Articles, Newsletters & Advisories
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...
The 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...
Pennsylvania DEP Unveils Initial Draft of Carbon Dioxide Trading Rule to Air Quality Technical Advisory Committee
On February 13, 2020, the Pennsylvania 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 Pennsylvania 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-and-trade 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 set-aside 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 sources”) 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...
February 14, 2020PHMSA Issues Final Rule for Underground Natural Gas Storage Facilities
Pipeline Safety Alert
On February 12, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA or Agency) released a final rule establishing new safety standards and reporting requirements for underground natural gas storage (UNGS) facilities (the Final Rule). The Final Rule modifies regulations that PHMSA previously established in an interim final rule (IFR) to address a congressional mandate in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act).
The Final Rule follows the approach taken in the IFR by incorporating the provisions in two industry safety standards for UNGS facilities by reference but eliminates the requirement to treat the permissive elements of those standards as mandatory. The Final Rule also makes other changes to the IFR, many of which respond to issues raised in public comments, a petition for reconsideration filed by several industry trade organizations, and a petition for judicial review filed by the State of Texas in the U.S. Court of Appeals for the 5th Circuit. Additional information about the Final Rule, which takes effect on March 13, 2020, is provided below.
Revised Approach to Non-Mandatory Provisions of API RP 1170 and API RP 1171
The Final Rule eliminates what was arguably the most controversial aspect of the IFR, i.e. the requirement to treat the permissive elements of two industry standards as mandatory. In the 2016 IFR, PHMSA incorporated API Recommended Practice 1170 Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage (RP 1170) and Recommended Practice 1171 Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs (RP 1171 or RPs, collectively) by reference. Like most industry standards, the RPs contain provisions that create mandatory obligations (“shall” statements) and non-mandatory permissive obligations (“should” statements). The IFR treated the “should” statements in...
February 12, 2020Christian Farmakis Featured Speaker at Dealmakers Conference
Law firm Babst Calland will participate at the 2020 Smart Business Dealmakers Conference in Pittsburgh, Pa. on March 5 at Wyndham Grand Pittsburgh Downtown.
The conference will feature middle-market CEOs, top private equity and venture capital firms, major lenders and leading service providers participating in sessions that cover the breadth of the merger and acquisition landscape addressing such topics as buying a business, selling a business, financing a deal, liquidity events, merging operations, alternative investing and more.
Attorney Christian A. Farmakis will join a group of recognized entrepreneurs and business experts in discussing Transaction Audits: How to prepare your company for any type of deal.
For more information about the Dealmakers conference, or to register to attend, visit: https://www.smartbusinessdealmakers.com/pittsburgh//event/
February 11, 2020PHMSA Proposes New Valve Installation and Minimum Rupture Detection Standards for Gas and Hazardous Liquid Pipelines
Pipeline Safety Alert
On February 6, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) in the Federal Register containing new valve installation and minimum rupture detection standards for gas and hazardous liquid pipelines. The NPRM would require the installation of automatic shutoff valves (ASV), remote-control valves (RCV), or equivalent technology, on certain gas transmission and hazardous liquid pipelines. The NPRM also contains proposed requirements for rupture detection and mitigation, including provisions for improving emergency response and conducting failure investigations and analyses. Public comments must be filed in response to the NPRM on or before April 6, 2020. Additional background information and a brief summary of PHMSA’s proposals are provided below.
Why Did PHMSA Issue the NPRM?
In 2010, a pair of significant pipeline incidents occurred in Marshall, Michigan, and San Bruno, California. The resulting NTSB investigations led to the issuance of safety recommendations relating to the use of ASVs and RCVs and other measures to improve rupture detection and response. Also, in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (2011 Act), Congress added mandates to the Pipeline Safety Act directing PHMSA to conduct studies and, if appropriate, establish regulations to address the concerns identified in NTSB’s safety recommendations. In the years following the 2011 Act, PHMSA commissioned the studies required by the congressional mandates and received separate recommendations from GAO on the need to improve pipeline incident response. PHMSA also issued two ANPRMs after the 2010 pipeline incidents asking for public comment on the need to amend the pipeline safety regulations for valve installation and rupture detection. All of these factors culminated in this NPRM.
