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My partner, Jon Welner, is a leading practitioner of prevailing wage law in California and is the Chair of JMBM’s Prevailing Wage Group. He is also a member of JMBM’s Natural Resources and Mining Group and advises and defends the construction materials industry on prevailing wage matters including recent California legislation to expand prevailing wage law to cover the delivery of concrete to public work sites (AB 219).

— Kerry Shapiro

Reversal of Fortune Deja Vu: Court Overturns AB 219… Again!

By Jon Welner

PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose. It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars–and can be brought years after construction is complete.

The U.S. District Court in Los Angeles has struck down AB 219 as unconstitutional once again.

AB 219 took effect on July 1, 2016. It applied California prevailing wage requirements to the delivery of ready-mix concrete to public works. This was big news for two reasons: (1) it hit the ready-mix concrete industry—and all of the businesses that depend on it—very hard; and (2) it represents the first time that prevailing wage requirements have been imposed on material suppliers (as opposed to on-site contractors).

On June 30, 2016—the day before AB 219 took effect—eight ready-mix companies filed a lawsuit in federal court challenging the constitutionality of the new statute on Equal Protection grounds. In essence, they argued it was unfair to single out ready-mix concrete companies for special treatment, leaving all other material suppliers unaffected.

Since then, the Court battle has taken a number of dramatic twists and turns. AB 219 has been suspended, reinstated, overturned, and appealed, as follows:

  • Oct. 21, 2016—District Court issues preliminary injunction suspending enforcement of AB 219. [AB 219 not in effect.]
  • Oct. 24, 2016—State appeals the preliminary injunction.
  • Dec. 16, 2016—Court of Appeals stays the preliminary injunction pending appeal. [AB 219 back in effect.]
  • Mar. 14, 2017—District Court issues permanent injunction overturning AB 219. [AB 219 not in effect.]
  • Mar. 14, 2017—State appeals the permanent injunction.
  • Mar. 29, 2017—State files motion to stay the permanent injunction pending appeal.

If the Court of Appeals grants the stay, AB 219 will be back in effect once again!

What should ready-mix companies do now?

With all of this back and forth, what should ready-mix companies do? Should they stop complying with AB 219, since it has been declared unconstitutional by the District Court? Or should they continue complying until there is a final decision on appeal?

Companies should consult with their own legal counsel to decide on a course of action. Here are some important considerations:

  • Contracts. Even though AB 219 has been ruled unconstitutional, ready-mix companies must still comply with their contractual obligations. If they have contracts requiring them to pay prevailing wage or take other steps consistent with AB 219, they must continue to do so (or modify the contract).
  • Non-DIR Enforcement. The lawsuit challenging AB 219 was brought against the Director of the Department of Industrial Relations (DIR) and the Labor Commissioner, the chief enforcement official at DIR. DIR has therefore taken the position that the permanent injunction only prohibits the enforcement of AB 219 by DIR—not enforcement by other agencies such as Caltrans or by workers or unions in private lawsuits. So despite the District Court’s ruling, we can expect Caltrans to continue requiring and enforcing AB 219 on its projects; and some drivers might work with unions to file lawsuits against their employers. (Of course, ready-mix companies will argue that no agency or person should be allowed to enforce AB 219, since the District Court ruled it to be unconstitutional!)
  • Retroactive Enforcement. DIR has also taken the aggressive position that if AB 219 is upheld on appeal, DIR intends to retroactively enforce it going back to the date it first took effect, i.e., July 1, 2016. This policy seems patently unfair: it requires companies to comply with AB 219 even though the District Court has declared the law to be unconstitutional. It is not clear whether courts in the future will allow DIR to do this. Nonetheless, DIR’s position creates uncertainty and risk for ready-mix companies who choose not to comply with AB 219.

What’s Next?

DIR has moved for a stay of the permanent injunction, pending a final decision on appeal. The Court will decide on the stay in the next few weeks.

The parties are scheduled to file their appeal briefs in August and September 2017. Oral argument will likely be scheduled for early 2018, with a decision sometime later in the year.

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Jon Welner is a leading practitioner of prevailing wage law in California. He is a Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM) and Chair of JMBM’s Prevailing Wage Group. Contact him at JWelner@jmbm.com.

JMBM’s Prevailing Wage Group advises and defends developers, contractors, and manufacturers on the most challenging and complex prevailing wage matters in California.

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BLM releases maps showing 1.3 million acres of proposed mining withdrawal

On January 13, 2017, the U.S. Bureau of Land Management (“BLM”) released maps showing the areas that BLM, on December 28, 2016, proposed to withdraw from mining. The withdrawal is designed to “protect nationally significant landscapes with outstanding cultural, biological, and scientific values” and is part of the Desert Renewable Energy Conservation Plan (“DRECP”).

