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Consult the Negotiator is the podcast of Marc Siegel, a leading labor and employment attorney in Chicago. Marc’s podcast series focuses on strategies and tips for negotiation and settlement of disputes. Marc was kind enough to invite me on as a guest to discuss taking on utilities and power suppliers, and approaches to settlements with those types of adversaries. It’s the May 19, 2021 episode, so if you’d like to hear yours truly, please listen to Consult the Negotiator wherever you get your podcasts. Thanks!

UPDATE 5.24.2021: Here’s the link to the podcast:

https://lnkd.in/d26mKyc

Governor Abbott of Texas has blamed the Green New Deal for the prolonged power outages caused by the extreme cold and snow/ice conditions that have descended on his state.

Nope.

The Green New Deal is not legislation. It’s nothing more than a 2019 U.S. House of Representatives resolution. Beyond that paper resolution, it doesn’t exist.

Mad Magazine, the comic book, used to run a section called “Things We’d Like to See,” and the magazine would have some parody cartoons of then-current events. The Green New Deal is just a set of “things the U.S. House of Representatives would like to see” in energy and the environment. Granted, an H of R resolution is more serious than Mad Magazine, but the Green New Deal has about the same degree of reality. So, no, the Green New Deal did not do harm to Texas.

Even if some sort of Green New Deal had been passed, it would not have applied to the Texas electric grid. Texas is the grid’s version of an island; its electric system is all intrastate and subject only to Texas, not federal jurisdiction.

Texas had similar cold-induced power outages ten years ago. The feds studied those events and recommended that Texas harden its generation, transmission and distribution infrastructure for cold weather. But those recommendations had no binding effect on Texas. Maybe Texas will now put those recommended improvements in the category of “things we’d like to see.”

On August 18, 2020, I had the pleasure of speaking with Will Stephens, the host of Radio Station WXAN, regarding the recently filed civil RICO class action against Madigan, ComEd et al., filed in the U.S. District Court for the Northern District of Illinois. The link appears below:

Gorsuch

Justice Gorsuch, U.S. Supreme Court

Bostock v. Clayton County, U.S. Supreme Court Case No. 17-1618 (June 15, 2020), is without doubt a milestone in the history of civil rights in the United States. The U.S. Supreme Court made the right decision. As the several recent police murders of black Americans has shown, there remains much work to be done in achieving equal justice under law for all Americans. Still, with Bostock the LGBTQ community can take at least take some comfort that the law is moving in the right direction. In these dark days of the Trump administration, that’s saying something.

However, the media has gone overboard in its praise of Justice Gorsuch, who is Trump’s first appointment to the Court. In particular, the media expresses surprise that the decision was 6-3 for Bostock, the plaintiff. The media asserts that those Republicans who have defended Trump because they want reliably conservative judges on the federal bench must be very disappointed. And, in fact, some are.

Charlemagne crowning

Detail of Media crowning Justice Gorsuch [prematurely] Liberal Judge of the Year, 2020

Before the Gorsuch hagiography gets much deeper, remember that you heard it here first: at some future date Gorsuch will issue an opinion that will incense everyone who’s not a Republican. (I almost said “conservative Republican,” but that would be redundant.) When it comes to interpretation of statutes and the U.S. Constitution, Gorsuch is a self-proclaimed “textualist” or “textual originalist” in the same vein as the late Justice Antonin Scalia. Recall that at his confirmation hearings in 2018 Gorsuch refused to comment on whether he believes three landmark cases were correctly decided: Brown v. Board of Education, 347 U.S. 483 (1954) (prohibiting racial segregation in public schools); Griswold v. Connecticut, 381 U.S. 479 (1965) (married couples have a constitutional right to use contraception); and Eisenstadt v. Baird, 405 U.S. 438 (1972) (unmarried couples have the same constitutional right as married couples to use contraception).

Keep those cases in mind.

