Vermont and the Supreme Court: A Guest Post by Representative Thomas Koch

Rep. Thomas F. Koch

Barre Town

“Scribblings”

An Occasional Newsletter from the Legislature

January 22, 2012

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I hate to say “I told you so,” but….

In 1997, the legislature passed a new campaign finance law, severely restricting both contributions and expenditures permitted in Vermont elections. The restrictions were, for most offices, totally unreasonable, without any inflation factor for future years, and in clear and absolute contravention of the 1976 United States Supreme Court decision in the case of Buckley vs. Valeo, which held that for the exercise of First Amendment rights in this day and age, it is often necessary to spend substantial amounts of money, and that many campaign finance restrictions, therefore, were unconstitutional.

During the debate, I quoted the Buckley case, and the answer I received was that the committee was well aware of that case, but that it was 20 years old, and the committee thought it was time for the Supreme Court to reconsider the case, and the bill before us was designed to set up the necessary challenge to Buckley. Obviously, the committee was totally unaware that in constitutional law, 20 years is like yesterday, and there was absolutely no reason to believe that the Supreme Court was inclined to change its mind.

Eventually, the bill passed, with only 17 negative votes in the House, mine being one of them. The court challenge eventually came, it went up to the Supreme Court, Vermont lost, and the Court threw out most of Vermont’s 1997 law. No surprise there. But in certain federal cases, including cases based on constitutional claims, the loser often has to pay the attorney fees of the winners. In this case, the state paid about $1.5 million—a rather poor use of the taxpayers’ money for what was a thoroughly improvident escapade in the first place.

One would think we would have learned our lesson. Don’t be silly.

In the February 1, 2008 issue of “Scribblings,” I wrote:

Then there is the subject of data mining, which is the practice of the pharmaceutical industry trying to determine which drugs physicians are prescribing, and then using that information to approach the physicians and persuade them to prescribe a particular manufacturer’s drug instead. It is a practice that I do not like and believe should be outlawed or severely restricted.

The problem is that the State of New Hampshire was the first to outlaw data mining. They got sued, and last spring the federal district court in New Hampshire declared their law unconstitutional. That just happened to be the same week our legislature was about to vote on a copycat data mining law. Faced with the likelihood that a copycat law in Vermont would meet the same fate as New Hampshire’s law, the health care committee pulled the bill back into committee and, with the help of the Attorney General, “tweaked” the bill, which the Attorney General then pronounced “defensible.”

There were those of us who urged caution and suggested that we ought to wait until the New Hampshire case had fully run its course through all appeals before adopting a law in Vermont. We suggested that the tweaked version was not so different as to avoid a court challenge, and that such a challenge—win or lose—would be very expensive. Nevertheless, the majority proceeded full steam ahead and voted for the bill.

Meanwhile, Maine also adopted a similar law, less strict than either New Hampshire’s or Vermont’s. Not surprisingly, the pharmaceutical industry sued Maine, and the federal district court in Maine, concluding that the drug companies would likely prevail at a trial on the merits, issued a temporary injunction preventing Maine’s law from taking effect.

Vermont has now been sued as well, and it is costing us dearly. The Attorney General has seven attorneys in his civil litigation division, four of whom are known to be working on this case, at least part time. That is a substantial allocation of limited resources. In addition, the budget adjustment bill that passed the House this week contains $117,000.00 to pay expert witnesses for this case, and the case is just beginning.

The Attorney General has now come to the legislature suggesting some amendments to make this “defensible” law even “more defensible!” Seeing the handwriting on the wall, the AG is asking that we re-write the law before we lose the case! But even with these amendments, the AG now advises that this is “an uphill fight.”

So the question is why are we looking for this fight in the first place? What do we have to gain? The theory is that if we can prevent data mining, then we can prevent the use of the data for marketing purposes, and if we can restrict marketing and advertising, we can drive down the price of drugs. The trouble with that theory is that it is untested, and as the New Hampshire court concluded, there is no evidence that it will work.

If our only gain is speculative cost savings, what are the risks? First, the lawsuit will be expensive just to present Vermont’s case. The current tab of $117,000.00 for expert witnesses will undoubtedly grow, and lawyer time, depositions, travel, and other expenses need to be considered. Half a million dollars is not an unreasonable estimate. And if we lose, the law requires that we reimburse the drug companies for their attorney fees and other expenses in challenging the law. We need to remember that just a year ago, we lost a challenge to our campaign finance law, and we had to pay $1,500,000.00 to the challengers. We could end up doing so in this present litigation.

