Monthly Archives: August 2011

Federal Court Permits a Constitutional Challenge to a Certificate of Need Law

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The Ninth Circuit Court of Appeals is allowing a commerce clause challenge to Washington State’s Certificate of Need (CON) laws to proceed.  The Court found that the original federal legislation that authorized states to enact CON statutes, which was repealed in 1986, did not provide the State with the necessary congressional authorization to avoid a commerce clause challenge for a CON regulation it adopted in 2008.  Since Vermont has recently limited its CON statute by disbanding the Public Oversight Commission, and it is unclear under the State’s Health Reform law exactly how the CON process will fit within our state reform efforts, other states’ experiences with their CON laws are worth watching.

In Yakima Valley Memorial Hospital v. Washington State Department of Health, — F.3d —-, 2011 WL 3629895 the State refused to license the Yakima Valley Memorial Hospital to perform elective percutaneous coronary interventions (PCI) under CON regulations that required examination of factors related to access to care, patient safety, quality outcomes, costs, the stability of Washington’s cardiac care delivery system and its existing cardiac care providers.  The hospital challenged the regulations under the Sherman Act and the Commerce Clause.  In deciding that the commerce clause challenge could go forward, the Court included a helpful, short history of CON laws:

The concept of certificate of need regimes, which many states enforce, is to avoid private parties making socially inefficient investments in health-care resources they might make if left unregulated.  A certificate of need program corrects the market by requiring preapproval for certain investments and, in theory, thereby ensures that providers will make only necessary investments in health care…Congress made certificate of need regimes part of the federal government’s national health planning policy in the National Health Planning and Resources Development Act of 1974 (NHPRDA).  The NHPRDA conditioned federal funding on enforcement of certificate of need regimes as part of the congressional effort to reduce health–care inflation and achieve an adequate supply and distribution of health resources…Congress repealed the NHPRDA in 1986, leaving states free to abandon their certificate of need programs… (citations omitted)

Yakima Valley, at 11212-11213.

The Court held that the hospital did not state a cause of action under the anti-trust laws but that it had proved standing and stated a cause of action under the Dormant Commerce Clause.  The State’s argument that NHPRDA provided sufficient authorization for the State to engage in regulation that might otherwise be impermissible under the Commerce Clause was unavailing.  There was no savings clause in the repeal.  The Court remanded the case to the district court to decide whether the CON laws impermissibly burden interstate commerce.

Like Vermont, the majority of states still have CON laws.  As is true in much of health care today, their ability to rein in costs and effectiveness is being questioned.  Legal challenges such as Yakima Valley may advance the policy discussions and provide insight into the future of CON laws here and across the nation.

Vermont Public Service Board Has Active Summer in Renewables Arena

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The Vermont Public Service Board has seen a spate of activity over the past several months in the renewable energy arena.  This has included both broad policy setting as well as project-specific decisions.  Much of the activity has centered around the Standard Offer Program.

The SPEED Standard Offer Program, created by the Legislature in 2009, established a guaranteed long-term price that is available to renewable energy projects of 2.2 MW or less.  After an initial round of PSB proceedings in 2009 and 2010 that set the rates for each technology type (solar, wind, biomass and hydro), as well as addressing program implementation issues, the Board has largely focused on reviewing individual projects under section 248.  Many of the program-related documents can be found at www.vermontspeed.com and on the Public Service Board’s website.

More recently, the Board has again focused on program-wide issues.  For example, on July 7th, 2011, the PSB issued a revised Standard Offer Contract, making a number of changes to the standard offer contract that are largely designed to clarify the rights of the project developers (producers).  See our blog post on July 9th.

In future posts we will review the Board’s rulings regarding Standard Offer technology caps, SPEED Facilitator costs, the Board’s new price-setting docket for Standard Offer projects, and the Board’s permit decisions on a number of standard offer projects.

Vermont Court Rules Solar Energy Support & Orientation Equipment Exempt From Sales & Use Tax

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In a decision issued last month, the Vermont Superior Court, Chittenden Unit, reversed a Formal Ruling from the Department of Taxes and held that fixed support and orientation equipment used to hold solar photovoltaic (PV) modules are exempt from Vermont’s sales and use tax under 32 V.S.A. §9741(14).

