Articles, Newsletters & Advisories
April 7, 2020Update: Paycheck Protection Program FAQs (as of Tuesday, April 7, 2020)
Yesterday, the Small Business Administration (the SBA) published “Frequently Asked Questions” (the FAQ) guidance regarding the Paycheck Protection Program (PPP Loan), enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Among other clarifications, below are some of the critical points that the SBA has clarified in the FAQ. The full FAQ can be found here. The SBA intends to update this document on a regular basis.
Monthly Payroll Verification by Lender
A lender is not to replicate an applicant’s calculation of “monthly payroll costs.” A lender’s minimal review of calculations based on a payroll report by a recognized third-party payroll processor, for example, would be reasonable. If the lender identifies errors in the borrower’s calculation, the lender should work with the borrower to remedy the error. See FAQ #1.
Some Companies with More than 500 Employees can Apply for PPP Loan
Companies with more than 500 employees can qualify for the PPP loan if the company satisfies the existing statutory and regulatory definition of a “small business concern” under section 3 of the Small Business Act. A company can qualify if it meets the employee-based or revenue-based size standard corresponding to its primary industry. Visit www.sba.gov/size for the industry size standards.
Additionally, a business can qualify for a PPP loan as a small business concern if it meets both tests in the SBA’s “alternative size standard” as of March 27, 2020. This test is satisfied if: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million. See...
April 3, 2020U.S. DOT Agencies Extend COVID-19 HazMat Relief
In response to the COVID-19 pandemic, U.S. Department of Transportation (DOT) agencies that regulate the surface transportation of hazardous materials (HazMat) have extended several forms of relief. The Pipeline and Hazardous Materials Safety Administration (PHMSA) has waived some HazMat training requirements and delayed some equipment recertifications. The Federal Motor Carrier Safety Administration (FMCSA) and the Federal Railroad Administration (FRA) are implementing PHMSA’s waiver in their modes. FMCSA has also allowed states to extend the effective dates for commercial driver’s licenses (CDL) and commercial learner’s permits (CLP). Additionally, FRA has activated its emergency docket. FRA has not extended any hazardous materials-specific relief.
Hazardous Materials Shippers, Carriers, and Package ManufacturersOn March 25th, PHMSA issued an updated policy declining to enforce recurrent training requirements under 49 C.F.R. § 172.704(c)(2) against HazMat employers unable to train employees due to COVID-19. Employers are still required to provide initial training to a new hazardous materials employee before the employee may perform regulated functions. On April 1st, PHMSA issued two surface transportation-related emergency special permits authorizing the filling and transportation of certain DOT specification cylinders up to 12 months after they are due for a periodic requalification during the COVID-19 emergency. PHMSA also authorized the transportation of certain cylinders overdue for retesting due to COVID-19 disruptions.
Truck TransportationOn March 18th, FMCSA issued an expanded emergency declaration waiving certain provisions of Parts 390 through 399—most notably the hours of service requirements—for drivers providing direct assistance in support of relief efforts. Direct assistance includes transporting medical supplies, food, paper, and grocery products; precursors for those products; fuel; and equipment for constructing facilities to treat or house COVID-affected individuals. Direct assistance does not include routine commercial deliveries, including mixed loads with a nominal quantity of emergency...
April 3, 2020PADEP Will Consider Requests to Temporarily Suspend Environmental Requirements Due to COVID-19
As businesses in Pennsylvania struggle to deal with significant disruptions and challenges to their operations caused by the COVID-19 pandemic, environmental agencies have recognized the challenges that the pandemic presents to achieving compliance with environmental obligations. For example, on March 26, 2020, the U.S. Environmental Protection Agency (USEPA) issued a temporary policy for excusing COVID-19-related noncompliance (see Babst Calland’s March 30, 2020 Environmental Alert for further details). Similarly, on March 31, 2020, the Pennsylvania Department of Environmental Protection (PADEP) issued an Alert announcing that it would consider requests to temporarily suspend certain regulatory, permit, and/or other legal requirements due to COVID-19. It also provided the form needed to make such a request. This announcement reflects a thought change from PADEP’s previous assertion that COVID-19’s impact on businesses in Pennsylvania would not excuse compliance with environmental laws, stating that “ll permittees and operators are expected to meet all terms and conditions of their environmental permits, including conditions applicable to cessation of operations.”
What is Required to Request a Temporary Suspension?
Unlike USEPA’s temporary policy, which does not require regulated entities to submit documentation regarding an inability to meet routine compliance obligations, PADEP is requiring submittal of the request form. While PADEP did not elaborate on how it will review requests for suspension, it will generally evaluate (1) the reasons for the request in light of the COVID-19 pandemic, and (2) the risk of harm to the environment or public health if the request is or is not granted.
