Defend Trade Secrets Act (DTSA) of 2016

Trade Secret Misappropriation Recourse and Whistleblower Protection

New Legislation Impacting Business

All businesses have intellectual property and trade secrets.  A company is in business because it is offering something of “value” which can be a number of things from product to process to promotion.  For example, proprietary software, product systems, new product generation, or even client lists.  The loss or misappropriation of such can be devastating to the success and profitability of a company.

In a measure to further protect businesses, the Defend Trade Secrets Act (DTSA) of 2016 was signed into law on May 11, 2016 after being unanimously passed in the Senate and ratified in the House. It creates a federal cause of action for trade secret misappropriation.  The central provision of the DTSA will be codified as 18 U.S.C. § 1836(b) and reads:

An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.

What this Means

A “trade secret” means “all forms and types of financial, business, scientific, technical, economic, or engineering information …  if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.”

Misappropriation includes: without permission (A) obtaining a trade secret that was knowingly obtained through improper means or (B) disclosing or using a trade secret with knowledge that either (1) it is a trade secret or (2) it was obtained through improper means. The “improper means” include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” However, misappropriation does not include “reverse engineering, independent derivation, or any other lawful means of acquisition.”

The DTSA also creates an ex parte seizure procedure for use in extraordinary circumstances where the party against whom the seizure is ordered would “destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person….”

Protection for Whistleblowers Under DTSA

The DTSA seeks to protect whistleblowers from criminal or civil liability for disclosing a trade secret if the disclosure is made for purpose of reporting a violation of law. Employers have an affirmative duty to provide employees notice of the new immunity provision in “any contract or agreement with employee that governs the use of a trade secret or other confidential information.” Failure to comply means that the employer may not recover exemplary damages or attorney fees in an action brought under the DTSA for theft of trade secrets against an employee.  The definition of “employee” is drafted broadly to include contractor and consultant work performed by an individual for an employer.

What Companies Should Do Next

Companies should update their employment manuals, employment agreements and confidentiality agreement to disclose the whistleblower immunity provisions in the DTSA. Otherwise the company is not eligible to recover double damages or attorney fees in trade secret litigation.

Trade Secrets

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Interpretation of Georgia’s ER Statute

In a decision in November 2015, the Georgia Supreme Court has provided for a greater understanding of Georgia’s Emergency Room statute, O.C.G.A § 51-1-29.5.  That statute provides tort immunity arising out of emergency medical care unless the physician or other health care provider is shown by clear and convincing evidence to have been guilty of gross negligence as opposed to ordinary negligence.

The Case – What Happened at the ER

In this case, a six month old child fell while in the custody of a babysitter and was taken to the Phoebe Putney emergency room.  A physician assistant examined the child and found no signs of the need to be examined by a physician or for more testing, and the child was discharged.  The child appeared normal for the next two days but then stopped breathing and was readmitted to the hospital where the child was found to have a skull fracture and surgery was performed.  The child suffered brain damage and now suffers severe developmental deficiencies including an inability to walk or talk.

The Takeaways – ER Statute

In the trial court, it was held that the hospital and its staff were not entitled to the heightened scrutiny of the ER statute.  The Georgia Court of Appeals reversed, and the Supreme Court of Georgia affirmed that reversal.  In doing so, the Supreme Court provided the following guidance:

  • Routine medical services provided in an ER setting do not receive the benefit of the statutory protection. An example would be routine flu shots administered in an ER.
  • If patients present themselves and assert that they require emergency care, the protection of the statute will generally be available, even if the diagnosis at the time is that the patient did not require, or no longer needs, emergency treatment. Even if the health care provider mistakenly concludes that the patient has stabilized or does not require emergency treatment, the statute will provide protection if “objectively” the patient appeared to initially need “emergency medical care.”
  • While the health care provider’s subjective opinion regarding the patient’s condition is not controlling, it will be relevant evidence to be considered by the trial court.
  • The patient’s symptoms or diagnosis after emergency department care will not be relevant to the question of whether the patient presented for emergency medical treatment initially.

Nguyen v. Southwestern Emergency Physicians, PC, 298 Ga. 75 (2015).

