U.S. Environmental Protection Agency Finalizes National Primary Drinking Water Regulations for Certain PFAS Chemicals

Environmental Alert

(by Jean Mosites and Mackenzie Moyer)

On April 10, 2024, the U.S. Environmental Protection Agency (EPA) finalized the National Primary Drinking Water Regulation (NPDWR) Rule regulating six per- and polyfluoroalkyl substances (PFAS) under the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.  This final rule establishes the first-ever nationally enforceable drinking water standards for PFAS.  The final rule establishes Maximum Contaminant Level Goals (MCLGs) and Maximum Contaminant Levels (MCLs) for perfluorooctanoic acid (PFOA), perfluorooctane sulfonic acid (PFOS), perfluorononanoic acid (PFNA), hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA, commonly known as GenX chemicals), and perfluorohexane sulfonic acid (PFHxS).  The final rule also establishes a Hazard Index MCLG and MCL for mixtures containing two or more of PFNA, HFPO-DA, PFHxS, and perfluorobutane sulfonic acid (PFBS).

For PFOA and PFOS, the final rule sets MCLGs – non-enforceable health-based goals that represent the maximum concentration of a contaminant in drinking water at which there is no known or anticipated negative effect on a person’s health – at 0 parts per trillion (ppt).  The MCLs, which are legally enforceable, are set at 4.0 ppt for PFOA and PFOS.  The MCLs represent the maximum concentrations allowed in drinking water that can be delivered to users of a public water system and are informed by factors such as available treatment technologies and cost.  As a change from the proposed rule, the final rule sets MCLGs and MCLs for PFNA, PFHxS, and HFPO-DA at 10 ppt.

For mixtures of two or more of PFNA, PFHxS, HFPO-DA, and PFBS, the final rule establishes a Hazard Index due to the chemicals’ likely co-occurrence.  The Hazard Index is calculated by dividing the concentration of each of the four PFAS compounds by its Health-Based Water Concentration (HBWC; 10 ppt for PFNA, 10 ppt for HFPO-DA (GenX), 9 ppt for PFHxS, and 2000 ppt for PFBS) and then adding the results together.  A total value greater than 1.0 is an exceedance of the proposed Hazard Index MCL.  For a more detailed explanation of the Hazard Index calculation, see EPA’s Fact Sheet for Understanding the Hazard Index, available here.

The final rule regulates community water systems (CWSs) and non-transient non-community water systems (NTNCWSs), collectively public water systems.  A CWS is defined as “a public water system which serves at least fifteen service connections used by year-round residents or regularly serves at least twenty-five year-round residents” and a NTNCWS is “a public water system that is not a [CWS] and that regularly serves at least 25 of the same persons over 6 months per year.”  40 C.F.R. § 141.2.

Under the final rule, public water systems have three years (by 2027) to complete initial monitoring of each of the six PFAS, followed by ongoing compliance monitoring.  The public must be provided with information on the levels of these PFAS in their drinking water beginning in 2027.  Public water systems have five years (by 2029) to implement solutions to reduce PFAS if monitoring shows levels exceeding the MCLs.  After those five years, public water systems that have PFAS in drinking water violating one of the MCLs must take action to reduce PFAS levels and provide notice to the public of the violation.

In the final rule, EPA identifies granular activated carbon, anion exchange resins, reverse osmosis, and nanofiltration as the best available technologies for PFAS removal in drinking water.  According to EPA, PFAS tend to co-occur, and these four treatment technologies have been documented to co-remove other forms of PFAS, along with the six PFAS being regulated.  More information on the final rule can be found on EPA’s webpage, available here.

The final rule supersedes any state-specific MCLs, if those MCLs are less stringent than EPA’s.  For example, Pennsylvania adopted MCLs for PFOA (14 ppt) and PFOS (18 ppt) in January 2023.  To retain primacy over the drinking water program, states must regulate PFAS no less stringently than EPA.  Under the final rule, states with primacy will have up to two years after the date of rule promulgation to develop regulations that are at least as strict as the federal MCLs.  Pennsylvania’s regulations already incorporate the federal drinking water standards by reference but given Pennsylvania’s earlier action to regulate PFAS in drinking water, it is likely there will be a regulatory amendment to remove Pennsylvania’s earlier standards.  25 Pa. Code § 109.202.  The regulations incorporated by reference are effective on the date established by the federal regulations; therefore, regulated entities in Pennsylvania should assume that the federal standards are effective upon the dates listed in the final rule.

