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February 22, 2021

Has COVID-19 affected the value of your commercial real estate?

The pandemic and the recession have had an unwelcome impact on the market value of many types of commercial real estate.  In particular, properties used for entertainment, hospitality, retail, restaurants, office complexes, nursing homes and assisted living facilities may have assessments that are higher than the actual current market value of the real estate.

March 31, 2021 is the deadline to assert an annual real estate tax assessment appeal in the state of Ohio and in Allegheny County, Pennsylvania.  The deadlines for the rest of Pennsylvania’s 67 counties fall between August 1st and October 4th.

If you believe that your property may be over-assessed, it is worthwhile evaluating whether a tax assessment appeal is warranted.  Babst Calland has a strong track record of assisting commercial property owners with real estate tax assessment appeals.  We would be happy to discuss your property’s performance, review the current assessment, and give you our thoughts as to whether an appeal may be warranted.

For more information, please contact Peter Schnore at pschnore@babstcalland.com or Meghan Moran at mmoran@babstcalland.com.

February 17, 2021

PHMSA publishes gas regulatory reform final rule

The PIOGA Press

(by Keith Coyle and Ashleigh Krick)

On January 11, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a final rule amending the gas pipeline safety regulations at 49 C.F.R. Parts 191 and 192. Adopted as part of the Trump administration’s efforts to reduce or eliminate unnecessary regulatory burdens, PHMSA estimates the final rule will result in approximately $130 million in annualized cost savings for pipeline operators. Although the effective date of the final rule is March 12, the agency provided a deferred compliance date of October 1, 2021, for the new amendments.

Additional information about the final rule is provided below.

Distribution integrity management program exemptions and farm taps

Consistent with the policy announced in PHMSA’s March 2019 Exercise of Enforcement Discretion, the final rule provides operators with the option to maintain pressure regulating devices on farm taps under either the distribution integrity management program (DIMP) requirements or 49 C.F.R. § 192.740. The final rule exempts farm taps originating from unregulated production and gathering pipelines from the DIMP requirements, the overpressure protection inspection requirements in § 192.740 and the annual reporting requirements in Part 191. The final rule does not amend PHMSA’s regulations to provide additional clarity in determining what qualifies as a farm tap or where production, gathering or transmission piping ends and distribution service line piping begins in farm tap configurations. The agency stated that these definitional issues will be addressed in a guidance document that remains under development or in a future rulemaking proceeding. In the preamble to the final rule, PHMSA emphasized that any portion of a farm tap originating from an unregulated pipeline that meets the definition of service line must still comply with all applicable Part 191 and 192 requirements. (Editor’s note: For background on PHMSA’s farm tap guidance, see the...

February 11, 2021

Venture debt: Determining when it’s the right path for your business

Smart Business

(by Sue Ostrowski featuring Michael Fink)

For startup companies lacking the cash flow or liquid assets to obtain a traditional bank loan, venture debt could be the answer to help elevate them to the next level.

“Startups often lack many of the characteristics that would give traditional lenders comfort that a regular commercial loan would be a good deal for them,” says Michael Fink, attorney at Babst Calland. “Venture debt can be an alternative to help bridge the gap to a company’s next valuation.”

Smart Business spoke with Michael about how taking on venture debt can keep a business moving forward without decreasing its valuation.

What is venture debt, and how is it structured?

At its core, venture debt looks similar to other commercial debt a company may incur; it may be structured as a term loan or line of credit, or an option to draw on either. The startup generally may choose the facility it feels best fits its needs.

However, because it’s a riskier loan for lenders, venture debt terms are generally more favorable to the lender than those of traditional loans. Borrowers can expect an interest rate higher than the prime rate (5 to 15 percent being common), more lender control rights and expanded negative covenants, prohibiting, for example, making large purchases or divesting a line of business without the lender’s consent.

Venture debt’s availability is based primarily on a company’s ability to raise future equity rounds, so venture debt lenders often require a small equity component in exchange for the higher risk the lender is taking on. For example, the lender may receive a warrant to purchase either common equity or the preferred equity to be issued in the next fundraising round, typically at a discount.

When should a company consider pursuing venture debt?

Venture debt typically isn’t available until a company has...