What’s in the NPRM?
Valve RequirementsInstallation Requirements for New Pipelines: Pursuant to 49 C.F.R. §...
February 10, 2020Revised DEP policy would expand the scope of projects requiring PHMC review
The PIOGA Press
On December 28, the Pennsylvania Department of Environmental Protection published notice of a substantive revision to the Policy for Pennsylvania Historical and Museum Commission (PHMC) and DEP Coordination During Permit Application Review and Evaluation of Historic Resources (012-0700-001). The draft policy, if finalized, would replace Implementation of the Pennsylvania State History Code: Policy and Procedures for Applicants for DEP Permits and Plan Approvals, finalized in 2002 and amended in 2006, and establishes the framework DEP would implement for its plan approvals and permit application reviews to comply with Pennsylvania’s History Code, 37 Pa. C.S. §§ 101 et seq.
The History Code and its application to oil and gas operations
Under Section 507 of the History Code, Common-wealth agencies must notify PHMC before undertaking any Commonwealth or Commonwealth-assisted permitted or contracted project that affects or may affect archaeological sites and provide PHMC with information concerning the project or activity. DEP requires applicants to submit the State Historic Preservation Office (SHPO) Project Review Form to PHMC if their project potentially affects an archaeological site. After receiving the form from the applicant, PHMC must then determine whether the project may adversely affect an archaeological site.
Oil and gas operations potentially fall within the History Code’s consultation and survey requirements as “Commonwealth-assisted permitted projects.” Activities that require state permits, such as construction of well pads, pipelines, compressor stations and underground injection control wells, could have the potential to affect historic resources that come within the purview of the PHMC coordination requirements in the History Code.
Neither the History Code nor the draft policy mandates outcomes for known or discovered historic resources identified during the review process or during a survey or field investigation. If PHMC identifies potential adverse effects to archaeological resources that may result...
February 7, 2020New WOTUS definition finalized, new challenges expected
The PIOGA Press
On January 23, the U. S. Environmental Protection Agency and the U. S. Army Corps of Engineers pre-published the final Navigable Waters Protection (NWP) Rule, which (yet again) redefines the scope of waters regulated under the Clean Water Act (CWA). In particular, the final NWP Rule revises the definition of “waters of the United States” (WOTUS) in 12 federal regulations and will become effective 60 days after publication in the Federal Register.
Once effective, the NWP Rule will almost certainly be challenged in the courts by NGOs and other interested parties. These challenges could result in the courts staying the NWP Rule in some, or all, states while the lawsuits are litigated.
The NWP Rule is the final step in fulfilling the Trump administration’s promise to repeal and replace the Obama administration’s 2015 Clean Water Rule (CWR), which many believe improperly expanded the scope of waters regulated under the CWA. Effective December 23, 2019, EPA and the Corps repealed the CWR and restored the WOTUS definition that existed before 2015. Prior to the repeal, the pre2015 rule’s WOTUS definition applied in approximately half of the states, while the CWR’s WOTUS definition applied in the remainder (including Pennsylvania), resulting in certain states having more federally regulated waters than other states.
The stated intent of the NWP Rule is to provide “clarity, predictability and consistency” regarding CWA jurisdiction. Consistent with President Trump’s February 28, 2017, Executive Order, the NWP Rule heavily reflects and relies upon Supreme Court Justice Antonin Scalia’s interpretation of the pre-2015 rule’s definition of WOTUS, as expressed in his plurality opinion in the seminal case, Rapanos v. United States (547 U.S. 715 (2006)). Missing from the NWP Rule is any reference to the significant nexus test discussed in Justice Anthony Kennedy’s concurring...
