Regulatory

Category: Regulatory

Construction

Project Labor Agreements and Government Funded Infrastructure Projects: What You Need to Know Now

Update: On February 4, 2022, President Joe Biden signed an Executive Order requiring the use of PLAs on federal construction projects for which the total estimated cost is $35 million or more. As many construction contractors are aware, the new Infrastructure Investment and Jobs Act, effective on November 15, 2021, includes significant monies for transportation, roads, bridges, rail, and other infrastructure construction. President Biden has encouraged public governmental agencies to use project labor agreements (PLAs) on these government-funded infrastructure projects. What is a PLA? A PLA requires that all contractors and subcontractors working on the project, whether union or non-union, sign and be bound by a PLA with the local building and construction trade council for work performed on the project. Members of a building and construction trades council include most labor unions in the construction industry including the operating engineers union, the carpenters union, and the laborers union. PLAs are intended to cover the period during which the public project is under construction and ends when the project ends. PLAs result from a public agency including a requirement for a PLA in a construction project’s bid specifications. For projects which require a PLA, the contractor must sign the PLA and agree to be subject to specified provisions in the collective bargaining agreement of the union(s) which traditionally represent the classification of employees employed by the contractor. For example, the operating engineers’ local union would traditionally represent heavy equipment operators and in this case, an excavating subcontractor would be subject to the wage and benefit provisions of the local operating engineers’ collective bargaining agreement. Many public agencies have been requiring PLAs for years, but we can expect to see an increase in the number of projects that will require a PLA in light of the current political environment. One advantage to public agencies is that a PLA promises that none of the union members of the local building and construction trades council will engage in a strike during the project. Obviously, this commitment from the unions avoids the delays and disruption that a strike can cause to a project. Today, nearly 87% of the construction industry is non-union. A PLA, which covers both union and non-union contractors, subjects the non-union contractors to many of the requirements of an applicable union collective bargaining agreement. The contractor or subcontractor is not required to sign the actual collective bargaining agreement; however, the PLA makes the contractor/subcontractor subject to certain provisions of a collective bargaining agreement, such as wages and benefits. Why Should a Contractor or Subcontractor Care? Although many non-union contractors believe that a PLA is not something they need to be concerned about, the fact is that if a non-union contractor wants to work on a public project, they should expect that they may be required to sign a PLA. Contractors who bid and are awarded work on a public job may not always be aware that the job is going to be governed by a PLA. Among other things, a PLA requires the contractor to agree to pay the applicable union wages, to contribute to union fringe funds, to use a union hiring hall, and to comply with both governmental and union rules on payroll and recordkeeping. Employees of a non-union contractor cannot be required to pay full union dues and become union members, but they can be required to pay a monthly agency fee to the union in lieu of union dues. Union hiring halls are prohibited from discriminating between union and non-union members when referring employees to projects but, obviously, it is not always easy to identify when discrimination occurs. Minority and women affirmative action goals, as well as requirements that a percentage of subcontractors be Disadvantaged Business Enterprises (DBEs), can conflict with a contractor’s obligation to hire from a union hiring hall. For many contractors and subcontractors, the requirement that they hire employees from a union hall makes it difficult to meet affirmative action and DBE goals. We have worked with many non-union contractors’ signatories to a PLA and have seen how the application of a PLA can discourage the subcontractors a construction company normally works from agreeing to work on a PLA project. In that case, contractors have to find different subcontractors, with whom they have little or no familiarity, but who are willing to sign a PLA. Further, the PLA typically allows union business agents to enter a project and talk to employees, and many non-union contractors do not want to expose their employees to continuous visits from union representatives. Contractors often view a PLA as an open door to a union petition for representation of their employees. Construction contractors can expect a significant flow of public work as a result of the Infrastructure Investment and Jobs Act but should be aware that many of these jobs will be governed by a PLA.

