This article was included in the Milk Producers Council's Report 5/10/2019 

The Social Security Administration Is Sending Out No Match Letters - How Does an Employer Deal With A No Match Letter When Received?

By Gregory J. Norys
Partner, Coleman & Horowitt, LLP, Attorneys At Law
gnorys@ch-law.com

While the Social Security Administration (SSA) warns against making inferences about an employee’s immigration status after the receipt of a no match letter, many Immigration and Customs Enforcement (ICE) offices consider an employer’s receipt of no match letters to be an indication that an employer might have questionable hiring and record-keeping practices. An employer’s failure to show specific action in response to a no match letter could therefore be considered by ICE as a significant negative factor when determining if enforcement actions, including fines and criminal prosecution, should be taken.

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Coleman & Horowitt Assists Client With CFATS Compliance.

Attorneys at Coleman & Horowitt recently assisted a client in discussions with the Department of Homeland Security (DHS) regarding compliance with the Chemical Facility Anti-Terrorism Standards (CFATS) program. Specifically, they assisted the client in explaining how certain chemicals, including chemicals of interest (COI), were being used to grow crops and therefore subject to the extension from CFATS for agricultural activities (Ag Extension). The practical aspect of this outcome is that the client will not be subject to potentially cost prohibitive security measures for fertilizers used in crop production. Please continue reading for a brief discussion of CFATS and the Ag Extension. If you have received correspondence from an analyst or investigator with DHS regarding CFATS, Lee N. Smith and Craig A. Tristao of our office are experienced in discussions and can help you navigate compliance.

The CFATS Program.

To protect the nation from the exploitation of hazardous chemicals, Congress authorized the Department of Homeland Security (DHS) to create the Chemical Facility Anti-Terrorism Standards (CFATS) program (6 CFR Part 27) in order to identify and regulate high-risk chemical facilities to ensure they have security measures in place to reduce the risk of a terrorist attack associated with certain chemicals of interest (COI) that can be used to create explosive devices or otherwise cause us harm.

The CFATS regulation lists more than 300 COIs, which if held in specified quantities or concentrations known as standard threshold quantities (STQ), trigger reporting requirements to DHS via an online questionnaire called a Top-Screen. Facilities are required to report their chemical holdings within 60 days of coming into possession of a COI. However, DHS has given certain agricultural facilities a time extension for that reporting requirement.

The Ag Extension.

In January 2008, the Department published in the Federal Register a December 2007 letter granting a time extension for certain farmers and other agricultural users who are otherwise required to report their COI holdings and submit a Top-Screen survey under CFATS (see 73 Fed. Reg. 1640 January 9, 2008).

The Ag Extension provides in pertinent part:

(1)        Until further notice, or unless otherwise specifically notified in writing by DHS, the Top-Screens will not be required for any facility that is required to submit a Top- Screen solely because it possesses any Chemical of Interest, at or above the applicable screening threshold quantity, for use—

(a) in preparation for the treatment of crops, feed, land, livestock (including poultry) or other areas of an agricultural production facility; or

(b) during application to or treatment of crops, feed, land, livestock (including poultry) or other areas of an agricultural production facility; This extension applies to facilities such as farms (e.g., crop, fruit, nut, and vegetable); ranches and rangeland; poultry, dairy, and equine facilities; turfgrass growers; golf courses; nurseries; floricultural operations; and public and private parks.

(2)        This extension does not apply to chemical distribution facilities, or commercial chemical application services.

(3)        This extension does not apply to chemical distribution facilities, or commercial chemical application services.

DHS Fact Sheet on the Ag Extension that Potentially Misinterprets the Extension.

Although the Ag Extension appears straightforward, agricultural businesses that utilize COIs may receive inquiries about how the COI’s are being utilized. This is because of a lack of understanding by DHS staff as to how COI’s are used in agricultural operations, and a DHS Fact Sheet which purports to exclude storage from the extension.

In November 2017, DHS issued a “Fact Sheet” on the Ag Extension. The Fact Sheet purports to identify situations when the Ag Extension does not apply. It provides:

“When the   Extension Does Not Apply.