Textual originalists like Gorsuch and the late Scalia portray themselves as completely passive, absolutely objective interpreters of statutes and the Constitution because they restrict themselves to the words in the text of the statute or Constitution — nothing more, nothing less. Anything outside the text is off limits, especially the legislative history.

The “originalism” part derives from their claim that the words in the statutory or constitutional text must be given the meanings they had when the text in question became law. The Scalia/Gorsuch textualist school wants to be sure to use the meanings at the time the text was enacted because that’s the only way, in their view, that the original intent of the language can be maintained from age to age. Changes in the use of language cannot be allowed to corrupt the original meaning of the text.

Gorsuch’s opinion is an authentic result of a textual originalist’s reading of the text of the 1964 Civil Rights Act. Still, the decision has startled Trump’s Republican supporters who counted on his judicial nominees to sock it to groups that they don’t like, such as the LGBTQ community.

But the most serious consequences are yet to come. Brown v. Board of Education prohibited racial discrimination in public schools and did so on the basis of the 14th Amendment to the U.S. Constitution. But when the 14th Amendment was adopted in the years immediately after the Civil War, “equal protection of the laws” most certainly did not refer to prohibiting racial segregation. It referred to protecting the recently freed slaves from the depredations of the Ku Klux Klan. Cases such as Plessy v Ferguson, 163 U.S. 537 (1896), which upheld racial segregation on a “separate but equal” basis, make that quite clear. Brown implicitly overruled Plessy, holding that “separate but equal” is inherently unequal.

The problem for textual originalists like Gorsuch is that under their theory the 14th Amendment must be read and interpreted as it would have been understood during the period of Reconstruction after the Civil War. At that time, protection of the freed slaves from raids and lynchings by masked horsemen in the states of the old Confederacy was what the 14th Amendment was all about. Nothing in the 14th Amendment mandates a prohibition of racial discrimination. Accordingly, under the Gorsuch textual originalism doctrine, Brown v Board of Education was wrongly decided.

If Gorsuch gets the chance, I predict he’ll vote to overrule Brown v Board of Education.

And let’s not forget the other two cases Gorsuch refused to talk about at his 2018 confirmation hearing, Griswold and Eisenstadt.  The decisions upholding constitutional rights in these cases are based on a citizen’s right to privacy. You can read the U.S. Constitution and all the Amendments forwards, backwards and upside-down, and you will not find any “right to privacy” in the text.

Accordingly, under the Gorsuch textual originalist approach, Griswold and Eisenstadt were wrongly decided, and should be overruled. At some point in the future, with Gorsuch on the bench, we may soon be saying goodbye to the constitutional right to use contraception.

If ever there were an artful dodger, Gorsuch is it. Had he given straight answers to the questions asked during his confirmation hearing, he would have told them that he believed Brown, Griswold and Eisenstadt were wrongly decided and should be overruled. He has to either admit that or become an apostate to his own textual originalist faith.  Imagine the uproar if, instead of being the shriveling coward that he his, during his confirmation hearing Gorsuch had answered questions honestly and forthrightly.

As the say in the commercials, “but that’s not all!” One hundred years ago, the 19th Amendment gave women the right to vote. Voting and holding public office are two very different things. Nothing in the text of the U.S. Constitution contemplates that a woman might hold public office in the federal government. Search all you want, but all the references are to males. Any sensible person with two gray cells to his name would tell you that a woman can, indeed, become president of the United States or be elected to Congress. But if you’re Gorsuch, Hillary couldn’t be president even if she’d won the electoral college back in 2016. Why? Because the text of the U.S. Constitution nowhere mentions female federal office holders. Voting? Fine. Office-holding? Not under Gorsuch. Doesn’t that sound ridiculous? Certainly, but then again everybody thought Trump was a joke.

Remember, you heard it here first: the exaggerated praise of Gorsuch is sorely misplaced, and many from the center-right to the left will someday tear their hair and rend their garments over a bass-ackward textualist decision by Gorsuch.

