Search

Stay Informed


SUBSCRIBE

May 14, 2019

Trump executive order puts spotlight on DOT LNG rules

The PIOGA Press

(by Keith Coyle)

On April 10, President Donald Trump signed an executive order, “Promoting Energy Infrastructure and Economic Growth.” In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the executive order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities.

The executive order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities” Accordingly, the executive order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.

Why does dot regulate LNG safety?

The LNG industry has a long history in the United States. The first LNG plant went into service in West Virginia in the World War I era, and a commercial liquefaction plant in Cleveland, Ohio, went into operation in the 1940s. In 1944, the Cleveland plant experienced an LNG tank failure that led to a fatal explosion and fire and resulted in extensive property damage. The first commercial shipment of LNG by vessel occurred 15 years later, in 1959, when the Methane Pioneer sailed from Louisiana to the United Kingdom. Several large-scale LNG terminals were constructed during the late 1960s and 1970s in places like Alaska, Louisiana, Georgia, Maryland, and Massachusetts, a period that coincided with DOT’s initial efforts to establish federal safety standards for LNG facilities.

In the Natural Gas Pipeline Safety Act of 1968, Congress authorized DOT to prescribe and enforce minimum federal safety standards for gas pipeline facilities and persons engaged...

EPA releases interpretive statement excluding releases to groundwater from NPDES program

The PIOGA Press

(by Lisa Bruderly and Gary Steinbauer)

On April 23, the U.S. Environ - mental Protection Agency published a notice of availability of an interpretive statement concluding that releases of pollutants to ground - water should be categorically excluded from Clean Water Act (CWA) permitting requirements. 84 Fed. Reg. 16810. The notice opens a 45-day public comment period, ending on June 7. EPA is requesting comments on its analysis and rationale and is also soliciting input on additional actions that may be needed to provide further clarity and regulatory certainty on whether the National Pollutant Discharge Elimination System (NPDES) permit program regulates releases of pollutants to groundwater.

With the issuance of the interpretive statement, EPA has reinjected itself into the ongoing debate, federal circuit court split and pending U.S. Supreme Court case over whether the CWA’s NPDES permit program regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water. The interpretive statement and the related, ongoing judicial decisions are of interest to the natural gas industry, among other industries, given the potential implications related to leaks/spills from pipelines, impoundments and other structures.

 Interpretive statement content and reasoning

EPA describes the interpretive statement as the agency’s “most comprehensive analysis” of the CWA’s text, structure and legislative history in relation to whether the NPDES permit program regulates point source releases to groundwater. Most of the 63-page interpretive statement discusses EPA’s legal analysis of the statutory provisions that implement and enforce the NPDES permit program, the forward-looking, information-gathering statutory provisions that explicitly reference groundwater, and the relevant legislative history. Based on its analysis of this information, EPA concludes that Congress deliberately chose to exclude discharges of pollutants to groundwater from the NPDES permit program, even when those pollutants are conveyed to a jurisdictional surface water via groundwater. While EPA’s conclusion...

EPA determines that revisions to Subtitle D regulations for oil and gas wastes are unnecessary

The PIOGA Press

(by Jean Mosites)

In May 2016, various environmental groups, including the Environmental Integrity Project and the Natural Resources Defense Council, filed a lawsuit in federal court alleging that the United States Environmental Protection Agency failed to evaluate its regulations for managing wastes associated with oil and gas development activities as non-hazardous under Subtitle D of the Resource Conservation and Recovery Act (RCRA). The suit alleged that EPA had a non-discretionary duty under RCRA to periodically review and, if necessary, revise its Subtitle D regulations for solid waste disposal facilities and state solid waste management plans with respect to oil and gas development wastes. It further alleged that EPA had not done so since 1988 and that EPA should be ordered to conduct a subsequent review. The 1980 Bentsen Amendment to RCRA had exempted oil and gas wastes from regulation under RCRA Subtitle C as hazardous waste and permits regulation of such wastes under Subtitle D as non-hazardous. Earlier, EPA had declined a 2010 petition by NRDC requesting E&P waste be regulated as hazardous under Subtitle C.

The May 2016 lawsuit was resolved in December 2016 through the entry of a consent decree in which EPA agreed to either propose revisions to its Subtitle D regulations for oil and gas wastes or make a determination that revision of such regulations is unnecessary by April 23, 2019. On April 23, EPA determined that revising its Subtitle D regulations was not necessary.

To arrive at its determination, EPA examined regulatory programs in states such as Pennsylvania accounting for the vast majority of oil and gas production in the United States. EPA reviewed current waste management practices, waste characteristics, and E&P waste release/spill incidents in these states. The agency found that: 1) uncontrolled releases of oil and gas wastes are uncommon; 2) human...