ER Statute

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Open Records Noncompliance by Board of Regents

Schick v. Board of Regents, 334 Ga. App. 425 (Nov. 12, 2015)

Starting in 2012, the editor of the Georgia Perimeter College student newspaper commenced open records requests for documents concerning a $25 million budget shortfall at the College and personnel layoffs. The request for document by Schick was expansive and would have been costly to fulfill. For example, the documents covered a period of time of approximately six years. College and Board of Regents representatives discussed with Schick that he might want to narrow the scope of his request and the amount he would have to pay to have the documents provided. As the Board undertook these discussions with Schick, the Board never invoked any statutory exemption to withhold any of the requested documents. Ultimately, with the assistance of counsel, the Board’s cost estimate to produce the documents was reduced from approximately $2,500 to $291.

The Board then began the process of reviewing and providing documents to Schick. By February 2013, the Board had produced over 12,000 pages of documents and it notified Schick that the compliance with his request was complete.

Schick believed there were certain “missing” documents and filed suit in June 2013 seeking complete production of documents responsive to his request. In its answer, the Board asserted that some documents were withheld under O.C.G.A § 50-18-72(a)(4) [for law enforcement, prosecution or regulatory agency pending investigation documents], and the Board produced an additional 713 pages of documents.

The case went to trial in Superior Court. The trial court found that the Board had violated the Open Records Act by failing to timely designate specific exemptions upon which it relied to withhold documents, and imposed a $1,000 penalty. The trial court did agree that the Board could withhold documents under the “pending investigation” exception, and Schick appealed.

On appeal, the key holdings of the Court in connection with the Open Records Act were these:

  • The Court reaffirmed that the Open Records Act is to be broadly construed in favor of allowing inspection of government records, and any exceptions should be narrowly interpreted.
  • One purpose of the Act is to make the production of records expeditious.
  • The Court did not accept the argument that the Board of Regents was a “regulatory agency” for purposes of the pending investigation exception in 50-18-72(a)(4).
  • And most importantly, the Court of Appeals rejected the argument that some documents were exempt just because the Board had shared these documents or provided them to “a law enforcement agency.” The Court of Appeals said that the exemption in (a)(4) is for records of a law enforcement, prosecution or regulatory agency, and not records merely related or pertaining to an investigation.
  • There is a separate exemption in 50-18-72(a)(3) of records “compiled for” law enforcement purposes, but these are limited to documents that would identify a confidential source, disclose confidential investigation or prosecution material that would endanger life or physical safety, or that would disclose a confidential surveillance or investigation.
  • The Court of Appeals affirmed the trial court’s refusal to impose attorney’s fees on the Board for the amount of time it took to produce the voluminous records. The Court found that the Board had worked diligently including nights, weekends and holidays to provide documents.
  • However, the Court of Appeals did remand the case for the trial court to determine if attorney’s fees should be assessed because of the Board’s invalid reliance on withholding some records based on the pending investigation exception.

open records

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Doubling Down on Overtime Exemption

Current Overtime Law

The Fair Labor Standards Act (FLSA) requires that covered, nonexempt employees in the United States be paid at least the Federal minimum wage for each hour worked and receive overtime pay at one and one-half times the employee’s regular rate of pay for all hours worked over 40 in a workweek. However, there are a number of overtime exceptions to this rule. For example, the current law does not require employers to pay overtime compensation to executive, administrative, professional and outside sales employees who are paid on a salary basis and receive more than $23,660.00 per year or $455.00 per week, even if they work over 40 hours. See 29 U.S.C. 213(a)(1).   This is referred to colloquially as the “white collar exemption.”

Overtime Exemption Change

The Department of Labor (DOL) proposes to more than double the salary level that would qualify white collar workers for overtime exemption. Among other things, the proposal sets the standard salary level equal to the 40th percentile of earnings for full-time salaried workers as of 2016, which is projected to be $970 per week, or $50,440.00 annually for a full-year worker. More importantly, in order to prevent the salary levels from becoming outdated, the DOL is proposing to include a mechanism to automatically update the salary and compensation thresholds on an annual basis. The DOL estimates that during the first year alone, 4.6 million currently exempt workers would become non-exempt and entitled to minimum wage and overtime protection under FLSA, without some intervening act by their employers. See Federal Reg. Vol. 80, No. 128 (Mon. July 6, 2015).

Impact on Business

The period for public comment on the proposal closed on September 4, 2015, and the proposed change attracted both praise and criticism from worker’s groups and businesses. The comment period also served to demonstrate some of the confusion that exists under the current regulation such as the mistaken belief that payment of a salary automatically disqualifies an employee from overtime pay; or that if a white collar employee is in fact nonexempt she would have to be converted to hourly pay. See Federal Reg. Vol. 80, No. 128 (Mon. July 6, 2015). The specific impact of the proposed changes on the CSRA is difficult to project, but the potential impact could be staggering for some businesses. The pending approval of the rule would be a good time for local businesses to reassess the exemption status of their employees in preparation for the change, which many believe to be inevitable.