The final rule is the latest action under President Biden’s plan to combat PFAS pollution and EPA’s 2021 PFAS Strategic Roadmap (available here), under which EPA is taking a “whole-of-agency approach” to address PFAS throughout its lifecycle.  The final rule is expected to be published in the Federal Register in the near future.  Additional rulemaking proposals include the designation of certain PFAS as hazardous and information gathering obligations to be imposed on certain wastewater systems.

EPA also announced nearly $1 billion in newly available funding through the Infrastructure and Investment Jobs Act (IIJA) to help states and territories implement PFAS testing and treatment at public water systems and to help owners of private wells to address PFAS contamination.  This funding is a part of the $9 billion included in the IIJA to invest in drinking water systems impacted by PFAS and other emerging contaminants.

Babst Calland’s PFAS Work Group, including environmental, public sector, and litigation attorneys, continue to track PFAS technical and legal developments and are available to assist you with PFAS-related matters.  For more information on this and other remediation matters, please contact Jean M. Mosites at (412) 394-6468 or jmosites@babstcalland.com, Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other attorneys in this practice.

To stay informed on timely legal and regulatory information on PFAS, view our PFAS Perspectives page, or subscribe to updates here.

New to Whom? The Fifth Circuit strikes down EPA’s attempt to regulate ongoing uses of PFAS under TSCA’s “significant new use” provision.

Environmental Alert

(By Joseph Schaeffer and Sloane Wildman)

On March 21, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an opinion in Inhance Technologies, L.L.C. v. U.S. Environmental Protection Agency, No. 23-60620 (5th Cir. Mar. 21, 2024) that confirmed the obvious: a company that has a 40-year history of using perfluoroalkyl substances (PFAS) in its fluorination manufacturing process is not engaged in a “significant new use” under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601-2697. While not preventing the U.S. Environmental Protection Agency (EPA) from regulating existing uses of PFAS under other TSCA provisions, this common-sense conclusion provides industry with much-needed clarity and predictability.

TSCA Background

TSCA was enacted in 1976 to regulate chemicals that “present an unreasonable risk of injury to health or the environment.” 15 U.S.C. § 2601. EPA may do so in one of two ways. Under TSCA § 5, EPA may regulate the use of “new chemical substance[s]” and any “significant new use” of chemical substances. 15 U.S.C. § 2604. To determine whether use of a chemical substance is a significant new use, EPA considers four factors:

(1) the projected volume of manufacturing and processing of a chemical substance; (2) the extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance; (3) the extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance; and (4) the reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

15 U.S.C. § 2604(a)(2). If the use is a significant new use, EPA issues a Significant New Use Rule (SNUR) for public notice and comment. Id. Industry wishing to engage in the significant new use then must submit a Significant New Use Notice (SNUN) at least 90 days in advance of manufacture or processing. Id. at § 2604(a)(1)(B)(i). EPA must review that SNUN and make one of three findings: “[1] the relevant chemical substance or significant new use presents an unreasonable risk of injury to health or the environment … [2] the information available …is insufficient to permit a reasoned evaluation of the health and environmental effects of the relevant chemical substance or significant new use … or [3] the relevant chemical substance or significant new use is not likely to present an unreasonable risk of injury to health or the environment.” Id. at § 2604(a)(3). If EPA finds that there is an unreasonable risk or insufficient information to evaluate the risk, then it must issue an order prohibiting or limiting the chemical substance’s manufacture. Id. at § 2604(e), (f).

Alternatively, under TSCA § 6, EPA may regulate any chemical substance—not just new chemical substances or significant new uses. Id. at  § 2605. The broader authority conferred under TSCA § 6, however, is balanced by a more rigorous rulemaking process that requires EPA to perform, among other things, a cost-benefit analysis supporting the new regulation. Id. at § 2605(c)(2)(A)-(C).

