility is a short-term CR

After three weeks of negotiations to produce a bipartisan continuing resolution to keep the government running beyond the end of this month and into December, Senate Majority Leader Mitch McConnell, R-Ky., last week took action by offering legislation to fund the government, largely at current levels, through Dec. 9. The bill is generally consistent with Democratic demands for a “clean” CR without policy riders. The majority leader’s bill includes bipartisan provisions that have long been part of CR discussions, such as the $1.1 billion in funding for Zika virus eradication efforts, $37 million for opioid abuse assistance, and $500 million in emergency assistance for communities affected by flooding and other natural disasters. Democrats expressed immediate opposition to the Republican bill, claiming that several issues were unresolved. In particular, Leader McConnell’s bill does not include emergency funding for communities facing drinking water contamination issues, such as the lead pollution in the drinking water in Flint, Michigan, a provision Senate Democrats have actively pursued since the summer.

Nevertheless, McConnell’s bill does not yet appear to have the 60 votes of support necessary to advance on Tuesday, when a procedural vote on the bill is scheduled to occur. Beyond the Democratic opposition, Republican senators are not united behind the bill. Senator Lindsey Graham, R-S.C., told reporters he would vote “no” because the bill does not contain a rider, supported by Democrats, to fix the quorum provisions of the Export-Import Bank so that it may approve loans even in the absence of a board quorum. Other Republicans, led by Sen. Ted Cruz, R-Texas, have been pushing to include in the CR a provision to prevent the transfer of internet governance from the Commerce Department’s National Telecommunications and Information Administration to the ICANN, an international nonprofit organization. That provision is not included in Leader McConnell’s bill.

So, one possibility is a short-term CR into the first week of October if the parties are close to a deal by the end of the week but lack the time to get it fully enacted by midnight on Friday.

Congress must plan for states to go insolvent.

A number of states, including large ones like New Jersey, Illinois, and Ohio, could become insolvent during the next decade.

These states are burdened with underfunded pensions and other post-retirement benefits (mainly health care) that will impose a growing burden on governments as more baby boomers retire. At the same time, the states’ ability to fund these pensions will be compromised by two factors. The first is a long-term fall in the labor participation rate, requiring younger workers to bear a heavier burden of funding legacy costs. The second is a decrease in long-term growth rates, which will cause both tax revenues and returns on pension investments to fall below expectations.

Reforms are needed to restore fiscal solvency.

It is not too early for Congress and the next president to start planning for a state to go insolvent. Both the Detroit and Puerto Rico bankruptcies were preceded by years of denial in the face of inevitable facts. Given the combination of high unfunded liabilities, slow growth, deadlocked politics and, in some cases, legal barriers to reform, some states are likely beyond the point of saving. Illinois is a good bet to go first, but five or 10 states are in similar positions.

One approach is for Congress to pass legislation dealing with the specific state involved. This need not be a bailout. In fact, a bailout would be extremely unwise. It would tax states that had managed their finances responsibly, reward unions and bondholders who had enabled poor government, and eliminate any pressure to deal with the problems early. However, the legislation must contain enough financial assistance to restore both short-term liquidity (the ability to pay bills now) and long-term solvency (the ability to stay afloat). This assistance need not cost the taxpayer much. Indeed a careful combination of loan guarantees conditioned on significant structural reforms may be all that is needed. This process would resemble that followed in New York City and Washington, D.C., both of which are widely regarded as successes.

A benefit of this approach is that it allows for continued financial supervision of the state’s finances, thus maximizing the chance of overcoming barriers to reform and ensuring a return to long-term solvency.

A large problem with this approach is that it may not be able to reduce the state’s debt burden. Congress’ ability to erase debts may be limited legally to the formal bankruptcy process. Although governments may use a combination of economic and legal pressure to encourage creditors to settle their claims for less than par, it would have a much more difficult time forcing holdouts to accept losses. In such circumstances, it could be that the political and economic burdens of making all creditors whole are just too great outside of the bankruptcy process.

The odds of a state becoming unable to pay its obligations grow every year. Many state retirement plans are significantly underfunded and are unlikely to meet their investment goals over the next decade. The financial demands on state budgets will increase significantly. At some point, making a concerted effort to catch up imposes too much political pain and only delays the inevitable. When the end game happens, it usually comes as a surprise to many.