May 13, 2019

Babst Calland Expands Washington, D.C. Environmental and Mobility, Transport and Safety Practices

WASHINGTON, DC and PITTSBURGH, PA – May 13, 2019 – Babst Calland announced today the lateral move of Gina Falaschi, who joined as associate in the firm’s Washington, D.C. office in the Environmental, Mobility, Transport and Safety, and Litigation practice groups.

Ms. Falaschi’s move to Babst Calland, along with Julie Domike, another seasoned environmental attorney who recently joined Babst Calland as shareholder in late April, further represents the firm’s commitment to meet clients’ needs related to environmental and emissions mobile source services before EPA, the California Air Resources Board, and other regulatory agencies as a part of its best-in-class team.

Ms. Falaschi provides advice to clients in the energy, transportation, and technology sectors regarding environmental regulatory compliance.  She has assisted companies with disclosure of regulatory violations to state and federal agencies, and has counseled clients in negotiations with the U.S. Department of Justice, U.S. EPA, and California Air Resources Board. In addition to counseling on compliance issues, she has worked with technology and energy companies in developing new projects and has advised clients on regulatory issues arising from joint ventures, mergers, and acquisitions.

She has litigated cases in federal court, represented clients in administrative cases before various federal agencies, and has experience with administrative rule challenges before the U.S. Court of Appeals for the District of Columbia Circuit.  Ms. Falaschi is admitted to practice in the District of Columbia, California, U.S. Court of Appeals for the District of Columbia Circuit, and U.S. District Court for the Eastern District of California.

Ms. Falaschi earned her J.D. from Georgetown University Law Center in 2016 and her A.B., magna cum laude, from Georgetown University in 2013.

May 10, 2019

EEO-1 Update: Employers Must Provide Pay Data to EEOC by September 30, 2019

Employment & Labor Alert

(by Stephen Antonelli and Alexandra Farone)

Large and certain mid-size employers must provide demographic data to the EEOC by September 30, 2019 regarding the 2017 and 2018 earnings paid to employees categorized by sex, race, and ethnicity. On April 25, 2019, the U.S. District Court for the District of Columbia ordered the EEOC to collect two years of employers’ pay data by this September deadline, reviving an Obama-era regulation that was stayed by the Trump administration. This requirement will apply to all employers with at least 100 employees, and federal contractors with at least 50 employees.

For more than 50 years, the EEOC has required large and mid-size employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race, and ethnicity. This data is now known as “Component 1” data. The Obama-era EEOC proposed requiring an additional component to this annual report that would require employers to disclose the earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories. In 2016, the Office of Management and Budget approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay on implementation of Component 2 data collection has been the subject of litigation since November 2017. The District Court vacated the stay in March 2019, and recently ruled to extend the Component 2 reporting deadline four months until September 30, 2019.

The Court’s ruling has no...

May 9, 2019

Babst Calland Picks Up Enviro Pro From Haynes And Boone

Law360

Babst Calland has hired a longtime environmental attorney from Haynes and Boone LLP who brings with her special expertise in the Clean Air Act, joining the firm a shareholder in its Washington, D.C., office.

Julie Domike joined the firm on April 29 after five years as a partner at Haynes and Boone. Previously, she spent time at Kilpatrick Townsend & Stockton LLP and what is now DLA Piper. She also spent nearly a decade at the U.S. Environmental Protection Agency, working on air enforcement and other matters that she said have continued to inform her work.

For the full article, click here.

May 6, 2019

Veteran Environmental Attorney Joins Babst Calland’s Washington, D.C. Office

WASHINGTON, DC and PITTSBURGH, PA – May 6, 2019 – Law firm Babst Calland today announced the lateral move of Julie Domike, a veteran environmental attorney, who joined the firm’s Washington, D.C. office as shareholder, effective April 29.

Ms. Domike will provide senior-level legal counsel in key practice areas including Environmental, Mobility, Transport and Safety, and Litigation. Ms. Domike has represented numerous clients across the country in complex negotiations with the U.S. Department of Justice and EPA, resulting in global settlements affecting multiple company facilities. Much of Ms. Domike’s practice involves permitting and other issues under the Clean Air Act, addressing issues associated both with mobile and stationary sources.  Ms. Domike has worked with companies engaged in developing new projects or modifying existing plants, and she has worked with clients on environmental audits and subsequent correction and disclosure to state and federal environmental agencies.

Having previously served as an attorney and manager at the United States Environmental Protection Agency (EPA) Headquarters, Ms. Domike understands the Agency’s enforcement approach and counsels clients to engage with EPA in rulemaking, and enforcement. She has represented a variety of companies that have been the focus of EPA’s regulations, including refineries, engine manufacturers, independent power producers, chemical plants, fuel producers, and construction and farm equipment makers.

Commenting about this lateral move to the Firm, Donald C. Bluedorn II, managing shareholder of Babst Calland, said, “We are very pleased to welcome Julie to our Firm and to our established team in Washington, D.C. She is a natural fit for us and her experience further complements the existing synergies that we offer clients, particularly in the Energy, Mobility, and Transportation industries."