Since the ultimate burden of proof for the actual application of an exemption rests on the employer, employers should begin evaluating the exemption status of employees as soon as possible so that they have enough time to adjust to the proposed rule. While the proposed bright-line salary test is one step of meeting exempt status, it works in concert with the “duties test.” As was previously the case, job titles, descriptions and paying a salary versus an hourly rate are not determinative of exemption status. In order to qualify as exempt under the proposed rule, an employee must not only meet the more than doubled pay requirement, but employees must also continue to meet certain tests regarding their job duties. There is potential for employees/positions that have traditionally been exempt to be treated as non-exempt for the first time in their careers or the history of the position.

Moving Forward

The new overtime white-collar exemption rule will be issued approximately July 2016, according to the U.S. Department of Labor’s fall 2015 regulatory agenda.  The DOL may also make some changes to the “duties test,” which have yet to be proposed. The proposed change is particularly relevant in Georgia and South Carolina where the annual pay is often less than the national average. The bottom line is that it matters, and moving forward, employers should pay close attention to employee’s job functions and make sure they brace for the impact of change to their current classification structure. A specific strategy is based on the needs of each individual business, but reclassification will require an effective roll-out strategy for all. As the DOL gears up to double down on overtime exemption, CSRA businesses should not gamble with their economic security. Businesses should be prepared to incorporate a communication plan, maintain proper documentation of the reclassification and schedule training regarding policies affecting employees.

Salary Threshold Increase for Overtime Exemption

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Open Meetings Violation: The Aftermath of the City of Cummings Denying Journalist Right to Video

Court Of Appeals Nixes Part Of The City Of Cummings Open Meetings Decision

Gravitt v. Olens, 2015 Ga. App. LEXIS, was decided by the Georgia Court of Appeals on July 16, 2015. It was the appeal of an enforcement action brought by the Attorney General of Georgia against the City of Cummings and its Mayor for having denied a journalist the right to video a city council meeting and also for having her removed from the meeting. The trial court imposed civil fines and attorney’s fees against the Mayor and the City. In the appellate decision, the following rulings were made:

  1. The City is not protected by sovereign immunity in an open meetings action filed against it by the Attorney General of Georgia. Since the Attorney General has been authorized by O.C.G.A § 50-14-5(a) to bring a civil enforcement action, it amounts to a legislative waiver of any immunity the City might have had.
  1. The Court further held that the Mayor had a “ministerial” duty not to violate the Open Meetings Act. Since it was a ministerial duty rather than a discretionary duty, the Mayor was not protected by official immunity.
  1. However, the Court of Appeals held that the City itself was not subject to the civil fines of $1,000 for the first violation and $2,500 for subsequent violations as provided in O.C.G.A § 50-14-6. According to the Court of Appeals, those penalties may only be imposed against “any person” who violates the Act, and that a municipality is not deemed a person.
  1. The Court of Appeals held that a fine in excess of $1,000 could not be imposed even though the lawsuit alleged three different violations against the journalist at the same meeting. The Court held that there had to be violations at a subsequent meeting to impose the $2,500 penalty, and that the lawsuit filed by the Attorney General concerned only violations at one meeting.

Left undisturbed was a $1,000 fine against the Mayor and attorney’s fees yet to be determined by the Superior Court.  It is anticipated that either the City and its Mayor or the Attorney General will seek further review from the Court of Appeals or the Georgia Supreme Court on the rulings that one or the other may disagree with.

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Fair Use of Photographs: Using Photos Found On Google Images

U.S. Court of Appeals Decides “Fair Use” of Photographs

The United States Court of Appeals for the Eleventh Circuit (Georgia, Florida and Alabama) decided a case on September 17 involving the “fair use” of a photograph obtained over the internet. Katz v. Google, 2015 U. S. Appeal LEXIS 16546 (11th Cir. 2015).

Raanan Katz is a minority owner of the Miami Heat basketball team and a commercial real estate tycoon. On a visit to Israel, a newspaper there took a candid photograph of Katz that showed his face contorted and his tongue sticking out.

A tenant in one of Katz’s shopping centers started a blog campaign critical of Katz’s business practices. She found the unflattering photograph through a Google search, and started including it as a part of her blogs criticizing Mr. Katz.

Mr. Katz contacted the newspaper in Israel and purchased the copyright to the photograph, and sued the tenant for copyright infringement for posting the photograph without permission. She defended on the basis of fair use.