Congress can nevertheless prepare for insolvency by choosing its strategy now. The ideal solution would treat holders of unsecured debt the same as unfunded pensions, it would impose enough losses to ensure that the state regained its financial solvency, and it would condition debt relief on significant reforms. Ideally, the process would be available long before a state technically became insolvent but after it was willing to make significant reforms. Unfortunately, political resistance and unrealistically exuberant projections may prevent a state from taking advantage of any solution before insolvency.

In Congress: Post Independence Day Recess

After adjourning abruptly on June 23 due to the Democratic protest on the House floor over gun control, the House returns to legislative business on Tuesday, with votes expected on 16 bills under suspension of the rules. Included in this suspension package is H.R. 5210, the Patient Access to Durable Medical Equipment Act, sponsored by Rep. Tom Price, R-Ga., bipartisan legislation to preserve patient access to durable medical equipment (DME) after severe cuts to Medicare DME payment rates were scheduled to take effect on July 1, 2016. If allowed to take effect, these cuts are expected to have a negative effect on patients’ access to DME, particularly in rural areas. Other measures to be considered under suspension of the rules include seven bills reported by the Natural Resources Committee, three bills reported out of the Financial Services Committee, and three reported out of the Foreign Affairs Committee.

The House:

On Wednesday, the House is expected to turn to consideration of H.R. 2646, the Helping Families in Mental Health Crisis Act. This legislation, proposed by Rep. Tim Murphy, R-Pa., and reported by the Energy and Commerce Committee, would reform the nation’s mental health system by focusing programs and resources on psychiatric care for patients and families most in need of services. The bill when introduced sparked partisan disagreement, but the sponsor and committee leaders worked to bridge those disagreements, and the bill as revised was reported unanimously by the committee last month, demonstrating its broad and bipartisan support. The potential that the bill could provoke further debate over gun rights and gun control during floor consideration (Energy and Commerce Committee Democrats attempted unsuccessfully to attach gun control amendments to the legislation during the committee markup, but H.R. 2646) is likely what led House leaders to bring the bill up under suspension of the rules, which precludes amendments during floor debate. The Senate Health, Education, Labor and Pensions Committee has been working on its own version of mental health legislation. Press reports indicate that key senators involved in the issue are seeking to attach the Senate version of the bill to the conference report on the opioid-abuse legislation, the Comprehensive Addiction and Recovery Act, passed in differing versions by both chambers and scheduled for consideration by a conference committee on Wednesday of this week. Either way, the broad recognition that the nation’s mental health system is in deep crisis could produce a legislative success before Congress adjourns this year, although funding issues may prompt Democrats to oppose a final bill if it does not include increased resources.

Also on Wednesday, the House is expected to take up H.R. 5611, the Homeland Security and Safety Act, sponsored by House Majority Leader Kevin McCarthy. The so-called “anti-terrorism” package would establish within the Department of Homeland Security a new “Office for Partnerships to Prevent Terrorism” to assist with the prevention of violent extremism and radicalization associated with terrorists and terror networks. The new legislation also contains a provision related to gun control. In the wake of the Democrats’ demands and the apparent shift in public opinion on the issue following the San Bernardino and Orlando shootings, the bill includes a provision that would allow the attorney general to delay for three days the sale of a gun to either an individual on the terrorist watch list or an individual who has been investigated for terrorism during the past five years, and prohibit the sale of a firearm if there is sufficient evidence that the purchaser poses a credible threat to homeland security. The language is reportedly based on a proposal authored by Sen. John Cornyn, R-Texas, in the Senate, which would also give the Justice Department 72 hours to delay the sale of a gun to any suspected terrorist on the watch list. The proposal failed to achieve the necessary support for passage in the Senate due to Democratic opposition, and House Democrats have already denounced its inclusion in the House anti-terrorism package as not doing enough to keep guns out of the hands of terrorists. Despite the likely Democratic opposition to the bill, the inclusion of the provision, which is not likely to become law, is a marked step forward for gun control advocates and may portend limited success for them in the next Congress. Consideration of H.R. 5611 will be subject to a rule.

It remains to be seen whether House Democrats will again employ protest tactics on the House floor over gun control as they did during the week of June 23, or how they will attempt to amend the Homeland Security and Safety Act during floor consideration this week. House leadership will be working to maintain order on the House floor in order to continue functioning effectively and proceed on legislative business prior to the summer recess.