February 2, 2022

Construction

An Employer’s Guide to Addressing Requests for Religious Exemption From a Mandatory COVID-19 Vaccine Policy

Employers mandating that employees be vaccinated against COVID-19 should know how to respond to an employee’s request for a religious exemption from the vaccination policy. In this post, I discuss the process an employer can use to distinguish an employee’s personal opposition to a vaccination from a sincerely held religious belief that qualifies as a religious exemption and what options an employer has to protect its business. Sincerely Held Religious Belief When an employee requests a religious accommodation, the first question to ask is whether the employee has a sincerely held religious belief, practice or observance which prevents them from being vaccinated. Title VII of the Civil Rights Act, states that sincerely held religious beliefs “include moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views.” This vague statement means that employees who have a personal or philosophical disagreement with a vaccine are not entitled to a religious exemption. However, it is difficult to distinguish a personal or philosophical belief from a moral or ethical belief held with the strength of traditional religious views. The religious belief does not have to be based on traditional religions and could derive from a religion or ethical or moral code with which the employer is unfamiliar. The U.S. Equal Employment Opportunity Commission (EEOC) has stated that employers should generally assume that an employee’s stated religious belief is sincerely held unless the employer has a good faith and objective basis for questioning the religious nature or the sincerity of the stated belief. There is little guidance as to the definition of a “good faith and objective basis” for questioning a claim of religious belief. Documentation of a Request for Religious Exemption We recommend that employers require employees who claim they have a sincerely held religious belief and request an accommodation, to submit the request in writing explaining the basis for the sincerely held religious belief. The employer is entitled to request information relating to the accommodation request and require a certification from the employee that the statements, documents and information provided to the employer are true and correct. An employer who has a good faith and objective basis for questioning the religious nature or the sincerity of the stated belief, can request documentation of the religious belief. Examples of good faith and objective bases for questioning the validity of a claim for religious exemption include: when an employee has never requested an accommodation in the past for religious reasons; an employee has made statements to others that they distrust the vaccine; an employee quotes an online news article challenging the efficacy of the COVID-19 vaccine. These statements reflect personal opposition to the vaccine and are inconsistent with the claim that the vaccination is contrary to the employee’s religious belief. The types of documents that an employer can request could include: Explanations from the employee about the nature and principles of the employee’s asserted beliefs and information about when, where and how they follow the practice or belief. Religious materials which describe the religious belief or practice. Written statements from others, such as religious leaders, with whom the employee has discussed his or her beliefs or who have observed the employee’s past behavior that evidences this religious belief. Each employee’s request for an exemption should be assessed on a case-by-case basis. The individual reviewing the request for the religious exemption is entitled to consider whether the employee has engaged in any previous behavior or conduct that either deviates from or is consistent with the principles of his or her beliefs. For example, perhaps the employee has made previous requests for accommodations for their religious beliefs. The person reviewing the request is entitled to consider all previous statements made by that employee which may help to ascertain whether the employee’s objection is truly based on a sincerely based religious belief or, rather, is a personal or philosophical objection to the vaccine. It is advisable for the same person to review and decide all requests for religious accommodation to ensure that these determinations are consistent and objective. An Interactive Process Should be Used to Determine if an Accommodation is Feasible If the religious exemption is granted, the employer should engage in an interactive process with the employee to determine whether the exemption from the COVID-19 vaccine requirement can be accommodated without creating a safety risk for other employees or the public. Examples of possible accommodations include: Weekly COVID-19 testing; The employee is required to wear a mask at all times; Requiring the employee to maintain social distancing from co-workers and/or others; Move the employee to a more isolated work area where they will be more than six feet apart from co-workers; Reassign the employee to another available position which will allow the unvaccinated employee to work in a more isolated manner. Employers should discuss the possibility of these options with the employee if they are feasible; an employer is not required to give the employee the specific accommodation the employee has requested. Whether any accommodations are feasible depends upon the unvaccinated employee’s job duties; the physical set-up of the work place; whether the employee interfaces with the public; and other characteristics unique to the employer and to the unvaccinated employee’s job responsibilities. There are situations where accommodations are not possible and, in that case, employers have the option to exclude employees who refuse to be vaccinated from the workplace. In this situation, the employee could be terminated or placed on an unpaid leave of absence until the pandemic subsides. Employers should not, however, exclude an employee from the workplace without consulting legal counsel. Accommodations Creating an Undue Hardship Employers can determine that the accommodation requested by an employee for religious reasons is an undue hardship for the employer. The existence of “undue hardship” in the context of religious accommodation uses a lower standard than is used to determine “undue hardship” under the Americans With Disabilities Act (ADA). An undue hardship in connection with a religious accommodation is one that would require more than a de minimis (minor) cost or burden to the organization or the business operations. In contrast, the standard for undue hardship under the ADA is “significant difficulty or expense.” Certainly, a safety risk or impact on the business operations or objectives can be considered in determining whether there is an undue hardship. Conclusion Religious objections to a mandatory vaccination policy can be very difficult to evaluate. Employers should be alert to statements which employees make to other employees or to management concerning their personal views of the vaccination. These statements may evidence either a sincerely held religious belief, for which an accommodation may be appropriate, or a personal or philosophical objection to the vaccine, for which no accommodation is required. If you have questions about your vaccine policies or other workplace policies during this challenging time, I am available to help. Please feel free to phone or email pkarasov@larkinhoffman.com with any questions you may have.