The extension does not apply to agricultural production facilities that use a COI at or above the applicable STQ for purposes other than those listed above. For example…● If an agricultural facility stores and/or distributes a COI…...

These facilities must submit a Top-Screen within 60 days of coming into possession of a COI.”

The intention of DHS is logical, they want to know what security measures are in place at an agricultural facility that possesses a COI. However, you maybe contacted because DHS’ Fact Sheet is overbroad with regard to storage of chemicals, and in addition it may not be obvious that the chemicals at issue are being used to grow crops, as staff are likely not be as familiar with agricultural operations as they are with industrial operations.

Notwithstanding the language in the Fact Sheet, the Ag Extension, by its terms, applies to “farms…; ranches…”  Moreover, it appears the intent of the letter was only to exclude “chemical distribution facilities, or commercial chemical application services” from the Ag Extension and to not exclude the Ag Extension to locations used by farming operations as part of their crop production activities – see the Ag Extensions reference in (1)(a) “in preparation for the treatment of crops…”.

Further, although the language “store” is not used in the Ag Extension, the word “possess” is used frequently (see, i.e., section (1)”…will not be required for any facility that is required to submit a Top- Screen solely because it possesses any Chemical of Interest...”) and certainly implies that “storage” at least for an interim basis, is included.

Additionally, in reviewing whether storage or possession is actually allowed under the Ag Extension letter, it is useful to compare the Ag Extension letter, which identifies operations subject to the letter as CFAT facilities, to the actual CFATs regulations.  The definition of a facility under the regulations also contains the language “possess.”

Chemical Facility or facility shall mean any establishment that possesses or plans to possess, at any relevant point in time, a quantity of a chemical substance determined by the Secretary to be potentially dangerous or that meets other risk-related criteria identified by the Department. As used herein, the term chemical facility or facility shall also refer to the owner or operator of the chemical facility. Where multiple owners and/or operators function within a common infrastructure or within a single fenced area, the Assistant Secretary may determine that such owners and/or operators constitute a single chemical facility or multiple chemical facilities depending on the circumstances.

            6 CFR Chapter I, Part 27.

As such, the Fact Sheets’ use of “store” is overbroad if it is applied to facilities that hold a COI as part of crop production activities– the exception would swallow the exemption, and your farm should not be required to provide a “Top-Screen” for the COI.

What to do When You Receive an Inquiry?

If you receive an inquiry from DHS, you should contact counsel to discuss how to best respond. Counsel can assist you in communications with the agency, analyze whether any extensions apply to your use of a COI, and help you comply with the CFATS program if necessary.

Central Valley Regional Water Board investigating Manure Pond Depth to Groundwater for Certain Dairies

This blog is re-posted from the Milk Producers Council Newsletter.  If you have any questions please contact Kevin Abernathy at the Milk Producers Council or Lee N. Smith or Craig Tristao of our office.. The Central Valley Regional Water Quality Control Board (Regional Board) officials confirmed Thursday that they are in the process of contacting about 70 dairies to investigate whether their manure retention ponds are in direct contact with groundwater. Some dairies have already reported receiving the letters, which order them to submit technical reports to help determine whether their ponds intersect the water table. Regional Board officials said the effort is focused in an area of the northern San Joaquin Valley known for historically shallow water tables, near communities like Hilmar, Turlock and Merced.  The targeted area appears to include parts of Stanislaus, Merced and San Joaquin Counties. Initial reports indicate that the Regional Board is giving dairies until July 31 to respond to their request for information determining whether the dairy’s pond intersects. The letters require affected dairies to have a licensed civil engineer or land surveyor prepare a “Groundwater Separation Study,” which would include the elevation of the land surface near the lagoon, the lowest part of the top embankment, depth of groundwater below ground surface, “highest anticipated groundwater,” and a comparison of the elevation of the bottom of the lagoon to highest anticipated groundwater. If the ponds intersect groundwater or highest anticipated groundwater, the Regional Board is asking dairies to respond by October 31 with a “remedial workplan” including a time schedule for “elimination of the threats to groundwater associated with this condition.” The October 31 deadline appears to be for submitting the plan, and the letters to not state a specific deadline for when affected dairies would have to fully implement the remedial workplan. However, they would have to propose a time schedule for doing so. Milk Producers Council  has requested additional information and is closely monitoring the situation; and will provide updates as developments warrant.