Additional items that may be considered in the House this week include H.R. 1270, the Restoring Access to Medication Act, reported out of the Ways and Means Committee. This legislation would allow for disbursements from health savings accounts, medical savings accounts, and health flexible spending arrangements for over-the-counter drugs. Current rules under the Affordable Care Act only allow these disbursements for the purchase of prescription drugs and insulin. Also pending a floor vote this week is H.R. 4361, the Federal Information Systems Safeguards Act of 2016, legislation to restrict federal employee access to personal accounts on platforms such as Facebook and Gmail at work in order to provide greater security for government information technology and systems. The legislation clarifies that federal agencies have the sole and exclusive authority to take appropriate and timely actions to secure their information technology and information systems. Among its provisions is one clearly barring access to pornographic or explicit materials from a government IT system. Consideration of both measures will be subject to a rule.

Finally, the House may also consider H.R. 5845, the FY 2017 Financial Services and General Government Appropriations Act, after postponing its consideration following the Democratic sit-in on the House floor in June. The $21.7 billion funding bill provides appropriations for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission, and other agencies. As discussed in a previous column, the Financial Services and General Government spending measure is considered one of the more controversial of the 12 annual appropriations bills because of policy riders that are opposed by most Democrats and the administration. Consideration of the Financial Services and General Government Appropriations Act for FY 2017 will be subject to the same structured rule process that governed consideration of the defense spending bill last month in order to avoid votes on controversial amendments.

The Senate:

The Senate resumes legislative business on Wednesday, when a vote is expected on a district court nominee. Senate Majority Leader Mitch McConnell, R-Ky., filed cloture on proceeding to four bills at the end of last week. Votes are expected on these cloture motions this week. Among these four measures are two pieces of legislation related to so-called “sanctuary cities,” which are those communities that have policies in place declining to assist or actively defying federal immigration laws and orders. These communities have been a focus of Republicans for many years and a hot-button issue on the presidential campaign trail, particularly since the fatal shooting of a San Francisco woman over the Fourth of July holiday in 2015 by a person in the country illegally after having been deported from the U.S. five times. The first cloture vote will be on a motion to proceed to S. 3100, the Stop Dangerous Sanctuary Cities Act, sponsored by Sen. Pat Toomey, R-Pa. This bill would limit federal funding to cities that do not comply with federal immigration law. The second vote scheduled in the Senate is cloture on the motion to proceed to S. 2193, a measure sponsored by Sen. Ted Cruz, R-Texas. This bill would increase mandatory minimum prison sentences for undocumented immigrants who repeatedly enter the United States illegally. The Senate voted on similar proposals last October when they were coupled together as a single piece of legislation, but the bill failed to pass. Both measures are subject to a 60-vote threshold for consideration on Wednesday, and neither is expected to garner the necessary support due to Democratic opposition.

If these first two motions on sanctuary cities are defeated, Leader McConnell has also lined up a cloture vote on a bipartisan bill sponsored by Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and Ranking Member Debbie Stabenow, D-Mich., that would establish a national guideline for the labeling of foods with genetically modified organisms. While the proposal under consideration has bipartisan support and is the product of careful and lengthy negotiations, some strong opposition to the bill remains, including that of Sen. Bernie Sanders, I-Vt., whose home state passed its own strict GMO labeling mandate in 2014 that went into effect on July 1, 2016. Several industry groups, which argue there is no scientific evidence that GMOs are harmful and prefer a single federal labeling standard over a patchwork of state laws, have sued to block the Vermont law and the litigation is currently pending. Should the Roberts-Stabenow measure pass, it would preempt and nullify the Vermont law and create a federal standard for the packaging of GMO foods. The cloture motion must achieve the 60-vote threshold in order to limit debate on the bill. The House has already passed a bill on GMO-labeling, but whether it would accept the Senate bill or insist on its stronger bill is not yet clear. Ultimately, the issue is of such importance to the food industry that if the Senate bill passes, as is likely, the House can be expected to accept it as well, perhaps even before the start of the summer recess.

The final item in the queue is a vote on cloture on the motion to proceed to the FY 2017 Department of Defense appropriations bill, also subject to a 60-vote threshold, which is expected to pass. The funding measure, advanced unanimously by the Senate Appropriations Committee, provides over $515 billion for the Pentagon base budget and $58.6 billion for Overseas Contingency Operations (OCO) for the upcoming fiscal year. The legislation does not shift OCO funding for base budget increases, a procedure the House Appropriations Committee pursued in its bill for FY 2017, which makes the bill more satisfactory for Senate Democrats to provide their support. The Senate is likely to continue its consideration of the Defense Appropriations bill into next week.