September 13, 2021

Legislative and Judicial Updates

Hold on to Your Hats! What to Expect Under President Biden’s Administration in Labor and Employment Law

Change in the political party of an administration can be expected to impact the development and interpretation of federal law and regulation. This is particularly true in the transition between former President Trump’s administration and that of President Joseph R. Biden. President Biden has only been the President for two weeks, yet he has already made significant changes in the agencies that enforce federal labor and employment law. Below are some of the changes already made and what you can expect. National Labor Relations Board The National Labor Relations Board (NLRB) is a five-person board appointed by the President with Senate consent, for 5-year terms. At the present time, there are three Republican and one Democratic members of the NLRB. President Biden has appointed the sole Democratic member, Lauren McFerran, as chair. One position on the NLRB is vacant, and it is expected that President Biden will fill the fifth seat in the near future. In August and September, the terms of two of the Republican members will expire, and President Biden will undoubtedly replace them with his own appointees. Thus by September, the Democrats will have the majority on the NLRB. The General Counsel of the NLRB is responsible for determining what types of cases should be prosecuted by the regional offices. The General Counsel often issues memoranda directing regional offices to issue Complaints based on specific factual situations and theories. Often the General Counsel seeks cases to challenge existing precedents to secure changes in the law. Within hours of being sworn in as President, President Biden’s administration asked Peter Robb, the General Counsel under former President Trump, to resign from his position. The General Counsel is appointed for a four-year term and President Biden asked Peter Robb to resign his position approximately 10 months earlier than his four-year term would have expired. Previous Presidents have waited until the expiration of the General Counsel’s term before replacing them. When Peter Robb refused to resign, he was immediately terminated. The following day, the Biden administration terminated the Deputy General Counsel, Alice B. Stock, after she refused to resign. President Biden has appointed Peter Sung Ohr to serve as Acting General Counsel. Mr. Ohr is a career NLRB attorney, having begun his career with the NLRB in the Honolulu subregional office. It can be expected that once the majority of the NLRB is Democratic, combined with a new General Counsel, this newly comprised NLRB will be issuing decisions and promulgating rules which expand employee and labor union rights. Department of Labor (DOL) President Biden has appointed Marty Walsh as his Secretary of Labor. Mr. Walsh served as the president of Laborers Union Local 223 and was publicly endorsed by AFL-CIO President Richard Trumka. Employers should expect that because of Mr. Walsh’s priorities, the DOL will be issuing rules focused on promoting and protecting the interests of labor unions and employees, and restoring many of the gains realized by labor unions and employees under President Obama. It can be expected that some of the initiatives issued by the Department of Labor under former President Trump will be rescinded. For example, on January 6, 2021 the U.S. Department of Labor announced its Final Rule to provide guidance on the classification of a worker as an independent contractor under the Fair Labor Standards Act. The Final Rule is slated to take effect on March 8, 2021. The Final Rule makes it easier to prove an individual is an independent contractor rather than an employee. President Biden has indicated he will halt or delay all regulations which the Trump administration issued immediately prior to President Biden’s inauguration, including the independent contractor rule. Office of Federal Contracts Compliance Policy (OFCCP) On September 22, 2020, President Trump issued Executive Order 13950, which instructed government contracting agencies to add clauses to government contracts prohibiting the use of workplace training which includes any form of race or sex stereotyping. President Trump’s Order prohibited federal contractors and subcontractors from providing certain workplace diversity training and programs, such as implicit bias training. On January 20, 2021, President Biden issued Executive Order 13985, titled “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.” Among other things, Executive Order 13985 revoked the Trump administration’s Executive Order 13950. As part of the withdrawal of President Trump’s Executive Order 13950, the telephone hotline and email address that was established to collect complaints about contractors’ alleged non-compliance with Executive Order 13950 has been shut down and all complaints of alleged non-compliance received through the hotline or any other means have been administratively closed. Occupational Safety and Health Administration (OSHA) On January 21, 2021, President Biden issued an Executive Order on Protecting Worker Health and Safety which directs the Department of Labor to issue revised guidance for employers within two weeks. The Executive Order also recommends that OSHA consider issuing emergency temporary standards for businesses to follow during the pandemic. The Executive Order instructed OSHA to examine mask-wearing requirements to offer additional resources to help employers protect their employees and to partner with state and local governments. On January 29, OSHA issued new guidance, entitled “Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace“. OSHA states this guidance is intended to inform employers and workers in most workplace settings outside of healthcare to identify and address risks of exposure to COVID-19. OSHA had come under criticism under the Trump administration for failing to issue any new standards or regulations regarding COVID and directing businesses how to protect employees from the spread of COVID in the workplace. In addition, President Biden appointed James Frederick, a United Steelworkers Union official, to a top OSHA position. It can be expected that under Mr. Frederick’s leadership, OSHA will be issuing more worker-friendly regulations and enforcement than previously. Federal Worker Protections President Trump issued several Executive Orders which limited the right of federal workers to collectively bargain, set time limits on negotiating collective bargaining agreements with federal labor unions, and removed civil service protection for certain federal employees. President Biden has revoked all of these restrictions, signaling his approach on employee rights and labor union protections. Conclusion New Executive Orders and federal agency appointments all point to the likelihood that we will see more worker-friendly and union supportive regulations and interpretations of existing law. Under President Trump, many of the priorities of President Obama were weakened or reversed and we are now seeing a reversal of this reversal of priorities. Employers should assume that federal labor and employment agencies will be issuing new regulations and rolling back agency directives and rules which leaned employer-friendly. Hold on to your hats!

February 5, 2021

Construction

Is Your Construction Site Following OSHA’s COVID-19 Guidelines?

