What Do the Supreme Court's Vaccination Rulings Mean for Your Business?

Reflecting the deep rift in public opinion concerning the government’s role in dictating how businesses, health care entities and public sector employers ought to act to stem the spread of COVID-19, a divided U.S. Supreme Court yesterday blocked an injunction of OSHA’s emergency rule which would have required an estimated 80 million employees to either fully vaccinate or submit to a regular testing program and mandatory onsite face covering requirement. The Court let a separate rule take effect requiring vaccinations for employees in nursing homes, hospitals and other facilities that receive Medicare and Medicaid payments.

With respect to OSHA’s ETS, the Court determined that the Sixth Circuit's decision to lift the injunction on the ETS was unwarranted and re-imposed a stay. Although that ruling does not technically dispose of the underlying legal challenges to the ETS, the decision relieves employers from complying with the ETS during the pendency of the litigation at the Sixth Circuit, and any further appeals. OSHA may opt to push ahead to implement some form of national standard regulation aimed at workplace pandemic prevention, although for now that is unclear.

In determining that OSHA lacked authority to issue the ETS, the Court noted that COVID-19 is not exclusively an occupational hazard, but rather something that everyone faces in their daily lives. Given that OSHA is principally tasked with regulating workplace health and safety, the Court determined that the regulation was likely beyond OSHA's legitimate reach. And, in holding that the balance of equities favored a continuation of the Sixth Circuit’s injunction, the majority opined that employers stood to incur billions of dollars in compliance costs and the ETS would cause thousands of workers to quit their jobs. The Court found that the ETS operated outside of OSHA’s authority by regulating public health more broadly rather than within its authority, which is limited to occupational hazards. The Court found that, although mandatory vaccination requirement would likely save lives and prevent hospitalizations, it was not the Court's role to weigh such trade-offs, which instead, was a responsibility better left to the legislative branch.

Although the Supreme Court’s ruling might settle the question of whether a federal mandate will be imposed on the private sector, at least through agency rulemaking, in Maine, the public sector will be keeping a close eye on a meeting of the Board of Occupational Safety & Health (BOSH) scheduled for January 18, 2022. BOSH, which has jurisdiction over Maine public sector employers, had intended this meeting to adopt an emergency rule replicating the ETS rule. The question will be whether BOSH has any intention – or authority – to move forward with a state-based rule in the absence of the federal mandate.

The Court’s decision to uphold the vaccination mandate imposed by the Centers for Medicare and Medicaid Services (CMS) did not come as a big surprise given the trend of lower court decisions on the subject. While in states like Maine this ruling has no practical impact because a state mandate has already been imposed and upheld, in many other states the ruling lifts injunctions that had blocked the federal mandate from applying. New Hampshire is one such state. Nationwide employers in the healthcare sector are now mandated to impose vaccination mandates on all their workers, regardless of location. The general guidance provided by CMS should be followed by all subject to the rule. That guidance, dated December 28, 2021, sets certain compliance thresholds to be achieved within 30 and 60 days, with 100 percent vaccination compliance required within 90 days of that date. It is unclear whether CMS will allow additional time to covered employers in the states affected by the Court’s decision.

Where does all this leave employers below the 100-worker threshold and those which would have been obligated to implement the ETS had the Court upheld the Sixth Circuit’s stay?

Private sector employers have the flexibility to develop and implement their own strategies or do nothing, subject of course to existing state and local laws which were unaffected by the Court’s ruling on the ETS. To date, either through executive orders or legislative action, 20 states have enacted prohibitions on the imposition by businesses and localities of proof-of-vaccination requirements or so-called vaccine passport programs. By contrast, another 5 states have taken action to facilitate the creation of digital vaccination status applications or have passed laws exempting fully vaccinated individuals from some COVID-19 restrictions if they can provide proof of vaccination. For now, the only common denominator is this -- because OSHA cannot impose its ETS on employers any policy decisions with respect to workplace pandemic prevention are being left to individual states.

Private sector employers in Maine, New Hampshire and Massachusetts remain subject to whatever state and local regulations are in place concerning workplace pandemic prevention requirements. Beyond those, employers have a myriad of choices in crafting how to supplement those requirements if at all. Employers that wish to implement vaccination incentives for their employees, those who want to set up a periodic testing program, and even those who wish to implement some form of mandatory vaccination requirement, are in a position to develop and implement policies and procedures scaled to their operations.

Preti's Labor and Employment team can guide employers through these options and help determine which workplace pandemic prevention strategies achieves the best balance between worker safety, your operational demands and legal compliance.

Does the Delta Variant Vary the New Rules on Remote Meetings?

