May Day Brings Virginia’s Labor Revolution

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Four major changes in Virginia’s labor laws delayed at the beginning of the COVID-19 recession will all take effect May 1. All were approved by the 2020 General Assembly once Democrats controlled both legislative chambers and then delayed at the 2020 Veto Session. May Day 2021 is almost here.

Minimum Wage. The 31 percent increase in the state’s minimum wage, from $7.25 to $9.50 per hour, will have the broadest impact. House Bill 395 and Senate Bill 7 also raised the minimum wage to $11 per hour eight months later, on January 1, 2022, and to $12 per hour a year later on January 1, 2023.

The bills outline two further increases, which only go into effect if the Assembly votes for them again: To $13.50 per hour in 2025 and then the often-touted $15 per hour in 2026 (by which time that will be considered inadequate.) From there the rate will automatically adjust upward annually for inflation, a consideration never offered to taxpayers when inflation raises their taxes.

Public Employee Unions. House Bill 582 and Senate Bill 939 permit cities, counties and towns to enter into collective bargaining agreements with their employees. The first step in each local governing unit will be adoption of its own ordinance governing the process, with almost no limitations or guidance provided under the 2020 legislation.

The Thomas Jefferson Institute published a report on Alexandria’s proposed ordinance and local legal advice to seek to limit the scope of the coming agreements. You can read the draft ordinance here. Mainstream media so far is clueless and silent on all this, but an education is coming. This is going to be a major political issue over the next few months and years, with the labor organizers probably far more prepared behind the scenes than the local government officials are at this point.

An increase in the minimum wage is just about money. Unionizing local workforces will be about politics, power, and accountability along with piles and piles of money. It is a true sea change for Virginia. The next step will be similar bargaining agreements with state employees, not yet legal.

Prevailing Wages. House Bill 833 and Senate Bill 8, which require payment of “prevailing wages” as defined by the federal Davis-Bacon Act by contractors doing business with certain government bodies, unless the contracts are for less than $250,000. The Department of Labor and Industry will be responsible for setting and reviewing prevailing wage rates, in coordination with the federal authorities.

An employer found to have violated this faces a potential criminal penalty with jail time. This is a mandatory rule for state-related work. Local governing bodies have the option to impose this by ordinance, setting up another Herculean political struggle in various cities and counties.

Project Labor Agreements. House Bill 358 and Senate Bill 182 allow (but do not require) state and local bodies to require project labor agreements with organized labor when contracting for construction, manufacture, maintenance, or operation of public works projects. The legislation reversed a prohibition on writing this requirement into state bids.

Most of these changes would already be in effect but for the 2020 COVID recession. Nobody expects these changes to lower the cost of government services or government contracts, for either construction projects or services. How much costs will go up, time will tell.

Whatever political clout organized labor now enjoys in the Commonwealth these will greatly add to it, especially in all local elections (with their lower turnout). With that added influence, other elements of the labor agenda will become within reach. Congress may impose some of them on Virginia before the General Assembly meets again.

Posted in Economy, State Government | 1 Comment

Renewable Energy? Here’s the Transmission Bottleneck!

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You want more renewable energy? You’re going to need more high-voltage transmission lines to move intermittent wind and solar power around the country to balance fluctuating supply and demand. And you’d better get started. Transmission planning and construction involves long lead times, typically between seven and ten years.

“The window may be closing to develop the needed transmission expansion to enable the optimization of clean energy, meet state clean energy objectives, and other ‘voluntary’ demand for low-cost renewable energy,” summarizes a new study, “How Transmission Planning & Cost Allocation Processes Are Inhibiting Wind & Solar Development in SPP, MISO, & PJM.”

That’s not coming from some fossil fuel-funded global warming skeptic. The report was underwritten by the American Council on Renewable Energy (ACORE) in coordination with the American Clean Power Association and the Solar Energy Industries Association.

Those groups are sending up a warning flare to alert Americans to a critical bottleneck to renewable development. There is a major disconnect between the goals of numerous states, such as Virginia, to achieve zero-carbon electric grids by 2050 and the ability of the entities overseeing the electric transmission grid.