Leader McConnell has indicated there will also be another opportunity for Senators to take up the House-passed FY 2017 Military Construction and Veterans Affairs appropriations conference report, which also serves as the vehicle to provide funding to combat the Zika virus. The Senate attempted a vote prior to the Fourth of July recess, but Senate Democrats blocked its consideration over the Zika funding restrictions and offsets, and called for a new negotiation on the legislation. Senate leadership has rejected the demands for a renegotiated proposal, indicating that the current House-passed proposal is the only means of moving forward before the upcoming recess. Leader McConnell has not yet scheduled the vote on the conference report.

Even with the shortened week due to the Independence Day holiday, there is an active hearing schedule on both sides of Capitol complex.

As mentioned above, the conference committee charged with negotiating opioid abuse legislation is scheduled to meet on Wednesday. One of the major remaining hang-ups to the bill involves funding for programs that are authorized in the legislation. Democrats argue that the authorization bill is ineffective without providing the necessary appropriations and that emergency funding should be allocated; Republicans oppose emergency funding that would likely not be offset and argue that funds should be provided through the annual appropriations process.

The House Appropriations Committee is getting closer to completing its work on the 12 annual appropriations bills for FY 2017. The State and Foreign Operations Subcommittee is scheduled to mark up its bill on Wednesday morning while the Labor, Health and Human Services, and Education Subcommittee meets on Thursday morning to mark up its bill. The full committee is likely to consider both bills next week.

Two House hearings scheduled this week will be focused on the Affordable Care Act cost-sharing reduction program. The House Ways and Means Subcommittee on Oversight meets on Thursday morning to discuss the program, while the full Energy and Commerce Committee will meet on Friday morning.

The Senate Homeland Security and Government Affairs Permanent Subcommittee on Investigations will be meeting on Wednesday afternoon to discuss the threat posed by online recruitment by ISIS and other terror networks. Representatives from the FBI, Department of Homeland Security and Department of State are among the witnesses that will provide testimony before the subcommittee.

Also on Wednesday afternoon, the House Judiciary Subcommittee on Regulatory Reform will hold a hearing on President Obama’s regulatory impact on the U.S. economy.

The Joint Committee on Taxation will hear from Treasury Department representatives on Wednesday regarding the administration’s proposed regulations under Internal Revenue Code section 385 to combat inversion transactions, those in which U.S. businesses merge with foreign firms and move their headquarters overseas to lower their tax rate. The Treasury Department issued the proposal in April. The proposal has drawn criticism from many domestic and multinational businesses, and members of both parties have joined in the criticism that the proposal sweeps too broadly and will capture many innocent transactions, thereby depressing domestic economic activity and job creation. Treasury Assistant Secretary for Tax Policy Mark Mazur and Deputy Assistant Secretary for International Tax Affairs Robert Stack are scheduled to appear before the joint committee.

A joint subcommittee hearing by the Committee on Foreign Affairs’ Subcommittee on Asia and the Pacific and the Committee on Armed Services’ Subcommittee on Seapower and Projection Forces is scheduled for Tuesday afternoon regarding maritime disputes in the South China Sea. Representatives from the Departments of Defense and State will provide testimony on the escalating territorial disputes between China and its neighbors in Southeast Asia.

 

 

N.J. Supreme Court upholds freeze on pension cost-of-living adjustments

The New Jersey Supreme Court ruled 6-to-1 Thursday that the state can continue to freeze cost-of-living adjustment payments to those collecting public pensions.

The decision upholds a 201l reform law to suspend the payments that was supported by Democrats and signed by Christie. According to the Associated Press, the ruling will save the state approximately $17.5 billion in added pension liabilities.

Thursday’s ruling received cautious optimism from Moody’s Investors Service, which said it “eliminates a major threat to the state’s fiscal stability, which is already challenged by narrow reserves and large, rapidly growing pension costs.”

“New Jersey’s finances have been more stable in recent years, and the state projects that 2016 reserves will remain on target and above prior years at $550 million,” Moody’s said. “However, reserves at this level will provide limited cushion against further budget volatility.”

Earlier this week, the Assembly Judiciary Committee advanced a measure that seeks to task voters with deciding on a constitutional amendment to require regular pension payments.