As the agency responsible for enforcing workplace safety, the Occupational Safety and Health Administration (“OSHA”) has issued two pronouncements concerning COVID-19 and the workplace. COVID-19 Guidance for the Construction Workforce On April 21, 2020, OSHA published Guidance for the Construction Workforce which consists of tips to help reduce the risk of exposure to coronavirus in the construction industry. Most of the recommendations are what would be expected and are most likely being carried out by construction companies. Among other things, OSHA recommends that in-person meetings, including toolbox talks and safety meetings, should be as short as possible, with the number of workers in attendance limited and using social distancing practices. OSHA also recommends that employers clean and disinfect portable jobsite toilets regularly and that hand sanitizer dispensers should be filled regularly. If tools and equipment are shared, construction employers should provide and instruct workers to use alcohol-based wipes to clean tools before and after use. If workers do not have immediate access to soap and water, employers should provide alcohol-based hand rubs containing at least 60% alcohol. Interim Enforcement Response Plan for Coronavirus 2019 On April 13, 2020, OSHA issued an Interim Enforcement Response Plan (“Interim Enforcement”) which provides instructions and guidance to area offices and safety and health officers for handling COVID-19 related complaints and severe illness reports. The Interim Enforcement explains that OSHA investigators should use as much flexibility as possible in investigating possible violations and also ensuring that OSHA inspectors are not unduly exposed to coronavirus. Inspections The Area Director is to evaluate the risk level of exposure and prioritize resources to determine if an on-site inspection is necessary. When feasible, inspectors should use electronic means of communications, such as remote video surveillance, phone interviews, email and video conferences to investigate possible violations. The Interim Enforcement also states that investigations and inspections in the healthcare industry have the highest priority. If there is an inspection, employers should expect that they will be asked to provide a written pandemic plan, infection control plan, protocols for use of personal protective equipment, records of employee infections or exposures, and training records relating to COVID-19. Recording of Injury/Illness Employers are responsible for recording cases of COVID-19 if all of the following requirements are met: The case is a confirmed case of COVID-19 as defined by the CDC; The case is work-related; and The case involves one or more of the recording criteria such as medical treatment and days away from work. Enforcement Discretion OSHA encourages its inspectors to determine if an employer is making a good faith effort to provide and ensure workers with the most appropriate respiratory and other personal protection equipment. Companies where fatalities and imminent danger exposures related to COVID-19 will be prioritized for inspections, with particular attention given to healthcare organizations and first responders. All other formal complaints alleging COVID-19 exposure, where employees are engaged in medium or lower exposure risk tasks, will not normally result in on-site inspections. Area offices will use non-formal procedures for investigating alleged hazards. In addition, OSHA is relaxing the requirement that an employer conduct an analysis of whether an employee’s COVID-19 diagnosis is work-related, unless objective evidence exists that a COVID-19 case is work-related. Conclusion Thus, employers should expect that OSHA may be focused more on compliance than citations. The Interim Enforcement gives field offices flexibility and discretion to maximize OSHA’s impact in securing safe workplaces in this evolving environment.