February 5, 2020Elizabeth A. Dupuis named to Pennsylvania Business Central’s “Top 100 People”
Pennsylvania Business Central
Elizabeth A. Dupuis has been named to this year's Pennsylvania Business Central's "Top 100 People" list and profiled in its Signature Top 100 issue. Nominations were taken throughout the publication's 24-county coverage area, and the final honorees were selected by a special selection committee for their professional and community contributions.
Betsy Dupuis has practiced law in Central Pennsylvania since 1997, most recently as Managing Shareholder at law firm Babst Calland’s State College office. Her practice focuses on real estate transactions, business planning and formation, commercial and contract litigation, estate planning and administration. She is also a licensed title agent in Pennsylvania and conducts commercial real estate closings through MidState Closing Company, a Babst Calland affiliate.
Among other honors, she is a graduate of Leadership Centre County and was recognized by LCC with the Community Leadership Association’s Distinguished Leader Award. She is the incoming chair for the National Association of Home Builders Legal Action Committee. She presently serves on the boards of the Centre County Chamber of Business and Industry (CBICC), the Central Pennsylvania Risk Management Association, and the Pennsylvania Builders Association. She is a past Chair of the Centre County United Way and the Palmer Museum of Art Gala.
She was recently re-appointed for a second four-year term as Solicitor for Centre County.
Top 100 People The vibrant economic and social life of central Pennsylvania is powered by people. 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...
January 31, 2020Artificial Intelligence Is Transforming the Legal Industry
The Legal Intelligencer
(by Christian Farmakis)
Artificial intelligence (AI) is adding efficiencies and transforming businesses everywhere, and legal practices are no exception.
General counsels who are hiring lawyers need to understand that this technology is available now, so they can make sure their lawyers are leveraging the latest technology tools. AI can increase speed, increase efficiency and lower costs for clients—if the law firm has the right tools, but more importantly knows how to use those tools.
The following are some of the common questions about advancement of AI technology in the legal space.
• How is AI technology disrupting the legal industry?
AI is a term generally used to describe computers performing tasks normally viewed as requiring human intellect.
AI legal technology won’t replace lawyers, but these tools will drastically change the way lawyers provide services for their clients. While estimates vary, 23%t to 35% of a lawyer’s job could be automated. As a result, lawyers will need to be more strategic and supervisorial, able to act as project managers and supervise the information being fed into systems, and knowledgeable about the assumptions underlying the machine learning algorithms.
So far, projects that classify data have been impacted the most, allowing projects such as e-discovery, due diligence, document management and research to be done faster and more efficiently.
Law firms can already pass these savings on to clients, but this is only the beginning of the transformation. Early law firm adopters are implementing artificial intelligence, machine learning and predictive analytics to legal contract review and document management, enhancing efficiency, intelligence and quality while reducing costs for clients.
For example, with the addition of artificial intelligence software, Babst, Calland, Clements and Zomnir can now deploy highly trained machine learning algorithms in its due diligence process resulting in faster, more intelligent contract or document review for clients. Whether the client...
New WOTUS Definition Finalized – New Challenges Expected
On January 23, 2020, the U. S. Environmental Protection Agency (EPA) and the U. S. Army Corps of Engineers (Corps) pre-published the final Navigable Waters Protection Rule (NWP Rule), which (yet again) redefines the scope of waters that are regulated under the Clean Water Act (CWA). In particular, the final NWP Rule revises the definition of “waters of the United States” (WOTUS) in 12 federal regulations and will become effective 60 days after publication in the Federal Register. Once effective, the NWP Rule will almost certainly be challenged in the courts by NGOs and other interested parties. These challenges could result in the courts staying the NWP Rule in some, or all, states while the lawsuits are litigated.
The NWP Rule is the final step in fulfilling the Trump administration’s promise to repeal and replace the Obama administration’s 2015 Clean Water Rule (CWR), which many believe improperly expanded the scope of waters regulated under the CWA. Effective December 23, 2019, EPA and the Corps repealed the CWR and restored the WOTUS definition that existed prior to 2015 (Pre-2015 Rule). Prior to the repeal, the Pre-2015 Rule’s WOTUS definition applied in approximately half of the states, while the CWR’s WOTUS definition applied in the remainder (including Pennsylvania), resulting in certain states having more federally regulated waters than other states.