What does the proposed withdrawal do?

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My partner, Jon Welner, is a leading practitioner of prevailing wage law in California and is the Chair of JMBM’s Prevailing Wage Group. He is also a member of JMBM’s Natural Resources and Mining Group and advises and defends the construction materials industry on prevailing wage matters including recent California legislation to expand prevailing wage law to cover the delivery of concrete to public work sites (AB 219).

— Kerry Shapiro

Reversal of Fortune: AB 219 is Back!

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California Mining Update

AB 1142 and SB 209: What operators need to know about SMARA modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro
Matthew J. Sanders


This article was first published in The Conveyor magazine, a publication of CalCIMA.

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators must request, on their annual reports, an inspection date within 12 months of their prior inspection.  For inspections conducted in 2016, the 12-month date will be triggered for 2017.

Financial Assurances

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines that are tied to the annual inspection date.  Moreover, each process provides the Department of Conservation (DOC) a new right to formally consult with lead agencies and operators during the FACE review process, and to give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency.

Corporate self-bonding is now permitted for companies worth more than $35 million, subject to regulations which will be approved by the SMGB.  Multiple operations can combine their assets to pass the financial test, but self-bonding is limited to 75% of the value of an operator’s FACE(s). Continue reading

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California Mining Update

AB 1142 and SB 209: What lead agencies need to know about SMARA Modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro
Matthew J. Sanders

 

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, lead agencies and operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators will request, on their annual reports, an inspection date within 12 months of their prior inspection. (For inspections conducted in 2016, the 12-month date will be triggered for 2017.)  Lead agencies may reschedule inspections, and will have 90 days — not 30 days — to file Notices of Completion with the Department of Conservation (DOC).  However, the additional time comes with a catch: lead agencies must use their Notices to describe any problems at operations and their plans for correcting them.

Financial Assurance Approval Process

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines, tied to the annual inspection date.  Both processes provide DOC a new right to formally consult with lead agencies and operators during the FACE review process, and also give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency. Continue reading

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Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that environmental lawyer Matthew J. Sanders has joined the firm as of counsel in its San Francisco office.

“As a former federal environmental lawyer, Matthew will be invaluable to our clients. I have no doubt they will greatly benefit from his past experience,” said Benjamin M. Reznik, Chair of JMBM’s Government, Land Use, Environment and Energy Department.

Sanders joins JMBM with thirteen years of broad experience, ranging from federal and state court litigation to complex counseling and compliance work. Most recently, Sanders was a clinical supervising attorney and lecturer at Stanford Law School. He has also served as an appellate attorney in the Environment and Natural Resources Division at the U.S. Department of Justice, as an attorney in the Real Estate and Environmental Group at Paul Hastings LLP, and as a law clerk for the U.S. Court of Appeals for the Ninth Circuit.

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On September 25, 2014, Governor Brown signed Assembly Bill 52 (“AB 52”), which modifies the California Environmental Quality Act (“CEQA”) to add new protections for Native American cultural resources and enhances the role of Native American tribes in the environmental review process. AB 52 is a significant amendment to CEQA that poses both challenges and opportunities for project applicants. A brief summary of the new law, which takes effect July 1, 2015, is provided below.

AB 52 Creates a New Category of Potentially-Significant Environmental Impacts

Under current CEQA law, lead agencies typically evaluate whether a project would impact historic or archaeological resources. Although impacts to Native Americans may be evaluated, AB 52 specifically mandates evaluation of whether a project will impact “tribal cultural resources” which include sites, features, places, cultural landscapes, sacred places, and objects with cultural value to tribes. If the potential for impacts to such resources exists, as with other environmental impacts, increasing levels of CEQA analysis, mitigation measures, and the consideration of alternatives is required. Input from a tribe as to what is culturally significant to that tribe will drive the analysis for a given project. These changes take effect on July 1, 2015.

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by Kerry Shapiro, Esq.

The recent submittal of significant proposed revisions to California’s mining law, the Surface Mining and Reclamation Act (“SMARA”), signals potentially broad-reaching changes to the statute. On February 21, 2014, Senator Fran Pavely (D) introduced SB 1270, a bill proposing to overhaul various sections of SMARA. SB 1270 proposes fundamental changes to SMARA. Click here for a copy of SB 1270.

If these changes go through, mine owners and operators will be subject to a new regulatory system under which the State will assume a far greater and centralized role in various aspects of SMARA, including mine inspections, enforcement, and establishment of financial assurance mechanisms. The mining industry also faces the likely prospect of increased carrying costs, arising from such proposals as changes to the annual reporting fee structure (proposed at a minimum of $1,000/year on a per-acre basis, and with no maximum cap), to increased ability to appeal decisions relating to the State’s “3098” list.

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