February 11, 2021

Court: Township Has No Standing to Enforce Neighbor’s Conservation Easement

The Legal Intelligencer

(by Anna Jewart and Krista-Ann Staley)

Zoning regulations, although important, are not the sole restrictions on land use. Property owners and a variety of entities may agree to impose additional private restrictions on specific pieces of land. These private restrictions can create confusion regarding who, between the parties to the agreement and the municipality, has the authority to interpret and enforce their terms. The Pennsylvania Commonwealth Court recently issued a detailed, albeit nonprecedential, opinion addressing this type of scenario in Naylor v. Board of Supervisors of Charlestown Township, No. 659 C.D. 2018 (Pa. Cmwlth. Jan. 7, 2021). In Naylor, the court addressed a decades-long disagreement over the scope of a conservation easements. Among its holdings, the court concluded a township did not have standing to enforce a private conservation easement, even when it owned a separate parcel subject to the same easement. Naylor is a good reminder that municipal regulations and private agreements are distinct matters with independent enforcement mechanisms.

Easements are a common form of private land use restriction. An easement is a nonpossessory interest of a holder in real property, imposing limitations or affirmative obligations on property called the “servient” estate. Conservation easements are designed for certain “conservation” purposes, such as protecting the natural or scenic values of real property; assuring its availability for agricultural, or recreational use; protecting, or managing the use of natural resources; or maintaining land, air, or water quality.

In Pennsylvania, conservation easements receive certain statutory protections under the Conservation and Preservation Easement Act, 32 P.S. §§5051 et seq., (Easement Act). Enacted in 2001, the Easement Act sets forth requirements for the interpretation, construction and enforcement of conservation easements. Conservation easements created before the Easement Act are typically reviewed under the common law rules of construction, the same rules applicable to contract interpretation.

Naylor involved a long history...

February 3, 2021

Pennsylvania Business Central 2021 Top 100 People

PA Business Central

This has been a year like no other! Our annual Top 100 People edition highlights the vibrant economic and social life of central Pennsylvania by honoring the people who make it happen. When goods or services are delivered in an efficient and timely manner, expertise and knowledge brought to bear on a problem, or necessary care provided, it’s not just the businesses and the institutions – but the people behind them that get the job done. We all know that powerhouse individual – the person with the vision, dedication and drive to not only complete the task, but to envision, expand and excel. We are fascinated by the impact a single individual can have on their workplace, their community and the lives of those around them. The stories of these individuals can provide instruction, inspiration and the motivation to raise our own standard of excellence. That is why we take great pride in bringing you Pennsylvania Business Central’s Top 100 People for 2021!

As always, we reached out to community leaders, local chambers of commerce, and you, our loyal readers, to identify those individuals whose unique contributions have set them apart as leaders. We received a wealth of nominations that reflect the rich diversity of central Pennsylvania and its business community. So many deserving nominations in such a challenging year, that we had to expand our list of honorees – and so we are proud to honor 120 outstanding leaders in this year’s edition!

In selecting this year’s honorees, we wanted to show the full spectrum of leadership – from the small entrepreneur to the CEO of a large corporation – that helps shape our communities and our lives. And while every story is unique, we think you’ll find that these honorees share a dedication to hard work, dynamic...

January 28, 2021

OSHA in 2021: Planning for the Year Ahead

The Legal Intelligencer

(by Brian Lipkin)

In 2021, employers can expect a few significant developments from the Occupational Safety and Health Administration (OSHA):

COVID-19 Standards. Currently, to decide whether an employer has taken proper COVID-19 measures, OSHA typically applies the “general duty clause,” which is the “catch-all” section of the Occupational Safety and Health Act. The general duty clause requires a workplace free from recognized hazards, to protect employees from death or serious physical harm.

Currently, OSHA also applies its existing standard on respiratory protection. This standard focuses on whether an employer has identified appropriate protective equipment, issued it to employees, and trained them to use and maintain it properly.

So far, there are no OSHA standards specific to COVID-19. In the near future, we expect that to change.

On Jan. 21—his first full day in office—President Joe Biden signed an executive order on protecting worker health and safety. Biden ordered the Secretary of Labor to consider issuing emergency COVID-19 standards by March 15. In particular, Biden directed the Secretary of Labor to consider ordering employees to wear masks in the workplace.

We expect the new standards will require employers to develop written plans to limit COVID-19 exposures in the workplace. These plans will likely require employers to identify potential risks, and outline mitigation strategies.

Biden also ordered the Secretary of Labor to issue updated COVID-19 guidance for employers by Feb. 4.

OSHA will release the new standards and guidance on its website at osha.gov/coronavirus.

Targeted Enforcement. Currently, OSHA prioritizes two types of workplaces for COVID-19 enforcement: hospitals and health care providers that treat COVID-19 patients; and workplaces with high numbers of complaints or known COVID-19 cases.

These priorities are consistent with the breakdown of complaints OSHA has received. As of Jan. 24, OSHA had received the most complaints on the health care industry: a total of 2,939. Retail stores, restaurants,...