April 24, 2020

Construction

The NLRB Changes Its Mind

In December 2018, President Trump made his third appointment to the NLRB, giving the Republicans a majority on the five-person Board. 2019 has seen a number of Board decisions in which the Board reversed or narrowed its decisions made by a Board which was controlled by Democratic appointees. Union Election Rules In 2014, the NLRB announced what is often called the “quickie election” rule. This rule significantly tilted the NLRB’s election process in favor of unions. It created an accelerated election process and made it harder for employers to present arguments against union representation. On December 13, 2019, the NLRB issued a final rule amending the 2014 election rule. These amendments will go into effect on April 16, 2020. The new rule gives parties 14 business days’ notice of the pre-election hearing, as opposed to the eight calendar days under the old rule. This allows employers an opportunity to properly investigate election issues and to prepare for a possible pre-election hearing. It provides employers eight business days after it receives notice of a hearing to compile briefs and layout arguments in its statements of position. Previously, the employer was required to file and serve its statements of position one day before the opening of the pre-election hearing, which was usually seven calendar days after service of the notice of hearing. NLRB officials will also have more leeway to extend these deadlines under the new rule. Petitioners are required to respond to employers’ statements of position at least three business days before the pre-election hearing, with their position on the issues raised by the employer. Previously, petitioners were only required to respond orally to employers’ statements of position at the start of the pre-election hearing. Under that practice, the employer had almost no advance notice of potential union arguments to an employer. This amendment places equal obligations on both employers and unions. Hearings will be held prior to the election regarding disputes concerning unit scope and voter eligibility, which was not allowed under the 2014 rule. Post-hearing briefs may now be filed within five business days of the hearing. This is a complete turnaround from the 2014 rule, which removed the right of parties to file post-hearing briefs unless the party received special permission from the Reginal Director. The new rule directs regional NLRB officials to set elections no fewer than 20 business days after the direction of election, unless the parties agree to a shorter time. Under the 2014 rule, elections could be held in as few as 13 days from the filing of the petition. Use of Employer’s Email System In 2014, the NLRB issued Purple Communications, which held that an employee who was given access to their employer’s email system may use their work email, during non-working time, to engage in protected communications, i.e., communications about labor unions, wages, or other workplace issues. On December 17, 2019, the NLRB issued Caesars Entertainment, which overruled Purple Communications and restored an employer’s right to restrict employee use of its email system during nonworking time for non-work-related purposes if it does so in a nondiscriminatory manner. The decision, however, creates an exception for circumstances where the use of employer-provided email is the only reasonable means for employees to communicate with one another. The Board stated that such cases should be rare given that in modern workplaces employees have access to smartphones, social media, and personal email accounts. The scope of this exception was not defined by the Board but will be “fleshed out on a case-by-case basis.” Confidentiality in Employer Investigations In 2015, the NLRB issued Banner Health, which required employers to prove on a case-by-case basis that the integrity of an investigation would be compromised without confidentiality. In other words, an employer may restrict discussions regarding workplace investigations only where the employer shows that it has a legitimate business justification and it outweighs employees’ Section 7 rights—rights to unionize or engage in other protected activities to improve their work environment as employees. On December 17, 2019, the NLRB issued Apogee Retail LLC, which overruled Banner Health and held that work rules requiring confidentiality during a workplace investigation are presumptively lawful. In Apogee Retail, the NLRB applied the test for facially neutral workplace rules established in Boeing Co., a case that was issued in December of 2017. The Board held that investigative confidentiality rules are presumptively lawful when they apply to open investigations. But, if the rule is not limited to the duration of the investigation, the rule requires a determination of whether there is a legitimate employer justification for the restriction that outweighs any impact on employees’ Section 7 rights. What Will the Future Bring? In 2020, we can expect that the NLRB will continue to revise if not reverse other decisions made during the Obama administration. Never before has precedent had so little value, with the political affiliations of the majority of the Board affecting the Board’s decisions. Generally, Board precedent has lasted for 10, 20 or 30 years or more, but we are now seeing that political affiliation is affecting precedential value. The General Counsel for the NLRB is also looking for specific factual situations in which to argue a position that deviates from previous cases in order to create new law or to return to holdings that were the law prior to President Obama’s administration.