With the Delta variant has come new recommendations suggesting that individuals once again wear masks in indoor public settings. We are getting a lot of questions regarding whether this new guidance counts as “an emergency requiring the board to meet by remote means,” such that remote participation is allowed under the new law. Because the current guidance is simply that masks should be worn indoors, and not that public or larger indoor meetings should be avoided, we do not think that the current situation qualifies as an emergency that requires the board to meet by remote means (as prudent as that might be). It is our belief that if the Governor signs a new order limiting in-person gatherings, or even if the CDC guidance is amended to discourage public meetings entirely, this may be enough to constitute an emergency. Only at that time will public bodies and their attorneys be able to assess the situation and determine whether a remote meeting is required, not just prudent.

Municipalities to Resume In-Person Public Meetings

After nearly a year and a half of remote proceedings, Maine municipal, county, and school boards will soon be required to reconvene in-person public meetings. On June 21, Governor Mills signed into law L.D. 32, “An Act Regarding Remote Participation in Public Proceedings.” The new law finally authorizes some remote participation in meetings – an issue that was quite divisive in pre-COVID days – but it does put an end to the type of remote meetings we’ve all grown used to.

Because last year’s “omnibus bill” which authorized remote meetings will remain in effect for 30 days after the state of emergency ends on June 30, L.D. 32 (codified at 1 MRS § 403-B) will become the governing law as of July 30, 2021. Per this emergency amendment, members of a public body must be physically present for public proceedings, except when doing so is “not practicable.” The circumstances under which being physically present may not be practicable include: an emergency requiring the body to meet by remote means; illness; absence from the jurisdiction and significant difficulties traveling to attend in person. A body must adopt a written policy governing the conditions upon which its members and members the public may participate by remote means. This policy must provide the public an opportunity to attend by remote methods when members of the body participate in such a way. A body may not limit public attendance at a proceeding solely to remote methods, except in case of emergency.

During hybrid meetings, all votes taken must be taken by roll call vote. Additionally, notice must include information on how the public may access the proceeding using remote methods, as well as identify a location for members of the public to attend in person. The body must make all documents and other materials they consider during the meeting available to the members of the public who attend by remote methods to the same extent they are available to those who attend in person, as long as it does not incur additional costs.

Note that these requirements apply solely to members of the body and public. This does not limit municipal staff or counsel from continuing to participate remotely.

Maine Governor Issues Executive Order Regarding the November Election

Governor Mills has issued a new executive order to facilitate the November 2020 general election. The stated purpose of the order is to ensure the integrity of the ballot and to protect the public health during the COVID-19 emergency. 

The order includes a limit of 50 or fewer people in each polling place and that the statutory minimum number of voting booths are not required if it would make it difficult to have them more than 6 feet apart. Voter lines must be marked to enforce a six-foot separation between voters. Voter registration is modified to allow voters to register 15 days before the election rather than 21 days. Municipalities may consolidate their polling places with a public hearing 30 days prior to election rather than the standard 90 and move polling places with a public hearing 20 days prior to the election rather than 60. The requirement that all polling workers reside in the municipality or county in which they serve is suspended. School budget elections are simplified. Absentee ballots may be processed 7 days before the election, rather than 4. Voters may vote in person by absentee ballot without giving a reason until 5:00 pm on the second business day before the election (Friday October 30). The Secretary of State will help Clerks have secure external boxes to drop off absentee ballots.

What Is the Municipal Liquidity Facility?

There is no question that COVID-19 has had a major impact on state and local governments’ revenue and expenses. To what extent it will impact any particular governmental unit will vary depending on its mix of revenue sources. In an effort to address state and local cash flow pressures and tax revenue shortfalls, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the U.S. Treasury established the Municipal Liquidity Facility (the “Facility”). The Facility’s purpose is to support credit and liquidity flow to state and local governments by providing short-term financing to certain governmental issuers. The Facility has the ability to purchase up to $500 billion of debt from impacted state and local governments. The Facility also monitors conditions in the primary and secondary markets for municipal securities in order to determine if any additional action will be necessary. 

Under the Facility, the Federal Reserve purchases short-term municipal notes issued by the states, the District of Columbia, eligible local governments, and Multi-State Entities. Eligible issuers must pay an origination fee of 10 basis points on the principal amount of notes purchased by the Facility. Notes purchased by the Facility may be called by the issuer at par any time before maturity. Unless extended, the Facility will cease buying notes after December 31, 2020. The Facility will be funded until its assets mature or are sold. Through this special purpose vehicle, the U.S. Department of the Treasury will provide $35 billion in initial equity to the program from its Exchange Stabilization Fund, as appropriated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The remaining funding, up to $465 billion, will come from the twelve regional Federal Reserve Banks.