January 28, 2021

EPA Releases and Requests Public Comment on Interim Guidance for Destroying and Disposing of Certain PFAS

Environmental Alert

(by Matthew Wood)

On December 18, 2020, the U.S. Environmental Protection Agency (EPA) released for public comment interim guidance on the destruction and disposal of per- and polyfluoroalkyl substances (PFAS) and materials containing PFAS (Interim Guidance; available for download here).  PFAS are a large group of manmade chemicals that have been used in wide-ranging consumer, commercial, and industrial applications since the 1940s and more recently have been discovered in various environmental media (e.g., drinking water sources), plants, animals, and humans.  Because PFAS do not tend to break down naturally, and evidence suggests that exposure to PFAS chemicals can lead to adverse health effects, developing methods to treat, dispose of, and destroy PFAS has been viewed by stakeholders as a necessary step to address PFAS in the environment.

The Interim Guidance, which EPA was statutorily obligated to publish within one year of the enactment of the National Defense Authorization Act for Fiscal Year 2020 (FY20 NDAA), discusses certain treatment and disposal technologies that may be effective in destroying or disposing of PFAS and PFAS-containing materials.  More broadly, it represents another formal step EPA has taken to address PFAS in the environment, coming nearly two years after EPA released its PFAS Action Plan.

In addition to providing a background on PFAS, the Interim Guidance generally covers four topics: (1) the PFAS and PFAS-containing materials to which it applies; (2) the applicable destruction/disposal technologies; (3) considerations for potentially vulnerable populations living near destruction/disposal sites; and (4) ongoing and planned research and development.  The Interim Guidance is based on currently available research and science, which is limited.  As such, EPA has identified knowledge gaps, uncertainties, and research areas that, if resolved, would inform future recommendations.  As EPA continues to conduct research and accumulate information, the regulated community can expect the agency to revise...

January 27, 2021

Explore Solvaire: Babst Calland’s Affiliated Alternative Legal Service Provider

We understand the unprecedented challenges facing our organizations. Now, more than ever, we realize how critical it is for our clients to seek cost efficiencies while making legal, operational, financial and ‘game changing’ business decisions.

Solvaire, Babst Calland’s affiliated Alternative Legal Service Provider – with its enhanced AI-enabled processes and machine learning capabilities – can help to increase efficiency, while lowering project costs. For more than 21 years, Solvaire has effectively designed, performed, and implemented complex buy-side diligence projects, discovery projects and tailored document management solutions. Solvaire’s track record and satisfied clients speak for themselves.

Check out Solvaire’s new website and request a free consultation to learn how Solvaire can work with your team to provide superior diligencediscovery and document management services – on time, with accuracy and consistency and within a budget that provides price certainty.

To stay informed about Solvaire news, latest case studies and content, as well as innovative business and technology enhancements, sign up for updates here.

Explore Solvaire, and unlock the value it provides.

On behalf of Babst Calland and Solvaire, we look forward to serving you on your next project.

Chris Farmakis Chairman, Babst Calland President, Solvaire

January 25, 2021

California Announces the Opening of the Vehicle Fleet Reporting System for Entities with Operations in the State

Environmental Alert

(by Julie Domike and Gina Falaschi)

On January 15, 2020, the California Air Resources Board (CARB) announced the opening of the reporting system for the Large Entity One-Time Reporting Requirement for vehicle fleet owners. This reporting requirement was passed by CARB as part of its June 2020 adoption of the Clean Trucks Rule. As the California Office of Administrative Law (OAL) has not yet approved the regulation, businesses may voluntarily provide information at this time if they wish to begin the reporting process ahead of the April 1, 2021 deadline.

The Large Entity One-Time Reporting Requirement seeks to gather information about how medium- and heavy-duty vehicles are being operated by individual fleets and entities in order for CARB to: (1) determine where zero-emission vehicles may now be suitable; (2) identify the barriers to adoption of zero-emission vehicles; and (3) define necessary vehicle characteristics to meet different fleet needs.

Many businesses, organizations, and government entities must comply with this requirement on or before April 1. An entity must report if it operates a facility in California and: (1) had more than $50 million in revenues in 2019 from all related subsidiaries, subdivisions, or branches, and has at least one vehicle; (2) owns 50 or more vehicles; (3) dispatches 50 or more vehicles into or throughout California; or (4) is a government agency (federal, state, local, and municipalities) that has at least one vehicle. This reporting requirement applies to owners of on-road vehicles with a manufacturer gross vehicle weight rating (GVWR) greater than 8,500 pounds; light-duty vehicles, such as cars and small pick-ups, are not covered by this requirement.