January 22, 2020

Local Government

Upcoming Ramsey County Elections Could Have a HUGE Impact on Local Development

Politics can be loud. With all the national media and punditry focused on the 2020 presidential primary, it would be easy to miss the significant local races on the ballot this November. However, with economic markers pointing towards a potential slowdown or recession, having a strong understanding of the local political landscape is essential for real estate and housing developers. For example, three of the largest redevelopment projects in recent Twin Cities history are currently located in Ramsey County. They include the following project: Twin Cities Army Ammunition Plant (427 acres)—The most contentious of the three developments, by far, is the Twins Cities Army Ammunition Plant, or “TCAAP,” site in Arden Hills, Minnesota. Currently known as the “Rice Creek Commons,” negotiations over the development of the county-owned site have broken down as city and county officials have struggled to see eye-to-eye on issues such as housing density and the inclusion of affordable housing. Ford Plant (135 acres)—This is the former site of the Ford Motor Company assembly plant located in the Highland Park neighborhood of Saint Paul, Minnesota. While the St. Paul City Council adopted the Ford Site Master Plan in 2017, there have been numerous efforts to revise or modify development plans since then (most recently in April, 2019) and, with the extended development timeline for a project this size, those efforts will continue to come before the council. Hillcrest Golf Course (112 acre)—Having ceased operations as a private golf course in 2017, the Hillcrest site is located on St. Paul’s east side. In recent months the St. Paul Port Authority has entered into development negotiations with the land owner and even gone as far as requesting a $10 million bond sale to facilitate redevelopment. With significant issues for all three projects remaining to be settled, there are a number of key local elections worth noting on the ballot this November. Ramsey County Commissioner (District 1): Following Commissioner Blake Huffman’s sudden resignation last May, a special election was called to fill the remaining year of his term. While the office of county commissioner is non-partisan, the Ramsey County Board is largely made up of commissioners with a history of endorsements from their local Democratic Farmer-Labor Party (“DFL”) units. Huffman was a notable exception, having previously held himself out as a Republican candidate for governor. Therefore, while the outcome of the election will have minimal impact on the political make-up of the Ramsey County Board, District 1 covers the TCAAP site and will place Huffman’s successor in an important post as parties look to break the current contentious gridlock. Following a primary that saw a slate of nine candidates reduced to two, the November general election will pit former Republican State Representative Randy Jessup against the DFL-endorsed political newcomer, Nicole Frethem. Jessup has strong name recognition in the generally right-of-center district having run for the Minnesota House of Representatives in 2014, 2016, and 2018 and having served in the House from 2015-16. However, Frethem was the top vote-getter in the August primary, coming away with a 41%-34.4% advantage. Turnout will be key come November as Fretham, an outspoken progressive, looks to flip the most conservative district in the county. The eventual winner will have to face the voters again in 2020. St. Paul City Council (Ward 6):Longtime East Side City Councilmember Dan Bostrom surprised many when, in late December 2018, he announced his resignation. Many people thought Bostrom, 78, might retire instead of seeking re-election, and potential candidates were already lining up to seek the seat, but his decision to vacate the seat he had held since 1996 shook