The Court of Appeals held that the tenant’s use of the photograph was in fact “fair use” and upheld the dismissal of Katz’s copyright claims.

The facts supporting fair use were these:

  • The use of the photograph in the blogs was primarily educational rather than commercial – a part of criticism and commentary.
  • The use of the photograph was transformative in that it was in conjunction with a new meaning, message or expression compared to its original use. The use by the tenant in the blogs was for purposes of ridicule and satire.
  • The original use and publication of the photograph occurred prior to the tenant’s posting on the blogs.
  • While photographs are entitled to copyright protection, this photograph was primarily a factual work and not one that involved subjective and artistic judgment.
  • The use of the photograph did not materially impact the market that Katz would have had for the photograph in question.

This opinion by the Eleventh Circuit supports the practice of blogs, newspapers and publications that locate and use photographs of individuals for purposes of illustrating news and commentary. For example, while Herschel Walker has the exclusive right to promote and market his name, image and likeness, and while a photographer of a picture of Walker would hold a copyright to the photograph, a blog or newspaper could as “fair use” publish a photograph of Walker in conjunction with a news article or commentary concerning Mr. Walker.

But, fair use of a photograph in conjunction with commentary, satire or reporting does not extend to an unauthorized commercial use for advertising, marketing or merchandising.

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Military Lending Act: Protecting Military Service Members

The Problem – Lending Practices That Prey on Military Service Members:

“Holly Petraeus, Consumer Financial Protection Bureau Assistant Director, Office of Servicemember Affairs, issued the following statement:

‘When I drive down the strip outside a military installation and count 20 fast-cash lenders in less than 4 miles, that’s not a convenience, that’s a problem. I commend Secretary Carter for taking this important step to make the Military Lending Act more effective.’” [1]

The Law:

The Military Lending Act[2] and its enforcing regulations protect U.S. military-service members and their families from predatory lending practices, making it harder for financial firms to charge high interest rates. Among other safeguards, the rules cap the Military Annual Percentage Rate (MAPR) at 36 percent. That is far lower than the effective rates paid for short-term, small loans—such as for vehicles or to cover expenses between paychecks—that can cost service members thousands of dollars in interest.

The Solution:

The military-lending law was recently amended to broaden the kinds of loans and loan products that fall under the existing law. Previously, creditors would avoid that cap by offering military consumers products like rolling lines of credit that didn’t fall under the law, allowing them to charge excessive rates. Now, all such credit products will be capped at 36%.

The rate cap now also includes certain costs of credit like interest, application and participation fees, charges for credit insurance, identity theft monitoring products, and other add-on products. This means lenders can no longer avoid rate cap rules by imposing extra fees. The rules also prohibit lenders from taking account access or a security interest in a vehicle title, and they prohibit lenders from requiring service members to submit to arbitration in the event of a dispute. The new rules will be gradually implemented starting on Oct. 1.

A person who violates this section is liable in a civil lawsuit for (i) any actual damage sustained as a result of the violation, but not less than $500 for each violation; (ii) punitive damages; (iii) attorney fees, and (iv) any other relief provided by law. A person may not be held liable if the person shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person’s obligations under this section is NOT a bona fide error.

A recent court decision upheld the certification of a class of military service members who were charged excessive interest rates. If you feel that you have been charged an excessive interest rate, whether through stated amount of interest, or through add-on fees or products, please contact a business litigation lawyer, government litigation lawyer, predatory lending lawyer or our firm for a consultation.

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[1] http://www.consumerfinance.gov/newsroom/cfpb-statement-on-department-of-defense-military-lending-act-final-rule/

[2] 10 U.S.C. § 987

Drug Trafficking – Reduced and Retroactive Prison Sentencing

Our Prison System: Overcrowded and Expensive

Over the past few decades, prison overcrowding has become a growing national concern. As of August 29, 2015, there were more than 94,000 individuals serving time in federal facilities for drug related offenses.[1] This figure is an increase from around five thousand inmates in 1980 when Ronald Reagen took office. In addition, the federal prison system currently costs taxpayers approximately 6.7 billion dollars a year to house these inmates. [2] A Congressional Budget Office analysis in September of 2014 found that passing a bipartisan bill in Congress to reform mandatory minimum sentences, the Smarter Sentencing Act, would reduce prison costs by $4 billion in just the first decade. The Justice Department projected savings of at least an additional $7.8 billion in the second decade. [3]

 “War on Drugs:” Reagan’s Assault on Drug Trafficking

These dramatic increases in prison populations are a direct result of the Reagan administration’s “War on Drugs.” Under the Reagan administration, federal sentencing guidelines were enacted that led to lengthy sentences for drug traffickers which was the intended goal of the revisions. However, the guideline changes also had the unintended result of placing offenders who only played minor roles in these drug operations, like couriers or “mules,” into lengthy sentences as well. In addition, the tougher laws have done little to slow down the drug trade or curb recidivism, both unfulfilled goals of the tougher criminal laws.