The report must contain general information about the entity and its operations, as well as information about the vehicles it owns and operates. This includes basic information about the vehicles (including off-road yard...

January 15, 2021

Navigating business continuity in a new era

Pittsburgh Business Times

Nothing highlights the urgent need for business continuity planning like a devastating, prolonged global pandemic.

Without question, this global pandemic has forced businesses, large and small, to face and adapt to a new normal. They've had to deal with state­ mandated closures, layoffs, employee safety threats, new remote work environments, cybersecurity concerns, supply chain interruptions, real estate lease adjustments, and a myriad of other serious business continuity challenges.

Many of those same issues will haunt the business community this year and possibly beyond, even amidst what one might hope would become a strong post-pandemic period of recovery. And that, said Don Bluedorn, managing shareholder and environmental attorney of Pittsburgh law firm Babst Calland, is why more businesses need to consider a longer-term view of their future - including adaptable disaster plans that take into account business continuity in times of unexpected disruptions.

Bluedorn spoke recently with the Pittsburgh Business Times about business continuity planning.

"This has been a unique year," said Bluedorn, who not only advises businesses but also has had to confront the pandemic himself as chief executive of one of Pittsburgh's largest law firms. "There's an old saw that 'tough times don't last, but tough people and tough businesses do. And I think that's certainly true during this pandemic and the difficult economic construct we all have had to face."

Business Continuity: Pre- and Post-Pandemic

Of course, Bluedorn was quick to point out the importance of ongoing business continuity or disaster planning even without the cloud of a pandemic hovering overhead.

"A SWOT analysis of strengths, weaknesses, opportunities and threats still applies," he said. "But I think people need to look more broadly than that now. Certainly, from my perspective, looking at the legal and regulatory implications that have arisen as a result of the pandemic are critically important. I also...

January 14, 2021

EPA issues draft guidance for ‘functional equivalent’ test for point source discharges to surfacewater through groundwater

The PIOGA Press

(by Lisa Bruderly)

On December 10, the U.S. Environmental Protection Agency (EPA) issued for public comment its draft guidance regarding the U.S. Supreme Court’s County of Maui “functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closed on January 11.

In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that an NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020, decision and its far-reaching implications in the May 2020 PIOGA Press article “Potential Clean Water Act liability extends to discharges to groundwater that reach surface water.”

The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:

Transit time; Distance traveled; Nature of the material through which the pollutant travels; Extent to which the pollutant is diluted or chemically changed as it travels; Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source; Manner by or area in which the pollutant enters the navigable waters; and Degree to which the pollution (at that point) has maintained its specific identity.

Emphasis on threshold requirements for NPDES permits

The draft guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether an NPDES permit is required under a limited number of scenarios. In fact, EPA devotes much of the eight-page draft guidance to discussing the following two threshold conditions that trigger NPDES permitting:

...

January 14, 2021

U.S. Fish & Wildlife Service finalizes ‘habitat’ definition under Endangered Species Act

The PIOGA Press

(by Robert Stonestreet)

On December 16, the United States Fish and Wildlife Service adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411. The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area. The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations.

The Service proposed two potential “habitat” definitions in August 2020 for public comment. In the final rulemaking, the Service chose to adopt a “habitat” definition markedly different than the two definitions proposed for public comment back in August. The adopted definition reads as follows:

For the purposes of designating critical habitat only, habitat is the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.

According to the Service, abiotic means “derived from non-living sources such as soil, water, temperature, or physical processes” and the term biotic means “derived from living sources such as a plant community type or prey species.” The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”

Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:

     Primary Proposed Definition: The physical places that individuals of a species depend upon to carry out one or more life processes. Habitat includes areas with existing attributes that have the capacity to support individuals of the species.

     Alternate Proposed Definition:...

January 14, 2021

President signs law reauthorizing federal pipeline safety program

The PIOGA Press

(by Keith Coyle and Brianne Kurdock)

On December 27, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law. Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multiyear effort to reauthorize the nation’s federal pipeline safety program. The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.

The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Admin - istration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these fiscal years from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities. The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.

In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the federal pipeline safety laws. Some of the key changes are highlighted below.

Title I of the 2020 PIPES Act:

Establishes a new three-year program for advancing pipeline safety technologies, testing and operational practices. Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties. Recognizes additional due process protections for PHMSA enforcement proceedings, including that: An operator be allowed to request that matters of fact and law be resolved in a...