up the campaign landscape significantly. Following a series of public interviews, Mayor Melvin Carter and the St. Paul City Council appointed Kassim Busuri, an educator and youth worker, to serve the remainder of his term, making Busuri the first Somali-American to serve on the city council. However, Busuri angered many, including a number of his city council colleagues, when he went back on a commitment he made during the appointment process to not seek the seat in the November general election. His campaign came under additional scrutiny in June when he was accused of making anti-gay posts on Facebook. Busuri now faces five challengers in an open ranked choice voting ballot. Among the five challengers, the two who stand out as the most formidable are Nelsie Yang, an economic justice organizer for the progressive community organizing group, TakeAction Minnesota, and Terri Thao, a member of the St. Paul Planning Commission and former chair of the board for the East Side Neighborhood Development ‎Company. The November ballot will also include small business owner Alexander Bourne, activist Greg Copeland, and housing advocate Danielle Swift. Ms. Yang’s campaign touts a number of significant political endorsements, including Women Winning, the St. Paul Regional Labor Federation, Take Action Minnesota, Our Revolution, and OutFront Minnesota. Meanwhile, Ms. Thao has been endorsed by Ramsey County Board Chair Jim McDonough, the St. Paul Area Chamber of Commerce, and multiple state representatives. The large number of candidates in the field make it difficult to predict who will ultimately represent the East Side, but it is clear that the eventual winner will likely have a significant voice in the Hillcrest development. St. Paul City Council (Ward 1): One of the other hotly contested city council seats to watch is in Ward 1, which includes the Frogtown, Summit-University, North End, Lexington-Hamline and Snelling-Hamline neighborhoods. Ward 1 has seen significant new investment in recent years with the opening of the Green Line LRT as well as the construction of Allianz Field. However, this race is worth noting for its potential impact on future developments, both along the University corridor as well as throughout other parts of St. Paul. The race pits incumbent City Councilmember and 2017 mayoral candidate, Dai Thao, against two well-organized challengers. Thao’s political career and tenure on the council has been tumultuous. An outspoken critic on issues of police office accountability, Thao has found himself the subject of more than one investigation into his conduct while in office—including being acquitted in late 2018 of multiple charges related to an allegation that he illegally assisted a voter in marking their ballot. In April, DFL delegates endorsed Thao’s campaign for re-election, though that too was not without controversy. Thao is being challenged by Anika Bowie, the vice president of the Minneapolis NAACP, and former staffer to Congresswoman Betty McCollum, Liz De La Torre. Bowie’s campaign touts her strong ties to the community (she’s a fifth-generation resident of the Rondo neighborhood) as well as her service on the St. Paul Police Civilian Internal Affairs Review Commission. She has also received a slew of progressive endorsements, including Women Winning, Our Revolution, and OutFront Minnesota. De La Torre’s campaign has focused on her career of service, including her work with Congresswoman McCollum as well as current work with victims of sexual violence. She has been endorsed by AFSCME Council 5, the Stonewall DFL, and Ramsey County Chair Jim McDonough. With ranked-choice voting, it is difficult to handicap the Ward 1 race, but seeing as how Councilmember Thao currently serves as one of two members of the city council on the St. Paul Port Authority, his re-election could have significant impacts on multiple redevelopment projects in the city.