 

The_Leopard

Burt Lancaster in the role of Don Fabrizio in the film The Leopard (1963)

These times remind me of the words of Don Fabrizio toward the end of Lampedusa’s novel The Leopard:

“Se vogliamo che le cose restino come sono, le cose dovranno cambiare.” (“If we want things to stay as they are, everything will have to change.”)

Last week we ran a post about lock-down beards. Alaina Demopoulos at The Daily Beast has a somewhat different take on the issue, and is well worth a read. Says Demopoulos: “With our new face-mask reality, it’s nearly impossible to pull one off.” You can read her article here.

 

For many guys, the current coronavirus lock-down has provided an opportunity to see how they look with a beard. For some it’s an experiment; for others, a protest. But there is a historical precedent for lock-down beards of which we should take note: namely, Pope Clement VII. Here’s a shot of him before he grew his lock-down whiskers:

Clement VII, a/k/a Giulio de Medici (1478-1534, and Pope, 1523-34), before growing his lock-down beard.

Born into the Medici clan, his early life had some rough spots. His father, Giuliano de Medici, was assassinated by the Pazzi conspirators right in the Cathedral of Florence (a/k/a Il Duomo) in the same year that his son, the future Clement VII, was born. They stabbed Giuliano nineteen times and then finished him off with a sword-blow to the head. The proverb “politics ain’t bean bag” may have originated around this time.

Back in Clement VII’s time, the pope was a secular as well as a religious leader, and the Vatican was the capital of certain lands and city-states in Italy now referred to as the Papal States. Back then it was called the Republic of St. Peter. This dual religious/temporal jurisdiction had long troubled reformers, including Martin Luther. 

In the 1520’s Charles V, a Hapsburg, had ascended to the Spanish throne and was also Holy Roman Emperor. He took the Holy Roman Empire business more seriously than his predecessors and wanted to unite Europe under his control. Charles’s growing power, together with the wealth flowing into his coffers from the New World, caused Clement VII to fear that the Emperor would try to dominate not only the Republic of St. Peter and the rest of Italy, but also the Church itself — not that Clement VII was looking for more problems to solve. The Holy See still hadn’t figured out exactly how to handle the Martin Luther problem. But Clement saw the Hapsburgs, who had forces to the north in Austria and to the west in Spain, as a bigger danger than an Augustinian monk in Wittenberg. Clement, in his temporal capacity, allied himself with France, then under Francis I, an enemy of Charles V. They called themselves the League of Cognac. The next time you’re at your favorite watering hole you can tell the bartender that cognac was a military alliance before it became a brandy.

War began.  

First there was bad news for Pope Clement and the League of Cognac. The forces of Charles V, Holy Roman Emperor, defeated the French forces near Pavia, in Italy. Then there was bad news for the Holy Roman Emperor: after winning that battle, he found that he didn’t have any money to pay his soldiers, so they threatened to mutiny. At first this looked like good news for Clement, but it became bad news when the Emperor agreed to march on Rome. Why? Because there was a lot of valuable, portable stuff in Rome that his soldiers could take as payment. Back then, pillaging conquered territory was an accepted technique for balancing the defense budget.

More than 30,000 Holy Roman Imperial troops, including some 14,000 from German principalities, started to march south to Rome. They got there at the beginning of May 1527. And when they got there, they unleashed the Renaissance version of shock and awe.

Depiction of the Sack of Rome, 1527

With only about 5,000 militia (citizen-soldiers with questionable training and even more questionable armaments) and around 200 Papal Swiss Guards, Rome was not well-defended. The Imperial forces breached the city’s walls on the first day and overran Rome’s militia. The Vatican’s Swiss Guard, though vastly outnumbered, put up one of the most memorable last stands in military history, holding off the Hapsburg troops so that Clement VII and his entourage could make their escape through a secret passageway to the Castel Sant’Angelo. Ironically, much of the Swiss Guard’s battle with Hapsburg troops took place in the Vatican’s Teutonic Cemetery. The passageway, known as the Passato di Borgo, is still there, though it’s no longer secret.