January 12, 2021

PHMSA Publishes Gas Regulatory Reform Final Rule

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On January 11, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule amending the gas pipeline safety regulations at 49 C.F.R. Parts 191 and 192.  Adopted as part of the Trump administration’s efforts to reduce or eliminate unnecessary regulatory burdens, PHMSA estimates that the Final Rule will result in approximately $130 million in annualized cost savings for pipeline operators.  Although the effective date of the Final Rule is March 12, 2021, the Agency provided a deferred compliance date of October 1, 2021, for the new amendments.

Additional information about the Final Rule is provided below.

Distribution Integrity Management Program Exemptions and Farm Taps 

Consistent with the policy announced in PHMSA’s March 2019 Exercise of Enforcement Discretion, the Final Rule provides operators with the option to maintain pressure regulating devices on farm taps under either the distribution integrity management program (DIMP) requirements or 49 C.F.R. § 192.740. The Final Rule exempts farm taps originating from unregulated production and gathering pipelines from the DIMP requirements, the overpressure protection inspection requirements in § 192.740, and the annual reporting requirements in Part 191. The Final Rule does not amend PHMSA’s regulations to provide additional clarity in determining what qualifies as a farm tap or where production, gathering, or transmission piping ends and distribution service line piping begins in farm tap configurations. The Agency stated that these definitional issues will be addressed in a guidance document that remains under development or in a future rulemaking proceeding.  In the preamble to the Final Rule, PHMSA emphasized that any portion of a farm tap originating from an unregulated pipeline that meets the definition of service line must still comply with all applicable Part 191 and 192 requirements. The Final Rule also exempts master meter...

January 4, 2021

Moving Forward: Has your business continuity plan changed for 2021?

Smart Business

(by Sue Ostrowski featuring Donald Bluedorn)

A business continuity plan helps protect your business both today and into the future in a way consistent with your goals and culture. But it’s not just about planning for contingencies this time. The pandemic has changed the way businesses need to approach their plans, says Attorney Donald C. Bluedorn II, managing shareholder at Babst Calland.

“Things are much different than a year ago, and along with business and operational contingencies, companies should review their legal and regulatory risks and opportunities as well,” he says.

Smart Business spoke with Bluedorn about how to ensure your business continuity plan moves your business seamlessly forward.

What changes during the pandemic are now either beneficial or detrimental to Business operations?

Businesses need to reimagine how they operate and create a proactive mindset around challenges the business or industry is facing. Are there any advantages or savings in how you operated last year that are sustainable or should be adopted?

Concerns with significant legal and contractual commitments are likely to emerge. And as people re-enter the physical workplace, or not, there may be employment issues. In addition, new leadership at the federal level could pose legal challenges and create evolving tax issues. In the Western Pennsylvania region, this could result in changes to energy regulations, a risk for some but an opportunity for others. Environmental compliance and regulatory obligations are also likely changing, and trusted advisers can help you navigate these challenges and incorporate them in your plan.

It’s an opportune time to review your plan from a business risk or legal and regulatory perspective. Are vendors fulfilling their commitments and are you fulfilling your own contractual obligations? Look at your real estate needs going forward. Will you need as much space? Will it be configured the same way? If you need to change...

January 4, 2021

President Trump Signs Law Reauthorizing Federal Pipeline Safety Program

Pipeline Safety Alert

(by Keith Coyle and Brianne Kurdock)

On December 27, 2020, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law.  Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multi-year effort to reauthorize the nation’s federal pipeline safety program.  The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.

The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year (FY) 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these FYs from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities.  The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.

In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the Federal Pipeline Safety Laws.  Some of the key changes are highlighted below.

Title I of the 2020 PIPES Act:

Establishes a new 3-year program for advancing pipeline safety technologies, testing, and operational practices. Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties. Recognizes additional due process protections for PHMSA enforcement proceedings, including that: An operator be allowed to request that matters of fact and law be resolved...

January 1, 2021

Babst Calland Names Three New Shareholders: Ben Clapp, Alyssa Golfieri and Gary Steinbauer

Babst Calland recently named Ben Clapp, Alyssa E. Golfieri, and Gary E. Steinbauer as shareholders in the Firm.

Ben Clapp is a member of the Environmental, Energy and Natural Resources, and Emerging Technologies groups. Mr. Clapp advises clients on the environmental components of complex transactions, including identifying and analyzing significant environmental liability and compliance issues arising in connection with mergers and acquisitions, asset sales, securities offerings, project financings, and corporate restructurings, and works to resolve, manage, allocate or mitigate these environmental risks in the client’s best interest.  Mr. Clapp assists buyers, sellers, financing sources, and underwriters in transactions taking place across a wide range of industries, including the upstream, midstream, and downstream oil and gas sectors, renewable energy, real estate, utilities, chemicals, manufacturing, mining, pharmaceuticals, pulp and paper, and food and beverage.