CEQA Revised Guidelines Memorandum

Coleman & Horowitt LLP  provided a presentation to the American Council of Engineering Companies/ San Joaquin Chapter on January 9, 2019 regarding the revised CEQA Guidelines.  

 After several years of regulatory efforts, in 2018 the most recent changes to the CEQA guidelines were finalized, and went into effect in December of the same year. While there are a number of changes, the most significant relate to analyzing traffic impacts,the Green House Gas (“GHG”) analysis, the water supply analysis and significant modifications to the Initial Study Checklist in Appendix G of the CEQA Guidelines.

The Memorandum is a summary of the more significant changes. Many of the final changes appear to be an attempt to reconcile the Guidelines with the current case law.  

https://docs.google.com/document/d/e/2PACX-1vRmmQX5PqZYNYe7QIKXZUfQ6ukGzE8zA6izXhDEfFlxY_O6fMjkgecI0lzRaEBYI9KFCx5Z6Jlbs3Eh/pub

Coleman & Horowitt LLP World Ag Expo Reception

We are having a reception at the World Ag Expo, please contact us if you wish to attend.

 Coleman & Horowitt LLP partner Lee N. Smith is participating in AB 617 South Fresno Steering Committee.  

AB 617 Steering Committee

In mid-December and January dozens of residents, business representatives and other community members attended the first meeting of the South Central Fresno Steering Committee as part of 

AB 617 

Assembly Bill (“AB”) 617 (C. Garcia, Chapter 136, Statutes of 2017) was approved by the California legislature in

2017, in conjunction with AB 398, which was an extension of the Greenhouse Gas Cap & Trade program, in an effort to engender support from the diverse parties in the air

quality arena. AB 617 in summary requires the California Air Resources Board (“CARB”) to develop a Community Air Protection Program for the state, and then select, based

on the plan, the highest priority locations to deploy community air monitoring systems. The Program’s focus is to reduce exposure in communities most impacted by air

pollution. Once the communities and relevant emissions are identified and a local steering committee appointed, specific options for monitoring and subsequent control

measures are to be proposed. From the outset there has been a concern with the potential for fence line monitoring of sources as well as the use of low cost personal monitors

by community groups. 

The third meeting of the South Fresno Steering Committee will be in Mid-February

What Consultants to Governmental Agencies Need to know about Government Code § 1090 and the Political Reform Act

Government Code§ 1090 and the Political Reform Act

This article is part of presentation that was made to the San Joaquin Valley Chapter of the American Council of Engineering Companies (ACEC) by David Weiland on January 9, 2019.

Government Code § 1090(a):

 Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity. 

How does Government Code section 1090 apply to consultants to California public entities? 

 If you provide professional services under contract for any public agency, or fill a statutory position by contract, awareness of section 1090 is critically important.  Attorneys, accountants, and engineers all need to understand the impact of section 1090 and its preclusive effect on the services they provide.  Opinions issued by the Fair Political Practices Commission (“FPPC”) and the California Attorney General (“AG”) are instructive as to such effect, and are covered herein.

Public officials, whether elected or appointed, should perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them. (Gov. Code § 81001, Par. b; “Political Reform Act.”)

Assets and income of public officials which may be materially affected by their official actions should be disclosed an in appropriate circumstances the officials should be disqualified from acting in order that conflicts of interest may be avoided. (Gov. Code § 81002, Par c.)

For the same reasons set forth involving Government Code section 1090, ACEC members should be aware of provisions of the Political Reform Act which might prohibit or restrict conducting business with a Public Agency if the member has a spouse employed by the Agency.  The FPPC also issues advisory opinions regarding Political Reform Act conflicts and should be consulted whenever there is the possibility of a conflict.