I have a suggestion. Rather than amend the data mining law, repeal it! The drug companies would have to drop their lawsuit, and we could cut our losses. Then wait to see how the New Hampshire and Maine cases finally turn out after all appeals have been taken. That should give us some pretty good guidance as to what we can and cannot do to limit the practice of date mining. Once we have that guidance, re-enact a law that follows the court’s guidelines and takes the maximum permitted action to restrict data mining. That way, we may avoid a new lawsuit, and even if we do get sued, the new law will be most likely to survive the challenge. I intend to offer such a repeal amendment next week, but I predict that I will not be successful. It seems that we enjoy being sued!

Guess what. The Attorney General took his “defensible” case to the Supreme Court…and lost. So far, we have received claims for legal bills from the drug companies who challenged the Vermont law in excess of one million dollars, and this week, the House voted to add $3,000,000 to the “state insurance liability fund” (now there’s a euphemism if I ever heard one!) to cover “pending or possible” liabilities.

Think we’re finished? Not a chance. You’ve no doubt heard that Vermont lost its Entergy Vermont Yankee case in Federal District Court and that Vermont Yankee will not be closing in March, as planned by its opponents, including Governor Shumlin. Because nuclear safety issues are solely the province of the federal government, and Judge J. Garvin Murtha found that the law Vermont was using to close down Vermont Yankee was predominantly motivated by safety concerns, he ruled that the Vermont legislature could have no legitimate role in the matter of relicensing the nuclear plant, and the matter should be handled by the Vermont Public Service Board.

Here’s what I wrote in “Scribblings” on January 10, 2010:

We have established processes to decide contested public utility cases. The Public Service Board is a three-member board appointed by the governor and confirmed by the Senate, which has special qualifications and experience with public power and utility issues. The board is appointed to act in a judicial-like capacity, finding facts after formally hearing the evidence, applying the law to the facts it has found to be true, and ultimately determining whether granting the applicant’s petition is or is not in the “public good.” An applicant and other interested parties, both pro and con, present their cases before the Public Service Board. The public is formally represented by the Public Service Department. Eventually, the PSB makes its decision. But in the case of licensing or relicensing a nuclear plant, the PSB is prohibited from making a decision—for or against the applicant—unless the legislature flashes the PSB a green light.

So what, one might ask, does the legislature really know about nuclear plants? What special expertise do the 150 members of the House and 30 members of the Senate have? Why should the legislature hold the ace of trump, to play or not to play at will? I would argue that we have no such expertise, and that we should not be involved in the process in the manner that we are. Forty-nine other legislatures have seen fit to respect established processes; only the Vermont legislature thinks it is the repository of all wisdom.

I trust that the established process will work to the benefit of all Vermonters if we allow it to, and for that reason, I am prepared to vote to get out of the way and allow the PSB to do the job it was appointed to do.

Now that Judge Murtha has sent the question of relicensing back to the PSB and other established regulatory agencies, we are waiting to find out if the Governor and the Attorney General will decide to appeal. In view of the fact that legislative involvement in the relicensing process was improvident in the first place, that few legal authorities are surprised by Judge Murtha’s decision, and that his 102 page opinion has been described as very detailed and well reasoned (not to mention the Attorney General’s track record in the Supreme Court), they would be little short of crazy to file an appeal.

By the way, expect Entergy to send the state its legal bills, which will probably be in excess of two million dollars!

One might hope that by now we have learned our lesson, but I have no confidence that we have done so. I am absolutely fed up with the idea that Vermont must “lead the nation,” that we need to be David slaying Goliath, and that we should waste the taxpayers’ hard-earned dollars in fruitless legal challenges that any good lawyer will tell you up front are losing causes.

As I said at the beginning, “I don’t like to say ‘I told you so,’ but…” the fact is, I did.

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This "Scribbling" also appeared in Vermont Tiger.

Representative Koch puts the current court case in the perspective of other Vermont attempts at redefining the Constitution.

Other Vermont reviews of this case include:

"But He Sure Can Take a Punch. Sorrell Comes Out of His Corner for Another Round" by Todd Smith at Vermont Tiger.

Legal Bills, by John McClaughry at Vermont Tiger.