Eligible local governments include counties with populations of at least 500,000 people, and cities with populations of at least 250,000. In addition, smaller states were given the option to designate a certain number of cities and/or counties to be eligible for the program, even if that city and/or county did not otherwise meet the population requirement. The number of allowed designations depends on the state's size, but the maximum was two designations. As both Maine and New Hampshire were considered to be smaller states, both governors were given the ability to designate a total of two cities and/or counties. Governors that have the ability to designate two Designated Cities and Designated Counties (on a combined basis) may choose any of the following combinations: (i) the most populous city and most populous county; (ii) the most populous city and second-most populous city; or (iii) the most populous county and second-most populous county. Massachusetts was not given the ability to designate any cities or counties based on its size.

In addition, state governors also can designate two "Revenue Bond Issuers" whose revenues are generally derived from operating government activities, such as utilities or airports, that could also sell bonds to the Facility. The municipal debt instruments eligible for purchase by the facility include tax anticipation notes (TANs), revenue anticipation notes (RANs), and bond anticipation notes (BANs), as well as other similar notes. Additionally, eligible debt securities must have terms to maturity of no more than 36 months from their dates of issuance. A given state, county, or city may have multiple entities, authorities, or instrumentalities that issue debt on its behalf. However, the Facility will limit itself to purchasing notes issued by only one issuer per state, county, or city. The Facility also will limit its purchases of notes from a given state, county, or city to an amount equal to 20% of its general revenues during its 2017 fiscal year. However, states may apply for exceptions under which the facility will buy notes in excess of these limits. The Facility is limited to 20% of a Multi-State Entity or Revenue Bond Issuer's gross revenue for fiscal year 2019.

In order to reap the benefits of this program, your municipality must meet the above eligibility requirements or have been specifically designated by the governor of your state as a Designated City or County. While the Facility is limited in eligibility scope and only aimed at new issuance, not secondary market purchases, the establishment of this program generated a positive response in the municipal bond market almost immediately upon its creation.

Parties Close to Settlement of Voting Rights Case

A lawsuit was filed in U.S. District Court on July 17, 2020, against the State of Maine and the Cities of Augusta, Portland, and Bangor and the Town of Winslow, alleging violations of the Americans with Disabilities Act on behalf of four visually impaired voters. The aim of the case is to cause the State and municipalities to implement a system which would allow blind voters to vote absentee without help from their personal computers. A system like this is available in a few other states, including Maryland. The plaintiffs allege that because of COVID, accommodations are necessary to avoid vulnerable citizens having to go to the poll or vote absentee and lose their privacy by having a trusted friend help them vote. A conference was held on July 23 with Judge Woodcock and the parties were given two weeks to work out a deal. The State is willing to implement a remote system for blind people to vote by computer based on a system already in place which allows active duty military to vote remotely anywhere in the world. The more complicated part will be figuring out how to make such a system work for local elections. The problem is that each municipality would have its own unique ballot, which would have to be provided to the vendor early enough to be included. There is expected to be a cost to the municipalities, which is unknown at this time. Preti Flaherty attorneys Laura Rideout and Steve Langsdorf are representing Augusta in this case.

State Issues COVID-19 Guidance Document for Reopening Public and Community Buildings

As part of Phase 2 of the Restarting Maine's Economy initiative, the State yesterday released guidance on safe reopening of municipal and other government buildings. Read the full COVID-19 Prevention Checklist here.

Crazy Times, Even in the Municipal Bond Market

The last few weeks have seen the municipal bond markets feeling the effects of the COVID-19 pandemic. Today, however, the Bond Buyer reported in its “Daily Briefing” that there was some stabilization last week in the municipal bond market.

During the weeks of the worsening of the pandemic, the municipal bond markets saw less investments in municipal bonds and increased sales by holders of existing municipal bonds. With investors in mutual funds holding municipal bonds withdrawing their investments in those funds, those mutual funds in turn were selling the municipal bonds in which they were invested. Compounding this sell-off, mutual funds were not purchasing, at their historical pace, other municipal bonds. This outflow of cash from the municipal bond market, together with a reduced inflow of cash, resulted in lower prices being paid for municipal bonds, leading to increased interest rates being paid by issuers and increased yields to investors. 

Various reasons have been suggested for this change: for example, investor risk assessments associated with municipal bonds may have changed; potential increase in the cost to municipal bond issuers for public support systems; holders seeking to move into cash positions; and general uncertainty. 