In 2020, EPA invoked its authority under TSCA § 5 to finalize a SNUR designating as a significant new use any manufacture or processing of certain PFAS that would not be ongoing after December 31, 2015 or for which there currently was no ongoing use (the “PFAS SNUR”). Inhance Tech., No. 23-60620, at *5-6. EPA stated in the proposed PFAS SNUR that it would not designate ongoing uses as significant new uses, but it required companies seeking protection under this safe harbor to submit their prior manufacture and use of PFAS for approval. Id. at *11. EPA then excluded only the submitted ongoing uses from coverage under the final SNUR. Id. Notably, in the proposed PFAS SNUR, EPA included a non-exhaustive list of industries as potentially affected by the proposed rule, but did not include the fluorination industry on this list.

EPA orders Inhance to cease manufacturing or process PFAS

Inhance fluorinates plastic containers to create a barrier that prevents the containers’ contents from leaching out and outside substances from permeating in. Id. at *2. Neither Inhance nor EPA was aware during the rulemaking process for the PFAS SNUR that fluorination involved the manufacture or processing of PFAS. Id. at *11. Because EPA had not identified the fluorination industry as one of the industries potentially subject to the PFAS SNUR Inhance did not submit a SNUN during the rulemaking process to invoke the safe harbor for ongoing uses. Id.

Two years after finalizing the PFAS SNUR, EPA learned that Inhance’s fluorination process resulted in the creation of PFAS. Id. at *2. Relying on the PFAS SNUR, EPA issued Inhance a notice of violation ordering Inhance to either change its fluorination process to stop creating PFAS or temporarily cease fluorination resulting in the creation of PFAS. Id. Rather than complying with the notice of violation, however, Inhance submitted SNUNs for its fluorination process to EPA for review. Id.at *2-3. EPA completed its review by issuing orders prohibiting Inhance from manufacturing or processing PFAS through its fluorination process, and Inhance petitioned the Fifth Circuit for review. Id. at *3.

The Fifth Circuit considers what qualifies as a significant new use

At the heart of Inhance’s petition for review was whether the creation of PFAS through its fluorination process was an ongoing use, which EPA could regulate only under TSCA § 6, or a significant new use, which EPA could regulate under TSCA § 5. TSCA does not define “significant new use” or “new,” and the parties proposed very different definitions. EPA argued that a significant new use is any use “not previously known to EPA,” id. at *9, whereas Inhance argued that a significant new use is a use “having recently come into existence” or “not previously existing,” id. at *8. Inhance’s fluorination process would qualify as a significant new use under EPA’s definition, since its creation of PFAS was not known to EPA until 2022, but would not so qualify under Inhance’s definition, since the process had been in place for decades.

The Fifth Circuit found Inhance’s definition to be more persuasive for two reasons.

First, Inhance’s definition better aligned with the TSCA’s text, structure, and purpose. TSCA § 5 creates forward-looking requirements—requiring notice before manufacture and processing and requiring EPA to consider projected volumes and reasonably anticipated manners and methods of manufacturing. Id. at *9. The cost-benefit analysis required under TSCA § 6 also indicates that Congress intended a more careful balancing for processes that had previously existed. Id. at *10. And, at bottom, the idea that an existing use becomes “new” when discovered by EPA runs counter to common sense. Id.

Second, Inhance’s definition avoids constitutional issues that would arise under EPA’s definition. Because Inhance did not know that its fluorination process created PFAS during the PFAS SNUR rulemaking, it had no reason to know that it would be subject to the regulation or that it would need to submit a SNUN to take advantage of the regulation’s safe harbor. EPA’s definition thus would require Inhance—and companies in a similar position—to be clairvoyant in identifying their regulatory obligations. Id. at *11-12.