GOVERNMENT CODE SECTION 1090

The 2015 appellate court case of Steven K. Davis v. Fresno Unified School District (“Davis”) highlights the dangers inherent for consultants working for public agencies involving projects consisting of multiple tiers of services and separate contracts.  While the Davis case solely addressed the involvement of a general contractor in pre-bid consulting services to the school district which subsequently hired the general contractor to construct the project, public agency attorneys and the FPPC have given the case broad interpretation to prohibit consultants from performing professional services to the agency involving overall planning, scoping, and project recommendations and then providing the services recommended by the consultant at the planning stage.  

Such prohibition is not necessarily limited to recommendations made by the consultant in an official capacity (i.e. Contract City Engineer).  It can include, for example, providing design services for a public works project emanating from recommendations made by the consultant in an earlier master plan prepared by the same consultant.  The Davis court concluded that Section 1090 was broad enough to include the corporate general contractor within the reach of the code’s prohibitions, finding that the contract to construct the school, after the general contractor served in a consulting capacity to the district, was illegal. 

 The remedy for an illegal public agency contract is the disgorgement of funds paid to the contracting consultant.  However, since Davis did not seek such remedy, it was not available to him in his lawsuit.  Nonetheless, the Davis court’s analysis of Section 1090, and of the Political Reform Act prohibitions on conflicts of interest, has now been extended by public agency attorneys and the FPPC to a wide range of professional service contracts.  Following are specific examples.

In a 2016 FPPC opinion letter, the FPPC concluded that a local city could not award a construction management (contract administration) contract to an engineering consulting firm that had previously prepared the construction drawings and specifications for the project. (FPPC File A-16-170.)  In this case, the consulting firm served in the statutory capacity of City Engineer, and had over the years, obtained a series of general services contracts covering a broad range of civil engineering services typically provided by a City Engineer.  Such contracts are not unusual, and are typical, for small communities which cannot afford their own engineering staff.  

Nonetheless, because the engineering consultant had prepared the construction drawings and specifications under a separate contract, the FPPC opinion concluded that the consultant had a disqualifying economic interest in the construction management contract prohibiting the consultant from providing those services.  Coleman & Horowitt was retained to respond to the opinion letter.  The response included a detailed historical recitation of the general services contracts between the consultant and the city, and a discussion of the broad range of services provided in the contracts which not only allowed the consultant to perform the construction management services, but arguably mandated that the consultant perform them.  While the effort in responding was expensive, it actually resulted in the FPPC withdrawing its prior opinion letter, allowing the consultant to perform the construction management services.

  

Acknowledging that there were details in the contracts unique to the particular project at issue, it has resulted in recommendations from our office that general services contracts of the nature at issue in the cited FPPC opinion be as broad and detailed as possible as to the types of services to be provided by the consultant, and the conditions under which such services must be provided by the consultant.

The AG has taken a slightly different approach to Section 1090 conflicts.  In an opinion issued in 2016, the AG determined that a City Attorney could not separately contract for bond counsel services based upon a percentage fee arrangement even though the attorney’s general services contract provided for such bond counsel services. (AG 12-409, January 28, 2016.)  In so holding, the AG determined that the percentage fee contract was allowable under the Political Reform Act, but not allowable under Section 1090 because the percentage fee arrangement presented the opportunity for the City Attorney to advise the city in a way that economically benefitted the City Attorney. 

 In other words, because the compensation to be paid to the City attorney under the separate bond counsel contract provided a “bonus” of sorts in the form of a percentage of the amount of the bonds, the attorney was in a position to economically benefit if the value of the bonds was higher.  Hence, the City Attorney’s recommendations for the bond issuance was potentially influenced by the attorney’s interest in the percentage fee, an arrangement prohibited by Section 1090. 

 In addition, the fact that a separate contract was required for the bond services also triggered the financial interest exclusion of Section 1090.  Hence, it can be concluded that, had the City Attorney merely provided the bond services under the scope of the general services agreement, without a separate contract, there would have been no conflict.  This is consistent with the ultimate conclusion reached by the FPPC in withdrawing its opinion letter involving the previously mentioned City Engineer contract for construction management services.

POLITICAL REFORM ACT

While the Political Reform Act (Gov. Code, § 81000, et seq.) is aimed primarily at California Election campaigns and practices, the provisions cited above apply to a wider range of situations involving consultant activities with public agencies which could economically benefit the consultant.  Where contracts are involved, the FPPC has authority to issue advisory opinion letters.  One recent letter emphasizes the potential issues that can arise involving spouses or close family members.