Julie Domike’s arrival at Babst Calland also represents sustained growth in the Mobility practice, led by Firm shareholder Tim Goodman, responding to our clients’ requests to provide environmental...

May 2, 2019

Public Comment Period Open on EPA’s Interpretive Statement Excluding Releases to Groundwater from NPDES Program

Environmental Alert

(by Lisa Bruderly and Gary Steinbauer)

On April 23, 2019, the U.S. Environmental Protection Agency (EPA) published a Federal Register notice of availability of an Interpretive Statement concluding that it considers releases of pollutants to groundwater to be categorically excluded from the Clean Water Act’s permitting requirements.  The notice opens a 45-day public comment period, ending on June 7, 2019.  EPA is requesting comments on the analysis and rationale included in the Interpretive Statement and is soliciting input on additional actions that may be needed to provide further clarity and regulatory certainty on whether the NPDES permit program regulates releases of pollutants to groundwater. The publication of the Interpretive Statement has reinjected EPA into the ongoing debate, federal circuit court split, and pending U.S. Supreme Court case over whether the CWA’s National Pollutant Discharge Elimination System (NPDES) permit program regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water.

Content and Reasoning Behind the Interpretive Statement

EPA describes the Interpretive Statement as the Agency’s “most comprehensive analysis” of the CWA’s text, structure, and legislative history as they relate to whether the NPDES permit program governs point source releases to groundwater.  The bulk of the 63-page Interpretive Statement includes EPA’s legal analysis of the statutory provisions implementing and enforcing the NPDES permit program, the forward-looking, information-gathering statutory provisions that explicitly reference groundwater, and legislative history.  Based on its analysis of this information, EPA concludes that Congress deliberately chose to exclude discharges of pollutants to groundwater from the NPDES permit program, even when those pollutants are conveyed to a jurisdictional surface water via groundwater.

While EPA’s conclusion is based primarily on its legal interpretation of the CWA, the major policy-based rationale supporting its conclusion is that groundwater is extensively regulated under other federal and...

April 22, 2019

Entity choice – When picking your company structure, it requires more than Googling

Smart Business

(by Jayne Gest with Kevin Wills)

Founders should understand that choosing a business entity isn’t one size fits all. That’s why founders should consult with legal and tax advisers to make sure that they choose the entity that works best for their circumstances.

“A big issue is that clients don’t always consult legal and tax advisers. They Google ‘start a company’ and go with one of the first links they find,” says Kevin T. Wills, shareholder at Babst Calland.

People also will call and say, ‘I want to start a company. Everyone says I should be a Delaware corporation,’ he says. That may be the case, but it’s important to talk it through first. A different structure may be better for your business.

Smart Business spoke with Wills about legal structures for startups.

What are some potential entity types?

When starting a business, most founders tend to consider three options.

C corporation (C-corp). A traditional corporation that is run by a board of directors, owned by stockholders and subject to federal income taxation. Limited liability company (LLC). More of a contractual arrangement that is governed by an operating agreement and offers pass-through taxation. S corporation (S-corp). This is a corporation, but the company’s revenue passes directly through and is only taxed at the shareholder distribution level.

What about limited partnerships (LPs)?

LPs are still prevalent in certain industries, but LLCs have limited the utility of LPs. Generally, you can structure an LLC to operate like an LP, where a board of managers runs the company and members are passive investors who get distributions.

What are the advantages and disadvantages to each structure?

C-corps work well for startups that need to raise capital from professional investors or plan to give employees stock grants to supplement compensation. They can be more attractive for investors because many venture capital funds have tax-exempt...

April 18, 2019

Equitable Relief in Land Use and Zoning Matters—Three Main Theories

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Defenses or claims based in equity have long been recognized by Pennsylvania courts in zoning and other land use matters. There are three main equitable theories, all of which bar a municipality from enforcing its land use regulations and permit property owners to continue a use or activity in violation of applicable ordinances—equitable estoppel, vested rights and variance by estoppel. Pennsylvania courts consider all three theories unusual remedies that should only be granted in the most extraordinary of circumstances, as in Lamar Advantage GP v. Zoning Hearing Board of Adjustment, 997 A.2d 423 (Pa. Commw. Ct. 2010). These three theories are closely related and the elements of each vary only subtly.

Equitable Estoppel

The doctrine of equitable estoppel applies when:

The municipality intentionally or negligently misrepresented a material fact; The municipality knew or had reason to know that the property owner would justifiably rely on the misrepresentation; and The misrepresentation induced the property owner to act to his detriment because of his justifiable reliance, as in Cicchiello v. Bloomsburg Zoning Hearing Board, 617 A.2d 835, 837 (1992).