Reduction in Federal Sentencing Guidelines for Drug Trafficking Offenses

All of the factors above led to the revision of the Guidelines which will take effect next month.  In July of 2014, the United States Sentencing Commission voted to apply a reduction in the federal sentencing guideline levels to most federal drug trafficking offenses retroactively, to take effect in November of 2015. The Federal Sentencing Guidelines are criminal law rules that set out a uniform sentencing policy for individuals and organizations convicted of felonies and serious (Class A) misdemeanors in the United States federal courts system.

The Result

The result of this decision is that many offenders currently serving time in the federal penal system could now be eligible to have their sentences reduced. Defendants sentenced in drug cases now have the ability to elect to have their sentence reviewed by the Court and judges now have the ability to review old cases to determine if a sentence reduction is warranted. Judges will review each case independently and determine if a sentence reduction poses a risk to public safety and is otherwise appropriate. The hope is that this long-overdue change will continue to allow the government to prevent and punish narcotics trafficking, allow minor offenders an opportunity to reform and be contributing members of society, and cut costs to the everyday taxpayer.

If you or someone you know thinks you may be eligible for a reduced sentence under the new guidelines, please contact a criminal law attorney or you can email our firm at  clientrelations@hullbarrett.com.

Prison,-BKH,-for-web

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The author of this piece, Brooks K. Hudson, is a criminal defense lawyer focusing on felony and white collar charges.  Prior to practice at Hull Barrett, Brooks worked at the District Attorney’s Office as an Assistant District Attorney.

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[1] Inmate Statistics – Offenses,” Federal Bureau of Prisons, accessed August 29, 2015,http://www.bop.gov/about/statistics/statistics_inmate_offenses.jsp.

[2] Office of Management and Budget, “Public Budget Database: Outlays,” http://www.whitehouse.gov/omb/budget/Supplemental.

[3] http://thinkprogress.org/justice/2014/09/17/3568232/the-united-states-had-even-more-prisoners-in-2013

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“Know Before You Owe” Will Likely Cost Home Buyers More Money

By now, presumably everyone in the residential real estate industry is gearing up for the implementation of TILA-RESPA Integrated Disclosure (“TRID”) and its new disclosure forms – the Loan Estimate and the Closing Disclosure.  The newly adopted bureaucratic regimen is set to take effect October 3 and most in the industry believe the new TRID rules will meet the overall goals of providing home buyers with clearer “know before you owe” information, and do so in a more timely fashion than with current disclosures.

But be forewarned the new requirements may prove costly to borrowers – in both time and money. This is mainly due to the requirement for the Closing Disclosure to be provided to borrowers no later than three business days prior to closing.  The new rules no longer allow for last-minute changes to the settlement statement just prior to and at the closing table.  Rather, any adjustment to the Closing Disclosure would trigger a new three-day waiting period before closing can occur.  The practical effect of this and other TRID rules is that closing dates will be delayed until lenders adjust to the new rules.

Due to these inevitable delays, many believe that the typical 30-day purchase and sale contracts and 30-day rate locks from lenders should be replaced with, at least temporarily, 45-day contracts and 45-day rate locks.  Insofar as purchase contracts are concerned, real estate practitioners on the buy-side should negotiate a closing date that is 45 days from the contract date.  They should also schedule the closing with the title agent or attorney to occur at least 10 days prior to the drop-dead closing date.

As it pertains to rate lock extensions, the answer is not as straightforward.  The standard time provided by Lenders in order to lock in their interest rate on a mortgage loan is 30 days.  In order to extend the rate lock beyond the standard 30-day window, borrowers will be charged a premium.  Some borrowers will resist the urge to pay extra for such protection.  However, in the context of a rising interest rate environment (which seems likely given the Federal Reserve’s recent position on interest rates), it seems prudent to advise buyers to pay a bit more for a 45-day rate lock.  The premium charged for an extended rate lock will ultimately be cheaper than the alternative of paying a higher interest rate over the life of the loan.