“The availability of backbone transmission capacity (generally 345 kV and above) is essential to the efficient and least cost deployment of U.S. solar and wind resources,” states the study. Better planning is needed at the Regional Transmission Organization (RTO) level — Virginia belongs to the PJM regional organization — “to identify the geographic areas where untapped renewable energy resources exist and develop optimal and cost-efficient paths for transmission infrastructure development to deliver low-cost renewable resources to load centers.”

Solar and wind power are coming, the report states. Fifteen states and territories have adopted mandates to achieve 100% carbon-free renewable energy. Electric utilities and corporate buyers are making their own commitments as well. Combined with continued cost declines for wind and solar, renewable energy “will be the principle source of electric generation in the future.”

Here’s the catch: “Yet, existing transmission planning processes have been insufficient in preparing the electric grid for this future resource mix.”

PJM and other regional transmission organizations have focused on meeting the current reliability and economic needs of the electric grid. “These processes were not designed to identify the necessary transmission expansion to enable future renewable energy development.” asserts the report. “The needed backbone transmission development has been essentially stalled.”

Prospective renewable-power generators are confronted with high network-upgrade costs to connect with the transmission system — sometimes in the hundreds of millions of dollars. Bottlenecks and delays as long as four years have prevented hundreds of renewable energy projects from reaching commercial operation, states the report. “There were 834 GW of proposed generators waiting in interconnection queues nationwide at the end of 2019, almost 90 percent of which were renewable and storage resources.”

Bacon’s bottom line: Governor Ralph Northam and the General Assembly have mandated a 100% zero-carbon energy grid by 2050. Little attention has been given ensuring the reliability of an electric grid 100% built upon intermittent power sources, especially during extreme weather events like the one Texas experienced earlier this year. Massive deployment of battery storage might be one potential solution, albeit an incredibly expensive one. Another alternative is importing electricity from other states and regions where different weather patterns prevail. But that, as the study makes clear, will require significant upgrades to the transmission grid.

Building and upgrading transmission lines is invariably unpopular. The planning and approval process can drag on for years. Will that capacity exist when Virginia needs it? Does anyone even know what transmission-grid upgrades will be needed on Virginia soil and be subject to Virginia regulatory approvals?

The electric generating and transmission system has been described as the world’s most complicated machine. Right now, the stooges in the General Assembly are in charge of maintaining important pieces of that machine. Unlike the Three Stooges in this clip, who knew they were lame brains, Virginia legislators see themselves as all knowing, all wise and all competent. What could go wrong?

A version of this commentary originally appeared on March 26, 2021 in the online Bacon’s Rebellion.

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Supreme Court to Review California Standards Imposed on Virginia

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On February 26, 2021 the North American Meat Institute (NAMI) requested the U.S. Supreme Court to review whether California can set the standards for animal agriculture, based on the state’s controversial Prop 12 law.

How agriculture produces meat in our society, and whether California gets to set the standards for everyone else, is in the balance.

What’s at stake

The question presented to the Court is simple. “Whether the Constitution permits California to extend its police power beyond its territorial borders by banning the sale of wholesome pork and veal products imported into California unless out-of-state farmers restructure their facilities to meet animal-confinement standards dictated by California.” If the rule is allowed to stand, any hog farmer across the Midwest or elsewhere will need to invest possibly millions in new livestock facilities in order to sell in to California’s vast consumer market. In effect, the law would be a financial burden to out-of-state producers who have no input on California regulations.

This battle goes way back, and we’ve been covering it here for a while. It started in 2008 when California passed Proposition 2, which changed the egg industry. Forrest Lucas and his Protect the Harvest organization stepped into the fight. Protect the Harvest and Mr. Lucas were able to convince the Missouri Attorney General and the Indiana Attorney General to sue California and Massachusetts (with a similar law) in the U.S. Supreme Court. Incredibly, the Supreme Court threw these cases out.