Importantly, it will not be enough for entities to show that COVID-19 has restricted their ability to comply with regulatory, permit, or other legal requirements; entities must demonstrate that strict compliance would prevent, hinder, or delay necessary action in coping with the COVID-19 emergency. This...
April 3, 2020Update: Interim Final Rule Issued for Paycheck Protection Program
On April 2, 2020, the Small Business Administration (the SBA) published an Interim Final Rule regarding the Paycheck Protection Program (PPP Loan), enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Below are critical points that the SBA has clarified in the published guidance. The Interim Final Rule can be found here.
What is the interest rate of the loan?
The SBA has advised that the interest rate of the loan has been increased from a 0.5 percent fixed rate to a 1 percent fixed rate.
Do independent contractors count as employees for purposes of PPP Loan calculations or PPP Loan forgiveness?
No. Independent contractors have the ability to apply for their own PPP Loans, so they do not count for purposes of a borrower’s PPP Loan calculations or forgiveness.
How can PPP Loan proceeds be used?
The proceeds of a PPP loan are to be used for:payroll costs (as defined in the Act and in 2.f.); costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; mortgage interest payments (but not mortgage prepayments or principal payments); rent payments; utility payments; interest payments on any other debt obligations that were incurred before February 15, 2020; and/or refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020.
If you received an SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP Loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP Loan. If your EIDL loan was used for payroll costs, your PPP Loan must be used to refinance your EIDL loan. Proceeds from...
April 2, 2020COVID-19 Updates to Pennsylvania & West Virginia Unemployment Laws
Employment & Labor Alert
At this uncertain time, many employers are considering whether to lay off or furlough employees – particularly employees who are unable to work remotely. Earlier this week, we provided guidance on an alternative to layoffs and furloughs, as some employers are exploring grants and loans that are available under the new federal and state stimulus programs. With this Alert, we are providing an update on recent changes to Pennsylvania and West Virginia unemployment laws:Increased Benefit Amounts Normally, unemployment benefits are capped at $573 per week in Pennsylvania and $424 per week in West Virginia. Under the Paycheck Protection Program provision of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the federal government will supplement state unemployment benefits by $600 per week. Through July 31, 2020, unemployment benefits will be capped at $1,173 per week in Pennsylvania, and $1,024 per week in West Virginia. As a result, for the next four months, some workers may actually earn more in unemployment benefits than they would have earned in wages. For example, an employee who would otherwise receive $100 per week of state unemployment benefits will now receive an additional $600 per week from the federal government. After the federal supplement of $600 per week expires, the employee may continue to collect unemployment benefits at the usual rate in each state Expanded Eligibility Until recently, Pennsylvania and West Virginia limited unemployment benefits to certain employees. In Pennsylvania, to receive unemployment benefits, an employee must have earned at least $116 per week, during at least 18 weeks in the past year. In West Virginia, employees must satisfy two requirements within the past year: they must have earned a total of at least $2,200; and they must...
March 31, 2020UPDATE: Assessing Your Organization’s Stimulus Program Options
Earlier today the U.S. Treasury Department (the Department) published additional information on the Paycheck Protection Program (PPP Loan), enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Below are critical points that the Department has clarified in the published guidance.
When can I apply?Small businesses and sole proprietorships can begin submitting applications on Friday, April 3, 2020 Independent contractors and self-employed individuals can begin submitting applications on Friday, April 10, 2020.
How much money can be borrowed?
The Department clarified that salary, wages, commissions, or tips are capped at $100,000 on an annualized basis for each employee.
How much of the loan is forgiven?
Due to likely high subscription, the Department anticipates that not more than 25% of the forgiven amount may be for non-payroll costs.
What is the interest rate of the loan?
0.5% fixed rate.
Read the latest guidance information issued by the Department of Treasury below.
For a top-line overview of the program, click here.
If you’re a lender, more information can be found here.
If you’re a borrower, more information can be found here.
The application for borrowers can be found here.
For more information on the above program or for assistance in applying for the program, please contact Babst Calland Attorneys Moore Capito at 304.552.8986 or email@example.com, Christian Farmakis at 412.394.5642 or firstname.lastname@example.org or Andrew Terranova at 412.773.8717 or email@example.com.
March 31, 2020EPA’s New Proposed Interpretation of “Begin Actual Construction” Under the New Source Review Preconstruction Permitting Regulations
On March 25, 2020, EPA released a draft guidance memorandum proposing to change the agency’s interpretation of the term “begin actual construction” under the New Source Review (NSR) preconstruction permitting regulations. If finalized, this proposed guidance would expand the activities the factories, power plants, refineries and other industrial operations may undertake while waiting to receive an NSR permit.