More will be known after next week when TRID goes into effect, but be prepared for extended purchase and sale contracts and changes in rate lock timing.

Residential-House-PKS-for-web

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Implications to the Public of Denying Access to GBI Records

GEORGIA SUPREME COURT DENIES FORMER SUSPECT ACCESS TO GBI RECORDS

Open-Records-for-Web

A recent decision by the Georgia Supreme Court denying access to records has an impact outside of the criminal justice system and extends to individuals, businesses and the public as a whole.

In Evans v. Georgia Bureau of Investigation, decided June 15, 2015, a unanimous Supreme Court denied access to records sought in a lawsuit filed by Christopher Evans. Evans was a Director of Operations for the Georgia Electronic Design Center at Georgia Tech. In 2010, he was arrested and charged with RICO violations. Two other persons were also arrested.

Ultimately the arrest warrants against Evans were dismissed and no indictment was returned against him. At that time, pursuant to an open records request, he requested copies of the GBI records that had been assembled insofar as they related to him. The GBI objected to the open records request on the ground that the investigation was still pending against the other two individuals.

Under Georgia law, there is no dispute that the GBI records concerning the arrest warrants taken out against Evans in September of 2010 are “public records.” However, the Supreme Court agreed with the GBI that there was still a pending investigation and therefore the requested records were exempt from disclosure under O.C.G.A § 50-18-72(a)(4) – the “pending investigation and prosecution” exemption, which reads as follows:

Records of law enforcement, prosecution, or regulatory agencies in any pending investigation or prosecution of criminal or unlawful activity, other than initial police arrest reports and initial incident reports; provided, however, that an investigation or prosecution shall no longer be deemed to be pending when all direct litigation involving such investigation and prosecution has become final or otherwise terminated; and provided, further, that this paragraph shall not apply to records in the possession of an agency that is the subject of the pending investigation or prosecution; and provided, further, that the release of booking photographs shall only be permissible in accordance with Code Section 35.

And while information regarding the other individuals might be redacted from the records, the Supreme Court has previously held that where (a)(4) applies, it exempts from disclosure the “entirety” of such records. The Court noted, but did not decide, that the pending investigation might be concluded after the expiration of the five-year statute of limitations for prosecution of any racketeering charges against those who were arrested.

The effect of denying the open records request is as follows:

1.     It prohibits the public from having access to law enforcement records.

2.     It restricts the ability of an individual wrongfully accused of a crime from timely accessing the necessary documentation to receive an expungement of the underlying arrest.

3.     It impacts business from a human resources standpoint, as companies require details of an investigation to determine an employee’s continued status with the company.  Being unable to access records pertaining to the investigation may paralyze human resource department’s ability to conduct its own inquiry.  Even though Georgia is an at-will employment state, most employers have reasonable standards for dismissal.  This could have a negative impact on the employer’s operations and can lead to potential litigation.

 

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Deluge of Lawsuits: The Battle Over the Scope of the Federal Clean Water Act

Federal, state, and local governments all seem to be in agreement on a basic principle: it is important to protect the integrity and quality of our nation’s oceans, rivers, lakes and streams. Many states (such as Georgia) have longstanding laws and agencies dedicated to this task. Recently, however, a major battle has erupted between the federal government and at least 28 states over a simple-sounding but fundamental question: where does the jurisdiction of state and local government end and the federal government begin? The answer to this question is not an academic issue; it has such significance that groups such as the Chamber of Commerce of the United States of America, the National Federation of Independent Business, the National Association of Home Builders, the National Association of Manufacturers, the American Farm Bureau, and others have filed additional lawsuits over the issue within the last month.

What is the dispute, and how does it impact your home and business?

In 1972, Congress passed a law which would grow into the current Clean Water Act (or “CWA”). Regulations are issued under the Clean Water Act by the United States Environmental Protection Agency (the “EPA”). By enacting the CWA, Congress recognized that states historically played a pivotal role in achieving water quality goals and in regulating land and water use as well.[1] Many states had already enacted laws and programs to protect local waterways.[2] Rather than invalidating all of these historic state efforts, Congress believed that the best way to enhance the integrity of our waterways was to overlay federal law on the existing state laws.[3] The CWA thus allows the states to administer some of their own programs, subject to EPA’s approval.[4] To this end, a number of the nation’s water pollution programs are primarily administered by the states rather than the federal EPA.[5]