Only one Supreme Court Justice, Clarence Thomas, has any understanding of agriculture. The other justices are all Harvard and Yale educated with little or no agricultural literacy. It is hopeful that the new justice from the Midwest, Justice Amy Coney Barrett, coming from Indiana and Notre Dame, may have some exposure to real animal agriculture.

The petitioner is NAMI and is composed of the nation’s oldest and largest packers and processors of pork and veal products.

Many farmers may have their gripes against the processors and packers but in this case, NAMI is taking the fight to the Supreme Court and it appears they should win for American agriculture. This is good! The petition filed with the Supreme Court is filled with discussion regarding agriculture’s losses in the California District Court and in the Ninth Circuit Court of Appeals. These losses have been covered extensively in my columns and blog.

The Petition is very strong regarding how California is attempting to extend its power over how we produce pork and veal in the United States. Legally a very strong and winning argument is articulated in the Petition when it is claimed, “The Ninth Circuit’s Extraterritoriality Ruling Conflicts With Multiple Decisions Of Other Circuits And With This Court’s Precedent.”

Protect the Harvest, Mr. Lucas and the Attorneys General argued this issue several years ago without success. With the record that has been created it appears this argument should win this time.

The Petition should be read by all who are interested in not having their business decisions controlled by California voters led by the Humane Society (HSUS) and animal rights groups.

Super Bowl for animal agriculture

This case presents a fundamental question regarding California or any state that wants to direct and dictate trade barriers and production conditions for other states and even other countries. This issue confronted even our founding fathers. A major reason for the original Constitutional Convention was something very similar: states such as Virginia had set up very high barriers for other states to send their products in to Virginia and other states. The Commerce Clause emerged as the Framers’ response, to preclude the kind of discriminatory state legislation that had once been permissible.

Anyone can understand that California is violating the Commerce Clause. Again, common sense was put into our Constitution — that a state statute cannot control commerce wholly outside its boundaries. It was a great decision to prohibit extraterritorial regulation.

California even at this date is sending its inspectors to various states to ensure laying hens have sufficient space in which to produce eggs.

Our founding fathers had special concerns about maintaining a national economic Union “…unfettered by state-imposed limitations on interstate commerce…”. In addition, the Petition tells the Supreme Court and California that ”States and localities may not attach restrictions to exports or imports in order to control commerce in other states.”

California has already passed Proposition 2 in 2008 which required California’s farmers and other states’ farmers to provide housing which did not create cruelty to laying hens. This proposition claimed there were studies that showed caged animals created more food borne pathogens; therefore, California had to set the standards for food safety. This of course has been proven bogus!

The NAMI petition cites many cases from the Supreme Court which strikes down state statutes which regulate production facilities and processes of out-of-state manufacturers. So, the next time you are angry as a farm producer, give thanks and appreciation to NAMI for trying to protect all animal agriculture from California and its views.

A version of this commentary originally appeared on March 30, 2021 in the online Farm Futures. The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

Posted in Agriculture, Government Reform, Law and Justice | Leave a comment

Maryland Managed Lanes Have Developer, But Still Face Opponents

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Last month, the Maryland Department of Transportation (MDOT), its State Highway Administration (SHA), and the Maryland Transportation Authority (MTA) selected Accelerate Maryland Partners LLC as the public-private partnership (P3) developer/operator for Phase 1 of the $11 billion I-495 and I-270 managed lanes project. The team is led by equity providers Transurban and Macquarie, with Dewberry Engineering and Stantec Consulting as designers. 

Accelerate Maryland Partners had the highest-ranked financial proposal. The company also offered to pay a $145 million development rights fee and agreed to a $54.3 million limit on what it will be paid during predevelopment. (Under “predevelopment,” they will work with MDOT to fine-tune the design, prior to negotiating the 50-year concession agreement.) The team also proposed a higher rate of return on its equity investment in exchange for taking greater construction cost risk, reducing the state’s risk in the project. 