In an opinion issued on November 6, 2018 (FPPC File A-18-212), the FPPC determined that the public agency employee, employed in a management position, was prohibited from reviewing any project involving her spouse, a planning consultant with multiple projects filed with the public agency.  While the public agency’s subsequent actions did not disqualify the planning consultant from dealing with the public agency, they did result in the public agency employee being shielded from any involvement with the planning consultant’s projects.  The FPPC analysis is instructive.

First, the FPPC factually determined that the agency employee was: a department head with ultimate responsibility over 60 employees and three separate divisions of City government; reported to only the City Manager but also consulted with other department heads of the City; provided direct supervision to five management level employees within the department; provided secondary guidance and supervision to other employees within the department; assisted the public in navigating the processes of the department; met with developers to answer questions regarding the department processes; made decisions involving ministerial acts; and provided recommendations regarding discretionary applications to be considered by the City Council.  The FPPC then factually determined that the spouse was employed as a planner and project manager for a corporate employer conducting business with the agency employee’s department.

The FPPC then analyzed whether the agency employee had a “financial interest” in the outcome of any decisions made by the department involving the projects with which her spouse was a consultant. (Gov. Code §§ 87100 & 87103.)  The Act defines a financial interest as: any business entity in which the public official has a direct or indirect investment of $2,000 or more (§ 87103(a).); any business entity in which the public official is a director, officer, partner, trustee, employee, or holds a position of management (§ 87103(d).); any source of income, except gifts or loans by a commercial lending institution made in the normal course of business on terms available to the general public without regard to official status totaling more than $500 in the preceding 12 months (§ 87103(c).); or the agency employee’s personal finances including those of immediate family members (§ 87103.).  Based on its analysis of these factors, the FPPC determined that the agency employee had a financial interest in the form of a community property interest in the consultant’s income from his employer.

Next, the FPPC examined whether it was reasonably foreseeable that a decision by the agency employee would have a material financial effect on her financial interest, which was the community property interest in the consultant’s income from his employer.  Applying Regulations 18701(b), 18702.1(b), 18702.1(b)(1) through (3), and 18704 of the California Code of Regulations, the FPPC determined that, even though the consultant did not actually submit the applications for the projects being considered, the agency employee had direct authority over the decisions regarding the project applications, resulting in a reasonably foreseeably material financial effect on the agency employee’s community property interest in the consultant’s income.  With the cooperation of the City Attorney, the agency employee directed the department staff that she would not be involved in any projects involving the consultant’s employer and further instructed her staff to carry out the policies of the department just as they would for any other applicant.  Only time will tell how successful this directive will prove to be.

David J. Weiland is a partner in the firm and is the head of the firm's litigation department. David joined the firm in 2014. He was admitted to practice in 1992. He is a graduate of California State University, Fresno, where he received a degree in civil engineering. He received his JD from San Joaquin College of Law, where he served as the Managing Editor of the San Joaquin Agricultural Law Review. Prior to joining the firm, David served as a partner, member of the Board of Directors, President and chair of the litigation department of the Fresno firm Dowling Aaron Incorporated. David, a registered civil engineer, represents clients in complex commercial, construction, real estate, professional liability defense, tort defense, as well as municipal law, real estate transactions, and land use matters. David is experienced in all phases of real estate and construction litigation and public agency law. He also has significant experience in the defense of professional liability claims against design professionals and attorneys. David previously served as the City Attorney for the cities of Sanger and Mendota. He also serves as an arbitrator privately and with the American Arbitration Association as well as a mediator. He attended the Straus Institute for Dispute Resolution for ADR training. David has been named a Super Lawyer® by Thomson Reuters from 2009 to 2018 and holds an AV®-preeminent rating from Martindale Hubbell. David is a member of the American Bar Association (Member: Construction Law Forum), Fresno County Bar Association (Member: Real Estate, Construction and Litigation sections), Association of Business Trial Lawyers, Legal Advisory Committee of the Associated