The Commonwealth Court has consistently held that the theory of equitable estoppel cannot be relied upon to provide relief when the property owner asserting it “knew or should have known that the alleged promisor was without authority to effectuate the alleged promise,” as in DiSanto v. Board of Commissioners, 172 A.3d 139 (Pa. Commw. Ct. 2017). For example, a property owner cannot reasonably rely on the statement of an appointed official when the property owner knew, or should have known, that the official does not have the authority to bind the municipality with his statements. See, e.g., Strunk v. Zoning Hearing Board of Upper Milford Township, 684 A.2d 682, 685 (Pa. Commw. Ct. 1996) (landowners could not justifiably rely on a zoning officer’s...

Pennsylvania EQB Advances a Cap and Trade Petition to Reduce Greenhouse Gas Emissions

Firm Alert

(by Jean Mosites and Kevin Garber)

On April 16, 2019, the Pennsylvania Environmental Quality Board, in a vote of 14-5, directed the Pennsylvania Department of Environmental Protection to develop a report and recommendation on a petition for a cap and trade regulation.  The Clean Air Council, Widener Commonwealth Law School Environmental Law and Sustainability Center, and others submitted the Petition on February 28, 2019 asking EQB to promulgate a regulation that would create a multi-sector cap and trade system to reduce greenhouse gas (GHG) emissions to achieve carbon neutrality in Pennsylvania by 2052.

The Petition

The Petition includes a fully drafted regulation that establishes a cap on covered GHG emissions, based on a 2016 base year, and reduces GHG emissions to carbon neutrality by 2052.  The regulation borrows heavily from the California cap and trade regulation, which is a multi-sector program that includes Ontario and Quebec.  The California regulation, however, does not require a reduction of all GHG emissions to net zero.

Citing a goal set by the United Nations Framework Convention on Climate Change and the Paris Agreement, the regulation proposes a cap on Pennsylvania GHG emissions to begin at 91 percent of 2016 emissions and thereafter decline by three percent each year until reaching net zero emissions by 2052.  Covered entities would be required to obtain allowances, by auction or allocation, for each metric ton of reportable GHG emissions per year attributable to their operations in Pennsylvania.  Allowances would cost a minimum of $10 each in 2020, with the price increasing by 10 percent plus the rate of inflation each year.  Any person may buy from the available allowances regardless of whether that person must surrender allowances for GHG emissions or not.

The petitioners cite the Pennsylvania Air Pollution Control Act and the Environmental Rights Amendment, Article I,...

April 17, 2019

Federal Court Partially Vacates U.S. EPA’s Steam-Electric Power Plant Effluent Limitations Guidelines

Environmental Alert

(by Donald Bluedorn and Gary Steinbauer)

On April 12, 2019, the Fifth Circuit Court of Appeals issued a decision in Southwestern Electric Power Company, et al. v. EPA, addressing pending claims in consolidated petitions challenging the U.S. Environmental Protection Agency’s revised effluent limitations guidelines for the Steam Electric Power Generating Point Source Category (ELGs).  The Opinion vacated the “legacy” wastewater and “combustion residual leachate” best available technology economically achievable (BAT) standards promulgated by EPA in 2015.  A copy of the Opinion is available here: http://www.ca5.uscourts.gov/opinions/pub/15/15-60821-CV0.pdf.

Under the Clean Water Act (CWA), EPA is responsible for establishing nationwide technology-based standards to govern discharges of pollutants by specific industrial categories.  See 33 U.S.C. § 1314(b).  In November 2015, EPA promulgated revisions to the ELGs after a multi-year study of wastewater management and treatment technologies used by steam-electric power plants since the ELGs were last revised in 1982.  EPA revised the ELGs to regulate six separate wastewater streams: (1) flue gas desulfurization (FGD) wastewater; (2) fly ash transport wastewater; (3) bottom ash transport wastewater (BATW); (4) flue gas mercury control wastewater; (5) combustion residual leachate (leachate); and (6) gasification wastewater.  In addition, the ELGs regulate “legacy” wastewater, which consists of one or more of the above-referenced wastewater streams (commingled or separate) if they are generated before the date determined by the state permitting authority.  For leachate and “legacy” wastewaters, EPA selected impoundments as BAT-level controls.  By contrast, EPA affirmatively rejected surface impoundments as BAT for the other five wastewater streams and imposed limits based on other forms of wastewater treatment or management.

In granting the environmental groups’ challenge to the BAT “legacy” wastewater limits in the ELGs, the Court repeatedly emphasized what it felt was a false distinction that EPA created between “legacy” wastewater and the other wastewater streams regulated under...

Trump Executive Order Puts Spotlight on DOT LNG Rules

Pipeline Safety Alert

(by James Curry, Keith Coyle and Brianne Kurdock)

On April 10, 2019, President Donald Trump signed an Executive Order on Promoting Energy Infrastructure and Economic Growth (Executive Order).  In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the Executive Order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities.  The Executive Order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities”  Accordingly, the Executive Order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.

What is LNG?