Transurban and Macquarie both have proven P3 track records in the region. Transurban financed, developed, and operates the managed lanes on I-95, I-395, and I-495. Macquarie was half of the P3 team that did likewise for the Elizabeth River Tunnels project. Both companies have delivered transportation megaprojects on time. And both have the experience to manage any unanticipated project hurdles. 

Much of the opposition to the project has suggested that the state should be investing in mass transit, not roadways. Yet, a rail line along the I-270 and I-495 corridor would cost state taxpayers billions of dollars and need ongoing taxpayer operating subsidies. By contrast, the managed lanes are expected to be paid for only by those who choose to use them.

The project will also create a new transit option for the 272,000 workers who commute into Fairfax County, Virginia, each day, many of them from Montgomery County, Maryland. These workers currently have no viable transit option and can only get to work by driving. The consortium is making a commitment to transit in the area, providing at least $300 million for bus services that can use the new managed lanes, as well as $5 million for Vision Zero improvements and bicycle and pedestrian connections. Managed lanes provide a virtual exclusive busway, in which buses can bypass congestion for faster and more reliable trips. Several different agencies including the Washington Metropolitan Area Transit Authority (WMATA), Montgomery County’s Ride On, and the Fairfax Connector bus service could offer transit service using the new lanes.

The next steps for the project are review and approval by the Maryland Transportation Authority board later this month, a 30-day review by Maryland’s comptroller, treasurer, and the legislature’s budget committees, with final approval hoped for by May 2021. MDOT, SHA, and the Federal Highway Administration are finishing up the Environmental Impact Study in parallel with the team’s pre-development work. 

Unfortunately, some environmental groups are still seeking to stop the project. The Maryland Sierra Club argues that the project has serious, negative environmental effects. The group commissioned a study that argued that the managed lanes will actually make congestion worse by shifting traffic from shoulder to peak hours, that managed lanes are an inefficient use of infrastructure, and that induced demand will occur.

While some traffic may shift from the shoulder hours to the peak, this is an economic benefit to the region. Those travelers would then be commuting at a more convenient time for them. Since the managed lanes provide a virtual exclusive busway and give commuters who need a reliable, guaranteed travel time a new option, they are hardly inefficient. Finally, tolling helps reduce induced demand by ensuring commuters pay the full cost of their trip.

But the Maryland Transit Opportunities Coalition argues that the toll lanes are unaffordable. The group uses a worst-case model to argue that drivers will pay “up to $49” to travel from Frederick to Shady Grove at the height of the morning peak travel periods, despite the state’s estimate of an average toll rate of $4-to-$5 for the same distance. Whatever the highest toll is, it will be paid by only a small fraction of commuters during the peak of the peak periods. The coalition, which advocates building more rail lines, including a Southern Maryland light rail project and an extension of the MARC train to western Maryland, fails to mention the likely new bus service option in the managed lanes. The coalition also claims that its rail expansion would be cheaper than the managed lanes, ignoring the fact that drivers who use the toll lanes would be the people paying for the toll lanes. In contrast, all taxpayers would end up paying for most of the cost of the rail expansions. 

There are also some opponents in the Maryland legislature. Their bills, HB 67 and SB 843, do not accurately reflect the terms of the P3 project. They would require duplicative environmental studies. Worse, they would require any toll changes to be subjected to a public hearing. Managed lanes are effective because tolls are allowed to increase or decrease based on demand and congestion. Requiring a public hearing to change the tolls would undermine the congestion relief, which is the primary benefit of priced managed lanes. Finally, a bill would require a monorail feasibility study along I-270, which has nothing to do with the project itself.

Maryland DOT has ensured that the managed lanes include dedicated funding for mass transit, environmental remediation, a pedestrian path, and bike lanes over the new American Legion Bridge. The growing Washington, DC, region needs additional roadway capacity, and it is past time for opponents to acknowledge this fact. 

A version of this commentary originally appeared on March 4 in the online Surface Transportation Innovations Newsletter.

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Congress Rushes in Where Richmond Democrats Fear to Tread

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One key goal for many of Virginia’s new progressive Democrats has been repeal of Virginia’s venerable Right To Work Law, and in 2020 they crossed one milestone by passing repeal in a key committee. But the Democratic leadership, perhaps wary of losing the bill in the Senate or angering too many moderate voters, ended the effort there and snuffed that bill.