Federal NSR permitting regulations provide that “o new major stationary source or major modification . . . shall begin actual construction without a permit that states that the major stationary source or major modification will meet those requirements.” 40 CFR § 52.21(a)(2)(iii). The regulations define the term “begin actual construction” to mean “in general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature.” 40 CFR § 52.21(b)(11).
EPA currently interprets “begin actual construction” as almost any physical on-site construction activity that is of a permanent nature, even if the activity does not involve construction “on an emissions unit.” This interpretation precludes many preparatory activities such as installation of building supports and foundation, paving, laying of underground piping, construction of a permanent storage structure, and other similar activities.
Under the proposed revised interpretation, a source owner or operator, prior to obtaining an NSR permit, may undertake physical on-site activities – including activities that may be costly, that may significantly alter the site, and/or are permanent in nature – provided that those activities do not constitute physical construction on an emissions unit. Under this interpretation, an “installation necessary to accommodate” the emissions unit at issue is not considered part of the actual emissions unit; thus, construction of such an installation would be permissible in advance of obtaining an NSR permit. EPA believes that this interpretation is more consistent with the...
March 30, 2020Assessing Your Organization’s Stimulus Program Options
The COVID-19 pandemic is impacting every business sector in the United States. Federal government and the Commonwealth of Pennsylvania have announced various stimulus programs to assist businesses eligible to receive certain economic benefits. Babst Calland’s Corporate and Commercial attorneys have been following the existing and new stimulus programs currently being offered.
This is a time-sensitive opportunity to consider how these programs may apply to your business. Various programs are summarized below for your convenience. Together, we can help you navigate this crisis and prepare your organization to continue thriving in the months and years ahead. To schedule a private conversation to help you evaluate whether these programs are right for your company, contact Attorney Moore Capito at 304.552.8986 or firstname.lastname@example.org.
ECONOMIC INJURY DISASTER LOAN
An Economic Injury Disaster Loan (EIDL) is a long-term, low-interest loan that provides small businesses with working capital of up to $2 million directly from the U.S. Treasury. The intent of this federal program is to provide six months of working capital to qualified applicants. In response to the impacts of the COVID-19 pandemic, the U.S. Small Business Administration (SBA) has lifted certain requirements to make it easier for small businesses to receive an EIDL.
Who is eligible to receive it?
Small businesses and sole proprietors in all 50 states, Washington, D.C., and U.S. territories may apply for an EIDL, so long as they do not exceed the size standard for the industry in which they operate. For a list of the size standards per industry, click here. Eligibility is also based on a series of factors set forth on the application.
What are the terms of the loan?
An EIDL has a maximum 30-year term, with a 3.75% interest rate for...
March 30, 2020EPA Establishes Temporary Policy for Excusing COVID-19-Related Noncompliance
In light of historic protective measures and travel bans to prevent community spread of COVID-19, the U.S. Environmental Protection Agency (EPA) issued an unprecedented temporary policy for exercising its enforcement discretion for environmental noncompliance caused by the COVID-19 pandemic. On March 26, 2020, the EPA published a memorandum entitled, COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program (“EPA’s COVID-19 Policy” or “Policy”). EPA’s COVID-19 Policy applies retroactively, beginning on March 13, 2020, and is in effect until EPA provides notice online within seven days of its termination. This Alert addresses five critical questions about EPA’s COVID-19 Policy.
When Does EPA’s COVID-19 Policy Apply?
EPA’s COVID-19 Policy applies when environmental compliance is not “reasonably practical,” despite making every effort to comply. Coverage under the Policy is not automatic. It requires regulated entities to take, at a minimum, the following proactive steps: (1) minimize the effect and duration of any noncompliance; (2) identify the nature and date(s) of noncompliance; (3) identify how COVID-19 caused the noncompliance and describe the response actions taken; (4) return to compliance as soon as possible; and (5) document each of these actions.
What Compliance Monitoring and Reporting Obligations Does the Policy Cover?
Generally, EPA does not expect to assess penalties for violations of a wide-range of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations if: (1) the regulated entity takes the steps outlined above and documents that COVID-19 was the cause of the noncompliance, and (2) EPA agrees with the entity’s determination.
EPA expects regulated parties to use existing statutory, regulatory, and permitting requirements for reporting COVID-19-related noncompliance, unless COVID-19 response actions themselves hinder reporting, in which case EPA expects facilities to document and maintain noncompliance-related information internally and make it available...
March 26, 2020Pennsylvania Legislature Considering Modification of Public Meeting Rules, Suspension/Tolling of Land Use Application Deadlines during COVID-19 Emergency Declaration
Among the many challenges facing Pennsylvania municipalities during the Coronavirus pandemic is how to conduct business in compliance with applicable statutory requirements when the physical presence of their officials, constituents, development applicants and other interested parties is either highly discouraged by public health officials or prohibited altogether. This can be particularly problematic for applicants for a variety of local government land use approvals, consideration and action on which usually are statutorily mandated to take place at public meetings and hearings.