The stated intent of the NWP Rule is to provide “clarity, predictability and consistency” regarding CWA jurisdiction. Consistent with the President’s February 28, 2017 Executive Order, the NWP Rule heavily reflects and relies upon Justice Antonin Scalia’s interpretation of the Pre-2015 Rule’s definition of WOTUS, as expressed in his plurality opinion in the seminal case, Rapanos v. United States (547 U.S. 715 (2006)). Missing from the NWP Rule is any reference to the significant nexus test discussed in Justice Anthony Kennedy’s concurring opinion...
January 30, 2020Council on Environmental Quality Proposes Amendments to NEPA Regulations
The Legal Intelligencer
If a newly proposed rulemaking is finalized, the process by which federal agencies are required to analyze the environmental impacts caused by their actions could be comprehensively updated for the first time in over four decades. On Jan. 10, the Council on Environmental Quality (CEQ) published a notice of proposed rulemaking in the Federal Register to update its regulations implementing the National Environmental Policy Act of 1969 (NEPA). The proposed revisions seek to narrow both the scope of projects that must be reviewed under NEPA, as well as the nature and extent of such review. These changes are intended to reduce the time, cost and workload required to comply with NEPA, and could also make it more difficult for opponents of agency actions that seek to block those actions in court based on alleged NEPA violations.
Background of NEPA
NEPA, enacted in 1970, is a procedural law; it does not mandate substantive environmental outcomes. The purpose of NEPA is to promote accountability and transparency in federal decisions to ensure that environmental concerns are integrated into federal decision-making. The CEQ, a division of the Executive Office of the President, is charged with overseeing implementation of NEPA CEQ first promulgated regulations implementing NEPA in 1978.
NEPA applies to major federal actions significantly affecting the quality of the human environment, including those undertaken by nonfederal entities that receive federal funding or require federal permitting approvals. Federal agencies have three primary means of complying with NEPA. First, federal actions that have previously been determined to involve no significant impacts to the environment may receive a categorical exclusion (CE) from a more in-depth and time-consuming, review. Second, projects for which impacts are not expected to be significant or are unknown require the preparation...
January 24, 2020Trucking regulators look to alleviate cost increases, while keeping safety first
(by Jayne Gest with Boyd Stephenson)
The trucking industry is still adjusting to the final transition to electronic logging devices (ELDs). Some relief may be on the horizon, however, as federal regulators consider whether to relax the hours of service requirements.
“Every solution has unintended consequences, and that is exactly what we are seeing now,” says Boyd A. Stephenson, associate at Babst Calland. “The supply chain is like a balloon, where everything is interconnected. You push on one part and another piece will pop out.”
Paper logbooks are left to the discretion of the driver, while ELDs record driving time automatically to ensure driving hours are strictly followed. The idea is to make the roads safer. Effective now, strict enforcement of the ELD mandate applies to all drivers, unless they operate under the short-haul rule exemption.
The trucking industry is dealing with rising transportation costs and an overall driver shortage in an economic expansion. Freight volumes also grew more slowly in 2019, with trade conflicts and tariff increases taking a toll on growth.
An American Transportation Research Institute survey found that the top industry concerns for 2019 were driver shortages, hours of service, driver compensation and detention or delays at customer facilities. These obstacles increase trucking costs, which get passed on to shippers that need their goods transported.
Smart Business spoke with Stephenson about hours of service rules and other industry changes that businesses should be aware of in 2020.
Why did the Federal Motor Carrier Safety Administration (FMCSA) feel a need to change the hours of service rules?
With ELDs in place, drivers cannot adjust their logs. Difficulties like wait time while cargo is loaded or unloaded, weather and traffic have highlighted the need to adjust the hours of service and let drivers spend more time on the road. Based on strong industry feedback, the FMCSA...