Mr. Clapp is a 2008 graduate, cum laude, of the American University Washington College of Law.

Alyssa E. Golfieri is a member of the Public Sector and Energy and Natural Resources groups. Ms. Golfieri’s practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development, and municipal ordinance enforcement. Ms. Golfieri represents the Firm’s municipal clients on a wide array of local government issues, including the preparation of zoning and land development ordinances pursuant to the Pennsylvania Municipalities Planning Code, the processing of land development applications, responses to record requests submitted under the Pennsylvania Right-to-Know Law, navigation of public bidding matters, abatement of property maintenance issues, defense of Notices of Violations before zoning hearing boards and magisterial district judges, and compliance with both the Pennsylvania Sunshine Act and the Pennsylvania Public Official and Employee Ethics Act. Ms. Golfieri has also served as assistant solicitor for several years, and is currently the solicitor for the Borough of Ford City.

Ms. Golfieri is a...

December 23, 2020

Congress Reauthorizes Pipeline Safety Act as Part of Year-End Spending and COVID-19 Relief Package

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On December 21, 2020, the U.S. Congress passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (the Act) as part of a larger year-end spending and COVID-19 relief package.  The Act reauthorizes the federal pipeline safety program through September 30, 2023, and establishes annual funding levels for the 2021, 2022, and 2023 fiscal years.  The Act also makes other important changes to the federal pipeline safety laws administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency).

The Act requires PHMSA to issue new rules for gas pipeline leak detection and repair programs and idle pipelines, update the operations and maintenance standards for certain large-scale liquefied natural gas facilities, and finalize outstanding rulemakings for gas gathering lines, class location changes, and the definition of unusually sensitive areas.  The Act establishes additional due process protections for PHMSA enforcement actions, authorizes a new declaratory order proceeding, and obligates PHMSA to consider an operator’s self-report in assessing a civil penalty.  Other noteworthy provisions in the Act include authorizing the implementation of a new pipeline safety testing program, the performance of various research and development studies, and the creation of a National Center of Excellence for Liquefied Natural Gas Safety.  Lastly, the Act contains various new requirements for distribution lines in response to the 2018 incident in Merrimack Valley, Massachusetts.

The Act does not include several provisions that Congress proposed in earlier versions of the legislation.  For example, the Act does not eliminate PHMSA’s obligation to consider the costs and benefits of changes to the pipeline safety regulations or prohibit the use of direct assessments as part of a pipeline operator’s integrity management program.  The Act does not change the mens rea (or mental state) requirement in the...

December 17, 2020

RLUIPA’s Land Use Provisions Remain Essential Against Religious Discrimination

The Legal Intelligencer

(by Krista-Ann Staley and Anna Jewart)

This year marks the 20th anniversary of the Religious Land Use and Institutionalized persons Act of 2000 (RLUIPA), 42 U.S.C. Sections 2000cc et seq, a federal statute that protects the rights of individuals and institutions to use land for religious purposes, in addition to protecting the rights of persons confined to institutions to exercise their faiths. Coincidentally, the anniversary comes at a time when the COVID-19 pandemic and related restrictions have severely limited our ability to gather safely, causing many churches, synagogues, temples, mosques and other places of worship to close or limit attendance. This context provides a unique opportunity to review two decades of RLUIPA’s application.

One key component of RLUIPA is the protection of the ability to gather and congregate without government intrusion. While earlier legislation, such as the Church Arson Prevention Act, 18 U.S.C.A. Section 247, protected places of worship against arson, vandalism, or other violent interference, RLUIPA protects the ability to establish or build those places of worship. To do so, it specifically addresses local land use regulations, including the application of zoning regulations and permitting practices.

Congress enacted RLUIPA in the late 1990s, following nine hearings over three years. Those hearings examined religious discrimination in land use decisions. They revealed what Congress described as “massive evidence” of widespread discrimination by state and local officials in cases involving individuals and institutions seeking to use land for religious purposes. This discrimination most often impacted minority faiths and newer, smaller or unfamiliar denominations, and could be coupled with racial and ethnic discrimination. RLUIPA, drafted with bipartisan support, unanimously passed both houses of Congress and was signed into law by President Bill Clinton in 2000. The Civil Rights Division of the Department of Justice, tasked with enforcing RLUIPA, reports the statute has had...