In an effort to address these issues, the Pennsylvania General Assembly is currently considering House Bill No. 1564 on an expedited basis. Among other things, HB 1564 would relax the requirements for physical attendance at public meetings during the Governor’s declaration of a disaster or emergency by substituting a variety of telecommunications alternatives. It also would provide for the suspension, or tolling, of statutory deadlines for municipal boards and agencies to hear and act upon a wide variety of land use and other development applications during the pendency of such a declaration. Notably, HB 1564 provides that an applicant can request, and a municipality at its discretion may proceed with, consideration and action on an application using telecommunication alternatives.
HB 1564 is on a fast track, with the House approving it on March 25, 2020, and the Senate expected to act upon it in the next several days. HB 1564 can be viewed here.
The following are the key provisions of HB 1564.
Use of Telecommunication Devices to Conduct Public Meetings
If the declaration is of a disaster or emergency which would render the conduct of public business dangerous to the health or safety of the members of the governing body, officials or members of the public, the governing body may exercise...
March 25, 2020DOL Announces April 1 Effective Date and Additional Guidance on Families First Coronavirus Response Act
Employment & Labor Alert
This is a follow-up to Babst Calland’s client alert on the Families First Coronavirus Response Act provisions and related new leave requirements. The Department of Labor announced that the effective date will be April 1, 2020. The leave is not retroactive and begins April 1. Each company’s number of employees to determine whether it meets the 500-employee threshold will be calculated at the time the leave is to be taken. The Department of Labor released Question and Answer guidance available here, providing additional preliminary information on calculating the employee threshold, leave calculations, rate of pay calculations, and interactions with other types of leave. The full regulations have not yet been released, and are expected prior to the April 1 effective date.
The model notice issued by the Department of Labor is available here, and was issued along with a Frequently Asked Questions regarding the notice requirements available here. The notice does not need to be displayed until April 1, 2020 and most employers will want to wait to publish the notice until their FFCRA policy is ready to avoid employee confusion. The notice must be posted in a conspicuous place on the employer’s premises, which may include email, company intranet, or physically at the workplace depending upon current operations.
Please contact any of Babst Calland’s Employment and Labor attorneys if you need advice on the Families First Coronavirus Response Act and its requirements.
March 23, 2020Protect what’s yours: How to create a strong trademark with a new product or business name
(by Jayne Gest with Carl Ronald)
A trademark or service mark identifies a company as the source of a particular set of goods or services. It protects the association, in a consumer’s mind, between goods or services and the company that sells or produces them.
“We try to protect the goodwill a company has earned by registering and enforcing their trademarks to make sure no one obtains an unfair business advantage by trading off our clients’ goodwill in the marketplace,” says Carl Ronald, shareholder at Babst Calland.
Smart Business spoke with Ronald about adopting trademarks.
How long do trademarks last?
Theoretically, trademarks can last forever. Realistically, though, trademark protection lasts as long as you continue to use a name or logo in the marketplace. There are two types, registered and unregistered, and the latter is often called “common law” marks.
A registered trademark is a text or design mark that a company applies for with the United States Patent and Trademark Office. So long as the business continues to use the mark and appropriate maintenance procedures are complied with, the registration will be good for an unlimited number of renewable terms of 10 years each.
Common law marks, on the other hand, last as long as they continue to be used in commerce but convey less protection.
What’s the procedure for protecting a new product or business name?
First, identify the word or logo you wish to use with your product or service, and decide whether you’re likely to use it longer than a few years, in order to justify the cost. Is this a name for a core product, or a slogan that plays off a current event or product line that may change seasonally or annually?
Next, evaluate the strength of the mark. The strongest are made-up word(s) that don’t describe what you...
March 20, 2020Seeking Clarity around Governor’s Order to Close Pennsylvania Businesses that are not “Life-sustaining”
In the late afternoon of March 19, 2020, and without advanced notice, Pennsylvania Governor Tom Wolf issued an Order for all “non-life-sustaining businesses” in the Commonwealth to close their physical locations. The Order was effective at 8 p.m. last evening with enforcement to begin at 12:01 a.m. on Saturday, March 21. A copy of the Order can be found here. There are many questions that arise from the Governor’s Order, and it can be expected that further clarifications will be forthcoming from the Governor’s office. The Governor’s office has also issued a press release with additional information.
In a press conference at 2 p.m. today, the Governor stated that the guidelines are being revised based upon feedback from businesses and other stakeholders, and that the forthcoming guidelines will be in line with the federal government’s Cyberspace and Critical Infrastructure Security Agency (CISA) guidance that has identified 16 “Critical Infrastructure Sectors,” as available here. In addition, the Governor encouraged businesses to seek a waiver if they believe that they have been incorrectly categorized as “non-life-sustaining.” The waiver process is meant to “cut through red tape” and the Governor stated that decisions will issue via email.