The Clean Water Act, by its terms, only applies federal law to “navigable” waters. “Navigable waters” are defined somewhat paradoxically as “waters of the United States.” If that definition seems somewhat unhelpful, you are not alone: the United States Supreme Court has already taken and heard three cases involving the proper reach of the federal Clean Water Act.[6] Earlier this year, a judge issued an opinion which noted “just how difficult and confusing it can be for a landowner to predict whether or not his or her land falls within CWA jurisdiction—a threshold determination that puts the administrative process in motion. This is a unique aspect of the CWA; most laws do not require the hiring of expert consultants to determine if they even apply to you or your property.”[7]

In an effort to resolve the mystery and bring clarity to the boundary line between federal and state jurisdiction, two federal agencies (the EPA, along with the U.S. Corps of Engineers) published a new regulation on June 29, 2015, attempting to define what they consider to be the “waters of the United States” (often referred to as the “WOTUS Rule”).[8] The WOTUS Rule is controversial for several reasons and touched off a series of lawsuits and actions in Congress seeking to change or invalidate the administrative agencies’ new rule.

Thus the law is currently in a state of upheaval – which is problematic for anyone who owns or uses property. According to the enacting agencies, the WOTUS Rule is a reasonable interpretation of Congressional intent, scientific findings, and decisions issued by the U.S. Supreme Court and others. To its critics, the WOTUS Rule is the result of a flawed rulemaking process which failed to take the concerns of interested stakeholders into account, and which oversteps the limited federal power that the Constitution of the United States otherwise reserves to state and local governments.

The national Chamber of Commerce, for example, contends in its lawsuit that the WOTUS Rule potentially will bring more than 8.1 million miles of rivers and streams under federal regulation, as opposed to the approximately 3.5 million miles presently categorized as “waters of the United States.”[9] The Chamber of Commerce thus concludes that under the WOTUS Rule, “virtually any business that owns or operates a facility or has property could be adversely affected, particularly if it has ditches, retention ponds for storm water runoff, fire/dust suppression ponds, or other surface impoundments on site.”[10] The enacting agencies have not yet filed a response to these allegations, and typically have at least sixty days from service of the complaint to respond.[11]

Adding to the confusion, the new WOTUS Rule allows for administrative agencies to use “remote sensing sources,” “desktop tools” and “mapping information” for them to make their determinations – which means that the regulators deciding their jurisdictional reach may be relying on information that is not available to (or is different from) the property owner and its experts (or its lawyers).[12] “Thus,” according to the Chamber of Commerce, “while the [WOTUS] Rule in many cases will clearly apply to lands beyond the reach of the CWA, it will also arguably apply in an even broader swath of cases – cases as innocuous as a landowner seeking to drain storm water from a depression that might (or might not) be considered a puddle, or wishing to dig holes for a fence post in an area that retains waters after storms.”[13]

The enacting agencies, by contrast, contend that these types of claims and concerns are either overblown or that they misunderstand the new WOTUS Rule. According to the enacting agencies, “[t]his rule makes the process of identifying waters protected under the CWA easier to understand, more predictable, and consistent with the law and peer-reviewed science, while protecting the streams and wetlands that form the foundation of our nation’s water resources.”[14] The enacting agencies also contend that the WOTUS Rule has a much more limited impact than do its critics, only estimating more modest increases of “between 2.84 and 4.65 percent in positive jurisdictional determinations annually,” if not an actual decrease in the scope of jurisdictional waters under the CWA.[15] The agencies also contend that the increased costs of implementing the WOTUS Rule will be more than offset by the economic benefits derived from implementing the new rule.[16] One would expect that all of these contentions, in one form or another, are now being challenged in court.

As of today, there are at least nine separate lawsuits challenging the WOTUS rule, brought by 28 individual states (including Georgia and South Carolina), and 29 private parties and trade organizations. These lawsuits, generally, seek injunctions against the implementation of the WOTUS Rule and/or an order declaring the WOTUS Rule invalid. Additional plaintiffs and lawsuits would seem likely as well, and it is fair to say that the myriad of procedural issues surrounding the disputes are quite complex.

Property owners and business owners are, unfortunately, stuck in the middle of this jurisdictional dispute. The WOTUS Rule, according to its critics, may impact properties with only intermittent streams, ditches, stormwater detention ponds, private fishing ponds, and simple generic “wet” spots — even if they are far from what one would consider to be a traditional “navigable water” used for commerce, and even if they have no significant impact on the chemical, physical, or biological makeup of those larger bodies of water. Property owners may be required to hire experts to determine whether their property – which does not front on any significant river or lake – falls under the federal permitting process of the WOTUS Rule and the Clean Water Act. The cost and time involved is not insignificant; the national Chamber of Commerce contends that “[t]he average applicant for a nationwide permit spends 313 days and $28,915 – not counting costs of mitigation or design changes. In addition, over $1.7 billion is spent each year by the private and public sectors to obtain wetland permits.”[17]

When does the WOTUS Rule take effect?