Swiss Guard

Vatican Swiss Guards, present day (do NOT make fun of their uniforms)

Churches, monasteries, palaces, shops and homes were looted and burned. The Vatican Library, with manuscripts and scrolls going back to the days of the ancient Romans, averted destruction only because one of the Imperial commanders, Philibert of Orange, decided to use it as his headquarters. Thus did many of the most important early writings of Western Civilization escape destruction by a hair’s breadth.

And speaking of hair’s breadths, this is when Clement VII started to grow his lock-down beard. As much as Charles V wanted to make war on the League of Cognac, he didn’t set out to conquer Rome, and as much as he disliked Clement VII, any king would think twice before ridding himself of a high-ranking priest, no matter how meddlesome. But locking down a pope is far short of killing him, and Charles V kept Clement VII prisoner in the Castel Sant’Angelo for the better part of a year. During his imprisonment Clement VII grew a full beard as a sign of mourning for the sack of Rome:

Pope Clement VII with lock-down beard.

Clement’s beard may not seem like a big deal, but one has to see it in context. Canon law required priests to be clean-shaven. Then again, Pope Julius II, the “warrior pope,” had worn a beard for nine months in 1511-12 as a similar sign of mourning for the loss of Bologna, one of the papal cities. Unlike Julius II, though, Clement VII kept his beard until his death in 1534. Clement VII never knew it, but he started a papal fashion trend in facial hair. His immediate successor, Paul III, and another two dozen popes down to Innocent XII, who died in 1700, all wore beards.

The 1527 sack of Rome is mostly forgotten now, but its consequences were immense. The largest overall consequence was a power shift away from Rome and towards the Emperor Charles V. The Emperor was able to impose his will on the Holy See. The most famous consequence of this was Clement VII’s refusal, at Charles V’s direction, to annul the marriage of King Henry VIII of England to Catherine of Aragon so that Henry could marry Ann Boleyn. Catherine’s nephew was none other than Charles V himself, and he was not about to let his aunt be so humiliated. The English Reformation followed. 

Charles V also imposed on the Church a greater degree of orthodoxy than had been the case under Clement VII. Recall that the Church was still processing its reaction to Martin Luther. The Hapsburg domination changed all that. The Counter-reformation began in earnest, and under Charles V the influence of the Holy Inquisition became pervasive throughout Catholic Europe.

Spanish Inquisition

Well, somebody might have been expecting it.

Any chance that Luther and his followers might be brought back within the Church was extinguished, and the division between Catholics and Protestants in Europe became permanent.

So as you admire your lock-down beard in the mirror, remember that these things have some interesting and significant historical precedents. 

Oil_2

Roll out the barrel, we’ll have a barrel of fun…

Around April 20 there were headlines about oil “going negative.” However, it’s easy to read too much into the headlines: no gas station was going to pay consumers to fill up their tanks.

What really happened was that the NYMEX West Texas Intermediate (WTI) May (then the prompt month) futures contract went down to negative $37.63 per barrel. That’s the first time that the WTI contract had ever gone into negative territory, so it was an extraordinary event by any standard. Still, only the May contract went negative; contracts for later months, June, July, etc., were still positive.

Several factors came together to push the May WTI futures contract price below zero, chief among which was the precipitous drop in demand for oil due to the coronavirus pandemic. Energy-intensive economies around the world ground to a halt. Car and truck traffic fell off sharply, as did air traffic. The decline in oil use meant that refineries cut back on output, and therefore purchased less. As if that were not enough, shortly before the coronavirus lockdowns hit full force, Saudi Arabia and Russia failed to agree on oil production quotas. That started an oil price war that flooded the international market with a huge oversupply of crude oil. Oil storage facilities around the globe started to reach maximum capacity. That’s important for the NYMEX WTI contract because it’s physically settled, meaning that if you hold a buy (long) contract that’s still open (i.e., not offset by a sell (short) contract), you have to take physical delivery of the huge quantity of petroleum represented by that contract. By way of comparison, the Brent futures contract, the other oil benchmark, didn’t follow WTI into negative territory; unlike the physically-settled WTI futures contract, the Brent is cash-settled against the Brent index price. Storing oil costs money. The oil supply glut meant that traders holding May WTI contracts had to settle out at a negative price because the commodity had become a liability rather than an asset.