New Jersey Legislation & Regulation Watch For 2016

New Jersey’s weakened gaming industry, workforce pressures and vulnerable environment have driven legislative developments in recent months, giving interested folks plenty of pending bills to watch in 2016.

Atlantic City, the state’s only constitutionally-allowed gaming revenue resource, has suffered  from casino bankruptcies, closures and competition, driving lawmakers to consider tax incentives that would boost the resort town, along with a proposal to geographically expand the market share of casinos.

Casino employees, some of whom have gone on strike in the past year, represent just one industry characterized by a labor pool that wants a better work-life balance. Lawmakers have heeded their calls with legislation that has drawn objections from a recession weary business sector still struggling to cope with ongoing economic uncertainty.

On the natural resources front, the New Jersey Department of Environmental Protection’s proposed changes to rules governing the state’s flood hazard areas have riled conservationists who fear the updates lessen protections and pander to developers.

Here’s a summary of critical legislation and regulation that could affect significant  New Jersey State changes in 2016:

Atlantic City Fiscal Recovery Package

Pinning their hopes on reviving Atlantic City, lawmakers are continuing to push a financial incentive package spearheaded by Senate President Stephen M. Sweeney and Sen. Jim Whalen, D-Atlantic.

Three of the bills have passed both houses of the Legislature as of the Assembly’s Dec. 17 voting session and are awaiting Gov. Chris Christie’s signature. The anchor of the proposal, A3981, calls for a payment-in-lieu-of-taxes plan to stabilize the town’s fiscal health.  A3984 would reallocate a casino tax that’s being used for redevelopment projects to help the city pay debt service on municipal bonds, and A3985 would drop a five-year obligation to use casino revenue for marketing purposes so those funds can be redirected to the city.

In November, Christie signed into law another part of the package, A3983, that would provide additional state money to the city’s struggling public schools, but implemented an  absolute veto to A3982, that would have required casinos to provide proof they are providing “suitable” health care and retirement benefits to employees.

Constitutional Amendment to Expand Gambling

Looking beyond Atlantic City, lawmakers are considering  advisiability of  casinos in the Meadowlands and the Monmouth Park racetrack.  Legislation would reverse the state’s constitutional restriction, and the topic could be left up to voters.

The Senate Budget and Appropriations Committee on Dec. 17 approved Sweeney’s SCR185, that would pose the question of non-Atlantic City gaming in a public referendum next November, while the Assembly passed a twin version of the bill on to that house’s Tourism, Gaming and the Arts Committee.

The legislation would make for a “potentially huge” expansion of the New Jersey’s gaming industry, although the passage of a constitutional amendment is difficult to predict given the expected high turnout due to the presidential election.

Supporting New Jersey Families Act

Casino employees and the state’s labor force in general also stand to get a boost from pending legislation aiming to improve work-life balance and increase paid time off. Along with legislation that would help displaced casino workers prepare to re-enter the workplace, lawmakers are also considering a family-geared legislation package that was unveiled in May by Senate Majority Leader Loretta Weinberg, D-Bergen. The Supporting New Jersey Families Act, which has yet to undergo committee review, would require employers in all industries to provide shift workers with predictable schedules and time off to attend school activities, expand state employee family leave privileges and establish a commission to do a gender pay disparity study. The bills have twin legislation in the Assembly.

The first prong of Weinberg’s package, the Schedules that Work Act, S2933, provides a private right of action for employees seeking to change their work schedules.

Paid Sick Leave

Among the most controversial legislatative actions are those advocating for employees is the proposed Paid Sick Leave Law, S785 and A2354, under which workers would get the better of five to nine sick days or more generous packages provided under local laws.

The Senate bill, also sponsored by Weinberg, got full approval in Dec. 17, while the Assembly version is poised for a second reading by the chamber. That bill counts Assembly members Pamela R. Lampitt, D-Camden, Shavonda E. Sumter, D-Passaic, Raj Mukherji, D-Hudson, Jerry Green, D-Passaic, and Benjie E. Wimberly, D-Bergen-Passaic as primary sponsors.

During a Senate committee hearing in June, the legislation was hailed by unions, think tanks and groups such as the New Jersey Working Families Alliance. Business-centered organizations, such as the New Jersey Farm Bureau and the New Jersey State Chamber of Commerce, criticized  the administrative and expense ramifications.