Not all issuers and municipal bonds are of equal risk in the current economic environment. Consider, by way of example, that some issuers have sufficient rainy day funds to see them through the crisis; some municipal bonds are supported by a revenue stream that may be less impacted by the pandemic. 

This is all part of the new economic world we are living in and what is written here at this point in time could change by the time you read it.

Maine State Primary Postponed – What to Do About Municipal Meetings and Budgets?

With the news that Governor Mills has ordered Maine’s primary election to be postponed until July 14, many towns are facing a dilemma about whether to postpone their own town meetings and elections. For those towns that like to coincide their local secret ballot meetings with the June primary, on top of the already existing health concerns, this is more reason to push local meetings off until July 14. But what to do about the budget? The Omnibus COVID Bill (LD 2167), provides that if the annual meeting is delayed beyond the date the annual budget is customarily approved, the prior year’s approved budget is deemed the budget for the ensuing year until a final budget is approved. The municipality may even commit taxes based upon last year’s budget, if needed. Schools are also authorized to operate according to the past year’s budget until subsidy numbers are finalized and the state of the emergency is over.

We take this budget extension provision to mean that the town may make operational and administrative expenses in the same amounts, in the same categories, as approved in the prior year. It may also allocate revenues as spelled out in the prior year’s budget. If capital improvement accounts were funded within the last year’s budget and the purpose remains, the town could choose to fund them on a month-to-month basis per the last budget. Alternatively, a cash-strapped town might wait to fund capital improvement accounts and eventually ask the budget meeting to reduce or eliminate the total allocation for the year.

While the COVID bill helps alleviate the pressure to hold budget meetings, it still leaves concerns about how to bridge the gap where the spending authorization remains unchanged from the prior year but revenues may have plummeted due to extended tax deadlines or other economic pressures. Many of our clients are using tax-anticipation notes, which can be borrowed on authority of the municipal officers without the need for town meeting. Others are relying on provisions in the last approved budget which allow the municipal officers to either spend from reserve accounts or appropriate from surplus to fund emergency expenses. In this economic environment, expenditures that previously would not have counted as emergencies probably do now meet that criteria. For towns that don’t have this type of spending authority or enough funding in place, there does remain the possibility of holding a small, special town meeting to make any approvals necessary. Anticipating low turnout, such a meeting still may legally be held, although the town will obviously have to take careful precautions to ensure that attendees are adequately spaced and protected.

Are Stay at Home Orders an Unconstitutional Taking?

In the midst of the COVID-19 pandemic, a question some are asking is whether there is a risk that governments will have to deal with claims that they have unconstitutionally taken value from property owners with the various stay at home edicts, closures, and other similar responses to the pandemic. The short answer is that such claims are unlikely to be successful as long as an ordinance and the local charter are followed, but it is a worthwhile discussion to keep in mind as municipalities consider their response to the pandemic.

The Constitution separates takings into two categories: physical and regulatory. A physical taking is, just like it sounds, when a government takes property away from an owner. It is fairly easy to identify physical takings, such as when DOT or a municipality takes property to build or expand public roads. A physical taking is unlikely – I am not aware of any governmental bodies in the U.S. physically taking property in response to the pandemic – but conceivably a municipality could take a building for quarantine or medical purposes. Should that occur, the municipality would need to pay the owner fair market value of the property taken. Since most of the buildings or spaces suitable for such uses are public buildings or spaces (e.g., the tents in Central Park in New York City), it is improbable that municipalities will need to compensate in such a way. 

On the other hand, regulatory takings could, in theory, apply to certain federal, state and local responses to the pandemic. Certain businesses deemed nonessential and specifically ordered to close undoubtedly will take a financial hit. Hair salons, theaters, and gyms, among others, forced to close could make an argument for lost income as a result of government measures to curb the spread of COVID-19 by claiming governments have violated the U.S. and Maine Constitutions in doing so. The Fifth Amendment provides protection against federal takings, while the Fourteenth Amendment protects against state and local takings.

Given what the CDC, the Maine CDC, and most public and private medical professionals have stated concerning COVID-19, governmental stay at home orders, forced closures, and so on are almost certainly a “valid use of police power,” which powers are given to states under the Tenth Amendment to act for the well-being of the public. The most important thing will be to make sure any emergency actions or orders strictly follow a local emergency planning ordinance and the municipal charter.