December 17, 2020

U.S. Fish & Wildlife Service Finalizes “Habitat” Definition under Endangered Species Act

Environmental Alert

(by Robert Stonestreet)

On December 16, 2020, the United States Fish and Wildlife Service (Service) adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411.  The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area.  The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations.  As detailed in the Environmental Alert published on August 10, 2020 (available here), the Service proposed two potential “habitat” definitions on August 5, 2020 for public comment. 85 Fed Reg 47333.  In the final rulemaking, the Service chose to adopt a “habitat” definition that is markedly different than the two definitions proposed for public comment back in August.  The adopted definition reads as follows:

For the purposes of designating critical habitat only, habitat is the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.

According to the Service, “biotic means derived from non-living sources such as soil, water, temperature, or physical processes” and the term “biotic” means “derived from living sources such as a plant community type or prey species.”  The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”

Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:

Primary Proposed Definition:  The physical places that individuals of a species depend upon to carry out one or...

December 14, 2020

U.S. EPA Issues Draft Guidance Regarding the “Functional Equivalent” Test for Point Source Discharges to Surface Water Through Groundwater

Environmental Alert

(by Lisa Bruderly and Tim Bytner)

On December 10, 2020, U.S. EPA issued for public comment its draft guidance (Draft Guidance) regarding the U.S. Supreme Court’s County of Maui "functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closes on January 11, 2021.

In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that a NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020 decision, and its far-reaching implications, in its May 11, 2020, PIOGA Press article titled “Potential Clean Water Act Liability Extends to Discharges to Groundwater That Reach Surface Water.”

The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:

Transit time; Distance traveled; Nature of the material through which the pollutant travels; Extent to which the pollutant is diluted or chemically changed as it travels; Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source; Manner by or area in which the pollutant enters the navigable waters; and Degree to which the pollution (at that point) has maintained its specific identity.

Emphasis on Threshold Requirements for NPDES Permits

The Draft Guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether a NPDES permit is required under a limited number of scenarios. In fact, U.S. EPA devotes much of the eight-page Draft Guidance to discussing the following...

December 10, 2020

Implications of the 2020 election for the energy industry

The PIOGA Press

(by Kevin Garber and Jean Mosites)

As of the date of this article, Joe Biden is likely to become the 46th president of the United States. Assuming that stands, the Biden-Harris administration will try to implement dramatically different environmental and energy policies than the Trump administration. Whether Congress enacts many or all those policies depends heavily on the outcome of the two January U.S Senate special elections in Georgia. The Biden administration can impart significant changes through executive orders and agency actions despite the outcome of those elections, while states and regional governmental bodies will continue to play a significant role in shaping policy. This article reviews some of the implications of the 2020 election for the energy industry.

2020 election summary

National elections. Republicans cut into the Democrat’s majority in the House but Democrats still hold a 222-205 margin as of the date of this article. Republicans hold 50 Senate seats to 46 for the Democrats and two for independents pending the outcome of the Georgia special elections for Senate in January. If Democrats pick up both seats, Vice President-Elect Kamala Harris would cast the deciding vote on matters which divide the Senate 50-50. Shelley Moore Capito (R-WV) is likely to succeed John Barrasso (R-WY) as the top Republican on (and possibly become the chair of) the Senate Environmental and Public Works Committee when Senator Barrasso moves on to head the Energy and Natural Resources Committee. Both are positive developments for the energy industry.

Mr. Biden has chosen individuals from non-governmental environmental organizations and academia to lead his transition teams to staff the Environmental Protection Agency, Council on Environmental Quality, the Department of Interior and the Department of Energy. The teams themselves are largely comprised of those of similar background. Notably absent are representatives from the energy industry,...

December 8, 2020

Pennsylvania Opens Public Comment Period for Proposed Revisions to Chapter 105 Regulations

Environmental Alert

(by Lisa Bruderly)

On December 5, 2020, the Pennsylvania Environmental Quality Board (EQB) published in the Pennsylvania Bulletin proposed revisions to more than 30 provisions of the dam safety and waterway management regulations under 25 Pa. Code Chapter 105. The public comment period will remain open until February 3, 2021.

The revisions will significantly amend the Pennsylvania Department of Environmental Protection (PADEP) regulations regarding the permitting of obstructions and encroachments of waters of the Commonwealth under Chapter 105. The proposed revisions are expected to create expansive new requirements, almost certainly increasing the time and effort required to complete individual/joint Chapter 105 permit applications.  These new requirements, if promulgated, will also likely increase PADEP application review times, particularly at the outset when the agency and the regulated community are becoming familiar with the new requirements.  Additionally, revised compensatory mitigation criteria could expand the extent of mitigation required for a project.  On the other hand, the addition of six new permit waivers means that certain projects may no longer be required to obtain a Chapter 105 permit.