Historically, oil prices have always been subject to big ups and downs. Back in July 2008, Brent crude traded at $147.27/bbl. By December 2008, that price had fallen to $30.28/bbl. Petroleum price stability is the exception, not the rule.

Generally speaking, demand and supply in the oil market are relatively inelastic, meaning that a price increase doesn’t immediately translate into a decrease in consumption because oil is difficult to replace quickly as a fuel or industrial commodity. Likewise, if oil prices fall, supply doesn’t immediately fall far enough to bring prices back up. The marginal cost of continuing to run existing oil wells (as opposed to the very high cost of bringing a new oil field into production), and the cost of plugging a well and then reopening it in the near term, mean that oil supply will not fall off radically when there’s a price drop. Oil supply and demand changes do have effects over the medium- and long-term, though. For example, back in the 1970s oil price shocks resulted in much higher prices to consumers, but prices did go back down. But those price shocks caused a shift away from oil as a generating fuel for electricity over the long term, as natural gas and nuclear power became favored generation types.

The history of oil prices is largely a history of attempts by oil producers to control the price by controlling supply. The most recent of these attempts was the failed negotiations between Russia and Saudi Arabia regarding output reductions in order to maintain price levels. Over the past twenty to twenty-five years, Saudi Arabia, with the largest readily accessible oil reserves, has played the role of swing producer. In the early 20th century, Rockefeller’s Standard Oil played that role. A swing producer can turn the oil spigot on or off to keep prices stable. And price stability is key because it helps to ensure a consistent long-term demand. If demand starts to rise quickly, the swing producer will provide additional supply. If demand starts to fall, it will cut back. But the swing producer (say, Saudi Arabia) is not the only seller in the market, and as the swing producer tries to exercise countervailing price pressure to maintain price stability, its competitors will step in to capture marginal sales on the way up or down. Being a swing producer is very expensive proposition, and the allure of capturing marginal sales while the swing producer bears the cost is one of the reasons why cohesion is so elusive for cartels like OPEC.

Pills

Diagnostic and Statistical Manual of Lockdown Disorders VII (DSM-VII)

Zoomarensis Nocturnitas
The most common variants of this disease take the form of delusions, hallucinations or nightmares in which the patient imagines he is surrounded by the disembodied heads of persons known in waking life, usually from the office. As these hallucinations progress, the talking heads appear to increase in number, and ultimately all of them begin to speak at once in a mass of unintelligible voices. Affiliated symptoms include cold sweats, respiratory difficulties, paranoia, delusions, and, when the sufferer finds that he cannot “mute” any of the talking heads, eventual insanity. The Lancet and the New England Journal of Medicine have reported mutations of this disease, such as googlehangoutatitis and retrograde skyperrhea. Extreme cases can result in unusual symptoms such as a pixelophobia, which is the acute fear of computer screens. No cure exists.

Primenesia Gravis
This disease is caused by the bezosia jeffus bacillus (definitely cone-shaped), which is thought to have made the jump to humans in the jungles of the Amazon. Teams from the Center for Disease Control theorize that bezosia jeffus entered the United States on the surface of a cardboard box left on someone’s front porch. Symptoms range from mild to severe, but all involve variants of the obsessive/compulsive ordering goods on the internet followed by a complete loss of memory of having ordered anything at all. The incubation period can be short as the time it takes to look at “Today’s Deals.” Some acute cases have resulted in creditcardiac arrest following subsequent delivery of regular mail.