Maine Legislature Passes COVID-19 Omnibus Bill re Public Meetings, Finance, and Other Municipal Concerns

The Maine Legislature last night passed emergency legislation, LD 2167 (referred to as the COVID-19 Omnibus Bill), which addresses many of the concerns being faced by municipalities in this unprecedented situation. Following is our summary of the provisions of this law which impact municipal government:

Public meetings

• During the declared state of emergency, meetings of municipal boards and committees may be conducted remotely by telephone, video, or Internet. The method must be adequate to allow members to hear and speak to one another, and must allow the public to hear what is said.
• Notice must still be provided (we recommend emphasizing web and press announcements during this time, if offices are closed and physical postings are not possible). The notice must include information on how the public may watch and/or participate. Again, remember that you do not need to make provision to accept public comments unless the meeting will include a required public hearing.
• The law does not appear to require that you provide a physical space and phone, terminal, or display where the public can attend in person to watch or listen to the proceedings.
• Votes taken at a remote meeting must be by roll call.

Budget and finance

• Similar to the process for enacting school budgets, the law allows for a municipality that cannot adopt its budget at the customary time to spend according to the prior year’s adopted budget until the current year’s budget can be passed. If these delays continue to the point at which commitment becomes necessary, taxes may also be committed based upon the prior year’s budget.
• During the period of the declared state of emergency and for 30 days after, disbursement warrants may be signed by a majority of the municipal officers with no public meeting required. The implication is that the municipal officers may sign individually with no meeting required.
• If the level of state education subsidy is not finalized before June 1, 2020, the school budget meeting and validation process may be delayed until 30 days after either DOE notifies the school unit of the amount of subsidy or the state of emergency ends. If the budget is delayed under this provision, the school may operate based on the prior year’s budget between July 1 and the date the new budget goes into effect.

Elections

• During calendar year 2020, the municipal officers may postpone a municipal secret ballot election by posting a notice in a conspicuous public location at least two days prior to the election. The notice must either indicate the new date of the election or indicate that the municipal officers will schedule it at a date to be determined. Ballots already printed for that election may be reused for the rescheduled election (despite including the wrong date), and absentee ballots already cast for the election must be held by the clerk and processed on the rescheduled election date.

Employment

• If an employee is laid off as a result of the state of emergency, unemployment benefits paid to him/her will not be charged against the employer’s experience rating.
• Employees will be eligible for unemployment benefits if they are (1) subject to a quarantine or isolation requirement; (2) have been temporarily laid off due to COVID-19 related closures; or (3) are on temporarily leave due to quarantine, isolation, or need to care for dependent family members as a result of COVID-19.

Education

• The Governor and Commissioner of Education may develop a plan to waive compulsory attendance requirements and/or allow remote learning to take the place of in-person instruction requirements.
• The Governor and Commissioner of Education will also implement a plan to continue to provide nutrition services during any period of COVID-19 related school closures.

Other municipal business

• Vehicle registrations, liquor licenses, and dog licenses are deemed extended until 30 days after the end of the state of emergency.
• Vehicle registrants may use the Rapid Renewal program even if their municipality does not already participate.

Municipal COVID-19 Update

We are understandably getting many questions from our municipal clients regarding how to handle public meetings, annual meetings, and public transactions given the Governor’s order prohibiting large gatherings. The other significant area of concern involves questions about how to balance serving the public while protecting your workforce. Several municipalities, including Portland and Augusta, have declared local states of emergency invoking powers only contemplated in times of crisis.

We are expecting that the emergency legislation being considered by the State Legislature tomorrow will include provisions suspending all or some of the FOAA requirements related to public meetings. For now, our best guidance as to how to handle meetings is as follows:

• Postpone non-essential board and committee meetings.
• If a meeting must be held, consider using Facebook Live, YouTube Live, or another streaming service. Remember that the public has the right to view all meetings, but not the right to speak (unless it is an advertised public hearing). For those members of the public who demand to attend in person, reduce risk by spacing out seating and/or providing a secondary room or location where the meeting will be streamed for those who do not have internet access from home.
• Members of boards who are particularly vulnerable due to age or underlying medical conditions may participate in the meeting by phone, Skype, Facetime, etc.. At this time, you should not worry if a quorum or majority of the board is participating remotely.
• (For town meeting towns only) If your annual town meeting falls within the next two months, consider having a special meeting only to make appropriations to fund municipal government as necessary to allow extension of the annual town meeting. Even if your charter requires that the annual meeting be held on a certain date, delay is very unlikely to impact the legality of the meeting whenever it is held. We expect this issue to be addressed by the Legislature.

Employee issues must be dealt with on a case-by case basis with an eye to consistent policies and fair treatment.

We will be in touch tomorrow evening or as soon as possible thereafter with clear, updated guidance following the Legislature’s vote. In the meantime, please do not hesitate to contact us with any questions.

Be well,

Stephen Langsdorf and Kristin Collins