LNG is natural gas that is cooled through a liquefaction process to minus 260 degrees Fahrenheit.  Natural gas converts to a liquid state at that temperature and occupies a volume that is 600 times smaller than its gaseous counterpart.  The reduced volume and high energy density of LNG makes long-distance transportation commercially viable, particularly to markets that lack access to local supplies of natural gas.  LNG facilities create three primary risks from a safety perspective.  As a cryogenic liquid, LNG can cause frostbite or severe burns upon contact with skin.  LNG also vaporizes when released into the environment and can ignite in certain air-gas mixtures.  High concentrations of LNG vapors may displace oxygen, creating the risk of asphyxiation in confined spaces.

Why Does DOT Regulate LNG Safety?

The LNG industry has a long history in the United States.  The first LNG plant went into service...

April 15, 2019

Babst Calland Continues to Expand Mobility and Safety Practice; Former NHTSA Senior Attorney Arija Flowers Joins Law Firm

WASHINGTON, DC, April 15, 2019 – Babst Calland announced that Arija Flowers has joined the Firm as an attorney in the Mobility, Transport and Safety Group in the Firm’s Washington, D.C. office.

Ms. Flowers, a former NHTSA attorney well-known in the industry, served as a Senior Trial Attorney with the NHTSA Office of Chief Counsel.  There, she was the lead U.S. federal enforcement attorney for a number of matters addressing some of the most significant issues in the industry. Ms. Flowers’ joining the Firm continues to enhance its best-in-class capabilities to meet the developing needs of mobility and transport clients and other companies with emerging technologies. The practice provides strategic leadership with business and legal advice for manufacturers, suppliers, start-ups, technology companies and government entities in the full-spectrum of transportation regulatory, safety, product quality, and automation matters, including automated/autonomous driving systems.

“Arija Flowers’ joining our team represents a consolidation at Babst Calland of several recent former NHTSA and DOT senior staff and leadership with the freshest and deepest understanding of NHTSA/DOT’s current decision-makers and technical analysis approach,” said Babst Calland’s Managing Shareholder Donald C. Bluedorn II.  “The continued outreach to us for services from companies – even those who are well represented at present – has really spoken to the success of our vision,” he added.

Ms. Flowers will join Will Godfrey, Babst Calland’s Director, Mobility, Automation and Safety, and a former General Motors engineer and senior NHTSA regulatory chief, and Tim Goodman, the leader of Babst Calland’s Mobility, Transport and Safety Group, and former NHTSA chief legal officer for enforcement and U.S. federal senior executive.

Ms. Flowers will help companies navigate the full-spectrum of mobility, vehicle safety and related regulatory matters, including self-certification of standards, homologation, regulatory compliance, automated/autonomous driving systems, innovative mobility and safety approaches, best practices and emerging trends, standards enforcement, defects...

April 12, 2019

Groundwater Conduit Theory and Its Impact on Superfund Sites, Waste Management Units

The Legal Intelligencer

(by Alana Fortna)

The Clean Water Act regulates the discharge of pollutants into “waters of the United States” pursuant to National Pollutant Discharge Elimination System (NPDES) permits issued by the U.S. Environmental Protection Agency (EPA) or an authorized state agency. This is not a new concept. However, what has come to be known as “the groundwater conduit theory” is disrupting the long-standing understanding of what is and what isn’t covered by the Clean Water Act. This new theory also creates questions for companies and attorneys dealing with Superfund sites and waste management units regulated under RCRA. This article discusses the circuit split on this theory and what I view as potential implications for Superfund sites and waste management units depending on how the U.S. Supreme Court rules.

Several federal cases have addressed the issue of the indirect discharge of pollutants into jurisdictional waters via groundwater transport, and the Supreme Court may weigh in on this question soon. This is an important issue with far-reaching ramifications because it is generally understood that all groundwater that is not otherwise removed (i.e., pumped for drinking water supply) will eventually discharge to a surface water. The Clean Water Act prohibits discharges of pollutants from a “point source” without a NPDES permit, 33 U.S.C. Section 1342. A “point source” is defined as “any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.” Based on this definition, discharges into and through groundwater have not been considered point source discharges because they are not the typical “end of the pipe” discharges. Recent case law out of the U.S. Courts of Appeal for the Fourth, Ninth...

April 11, 2019

Babst Calland Nabs Ex-NHTSA Atty Who Led Takata Probe

Law360

(by Cara Salvatore)

Babst Calland has hired a former National Highway Traffic Safety Administration lawyer who played a lead role in the agency's work on the Takata air bag probe and other high-profile matters, the firm said Wednesday, the third former NHTSA staffer to join the firm's transportation practice in recent years.

For the full article, click here.