While further guidance remains pending, this Alert will summarize the current Order and suggest methods to address confusion regarding the Order or to seek relief from its provisions.
The Order provides that “No person or entity shall operate a place of business in the Commonwealth that is not a life sustaining business regardless of whether the business is open to the members of the public.” The Order does not prevent working from home. The Order further provides specific guidance on what the Governor has decided is a “life sustaining business.” A list of businesses and industries that...
March 20, 2020Turning Down the Heat – What sort of legal and legislative action is necessary to help put Pennsylvania on the front lines of the battle against climate change
Pennsylvania's Best Lawyers
(by Joseph Reinhart)
Much state environmental law is based on federal statutes. How can environmental-law attorneys help?
Environmental lawyers can be instrumental in sustaining rural communities and protecting natural resources by helping landowners and businesses understand the complex and interrelated laws and regulations governing so many aspects of economic development. Many municipalities in Pennsylvania have passed ordinances designed to protect residents in rural areas from environmental harm associated with natural-resource development. In some cases, these ordinances are issued with the intention of implementing Pennsylvania’s Environmental Rights Amendment. These ordinances may require approval prior to conducting activities as common as earth disturbance and road usage. Sorting out the laws and ordinances applicable to these activities, and determining which governmental authority has jurisdiction over them, are tasks well-suited to attorneys trained in environmental law.
Many states have developed their own climate-change plans. Do you think Pennsylvania will do that?
In 2018, Governor Tom Wolf issued an executive order establishing a Climate Action Plan for the commonwealth. The plan seeks to achieve, by 2025, a 26 percent reduction in greenhouse-gas emissions from 2005 levels. It includes a wide variety of proposed actions, including improvements in energy efficiency, increased use of electric vehicles, maintenance of nuclear generating capacity, and investment in solar development. The plan also contemplates development of a cap-and-trade program to limit carbon-dioxide emissions.
Will the passage of certain laws be necessary?
Wolf’s executive order requiring the development of a cap-and-trade program has been met by stiff resistance from parties concerned about the costs and potential adverse economic consequences associated with a carbon tax. In December 2019, members of the Pennsylvania House and Senate referred bipartisan companion bills, known as the Pennsylvania Carbon Dioxide Cap and Trade Authorization Act, to their respective environmental and energy committees. The proposed legislation provides that there...
March 20, 2020The Coronavirus May be a Basis to Invoke the Force Majeure Provision of Consent Orders and Consent Decrees in Pennsylvania
On March 6, 2020, Governor Tom Wolf issued a Proclamation of Disaster Emergency throughout the Commonwealth under the Pennsylvania Emergency Management Services Code in response to the expanding COVID-19 coronavirus pandemic. On March 13, President Donald Trump declared a state of national emergency. Many other states and local governments are following suit. These government actions may be a basis to invoke the force majeure clause of consent orders and consent decrees between regulated parties and the Pennsylvania Department of Environmental Protection, other state and local environmental regulatory agencies or the U.S. Environmental Protection Agency.
The standard force majeure provision of most PADEP consent order and agreements allows deadlines in the order to be extended if circumstances beyond the reasonable control of the regulated party prevent compliance with the order. Similar provisions are often found in consent agreements with USEPA and in consent decrees approved by federal and state courts. These force majeure provisions typically require the affected party to notify the agency of the force majeure event when the party becomes aware or reasonably should have become aware of the event impeding performance. For example, the model PADEP Consent Order and Agreement requires telephone notice within five working days and written notice, in some circumstances by notarized affidavit, within 10 working days describing the reasons for the delay, the expected duration of the delay, and the efforts being taken to mitigate the effects of the event and length of the delay. This model provision states that failure to comply with the timing and notice requirements invalidates a force majeure extension.
There are compelling reasons why the coronavirus pandemic, which is unlike any event experienced in this country, is beyond the contemplated scope of agency force majeure clauses such that strict...
March 19, 2020The Families First Coronavirus Response Act
Employment & Labor Alert
The Families First Coronavirus Response Act (the “Act”) was enacted on March 18, 2020 and adds two additional types of leave connected to the coronavirus (“COVID-19”) pandemic. Employers should immediately institute policies relating to these new leaves to ensure proper compliance and to avoid violating the Family and Medical Leave Act or the Fair Labor Standards Act.