January 22, 2020The Council on Environmental Quality Proposes to Amend NEPA Regulations
On January 10, 2020, the Council on Environmental Quality (CEQ) published a notice of proposed rulemaking in the Federal Register to revise regulations implementing the National Environmental Policy Act of 1969 (NEPA). These revisions could significantly affect projects in several industries, including infrastructure development, that require approval by federal agencies.
NEPA is a procedural statute that requires federal agencies to evaluate environmental impacts associated with proposed major actions. Major actions are actions subject to federal control and responsibility with potential significant effects. CEQ’s regulations that implement NEPA aim to ensure that environmental effects from such actions are considered before they are undertaken. These regulations have never been comprehensively revised since they were promulgated in 1978, despite statutory changes that provided for a more streamlined NEPA review of certain infrastructural projects. The Trump administration first signaled its intent to update the NEPA regulations in 2017, when it issued an Executive Order directing CEQ to review the environmental review process to enhance its efficiency, specifically for major infrastructure projects. In June 2018, CEQ published an advance notice of proposed rulemaking (ANPRM) soliciting comments on potential revisions to the NEPA regulations. CEQ considered those comments when developing the current proposed rule.
Summary of CEQ’s Proposed Changes
CEQ has proposed extensive revisions to its regulations in an effort to create a more efficient and timely NEPA review process. The proposed changes would impact several fundamental aspects of the NEPA process, such as the application and scope of NEPA review, analysis of alternatives, and timing requirements. Key proposed changes include:Revision of the term “effects.” This revision would alter the scope of an agency’s effects analysis under NEPA. Under existing regulations, the term “effects” is defined to include all...
January 14, 2020Pennsylvania Supreme Court establishes requirements for easements by necessity
The PIOGA Press
The modern oil and gas industry is a complex and multifaceted operation involving significant upstream, midstream and downstream infrastructure. Well pads located on the surface are necessary to extract the oil and gas from the subsurface. A constantly expanding network of pipelines are required to transport the produced oil and gas from the well pad to places of market or refinement. This complexity requires a constant balance of property rights between surface owners and mineral owners and operators. One mechanism by which the parties balance property rights is through the use of easements. Easements can be created in several different ways, including through an implied easement by necessity which was recently addressed by the Supreme Court of Pennsylvania in Bartkowski v. Ramondo, No. 60 MAP 2018, 2019 Pa. LEXIS 6100 (October 31, 2019).
Implied easement by necessity
Before discussing Bartkowski, it is helpful to understand the elements of an implied easement by necessity. In Pennsylvania, for an implied easement by necessity to exist, three elements must be met:Title to the dominant and servient properties were once held by one person; This unity of title must have been severed by a conveyance of one of the tracts; and The easement must be necessary for the dominant owner to use the land, with the necessity existing both at the time of the severance of title and at the time of the exercise of the easement. An easement by necessity is always of strict necessity and not a mere matter of convenience.
Claiming an easement by necessity involves inherent risks. By definition, there is no document of record creating the easement or defining its scope. Therefore, it is not uncommon for the servient and dominant landowners to disagree as to whether the easement exists....
January 9, 2020Trump Administration Partners with US DOT in Releasing New Autonomous Vehicle Guidance
Emerging Technologies Alert
On January 8, 2020, the Trump administration, in collaboration with the U.S. Department of Transportation (US DOT), issued Automated Vehicles 4.0: Ensuring American Leadership in Automated Vehicle Technologies. This is the federal government’s fourth iteration of its voluntary guidance on autonomous vehicles (AVs). So far, the US DOT’s hands-off approach to AV regulation has allowed for technological innovation while allowing industry participants and states to explore different avenues for testing AV technologies on public roads. AV 4.0 does not disturb this approach, and instead focuses on explaining the research and development happening across the federal government and the opportunities for stakeholders to become involved.
In September 2016, the National Highway Traffic Safety Administration (NHTSA) issued its first guidance on AVs called the Federal Automated Vehicles Policy. The Policy provided a model state policy framework, explained NHTSA’s current regulatory tools to address AVs, and described potential new tools and authorities that NHTSA could use in addressing AVs. NHTSA also provided vehicle performance guidance to AV manufacturers and developers for designing, testing, and deploying AVs.