According to the public comment notice, other revisions include adding or changing 18 definitions, adding antidegradation and cumulative impact subsections to the applicant information requirements, providing a new option for dam owners to satisfy proof of financial responsibility obligations, amending the wetland replacement criteria regarding compensatory mitigation for unavoidable impacts to aquatic resources, and adding new structures and activities that may be exempt from submerged lands licensing charges.

The proposed revisions to Chapter 105 have been anticipated for more than one year. In anticipation, PADEP solicited input from multiple Commonwealth agencies and commissions. It also consulted  its Agricultural Advisory Board, Water Resources Advisory Committee and Citizens Advisory Council. The EQB adopted the proposed revisions on July 21, 2020. The last comprehensive revisions to the wetland permitting...

December 4, 2020

Governor Wolf Paves the Way for New Plastics Recycling and Manufacturing in Pennsylvania

Environmental Alert

(by Matt Wood and Colleen Grace Donofrio)

On November 25, 2020, Governor Tom Wolf signed ACT 127 of 2020 (House Bill 1808), which, when effective on January 24, 2021, will amend Pennsylvania’s Solid Waste Management Act (SWMA) to support advanced plastics recycling operations in the Commonwealth by exempting qualifying operations from the waste management requirements.  ACT 127 accomplishes this by amending the SWMA to exempt the conversion of plastics at facilities with advanced recycling processes from the waste “processing” and “treatment” requirements under the SWMA and its implementing regulations.  These facilities turn hard-to-recycle plastics (e.g., plastic bags, wrappers, PVC 3, LDPE 4, PP 5, PS 6, Other 7) into useable raw materials and products.

Specifically, ACT 127 amends the SWMA to define:

“Post-use polymers” – post-use plastics from residential, municipal, or commercial sources that would not otherwise be recycled and, when converted using advanced recycling, are not considered waste. “Advanced recycling” –  a manufacturing process whereby post-use polymers are converted into basic hydrocarbon raw materials, feedstocks, chemicals, liquid fuels, waxes, lubricants, and other related products.  Conversion processes include, but are not limited to, pyrolysis, gasification, depolymerization, catalytic cracking, reforming, and hydrogenation. “Advanced recycling facility” – receives, separates, stores, and converts post-use polymers into raw materials and products.

Facilities coming under the exclusion are not regulated as waste “processing” or “treatment” facilities but still need to comply with all other applicable environmental requirements (e.g., air, water).  Facilities that only perform a portion of these services (e.g., segregation facilities) do not qualify for the exemption from the waste requirements.

ACT 127 is likely to attract new advanced recycling businesses to Pennsylvania and thereby foster job creation, drive investment and innovation, and create regulatory certainty, with the added benefit of recycling more plastics.  Conversely, many of the products developed from the...

December 2, 2020

Fourth Circuit Rules Oil and Gas Lease Allows for the Deduction of Post-Production Costs Pursuant to West Virginia Law

Energy Alert

(by Tim Miller and Katrina Bowers)

The United States Court of Appeals for the Fourth Circuit (Fourth Circuit) has vacated a judgment of the United States District Court for the Northern District of West Virginia that held an oil and gas lease failed to sufficiently indicate the method for calculating post-production costs to be deducted from royalty payments pursuant to West Virginia law. The lease provided that the lessor would bear some part of the post-production costs and contained a detailed list of post-production expenses that were deductible from royalties, but the District Court held the accounting methodology was not sufficiently disclosed. In Young v. Equinor USA Onshore Properties, Inc., No. 19-1334 (4th Cir. Dec. 1, 2020), the Fourth Circuit held that West Virginia law does not require that an oil and gas lease set out an “Einsteinian proof” for calculating post-production costs and, in fact, could be satisfied by a simple formula. In holding that the lease sufficiently indicated the method for calculation in compliance with West Virginia law, the Fourth Circuit explained that the method was to add all the identified, reasonable, and actually incurred post-production costs, deduct them from the lessee’s gross proceeds, and then adjust for the lessor’s share of the total pooled acreage and royalty rate. This opinion also questions the continued viability of the West Virginia Supreme Court’s holding in the Estate of Tawney v. Columbia Nat. Res., LLC, 219 W. Va. 266, 633 S.E.2d 22 (2006) in light of critical comments in a subsequent royalty case decided by the West Virginia Supreme Court in 2017, Leggett v. EQT Prod. Co., 238 W. Va. 264, 800 S.E.2d 850 (2017).

If you have any questions about the Young decision or its impact on the oil and gas industry, please contact Timothy Miller...