Key Provisions Related to CoverageThe new leave provisions apply to private sector employers with fewer than 500 employees and provide eligible workers with additional paid and unpaid time off over and above any existing leave already provided by their employer. Businesses that were too small to be previously subject to FMLA are now covered by these provisions. Under the Act, the Secretary of Labor is given the authority to issue regulations that would exclude health care workers and emergency responders from the Act, as well as businesses with less than 50 employees where the regulations would jeopardize the business as a going concern. Unless and until the Secretary of Labor issues such regulations, the provisions of the Act apply to all private sector employers with less than 500 employees. Any leave payments made pursuant to the Act are capped as described below at the amount of the tax credits created to reimburse employers (maximum aggregate over both leaves of $15,110 per employee). The Act is effective not later than April 2, 2020, and remains in effect until December 31, 2020. Under the Act the Department of Labor is to issue a mandatory workplace poster relating to the new leave provisions by March 25, 2020.
Emergency Paid Sick LeaveFull-time employees regardless of tenure are immediately eligible for 80 hours of paid sick leave on the Act’s effective date. Part-time employees...
March 18, 2020Business Continuity During the COVID-19 Pandemic; Leveraging AI/Machine Learning Contract Review
(by Christian Farmakis)
Dear Clients and Friends:
Clearly, in light of the COVID-19 pandemic, this is a time for reflection and a time for staying on top of our personal and professional priorities.
With the Coronavirus pandemic having a widespread effect on business continuity, supply chains and revenues, Babst Calland and its alternative legal service provider, Solvaire, are currently advising C-suite executives and managers as they seek to quickly assess their contract provisions, evaluate their exposure and make effective operational and financial risk-based decisions. Of particular concern, key suppliers may desire to invoke “force majeure”, delay or termination provisions during this time of uncertainty. Similarly, our clients may desire to invoke these same provisions to delay or terminate unessential projects.
By employing a series of AI/machine learning and other legal technologies, we can conduct accelerated and thorough searches across huge document sets revealing key information about each contract before our professional staff even begins reviewing the documents. During this time, we understand the unprecedented challenges your organization and internal teams may be facing. Our team is here to help. Solvaire has 20 years of project management and quality control experience to organize and manage contract review projects from start to finish.
We employ flexible staffing models and can quickly ramp up staffing based on deadlines and need. Our reviewers and staff are fully capable of working remotely, allowing us to comply with the latest CDC Guidelines regarding social distancing.
Projects can be customized to fit your timeline and needs. Representative contract clause extraction provisions include force majeure, material adverse effect, termination, insurance, delay, term, governing law, payments and notice information, among others. Our legal technologies can also be quickly “trained” to find critical contract provisions unique to your business or industry.
Our entire team stands ready to assist in your business continuity. Please take care...
March 11, 2020DEP unveils initial draft of carbondioxide trading rule to Air Quality Technical Advisory Committee
The PIOGA Press
On February 13, the Department of Environmental Protection presented its preliminary draft proposed rulemaking to establish a carbon dioxide budget trading program to the Air Quality Technical Advisory Committee (AQTAC). The proposed trading program would apply to fossil fuel fired electricity generators of greater than 25 MW in Pennsylvania. The draft proposal reflects a first look at DEP’s vision for a cap-and-trade program as directed by Governor Tom Wolf’s October 3, 2019, Executive Order 2019-07.
The draft proposed rule, although still in development, parallels the model rule prescribed by the Regional Greenhouse Gas Initiative (RGGI). RGGI is a coalition of 10 states in the Northeast and Mid-Atlantic that participate in a regional CO2 cap-andtrade program for fossil fuel-fired electricity generating units that have a nameplate capacity of over 25 MWe.
Under the program, each member state has a budget of CO2 allowances, which it then allocates through setaside programs, offsets or periodic auctions. The number of allowances in each state’s CO2 budget that are allocated through auction varies widely among members. Each affected source (CO2 budget source) is required to hold sufficient CO2 allowances based on its CO2 emissions as determined from continuous monitoring. Each allowance is equal to one ton of CO2 emissions.
States’ CO2 budgets, and in turn available allowances, periodically reduce over time. This requires each CO2 budget source to either reduce CO2 emissions as measured by continuous monitoring, or obtain extra CO2 allowances to cover its emissions in excess of its allowance account. Under RGGI, auctions to obtain allowances generally occur quarterly, and may be open to qualified participants other than CO2 budget sources. The draft proposed rule explicitly mentions financial institutions and environmental groups as potential auction participants. The proposal specifies an annual rather than quarterly auction process.
March 6, 2020Court Provides Clarity on the Applicable Scope of Review in Land Use Appeals
The Legal Intelligencer
(by Alyssa Golfieri)
Zoning hearing boards have exclusive jurisdiction to hear and render final adjudications on nine discrete matters, ranging from substantive challenges to the validity of land use ordinances, to appeals from determinations of a zoning officer, to applications for variances and special exceptions from the terms of zoning and floodplain ordinances. See Section 909.1(a) of the MPC, 53 P.S. Section 10909.1(a). If a party to a land use matter is unhappy with a zoning hearing board’s final adjudication, he has 30 days to appeal the decision to the trial court. See Section 1002-A of the MPC, 53 P.S. Section 11002-A.