To steal a phrase, the jury is still out. The WOTUS Rule provides by its terms that it takes effect on August 28, 2015.[18] Given the various lawsuits which have already been brought, as well as pending Congressional action aimed at preventing the WOTUS Rule from being implemented, it remains an open question. There are multiple requests to courts to enjoin the implementation of the WOTUS Rule, and the House of Representatives voted at least one bill out of committee to essentially defund agency implementation of the WOTUS Rule. All of these things, however, will take time — perhaps considerable time — to resolve. And given the looming presidential election process which is fast approaching, it is uncertain that the WOTUS Rule – even if it clears all of its hurdles – will ever actually have the effect of law at any date in the future.

So, ultimately, why does this matter to you?

The short answer is, even the enacting agencies recognize that the WOTUS Rule may have a significant impact on consumers and the economy. The enacting agencies concede, for example, that the WOTUS Rule is a “major rule” which is defined as a regulation likely to result in “an annual effect on the economy of $100,000,000.00 or more;” “a major increase in costs” for consumers, industries, government agencies or geographic regions; and/or likely to create “significant adverse effects” on employment or markets.[19] Any person, business, or local government that wants to develop or use land may now be subject to a federally mandated permitting regime which can impose significant cost, expense and complexity on any project. Or, given the multiple pending lawsuits, it may not. The state of affairs thus adds an element of uncertainty as to what, exactly; the applicable law is for the short term.

Thus, ironically, a rule designed to clarify the law may have instead brought more uncertainty than already existed. We will continue to monitor the various lawsuits and legislative activities surrounding the WOTUS Rule, and will be providing an update as events warrant.

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[1] The Clean Water Act specifically limits its intrusion into the states’ traditional authority to regulate land use and water use. See 33 U.S.C. § 1370 (stating that states may adopt “any standard or limitation respecting discharges of pollutants” that are not “less stringent” than federal standards and requirements.)

[2] See, e.g. Ga. L. 1964, p. 416 (Georgia Water Quality Control Act of 1964, O.C.G.A. § 12-5-20 et seq.).

[3] In addition to improving water quality, the Clean Water Act recognizes that states have primary responsibilities to prevent, reduce, and eliminate pollution, and to plan the development of land and water resources. 33 U.S.C. § 1251(b).

[4] 33 U.S.C. § 1342(b).

[5] To date, all states except Idaho, Massachusetts, New Hampshire, and New Mexico have EPA-approved NPDES programs. EPA governs Native American lands. State Program Status, ENVIRONMENTAL PROTECTION AGENCY, http://cfpub.U.S. Environmental Protection Agency.gov/npdes/stormwater/authorizationstatus.cfm (last visited March, 25 2013).

[6] United States v. Riverside Bayview Homes, 474 U.S. 121 (1985); Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001); Rapanos v. United States, 547 U.S. 715 (2006).

[7] Hawkes Co., Inc. v. U.S Army Corps of Engineers, 782 F.3d 944, 1003 (8th Cir. 2015) (Kelly, K., concurring).

[8] 80 Fed.Reg. 37,054 (June 29, 2015).

[9] Chamber of Commerce of the United States of America, et. al. v. EPA, No. 4:15-cv-386, Complaint filed July 10, 2015 at ¶ 83.

[10] Id. at ¶ 85.

[11] FED.R.CIV.P. 12(a)(2).

[12] See 80 Fed.Reg. at 37,076-77 (June 29, 2015).

[13] Chamber of Commerce, supra at ¶ 90.

[14] 80 Fed.Reg. at 37,055 (June 29, 2015).

[15] Id. at 37,101.

[16] Id.

[17] Chamber of Commerce, supra at ¶ 89.

[18] 80 Fed.Reg. at 37,054 (June 29, 2015).

[19] 5 U.S.C. § 804(2).

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David E. Hudson Quoted on Open Meetings Act Violation

David E. Hudson, media law attorney for Hull Barrett, PC, gives his opinion to WRDW-TV Augusta regarding Hancock County Board of Education not allowing cameras into a public meeting Thursday night. The meeting was in regards to a fight three weeks ago just after the Hancock County – Warren County football game.
Read the WRDW-TV Augusta Article     Watch Channel 12 Report