NHTSA replaced this guidance in September 2017 with Automated Driving Systems 2.0 (ADS 2.0). ADS 2.0 established a “Voluntary Safety Self-Assessment”, recommending that entities engaged in the testing and deployment of AV technologies voluntarily submit an assessment of how they address safety to establish public trust and confidence in the technology. AV 2.0 outlined 12 safety elements (including system safety, operational design domain, crashworthiness and others). By the end of 2019, only a small fraction (under 25 percent) of AV testers published such assessments. ADS 2.0 also provided guidance to state legislatures on potential legislation and best practices for regulatory bodies charged with ensuring roadway safety.
US DOT released Automated Vehicles 3.0 (AV 3.0) in...
RGGI’s New Relative, TCI: A Cap-and-Invest Initiative for Emissions from Transportation Fuel
A new regional program under consideration in 12 Northeast and Mid-Atlantic states and the District of Columbia would create a cap-and-invest program for GHG emissions from fossil fuels used in transportation. The initiative proposed by the Transportation and Climate Initiative (TCI) – a regional collaboration of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, and the District of Columbia that seeks to improve transportation, develop the clean energy economy and reduce carbon emissions from the transportation sector – would be similar to the Regional Greenhouse Gas Initiative (RGGI), which administers a cap and trade program for power plant GHG emissions.
TCI released a draft memorandum of understanding (TCI MOU) on December 17, 2019, which anticipates that each participating jurisdiction will follow its legal process to adopt a program consistent with a jointly developed Model Rule to implement the final TCI MOU. TCI plans to finalize the Model Rule by the end of 2020 after a 60-day comment period and expects that the TCI cap-and-invest program could be implemented in 2022.
The cap and invest program would begin with an initial GHG emissions allowance cap assigned to each participating jurisdiction, which would then decline each subsequent year to bring about a reduction of emissions from the transportation sources. These emission allowances would be distributed at auctions, and funds generated from these auctions are anticipated to fund low-carbon and clean mobility options in urban, suburban, and rural communities. The contemplated program will cover all gasoline and on-road diesel fuel dispensed at the terminal rack and require fuel suppliers to hold emissions allowances equal to the GHG emissions from the fuel they distribute in the participating jurisdictions.
The proposed TCI MOU defines two types of...
January 8, 2020Arbitration Means Arbitration: Golden Eagle Resources II v. Willow Run Energy
(by Mychal Sommer Schulz)
The West Virginia Supreme Court of Appeals recently signaled that it would treat arbitration issues under the West Virginia Revised Uniform Arbitration Act, W. Va. Code § 55-10-8, et. al. (the “Act”), exactly the same as arbitration issues that arise under the Federal Arbitration Act (FAA).
In Golden Eagle Resources II, L.L.C. v. Willow Run Energy, L.L.C., No. 19-0384 (Nov. 19, 2019), the Court addressed a written contract by which Willow Run conveyed mineral interests in property to Golden Eagle. The written contract contained an arbitration provision by which the parties agreed that any “disagreement between the Parties concerning this Agreement or performance thereunder” would be submitted to arbitration. A dispute arose about whether a cloud on title existed on the mineral interests conveyed, which led Golden Eagle to withhold payment for those interests, after which Willow Run filed a breach of contract civil action in the Circuit Court of Pleasants County.
Golden Eagle sought to dismiss the civil action and have the dispute referred to arbitration. After the circuit court agreed to allow Willow Run to amend its complaint to include a declaratory judgment claim against additional defendants who allegedly may have created the cloud on title, the circuit court refused to refer Golden Eagle’s claims to arbitration because it found that (1) W. Va. Code § 51-2-2(d) (2017) grants circuit courts jurisdiction “to remove any cloud on the title to real property, or any part of the cloud, or any estate, right or interest in the real property” and (2) the additional parties in the amended complaint, who were not signatories to the arbitration agreement, were necessary parties to the dispute as they allegedly may have cause the cloud on the title to the mineral interests conveyed to Golden Eagle.