September 11, 2019

Local Government

What to Make of Expanded City Regulatory Role

Those of us who advise business clients, including real estate development clients, about state and local regulatory matters are pretty comfortable working under the long-standing division of authority between cities and state or federal regulators. We understand, for example, that local units of government are creatures of the state legislature, with powers limited to the specific grant of authority by the legislature (subject to some additional authority for charter cities). We accept that cities get to establish local zoning and development regulations governing development and construction activities, based on express authority conferred under state or federal law or regulations. There has been a long-standing tension, however, between state and local governments about what a given city is expressly or impliedly authorized to do under a city’s so-called police powers, absent a clear preemption. In some areas of regulation, like environmental protection, we rely on policies that are established at the state or federal level to ensure some level of uniformity and consistency. In recent years we have seen cities go in a whole new direction by enacting policies pertaining to areas historically reserved to state or even federal agencies. Refer to municipal actions regarding climate change, minimum wage and mandatory employee benefits as recent examples. Why should the real estate development community care about this trend? Our clients who are considering whether to invest in a particular city, such as Minneapolis or St. Paul, now not only need to be concerned with whether their project complies with local development regulations, but also whether their very business operations are uniquely regulated. They may be very concerned that such cities have taken it upon themselves to regulate aspects of their business in a way they have not experienced before. Many cities are pursuing expanded policies in response to social activism within their community or because of perceived inaction by state or federal officials. However, this trend may cause companies to invest their capital elsewhere to avoid the added burdens and cost of one-off local regulations that can be avoided simply by crossing the boundary line to another jurisdiction. For example, elected officials in Minneapolis have for several years been pushing to enact a substantially higher minimum wage than what is required under state or federal law, applicable to employers doing business in their city. For those employers who hire affected employees, the associated labor costs will be a new factor for them when deciding whether to site a new coffee shop or fast-casual restaurant in Minneapolis or in an adjacent city without such policies. Another example relates to climate change and the adoption by cities of sustainability policies. Historically, matters pertaining to environmental protection have centered on state and federal regulation. We understand that cities have authority to regulate stormwater discharge or wetland infiltration, but those policies emanate from state or federal law. Developers and their clients need to consider carefully what a given city may require of them to manage perceived adverse impacts of new or existing development. For some, this is not a concern as their employees or customers are already demanding more aggressive practices in this area. But not very many companies know how to confirm their “carbon footprint” let alone how to manage it or reduce it. For small manufacturers doing business in such cities, it might be the red flag that tells them it’s time to move on. Given the trend in expanded municipal activism, one has to wonder what are the practical limits to new local government policymaking? If the state environmental regulators have a rule that specifies what is required for environmental review and compliance can a city up the ante and enact its own policies for environmental review, including by establishing more aggressive requirements for environmental impact statements? One clear advantage of having such matters addressed at a higher level is to avoid inconsistent approaches within a state or region that may otherwise lead to confusion and mistakes. We are already seeing this play out as various business organizations have found it necessary to challenge local government actions in court. Thus far the results of such challenges have been mixed. Efforts to preempt local government authority on a broad range of topics have not made much progress – at least not yet. We have entered a new age of democracy, aided in large measure by the internet, in which one person’s pique can be the basis for forming a coalition and organizing behind a cause, electing local candidates to office and proceeding forthwith to enact new regulations. This is playing out before our eyes in Minneapolis and in other cities in Minnesota and elsewhere. Absent a clear indication of federal or state preemption in any given area, it would appear the tracks are laid down and the train is moving. Unfortunately we don’t yet know the train’s destination or the cost of the ticket.

September 27, 2017

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