April 10, 2019

EQB to consider cap-and-trade petition this month

The PIOGA Press

(by Kevin Garber and Jean Mosites)

The Pennsylvania Environmental Quality Board (EQB) will consider a petition for a cap-and-trade regulation at its April 16 meeting. The Clean Air Council, Widener Commonwealth Law School Environmental Law and Sustain-ability Center, and others submitted the petition on February 28, asking EQB to promulgate a regulation that would create a multi-sector cap-and-trade system to reduce greenhouse gas (GHG) emissions to achieve carbon neutrality in Pennsylvania by 2052.

The petitioners initially submitted the petition to EQB on November 27, 2018. Under EQB’s Petition Policy (25 Pa. Code Chapter 23), the Department of Environmental Protection is to notify EQB and the petitioner within 30 days of DEP’s receipt of the petition whether the petition meets the policy’s eligibility criteria. DEP advised the petitioners on December 26 that the petition met the criteria and would be submitted to EQB for consideration at the first meeting of 2019.

However, DEP did not notify EQB members until, apparently, early February. Upon learning of the petition, Representative Daryl Metcalfe, chairman of the House Environmental Resources and Energy Committee, requested DEP on February 19 to have the petitioners resubmit their petition. The petitioners resubmitted the petition on February 28 with minor changes and additional signatories. DEP notified petitioners and the EQB on March 1 that DEP would review the petition to ensure it still meets the eligibility criteria. DEP has now done that and EQB scheduled the matter for consideration at its April 16 meeting.

The petition

The petition includes a fully drafted regulation that establishes a cap on covered GHG emissions, based on a 2016 base year, and reduces GHG emissions to carbon neutrality by 2052. The regulation borrows heavily from California’s cap-and-trade regulation, which is a multi-sector program that includes Ontario and Quebec. The California regulation, however, does...

March 28, 2019

EPA Announces PFAS ‘Action Plan,’ While Pa. and Other States Chart Their Own Courses

The Legal Intelligencer

(by Lindsay Howard and Matthew Wood)

In a press conference on Feb. 14, 2019, the U.S. Environmental Protection Agency (EPA) announced its multifaceted “action plan” outlining steps the agency is taking to protect public health and the environment from per- and polyfluoroalkyl substances (PFAS). PFAS are a group of synthetic chemicals that have been in use since around the 1940s and have numerous commercial and consumer applications. They have been used in nonstick coatings for cookware and food containers, waterproofing for fabrics and textiles, the manufacture of plastics and resins, and the formulation of firefighting foams. Their widespread use and the discovery of PFAS chemicals in various environmental media across the United States has raised interest and concerns about their potential effects on human health and the environment.

PFAS in the Environment 

PFAS chemicals have been found in, among other things, groundwater (which may be used for drinking water), surface water and sediments, as well as in wildlife and human blood. Human exposure may occur through ingestion of contaminated drinking water and consumption of animals and plants in which PFAS have bioaccumulated (or that have been exposed to PFAS in the course of preparing or cooking food for consumption). Studies have shown that exposure to PFAS chemicals may have negative health consequences, which has driven the EPA and other stakeholders to better understand the chemicals, the extent of their presence in the environment, their potential health effects and the best methods for containment and cleanup.

EPA's Action Plan

To develop its action plan, the EPA requested comments, visited with leadership and citizens of PFAS-affected communities, and hosted a PFAS National Leadership Summit in Washington, D.C. in May 2018. The input from these events informed the action plan’s four primary approaches to addressing PFAS: identifying and understanding PFAS; addressing current contamination; preventing...

March 22, 2019

Read the fine print – Know what you’re getting into before you sign the loan papers

Smart Business

(by Jayne Gest with Christian Farmakis)

It’s not always easy for business owners to find financing. Most business owners will, at some point, turn to conventional bank lending to help finance their business or fund growth, like acquisitions. There are, however, many different types of financing products available in the commercial lending market. But whatever type of financing you settle on, it’s critical to know exactly what you’re risking.

“Business owners often focus more on ‘getting the loan’ than on the specific terms and covenants of the loan, which in many instances can hinder the ongoing operations of the business,” says Christian A. Farmakis, shareholder and chairman of the board at Babst Calland.

Smart Business spoke with Farmakis about the lending environment and legal risks to keep an eye on.

What are loan options for small and mid-sized business owners?

Since the Great Recession, traditional bank lending has competed with other forms of lending. For instance, business owners are increasingly turning to private equity funding and family office lending rather than traditional, asset-based lending. These options may require sacrificing significant ownership and control over the business.

Other loan types include U.S. Small Business Administration loans backed by the federal government but underwritten by banks, small business loans for real estate financing and equipment loans.

Credit unions and regional and community banks sometimes offer different and more flexible terms and do smaller loans because they service the loan in their portfolio, where a larger bank might have stricter underwriting requirements.

What legal issues could crop up in the term sheet and loan documents?

Loans can include affirmative and negative covenants, but it’s usually the negative ones that trip people up.

Most loans require you to give a personal guarantee, provide certain information on a yearly basis, keep you from spending above a particular threshold on capital expenditures...

