Government enforcement actions, including the issuance of subpoenas and Civil Investigation Demands (CIDs), must be authorized by the laws that created the agency or invested it with such broad investigative powers. A relatively new agency like the Consumer Financial Protection Bureau (CFPB), which was established by the Dodd-Frank Act, will often see its enforcement powers challenged at the start, and the regulated community should be aware of these inherent limitations on the exercise of governmental authority.
On April 21, the U.S. Court of Appeals for the District of Columbia Circuit issued another ruling adverse to the CFPB. In CFPB v. the Accrediting Council for Independent Colleges and Schools, the Court of Appeals affirmed the District Court’s ruling that the CFPB has no authority to issue a CID to the Council seeking information held by the Council related to “unlawful acts and practices in connection with accrediting for-profit colleges.”
On April 14, a U.S. Magistrate serving with the U.S. District Court for the Northern District of Indiana issued a ruling in a matter involving the attorney-client and attorney work product privileges. The case is Valley Forge Insurance Company v. Hartford Iron & Metal, Inc. The District Court held that the attorney’s communications with environmental contractors Keramida, Inc. and CH2M Hill, Inc. were not entered into for the purpose of rendering legal advice and, therefore, the attorney-client privilege did not apply. However, the District Court did agree that some of the emails were protected by the attorney work product doctrine.
Stored materials present a potentially serious point of tension between lenders and borrowers in the negotiation of a construction loan agreement. In construction lending, the term “stored materials” refers to the materials and items that are purchased in advance of their use and incorporation into the project. Those materials will need to be stored either on the project site or in a warehouse or other location “off-site.” Many lenders are wary about allowing funds to be used for stored materials because of the risk of loss off-site and, accordingly, may place conditions on the use of such funds. However, the borrower, usually through its general contractor, needs to purchase materials “in advance” to keep construction moving smoothly. For example, it would be completely impractical to require the general contractor to purchase the windows of a high-rise on a daily, as-needed basis.
The new administration at the Environmental Protection Action has taken these actions:
- Reconsidering the New Methane Rules.
On June 3, 2016, pursuant to the Clean Air Act (CAA), EPA promulgated amendments to the existing oil and gas New Source Performance Standards, 40 C.F.R. Part 60, Subpart 0000, and established new methane emissions standards for the these sources, 40 C.F.R. Part 60, Subpart 0000a, with respect to volatile organic compounds (VOC) and greenhouse gas emissions. The new 0000a standards are designed to reduce pollutant greenhouse gases (GHG) emissions from oil and natural gas production, processing, transmission and storage activities and operations.
On April 18, responding to petitions for reconsideration filed by industry groups and trade associations, EPA determined that these petitions raised an important issue that had not been considered earlier regarding the monitoring of fugitive emissions. As a result, EPA will convene a new proceeding to reconsider these requirements, and stayed the compliance date for fugitive emissions monitoring for 90 days. EPA will also consider the impact of these rules on low–production wells.
In Federal Contractors Beware DHS Proposes Robust Cybersecurity Procurement Regulation to Safeguard Controlled Unclassified Information (CUI), my colleague Brian Cruz and I discuss the proposed Department of Homeland Security (DHS) procurement regulation to safeguard CUI and its internal inconsistencies/ambiguities.
Yesterday, the Environmental Protection Agency published a notice in the Federal Register seeking public comments on any “regulations that may be appropriate for repeal, replacement, or modification.”
This notice invites an unprecedented level of review over EPA’s entire existing body of regulations. The notice aims to implement the President’s February 24 Executive Order 13777 Enforcing the Regulatory Reform Agenda “to alleviate unnecessary regulatory burdens.” The notice describes those regulations vulnerable to overhaul as those that:
(a) Eliminate jobs, or inhibit job creation;
(b) Are outdated, unnecessary, or ineffective;
(c) Impose costs that exceed benefits;
(d) Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies.
The comment period closes only 30 days out, on May 15, 2017. Contact your counsel for more information or to request assistance in commenting.
As any builder will tell you, it is impossible to know with certainty the exact amount a project is going to cost. Variables affecting the cost run the gamut from labor and material costs to delays for unforeseen conditions, weather or other causes. The longer a project is expected to take, the more uncertain the project’s costs become. For this reason, contingencies are included in budgets by all parties involved: owners, contractors, subcontractors and, occasionally, lenders. Ideally, these contingencies will allow the project to absorb delays and other unexpected events without the owner being forced to contribute additional equity (and “balance the loan”) at the time. The owner will desire maximum flexibility over the re-allocation of the contingency(ies) to line items that will then be funded by the lender—while the lender will want to “control” the use of contingency line items to the extent possible.
With this in mind, let’s look at some of the competing motivations at play and “typical” loan agreement provisions regarding the use (or re-allocation) of contingency(ies) to other line items in the Project Budget.
On April 11, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court and held, in a unanimous opinion, that the American Forest Resource Council has standing to challenge the U.S. Fish and Wildlife Service’s 2012 designation of 9.5 million acres of federal forest lands as a protected critical habitat for the northern spotted owl. The case is Carpenters Industrial Council, et al., v. Zinke.
On April 11, the U.S. Court of Appeals for the District of Columbia Circuit vacated the Environmental Protection Agency’s December 18, 2008 CERCLA/EPCRA Administrative Reporting Exemption for Air Releases of Hazardous Substances from Animal Waste at Farms rule (Rule) that created hazardous substance reporting exemptions for all farms, except large animal raising operations known as concentrated animal feeding operations (CAFO). The case is Waterkeeper Alliance, et al. v. EPA. The case was argued in December 2016, or almost eight years after the rule was promulgated.