Given New Jersey Governor Chris Christie’s previous opposition to mandated sick leave, the future of the legislation remains uncertain, since in the aggregate, the  legislative proposals would create new administrative burdens on employers, including smaller businesses and start-ups, and increase the risk of litigation as traditional employer prerogatives are legislatively  prescribed.

Flood Hazard Area Rules

The New Jersey Department of Environmental Protection’s planned changes to flood hazard area rules, announced in June drew not only a backlash from environmentalists but twin bills proposed explicitly to overturn the changes. They are presently pending public comment.

Among the biggest changes in store is the increase in the amount of vegetation in riparian zones — where regulated water meets land — that can be disturbed for construction, and the extension of that allowed disturbance to building projects that would normally require a hardship exemption.

Sen. Raymond J. Lesniak, D-Union, served as a primary sponsor of SCR180 that received full Senate approval in October and is pending before the Assembly. Identical legislation, ACR249, was introduced in November by Assemblyman John F. McKeon, D-Morris, and Assemblywoman L. Grace Spencer, D-Essex. Both bills have been advanced by the Assembly Environment and Solid Waste Committee.

These rules affect virtually all development in all sectors across the state, and also serve as one of the state’s few points of leverage over federally authorized projects, like pipelines and utility facilitiesThese rules also dictate rebuilding and resiliency policy in and near flood prone areas. The impact would reach beyond the shore to industrial sites, many in low-lying areas along New Jersey Rivers.

Where the state goes on these issue affects not only environmental quality but also the value of properties, and the costs and likelihood of future business expansion.

Congress to take up Puerto Rico Bankruptcy?

This week, nothing mattered much beyond Greece. The situation has been well-covered, so no reason to recount the story here.

But, the governor of the island state of Puerto Rico (which is a U.S. territory) told the New York Times that Puerto Rico cannot pay its debts. The government and various agencies risk default this month.

Puerto Rico had two big economic contributors in the past – the U.S. military and favorable tax treatment for pharmaceutical companies operating on the island. Both of these things went away over the past 15 years, leaving the country with a big hole in its economy and a bloated government. The territory ran a deficit in every year since 2007 except one, and yet continues to increase government spending. The government employs roughly 27% of the workforce..

As a territory, the island operates like a state in the U.S., and there’s no provision in the Federal Bankruptcy Code for such an institution to declare bankruptcy. Puerto Rico has been pushing Congress to take up a couple of bills that would allow some of the public agencies on the island to declare bankruptcy, but nothing has happened on that front.

The territory’s constitution explicitly states that it must pay its debt before all other expenses, which includes rent, wages, and pensions. What are the chances that Puerto Rican leaders will send all available cash to bondholders and not pay their workers or retirees?  Zero. Anticipate congressional action after the Fourth of July Holiday.

Supreme Court Curbs EPA’s Power To Regulate Emissions

The U.S. Supreme Court on Monday struck down the U.S. Environmental Protection Agency’s  rule limiting mercury and other toxic emissions from power plants, saying in a 5-4 ruling that it should have considered the rule’s billion-dollar compliance costs first.

The high court’s majority says the EPA “strayed far beyond the bounds” of the standard established in Chevron v. NRDC when it issued its landmark power plant regulation. (Credit: AP)

Although the majority did find that cost must be considered, it said it does not hold that the law unambiguously required the agency, when making this preliminary estimate, to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value. The opinion said it will be up to the agency to decide how to account for cost.

The EPA had argued that the hazardous-air pollutants program does not require it to consider cost when first deciding whether to regulate power plants because it can consider cost later when deciding how much to regulate them.

But, according to the opinion, “Cost may become relevant again at a later stage of the regulatory process, but that possibility does not establish its irrelevance at this stage.”

States and industry groups challenging the 2012 Mercury and Air Toxics Standards claimed their $9.6 billion annual compliance costs far outweigh the benefits they will produce. The EPA argued that it had reasonably construed Section 112 of the Clean Air Act as directing it to consider compliance costs when establishing the appropriate level of any power plant regulation, but not when deciding whether to regulate those plants in the first place.

The cases are State of Michigan et al. v. EPA, case number 14-46, Utility Air Regulatory Group v. EPA, case number 14-47, and National Mining Association v. EPA, case number 14-49, in the Supreme Court of the United States.

By: Martin J. Milita, Jr. Esq., Sr. Director.

Please feel free to contact the author or your other Duane Morris Government Strategies LLC contact to learn more about this article and what it may mean to you.

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