The reason?  The Court determined that the steel and aluminum racks are used “directly and exclusively” for the manufacture of electricity.  Under Vermont law, machinery and equipment is exempt from the sales and use tax if it is used “directly and exclusively” in the manufacture of electricity for sale.  32 V.S.A. §9741(14).  The decision in this case turned on the meaning of the phrase “directly and exclusively.”

The Department of Taxes argued that, because the racks were fixed, as opposed to the mobile “tracker” types of racks, there was not an “active causal relationship between the use of the machinery and equipment…and the production…” of electricity.  Therefore, the Department concluded that the aluminum racks could not be considered as used “directly and exclusively” for the production of electricity.  Formal Ruling 2011-03 at 1-2.  The Department fixated on the notion that because the racks didn’t move they couldn’t be directly or meaningfully related to the production of electricity.

The solar farm operator argued that the fixed racks, which position the PV modules at a 30 degree angle facing solar south, thereby allowing them to absorb the maximum possible amount of solar energy, are an integral component of the system and are therefore “actively” involved in the production process.  The Court agreed with the solar farm operator and found that, although the support and orientation equipment do not themselves produce electricity, “the amount of electricity a PV module produces depends in part on its orientation.”  Because of the integral nature of the equipment to the production of electricity, the court concluded that the equipment “is exempt from the Vermont sales and use tax because it is directly and exclusively used in the manufacture of electricity for sale.”

The decision is of great importance to solar producers, and possibly other energy producers, as it will help to keep down the price of this renewable energy.

The solar farm operator in this matter, Alteris Renewables, Inc., was represented by Dunkiel Saunders Elliott Raubvogel & Hand attorney, Karen Tyler.

Does my organization REALLY need a social media policy?

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As we lawyers like to say: You’re better safe than sorry.  For many of us, social media has become part of the fabric of our lives – we use it to communicate with friends and family, we use it to gather information important to our personal and business lives and we use it to promote and market our ideas, our businesses and our organizations’ missions.  Social media offers so many new, smart, cool, fun opportunities to communicate – and with the smart and cool comes the not-so-smart, the dangerous and the ugly – including: defamation, disclosure of confidential or proprietary information, securities law violations, harassment and other forms of employment discrimination.

From time to time on this blog, we will explore the opportunities and the pitfalls relating to the use of social media in the workplace and offer some tools to capitalize on the good and minimize the bad and the ugly.

The first tool to avoid the risks associated with the use of social media is a thoughtful and well crafted social media policy.  We recommend that most employers consider adopting a social media policy to help guide the use of social media in the workplace.

A good social media policy has the following characteristics:

  • Practical.  A good policy should be in line with your organization’s culture.
  • Based on trust.  Your organization’s social media policy should start with the assumption that your employees want to the right thing.  The policy should be a tool to guide them toward that end.
  • With few absolutes.  Absolutes can be difficult to enforce.  As an employer, you will need some discretion in addressing situations that you can not anticipate.  Try to frame your policy with more Do’s than Don’t’s.
  • Clear and concise.  A policy that is easily understood is more likely to be followed and is easier to enforce.  Social media policies should be general enough to encompass new technologies and media, yet specific enough to cover all areas of concern.
  • Consistent.  One set of rules should apply equally to everyone in your organization.
  • Legal.  Be sure to avoid prohibiting legal conduct or encouraging illegal conduct.

In terms of content, a good social media policy should include the following:

  • Request that employees always use good judgment
  • Clear statement that violation of policy is grounds for discipline
  • Clear statement on whether employees are allowed to Facebook, Tweet or blog during business hours and if so, to what extent
  • Prohibition on posting of confidential or other proprietary information unless for allowable uses and on posting false or misleading information about the organization or its employees, customers or affiliates
  • Requirement that any employees that blog about work include disclaimer.

Here are few examples of a variety social media policies from organizations with a wide variety of cultures:  Intel, Flickr, Reuters, Kaiser Permanente, Hill and Knowlton.