What it all means

The Fifth Circuit was careful to note in conclusion that its decision only prohibits EPA from invoking its TSCA § 5 authority to regulate ongoing uses of PFAS. EPA may continue to invoke its TSCA § 6 authority. As the Fifth Circuit acknowledged, though, the regulatory process under TSCA § 6 is more rigorous and requires a cost-benefit analysis that is absent from the TSCA § 5 process. Given the difficulties some industries have faced in finding effective PFAS replacements, it is thus possible that ongoing uses that would have been prohibited or limited under TSCA § 5 will survive due to the cost-benefit analysis required under TSCA § 6. Though time will tell, this might prove to be the most significant consequence of the Fifth Circuit’s decision.

As the federal and state governments continue to take action to address PFAS across many program areas, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters.  For more information on this development and other remediation matters, please contact Joseph V. Schaeffer at (412) 394-5499 or jschaeffer@babstcalland.com, Sloane Anders Wildman at (202) 853-3457 or swildman@babstcalland.com, or any of our other environmental attorneys.

Federal Court Dismisses Challenge to WV Pooling Statute

Energy Alert

(by Robert Stonestreet and Austin Rogers)

A federal court has dismissed a challenge to the validity of a West Virginia law authorizing pooling and unitization of oil and gas formations associated with Marcellus and Utica shale wells.  The court concluded that the mineral owners who filed the suit lacked standing to bring their claims because they failed to allege an actual injury from the challenged law.

As reported in an Alert published on February 1, 2024, the Fourth Circuit Court of Appeals directed the lower court, Judge John Preston Bailey of the District Court for the Northern District of West Virginia, to resolve a pending lawsuit challenging the law, known as Senate Bill 694, enacted by the West Virginia Legislature in 2022.  This includes a determination of whether the mineral owners established legal standing to challenge the law.  The District Court had previously abstained from addressing the merits of the claims or the legal standing of the mineral owners.

Judge Bailey ruled that the mineral owners lacked legal standing for at least two reasons. First, the Court observed that the mineral owners did not allege that their mineral interests had been adversely affected by the challenged law, that they were subject to unitization under the law, or that their royalties were diminished in any way by the law. Second, the Court found no causal connection between the mineral owners’ alleged injury and the enactment of the law.  The Court noted that the mineral owners did not explain how the agency they sued, the West Virginia Oil and Gas Conservation Commission, was affecting their mineral interest “in any way” or that future enforcement of the law against them was “imminent.”

If you have questions about this lawsuit or West Virginia law governing pooling and unitization, please contact either of the following attorneys to learn more: Robert Stonestreet at rstonestreet@babstcalland.com or 681.265.1364 or Austin Rogers at arogers@babstcalland.com or 681.265.1368.

D.C. Circuit Delivers EPA a Loss on Startup, Shutdown, and Malfunction Waivers under the Clean Air Act

Environmental Alert

(by Joseph Schaeffer and Gina Buchman)

On March 1, 2024, the D.C. Circuit issued its long-awaited decision in Environmental Committee of the Florida Electric Power Coordinating Group, Inc. v. EPA, No. 15-1239 (D.C. Cir. Mar. 1, 2024), in which it vacated the majority of an Environmental Protection Agency (EPA) final agency action commonly referred to as the 2015 SSM SIP Call.  The agency action required states to remove provisions in their state implementation plans (SIPs) that insulate sources from liability for excess emissions occurring during periods associated with startups, shutdowns, and malfunctions (SSM). To understand the impact of this decision, it is necessary to understand both what was at issue and what the Court did (and did not) decide.

Environmental Committee is the product of a long-simmering dispute over SSM provisions.

Under the Clean Air Act, 42 U.S.C. § 7401 et seq., states are required to adopt and submit for EPA’s approval SIPs that provide for the implementation, maintenance, and enforcement of national ambient air quality standards within their jurisdictions. 42 U.S.C. § 7410(a)(1). From the time that SIPs were first required as part of the 1970 amendments to the Clean Air Act, many states have included special provisions governing SSM events. These SSM provisions generally fall into one of four categories:

  1. Automatic exemption provisions excluding SSM periods from otherwise applicable emissions rules;
  2. Director’s discretion provisions allowing state officials to independently and conclusively determine that excess emissions during SSM periods are not violations of applicable emissions rules;
  3. Enforcement discretion provisions allowing state officials to bar enforcement action for excess emissions during SSM periods; and
  4. Affirmative defense provisions allowing sources to defend against all or some liability for excess emissions during SSM periods.