This year the same bill was stalled in committee, but patron Delegate Lee Carter, D-Manassas, did force a roll call with a motion to discharge the committee and bring it to the House Floor. It also failed.

Where General Assembly Democrats feared to tread, Virginia’s Congressional Democrats happily rushed in. Every House of Representatives Democrat from this state has voted for H.R. 842, sponsored by Virginia’s own Rep. Robert Scott, D-Newport News. All the Republicans were nays.

Scott calls it the Protect the Right to Organize, or PRO Act, and the hot potato is now firmly on the plates of Democratic U.S. Senators Tim Kaine and Mark Warner. Kaine’s vote of yea is as sure as sunrise, putting the heat on our senior senator with his lightly-worn pro-business mantle. Will he shed it to give the unions and his new president what they want?

Scott chairs the House Committee on Education and Labor, where the bill originated. If you doubt the intent to repeal state right to work laws, the committee has issued its own propaganda piece on the bill which includes this among the talking points:

Gives workers the power to override so-called “right-to-work” laws that prevent unions from collecting dues from the workers they represent. “Right-to-work” laws advanced by anti-union politicians are design to strip workers of the power and resources to defend themselves against wealthy special interests. The PRO Act allows employers and unions to enter into a contract that allows unions to collect dues from the workers they represent.

The other perspective, of course, is that right to work laws allow employees to make a free choice to join a union or not, to fork over a percentage of their pay or not, to finance the union’s preferred political candidates or not. Without doubt, Congress has the authority to take that away because it was the 1947 Taft-Hartley Act which gave states the authority to create such protections.

It followed on the heels of the tumultuous labor battles that hamstrung America’s war production efforts, with strikes crippling key industries at key times in World War II. It is a bitter history which has faded over 75 years (try Arthur Herman’s Freedom’s Forge), but the economic benefits of Taft-Hartley’s restraint on unchecked union power remain. They are now in real jeopardy.

Repealing any and all state right to work laws is just one aspect of this union wish-list bill, which also passed in 2019 but then faced a Republican Senate. Virginia’s Democratic House members, who campaign as pro-business and individual liberty when needed, have also voted for this:

  • Secondary strikes, where the union targets a company’s suppliers and customers as well to add pressure, which is now banned.
  • Federal binding arbitration, as opposed to mediation, even in the case of first contract negotiations. The bill makes major changes to the arbitration and mediation rules, all of them adding power to the union.
  • Punitive damages, civil penalties, personal liability, and private right of action are added to the list of weapons on the side of the union in contract disputes.

There is a good summary of the bill from the employer’s point of view here, balancing the sales pitch put out by Scott’s committee. It also points to what might prove the Achilles Heel if the House insists, and those are the new rules sought to limit independent contractors. The National Law Review writes:

Unions have long pushed for legislation to expand the definition of “employee” and limit the definition of “supervisor” to bring a greater number of individuals under their sway. Independent contractors are also currently exempt from the scope of the (National Labor Relations Act).

The PRO Act would expand the definition of “employee,” adopting the California “ABC” test to exclude most workers from exempt independent contractor status. The PRO Act would also require employers to act at their peril, even if acting in good-faith; employers found to have mistakenly classified their workers as independent contractors would be in violation of the NLRA.

California’s hardly right-wing electorate has actually repealed many of the same provisions in that state’s Assembly Bill 5. The same battles over who is or is not an independent contract have raged in the Virginia General Assembly. Again, Congress is about to ride in and settle the argument for everybody, with the help of Virginia’s own elected representatives.

As progressive as the Virginia General Assembly has become, where it has failed to push dramatic change across the finish line the new Congress is stepping in. Right now, all 50 Senate Democrats are potential swing votes, but Mark Warner is one of the obvious ones. In reality, the key vote will first be on maintaining the filibuster rules. That goes, the world changes fast.

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