The Court reversed the circuit court...
Legal Tech: Babst Calland & Solvaire: An AI Contract Review Use Case
Law Journal Newsletters
Babst Calland and our technology affiliate, Solvaire, have been performing complex due diligence, discovery, and document management projects for clients for more than 20 years. Our clients look to us for due diligence guidance in the areas of acquisitions and divestitures, as well as complex corporate, commercial and real estate transactions.
The firm has a long history of utilizing the latest technologies to enhance contract review. And, in the last few years, the firm has taken a deep look at AI-assisted review and its ability to enhance efficiency and reduce cost for clients. Saying that we have become “AI Believers” in the process is an understatement. After many AI tool evaluations, trials, and getting numerous AI projects under our belts, we have become our clients’ go-to resource in leveraging AI for their benefit.
Taking Off On an AI Journey
In today’s business climate, clients demand greater efficiency when it comes to contract review for many complex deals and transactions. We have found that the combination of deep legal expertise, coupled with embracing carefully researched and vetted technology, is the most effective means of delivering high quality and timely review in an increasingly competitive marketplace.
Over the last few years, our firm has embarked on an exhaustive search for tools that will help us deliver more value to our clients. We spent the first 36 months of our AI journey reviewing nine different well-known contract review tools. Within the last 12-18 months, we have incorporated specific tools into the firm’s due diligence and contract management processes. We are particularly excited about our selection of Diligen, which we find to be a high-performance contract review platform. In the end, we chose Diligen for its intuitive and flexible interface, robust performance, and its ability to handle large volumes of contracts.
Babst Calland Expands Environmental Practice
Attorney Richard S. Wiedman Joins Firm
PITTSBURGH, PA – Babst Calland announced today the addition of veteran environmental attorney, Richard S. Wiedman, who joined as a shareholder at the Firm’s Pittsburgh headquarters.
Mr. Wiedman is joining Babst Calland’s team of highly-focused environmental attorneys in providing senior-level legal and regulatory counsel, particularly in the areas of environmental, permitting, environmental business counseling, and environmental litigation.
“We are very pleased to welcome Rick to our Firm and to our established team in Pittsburgh. I have known Rick for over 30 years and he is a natural fit for us as he shares our values, experience, and philosophy in serving clients, some with whom we already have existing relationships,” said Donald C. Bluedorn II, Managing Shareholder of Babst Calland. “Rick is a great addition as we continue to expand Babst Calland’s team and capabilities to serve the needs of existing and new clients across the country.”
Since 1980, Mr. Wiedman has represented clients before federal and state environmental agencies, and counseled clients on regulatory compliance issues and environmental considerations in a variety of business transactions. He also devotes significant time to the negotiation and prosecution of environmental permit and regulatory challenges, the defense of federal and state enforcement actions, and the representation of clients in remedial action/corrective action and cost recovery matters under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund), the Resource Conservation and Recovery Act (RCRA), and their state counterparts.
His experience reflects the interrelationship of the major regulatory programs as they pertain to industrial activities. Many of the projects with which he is involved require the coordination of multidisciplinary efforts where creative engineering and technical approaches are often critical to the development and success of legal and regulatory strategy. In this regard, he works closely with experts and outside consultants in...
January 6, 2020West Virginia DEP Opens Comment Period on New Wetland Assessment Tool
The West Virginia Department of Environmental Protection (WVDEP) recently released a new tool consisting of a standardized method for the functional assessment of wetlands, known as the West Virginia Wetland Rapid Assessment Method (WVWRAM). According to the WVDEP’s public notice accompanying its release, the WVWRAM represents the agency’s first effort to devise a state-specific protocol that will rate not just the quantity and type of wetlands, but also their chemical, physical, and biological integrity in arriving at a regulatory score. For permitting and mitigation scenarios (including off-site mitigation and creation of mitigation banks), that WVWRAM score will then be used as an input into the existing functional assessment tool known as the “West Virginia Stream and Wetland Valuation Metric” or “SWVM.”