When rendering final adjudications, zoning hearing boards sit as fact finders. This means zoning hearing boards are the sole judge of the credibility of witnesses and the weight afforded evidence. See Tri-County Landfill v. Pine Township Zoning Hearing Board, 83 A.3d 488, 518 (Pa. Commw. Ct. 2014). As such, when a zoning hearing board’s decision is appealed to the trial court, the trial court should not, with one exception addressed below, engage in fact-finding or disturb the board’s credibility determinations. See Section 1005-A of the MPC, 53 P.S. Section 11005-A; see also Manayunk Neighborhood Council, 815 A.2d at 652 (Pa. Commw. Ct. 2002). Rather, the trial court must uphold a zoning hearing board’s determination so long as the board did not commit a manifest abuse of discretion—an abuse of discretion occurs only when a zoning hearing board’s findings are not supported by substantial evidence, which Pennsylvania courts have defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Berman v. Manchester Township Zoning Hearing Board, 540 A.2d 8, 9 (Pa. Commw. Ct. 1988); Hertzberg v. Zoning Board of Adjustment, 721 A.2d 43, 46 (Pa. 1988)—or an error of law.
The one exception to a trial court’s deferential standard of review is a circumstance where the trial...
March 4, 2020Potential Impacts to Real Estate Development of Proposed Amendments to NEPA Regulations
Proposed changes to regulations implementing the National Environmental Policy Act of 1969 (NEPA) have the potential to affect real estate development within the greater Pittsburgh region and nationwide. The proposed regulations, issued by the Council on Environmental Quality (the “CEQ”) in January 2020, would revise NEPA procedures by narrowing both the scope of actions that must be reviewed under NEPA as well as the extent of such review. With these changes, the time, cost and environmental analysis required to comply with NEPA could be significantly reduced, and development projects that previously faced delays could proceed more quickly through the review process, or potentially avoid it altogether.
Background and Purpose of NEPA
NEPA was enacted in 1970 with the goal of promoting accountability and transparency in federal decision-making by ensuring that the environmental impacts associated with federal actions were considered by the agencies undertaking those actions. Under NEPA, each federal agency is responsible for conducting a NEPA analysis on all agency actions that are deemed “major Federal actions” to determine if such actions impact the environment. “Major Federal actions” are currently defined in CEQ NEPA regulations as “actions with effects that may be major and which are potentially subject to federal control and responsibility” (emphases added). That may include both federal projects and projects undertaken by non-federal entities that receive federal funding or require federal permitting. Examples of major Federal actions include oil and natural gas pipeline construction projects, highway construction, and bridge replacement. The federal agency that takes a major Federal action (e.g., the issuance of a permit) is required to prepare an analysis of the project’s effects on the environment, which can take three forms: (i) a categorical exclusion (CE) for an action that has been...
March 4, 2020Babst Calland Attorney Jean M. Mosites Appointed to the EHB Rules Committee
Jean M. Mosites was recently appointed by Rep. Mike Turzai, the Speaker of the Pennsylvania House of Representatives to the Pennsylvania Environmental Hearing Board Rules Committee. Committee members serve two-year terms and may be reappointed for additional terms.
The Rules Committee reviews and makes recommendations regarding procedural rules for matters brought before the EHB. The Committee consists of nine attorneys who are in good standing before the Bar of the Supreme Court of Pennsylvania and who have practiced before the Board for a minimum of three years or who have comparable experience.
As a shareholder in Babst Calland’s Environmental and Energy and Natural Resources practice groups, Ms. Mosites has extensive experience representing clients in administrative appeals and environmental litigation in state and federal courts and before the Environmental Hearing Board in Pennsylvania, as well as counseling on environmental compliance and resolving liabilities under federal and state law.
February 26, 2020Julie R. Domike – Environmental Attorney
Emerging Technologies Profile
Is there one thing you recall that influenced your career path? Yes, I started thinking about hands-free vehicles when I was just a kid. On a vacation back to the U.S., as my father accelerated the family station wagon onto the highway, I imagined something like a subway’s third-rail. Vehicles would connect to it and travel forward in a safe and graceful caravan. Drivers would be able to use their time how they pleased—maybe playing a game of cards with their daughters. When it was time to return to active driving, the vehicle would disconnect, and the driver would resume the controls. Even back then, the idea made so much sense to me.
What may surprise people about your background? As an attorney at the EPA, I was involved in rulemaking and enforcement for the first part of my career. In private practice, I represent companies that have been the focus of EPA’s regulations. Some of my friends tell me that my best skill is as an intermediary who can play on both sides of the regulatory fence.