Double the Trouble: Tax Sales of Duplicate Mineral Assessments in West Virginia

Institute for Energy Law Oil & Gas E-Report

(by Adam Speer)

Anyone dealing with land and title issues in West Virginia quickly learns the importance of real property assessments. The relative ease in which an interest in land, including mineral rights, can be lost in a tax sale means that landmen and title practitioners who fail to examine a property’s tax assessment history do so at their peril. Those histories are found in the volumes of “landbooks” maintained by each county assessor’s office. A relatively common and beguiling problem arises when the title examiner discovers that a property has been double assessed. Such duplicate assessments are rarely obvious, as assessed interests are often described by brief and vague notations and sometimes assessed in the name of a long-gone predecessor in title.

Recently, in Haynes v. Antero Resources Corporation, Hill v. Lone Pine Operating Company and L&D Investments Inc. v. Mike Ross, Inc., the Supreme Court of Appeals of West Virginia considered the validity of several tax deeds that stemmed from the duplicate assessment of certain oil and gas interests created by the Harrison County Assessor’s Office. In each of the cases, the court reaffirmed its long-standing precedent that holds that in the case of two assessments of the same land under the same claim of title, the state can only require one payment of taxes under either assessment. The cases highlight the potential consequences of duplicate tax assessments of severed mineral interests in West Virginia and the need to have interests properly assessed. The Haynes, Lone Pine and L&D Investment decisions should be maintained in any title practitioner’s toolkit for analyzing interests conveyed by a tax sale and determining the likelihood of a successful challenge to set aside a tax deed.

For the full article, click here.

For the full report,

March 21, 2019

Reprise of Employment Law Issues in Pa.’s Medical Marijuana Act

The Legal Intelligencer

(by John McCreary)

The February 2017, issue of Pennsylvania Law Weekly published this author’s comments on the employment law issues created by the then-recently enacted Medical Marijuana Act (MMA). I identified some of the practical and legal problems presented by the continued illegality of marijuana under federal law, the conflict between statutory employment protections for medical marijuana patients and common employer policies prohibiting illegal drug use. I predicted that the “imprecision of the MMA’s statutory language” would “inject needless uncertainty into the employer-employee relationship” that “likely would not be resolved absent litigation.” Although to date there have been no cases reported under Pennsylvania’s MMA, several courts in other jurisdictions have considered employment issues arising under similar medical marijuana statutes. The uncertainty is lessening; the smoke is beginning to clear.

The 2017 article conjectured that the federal Drug Free Workplace Act (DFWA), which requires recipients of federal funds to maintain a drug-free workplace as described, see 41 U.S.C. Section 8102, might serve as a defense to a claim brought by a medical marijuana patient. Noffsinger v. SSC Niantic, 338 F.Supp.3d 78 (D.Ct. 2018), a case arising under Connecticut’s Palliative Use of Marijuana Act (PUMA), Conn. Gen. Stat. Sec. 21a-408 et seq.says otherwise. There, medical marijuana patient Noffsinger accepted a position as activities manager at the defendant’s health and rehabilitation facility. The plaintiff informed her prospective employer about her medical marijuana prescription. PUMA Section 21a-408p(b)(3) provides that “no employer may refuse to hire a person or may discharge, penalize or threaten an employee solely on the basis of such person’s or employee’s status as a qualifying patient” under PUMA. When Noffsinger’s pre-employment drug screen returned positive for marijuana the job offer was rescinded. A representative of the defendant articulated company policy: “medical marijuana is not an approved prescription, … we use federal law, which indicates that...

March 18, 2019

Department of Labor Proposes Increase to Salary Threshold

Employment Alert

(by John McCreary and Stephen Antonelli)

Under the current law, for an employee to be exempt from the FLSA’s overtime provisions, he or she must earn at least $23,660 per year ($455 per week) on a “salary basis” and perform the job duties described in the executive, administrative, professional and other exemption categories recognized by DOL. If enacted, that salary threshold would rise to $35,308 ($679 per week) under the new rule, which could become effective in January 2020.

The job duties tests will not change. This salary increase would mark the first increase in the salary threshold since 2004. The new rule would enable approximately one million more employees to earn overtime pay.  A more drastic increase to the threshold was approved by the Obama administration and blocked by a federal judge in Texas shortly before it was to become effective. That increase would have doubled the salary threshold and enabled over four million additional employees to be eligible to earn overtime.

In addition to increasing the overtime salary threshold, the final rule would also:

increase the total annual compensation requirement for highly compensated   employees (HCE) from $100,000 to $147,414; maintain overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including, non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers; and make a commitment to periodically review the salary threshold, although any update would not be automatic and would continue to require notice-and-comment rulemaking.

More information about the proposed rule is available at www.dol.gov/whd/overtime2019. Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. If you have any questions or need assistance in...