Necrotizing Fascistitis
This virus was originally spread by television advertisements on Fox News for the sale of nutritional supplements and gold bullion, but has now been found to be readily transmissible by Fox News hosts, who can infect anybody. Once the human body has been infected, the virus swiftly infects all brain cells, eventually resulting in the clinical death of most of the host’s brain functions. In no case, however, has the victim’s desire or ability to buy guns and ammunition been impaired. The disease has a very short incubation period of around four hours, spread across prime time on weeknights. After the host becomes clinically brain-dead, they will suddenly be revitalized and will wake up and exhibit hyperactive, zombie-like behavior. This includes an intense desire to visit state legislatures while armed with M-16’s. If caught early enough, the progress of necrotizing fascistitis can be slowed, and in some cases reversed, by nightly injections of 50 cc’s of rachelmaddowsevir, or, in the alternative for bad cases, very small doses (5 milligrams or less) of the very powerful keitholbermanatastin.

Manchurian_Cand

The 1962 Spy Thriller

“Why don’t you pass the time by playing a little solitaire?”

In the 1962 thriller The Manchurian Candidate, a U.S. Army platoon is captured during the Korean War and taken to China. There, the platoon is brainwashed by Chinese and Soviet spymasters into believing that their sergeant, Raymond Shaw, rescued them all from the hands of the enemy. Not only that, everyone in the platoon believes (and repeats) that Shaw “is the kindest, bravest, warmest, most wonderful human being” any of them have ever known in their lives. Shaw is awarded the Congressional Medal of Honor. The nefarious Communist plot is to turn Shaw into a sleeper agent who will rise through the U.S. intelligence and political establishments. Once he’s in place, the Chinese can trigger him by suggesting that he play a little solitaire. When Shaw turns over a red queen, the sleeper agent is activated.

Fast forward to May 1, 2020: The Trump Administration issued Executive Order 13920, Securing the United States Bulk Power System.

The Executive Order acknowledges that the U.S. bulk-power system (shorthand for the interstate electricity transmission system) is a target of foreign adversaries of the U.S. who seek to commit malicious cyber- and other attacks on our bulk-power system. Historically, blackouts in the U.S. have affected areas or regions, but none have stretched from coast to coast. Still, anybody who has been through a blackout knows that the failure of the electricity grid is catastrophic, no matter how localized the outage. Electricity is the unnoticed platform that supports modern civilization itself.

The Executive Order prohibits the unrestricted acquisition or use in the United States of any bulk-power system electric equipment designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries. Any such acquisition or use is a “transaction,” and such transactions are prohibited even if any related contract, license or permit was entered into or granted prior to the date of the order. (Executive Order 13920, Sec. 1(c)).

The order itself doesn’t name the foreign adversaries with whom transactions are prohibited, but the State Grid Corporation of China, the world’s largest utility, most likely tops the list.

State Grid has been on an acquisition binge for several years. As far back as 2012, State Grid became the largest shareholder in Redes Energeticas Nacionais, Portugal’s national power grid. In 2013, State Grid began acquiring interests in utilities and transmission and distribution networks in Victoria and New South Wales, Australia. In 2014, State Grid took a substantial equity stake in Italy’s CDP Reti, which operates both electricity and natural gas networks. Brazil, Laos and some countries in central Africa have also been recipients of State Grid’s interest, in particular with regard to the development of ultra-high voltage transmission facilities that can transmit power over very long distances with relatively lower line losses. (There are still line losses, however.) Many have viewed Beijing’s rapid international expansion of its electricity industry as a geopolitical companion piece to its Belt and Road Initiative.

Xi_Jinping

Presiden Xi Jinping of the People’s Republic of China

A Manchurian Capacitor (used to improve power factors) is a distinct possibility. If China were to build into the grid equipment it sells in the U.S. sleeper mechanisms that could cause a breakdown in our electrical grid, the effects would be catastrophic on a historical scale. But even short of this, a threat by China to trigger a grid failure in the U.S. would be much more plausible, and therefore much more effective, than a threat made with ICBM’s that could end China’s existence as well as ours.

Executive Order 13920 signals a fundamental change in the perception of China since the outbreak of the global Covid-19 health crisis. Nobody wants electric grid equipment that Xi Jinping can tell to go play a little solitaire.