What brought you to the nation’s capital? As the daughter of an American working abroad, I was raised all over Latin America. While growing up in countries still squarely under the thumb of charismatic caudillos, the idea of a country governed by law instead of one man’s whims seemed like a paradise. I’ve always been impressed by the predictability that stare decisis and precedent lend to our system. My law degree is from Georgetown, and from there I joined the EPA where the focus was on implementing the 1990 amendments to the Clean Air Act.
How do you ease your daily commute into/out of the District? Currently, while en route, I’m listening to the audiobook Go, Went, Gone by German novelist Jenny...
February 24, 2020The value of M&A and why you can’t afford to ignore it
(by Jayne Gest with Chris Farmakis)
Vivak Gupta has hands-on experience with M&A — including his share of battle scars — after 36 years in the IT industry. Most recently, he was the president and CEO behind Mastech Digital’s $55 million deal for InfoTrellis in 2017.
No two acquisitions are the same, but he says he tries not to make the same mistakes twice.
“It’s a pretty complex process, and there is no shortcut but to actually learn from experience,” Gupta says. “It’s baptism by fire — you have to burn your fingers and then you really get to know what works and what doesn’t work.”
But even when Gupta isn’t actively looking to buy or sell a business, he keeps an eye on the dealmaking market — who is buying and selling companies and raising capital — because it’s a good indicator of what’s happening in the industry.
“Why is my competitor acquiring a company in, just as an example, the cloud space?” he says. “How is it connecting with their current strategy? Then, you watch how they complete the acquisition and how the market rewards them or penalizes them for that acquisition.”
Gupta isn’t alone in his feelings about the value of M&A. Many executives, investors and advisers see how mergers, acquisitions and dealmaking play a critical role in business today — both directly and indirectly. And those who ignore it run the risk of falling behind as their competitors scoop up a new technology, diversify into new geographies, raise growth capital and implement long-term exit plans that help them operate better.
You owe it to yourself to build your M&A knowledge and network, but don’t take our word for it. Here’s what some of Pittsburgh’s dealmakers had to say.
Take the initiative
M&A is done by different companies for different reasons, Gupta...
February 24, 2020The rise of representations and warranty insurance
(by Jayne Gest with Kevin Wills)
Representations and warranties insurance, which has become more affordable for merger and acquisition transactions, is growing much more prevalent in recent years as the market for such insurance has grown more competitive.
“If you haven’t paid attention or you’re not a regular acquirer of businesses or assets, your opinion of reps and warranties insurance might be dated,” says Kevin T. Wills, shareholder and chair of the corporate and commercial group at Babst Calland.
Smart Business spoke with Wills about how representations and warranties insurance works and what to consider with this risk mitigator.
What are the benefits of utilizing reps and warranties coverage?
These policies can be advantageous for both buyers and sellers.
For a seller, it can reduce or eliminate any need to holdback or escrow a portion of the purchase price with respect to post-closing indemnification claims for breaches of representations and warranties. This provides a seller with a cleaner exit with less contingent liabilities and more certainty as to the sale proceeds. Additionally, if a seller is going to have an ongoing relationship with the buyer, it also avoids the potential awkwardness a lawsuit may cause.
On the buyer side, it can make your bid more attractive if the seller knows that it will not be responsible for post-closing claims for breaches of representations and warranties. It helps with the negotiation of the purchase agreement because a seller is less concerned with their post-closing exposure for breaches of representations and warranties, which saves time and reduces legal fees. Also, in some instances, the coverage limit and duration that the buyer acquires — the amount of the insurance policy and the term thereof— may exceed what the seller would be willing to give in a negotiated indemnification context. Further, liability baskets and caps do...
February 18, 2020Treasury Issues Committee on Foreign Investment in the United States Review Rules
Emerging Technologies Alert
Technology companies seeking foreign investment should be aware of recently effective changes to the Committee on Foreign Investment in the United States (CFIUS) notification process for investments by foreign entities. While these changes generally mirror CFIUS’ recently terminated pilot project, differences between the programs could determine whether a US business needs to file with CFIUS for pre-foreign investment review. The following client alert explains the program changes in greater depth.
On January 17, 2020, the Treasury Department’s Office of Investment Security (Treasury) released two final rules requiring some foreign entities acquiring an interest in a US business with a national security nexus (Transaction Rule)
The Treasury implemented a version of the Transaction Rule under a 2018 interim final rule and through a pilot program requiring mandatory declarations of certain transactions involving investments by foreign entities in US businesses beginning November 10, 2018. The Transaction Rule replaced the pilot program beginning February 13, 2020. The Real Estate Rule also took effect that day.
What’s in the Rule?The Transaction Rule largely continues the processes adopted for...