March 14, 2019

Opportunity now available to comment on proposed rule revising definition of ‘Waters of the United States’

The PIOGA Press

(by Lisa M. Bruderly and Gary E. Steinbauer)

On February 14, the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers opened a 60-day public comment period on the proposed rule to revise the definition of “waters of the United States” (WOTUS) under the Clean Water Act (CWA) by publishing the proposed rule in the Federal Register. The comment period is scheduled to end April 15, although this date may be extended. The publication comes more than two months after the agencies released the proposed revised definition of WOTUS to the public on December 11.

Comments provided on the proposed new WOTUS definition must be considered by the two agencies prior to promulgation of the new definition. Oil and gas companies as well as other regulated parties are encouraged to provide their input during the public comment process.

Less WOTUS would reduce federal permitting and compliance requirements

The agencies proposed the revised WOTUS definition to provide more predictability and certainty in identifying federally regulated waters. Overall, the proposed WOTUS definition is generally regarded as being less stringent than previously proposed definitions. For the oil and gas industry, the new proposed definition of WOTUS could reduce the federal CWA permitting and compliance obligations associated with the construction and maintenance of well sites and pipelines. Under the proposed new definition of WOTUS, only those waters or features with a “continuous surface connection” to an otherwise traditionally navigable water (i.e., river, lake, or other waterbody that supports or has supported navigation) would be subject to federal jurisdiction. The proposed definition of “tributary” would be limited to streams with perennial or intermittent flow during a “typical year,” and would exclude ephemeral streams and features that flow only in direct response to precipitation. In addition, wetlands would be federally...

Pa. EQB Petitioned to Implement Cap-and-Trade Regulation for Greenhouse Gases

PA Law Weekly

(by Jean M. Mosites and Varun Shekhar)

On Feb. 28, Clean Air Council and Widener Commonwealth Law School Environmental Law and Sustainability Center, among others, resubmitted a petition to the Pennsylvania Environmental Quality Board, asking it to promulgate a regulation that would create a multi-sector cap-and-trade system in Pennsylvania to reduce greenhouse gas (GHG) emissions to achieve carbon neutrality by 2052.

The Petition

The petition includes a fully drafted regulation that establishes a cap on all reported GHG emissions, based on a 2016 base year. The cap would decline by 3 percent each year.

The petitioners acknowledge: “The proposed regulation will have an impact on all sectors of Pennsylvania’s economy, although the impact will vary among businesses and individuals, with some benefiting and some suffering adverse impacts.”

Capping GHG emissions means that the covered entities meeting certain thresholds—including producers of cement, glass, steel, lead and paper, any facility producing or importing electricity, and fossil fuel producers—all must obtain allowances, by auction or allocation, for each metric ton of reportable GHG emissions per year attributable to their operations in Pennsylvania. According to the EPA’s envirofacts database, close to 400 facilities in Pennsylvania report GHG emissions to the EPA.

The petition proposes that emissions from covered sources would be capped, with the cap declining each year by an amount equal to 3 percent of 2016 emissions. If the regulation becomes effective for 2020, the cap would be equal to 91 percent of 2016 emissions. Limited by the ever-declining cap and availability of allowances, each covered entity must reduce its GHG emissions over time to achieve carbon neutrality by 2052. Allowances under the proposed trading system would be priced at a minimum of $10 each in 2020, with the price increasing by 10 percent plus the rate of inflation each year. Any person may...

February 22, 2019

A cautionary tale: The good and the ugly of convertible debt financing

Smart Business 

(by Jayne Gest with Christian Farmakis and Justine Kasznica)

Convertible debt is a common investment vehicle by which early-stage companies raise capital, where an investor grants to a company a short-term, often interest-bearing loan that converts into equity of the company at a future date. The convertible debt investors agree to push the question of what the company is worth — the valuation — down the road until the company’s next priced funding round. In return, the investors receive certain advantageous terms at the time that the debt converts to equity.

Smart Business spoke with Christian A. Farmakis, shareholder and chairman of the board, and Justine M. Kasznica, shareholder, at Babst Calland, about this investment vehicle.

What are the benefits for these investors?

As with any loan, the convertible debt note accrues interest until a defined maturity date. Unlike a standard promissory note, the convertible note often includes a conversion discount, valuation cap and other terms designed to mitigate the investor’s risk.

With the conversion discount, these investors receive a discount on the price per share at which their note converts to equity at a future priced round. Although discounts vary, it’s commonly set around 20 percent. Thus, if the price per share is set at $1, an investor’s convertible debt note would convert at a price of 80 cents per share.

With a valuation cap, (a) a maximum value of the company is established, solely for the purpose of calculating conversion of debt to equity; and (b) the investor’s price per share will be capped at the agreed upon number.

How can convertible debt negatively impact the startup?

Convertible notes are intended to be short-term investments. But when a company doesn’t get to its priced round quickly — or may require more notes to generate sufficient capital to keep the company in...