The WVWRAM was developed as a part of the WVDEP’s federally-funded Wetland Program Plan and has been in the works for at least five years, with field testing in 2017 and 2018 that involved some 22 stakeholder organizations. In addition to the WVWRAM computer model, the WVDEP released an 11-page Field Form (data sheet), a User Manual, and a Reference Manual that were prepared by WVDEP scientists. The WVDEP plans to work with the U.S. Army Corps of Engineers and the Inter-Agency Review Team (IRT) to incorporate the WVWRAM into Clean Water Act Section 404 permitting for sites in West Virginia, and in the preparation of corresponding mitigation plans that are required to compensate for unavoidable loss or damage to wetland resources caused by permitted activities. According to the WVDEP press release, five two-day WVWRAM training workshops were held in 2019, with 122 participants from 40 organizations completing the necessary training to use the new protocol.
Generally, the agency does not expect there will be any change to the average amount of mitigation required...
December 20, 2019Pittsburgh Paid Sick Leave Law Coming March 2020
Employment and Labor Alert
(by Stephen Antonelli and Alexandra Farone)
The City of Pittsburgh recently announced that the Paid Sick Days Act is slated to take effect on March 15, 2020. This Act requires employers to provide their employees with paid sick leave based on hours worked. The Act will apply differently to employers of different sizes:For employers with 15 or more employees, eligible workers must be provided one hour of paid leave for every 35 hours worked, up to a maximum of 40 hours of paid leave per year. For employers with less than 15 employees, eligible workers must be provided one hour of unpaid leave for every 35 hours worked, up to a maximum of 24 hours of paid during the first year of enforcement. After one year from the effective date of the Act, these small employers must provide one hour of paid leave for every 35 hours worked, up to a maximum of 24 hours of paid leave per year. Employers based outside of Pittsburgh must begin offering leave under the Act for any of its employees that spend at least 35 hours working inside city limits.
Eligible employees include full- and part-time employees who work within the geographical limits of the City of Pittsburgh. The following types of workers are not eligible for leave under the Act: federal and state employees, independent contractors, construction workers in a collective bargaining unit, and seasonal employees as defined by the Act. Accrued leave may be carried over to the following calendar year unless the employer opts to “frontload” the maximum amount of leave at the beginning of each year. Sick time under the Act may only be used for the employee’s illness, injury, or health care; health-related care for an employee’s family member as defined by the Act; or...
FMCSA Seeks Comments About Advanced Safety Technologies
Emerging Technologies Alert
On December 18, 2019, the Federal Motor Carrier Safety Administration (FMCSA or Agency) published an information collection notice which proposes a limited scope for implementing the Beyond Compliance motor carrier safety program. According to the notice, FMCSA personnel intend to query a little over 100 motor carriers with strong safety records about what technologies they employ and what programs or practices they engage in to achieve strong safety results. According to the notice, this research will be packaged into a technical report, which the Agency researchers will then incorporate into a Beyond Compliance report the Agency is required to transmit to Congress. If only motor carriers are consulted, technology providers may lose the opportunity to identify safety innovations that are not yet widely known to the trucking industry. The docket for comments will remain open through February 18, 2020.
In the Fixing America’s Surface Transportation Act of 2015, (FAST Act) Congress directed the FMCSA to establish the Beyond Compliance program. Congress designed Beyond Compliance to identify advanced trucking safety technologies and practices that are not required by regulation but which improve safety. After identifying these technologies, motor carriers would participate in the Beyond Compliance program by adopting these advanced safety technologies. FMCSA would then reward the carriers by publicly recognizing the motor carrier. Congress has also directed the Agency to deprioritize trucks operating for carriers that meet Beyond Compliance criteria for roadside inspection by either creating a new measurement category in FMCSA’s online CSA Safety Management System (SMS) or by designating that Beyond Compliant carriers’ CSA SMS scores are otherwise improved by participating in the program.
Congress also required FMCSA to adopt a process in which any interested party could submit a technology or process for inclusion...