After years of sustained criticism of these provisions from environmental organizations, Sierra Club filed a rulemaking petition in 2011 that asked EPA to require states to remove SSM provisions from their SIPs. And in 2015 EPA responded by issuing a SIP call requiring 35 states and the District of Columbia to do just that. 80 Fed. Reg. 33840 (June 12, 2015).  Industry and many states then filed a petition for review with the D.C. Circuit raising two primary sets of issues: first, whether EPA properly exercised its authority to issue a SIP call and, second, whether EPA correctly determined that SSM provisions are prohibited under the Clean Air Act.

Environmental Committee imposes limits on EPA’s authority to reject SSM provisions while rejecting limits on EPA’s authority to issue SIP calls.

The Court’s decision first addressed whether EPA had properly exercised its authority to issue a “SIP call.” Under the Clean Air Act, EPA must issue a SIP call when it finds that a SIP is “substantially inadequate” to (1) attain or maintain the National Ambient Air Quality Standard, inadequate, (2) mitigate interstate pollutant transport, or (3) comply with any requirement of the Clean Air Act.  42 U.S.C. § 7410(k)(5). The petitioners argued that EPA issued the SIP call here without such finding and thus meeting the required preconditions for issuing a SIP call.  The Court, however, rejected petitioner’s argument and, in doing so, the Court reached four significant conclusions:

  1. EPA is not required to make factual findings that a SIP provision prevents (or will prevent) compliance with national ambient air quality standards where, as in this case, EPA has found that a SIP provision has substantial legal deficiencies.  It need only identify the deficiency and explain why it is substantial;
  2. EPA may invoke the need for a SIP “to otherwise comply with any requirement of [the Clean Air Act],” 42 U.S.C. § 7410(k)(5), to issue a SIP call requiring correction of individual provisions even where the SIP as a whole is adequate to meet national ambient air quality standards;[1]
  3. EPA may issue SIP calls to clarify ambiguous provisions, even where states have issued post hoc interpretative letters, because clarity benefits all stakeholders’ ability to police compliance with the Clean Air Act; and
  4. EPA may, but is not obligated to, consider costs and benefits before issuing a SIP call.

Having decided that EPA properly issued a SIP call, the Court next addressed whether EPA could lawfully require states to remove SSM provisions from their SIPs. Under the Clean Air Act, SIPs must “include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of [the Clean Air Act].” 42 U.S.C. § 7410(a)(2)(A). Because SSM provisions represent a temporary departure from ordinarily applicable emissions rules, EPA argued in its SIP call that they violate the statutory requirement that an “emission limitation” “limit[] the quantity, rate, or concentration of emissions of air pollutants on a continuous basis.” 42 U.S.C. § 7602(k) (emphasis added). The Court found that it did not need to decide that issue, however, because EPA had predicated the SIP call on the mistaken conclusion that SIPs must include emission limitations.

The Court held that the Clean Air Act requires a SIP to contain an “emission limitation” only as “necessary or appropriate” to meet applicable requirements under the act. 42 U.S.C. § 7410(a)(2)(A). Provisions that are not “necessary or appropriate” to meet applicable requirements under the Clean Air Act thus can be included in a SIP without needing to meet the definition of an “emission limitation.” Those provisions instead can be considered to be “other control measures, means, or techniques.” Id. The Court accordingly held that EPA cannot call a SIP “solely on the ground that [a measure] fails to meet the statutory definition of an ‘emission limitation’—a definition it did not need to satisfy.” Environmental Committee, at *36. Rather, EPA must determine first that it is “necessary or appropriate” for the emissions rules subject to SSM provisions to operate on a continuous basis. Because EPA did not do so, it failed to establish that SIPs were subject to call for including SSM provisions authorizing automatic exemptions, director’s discretion, or complete affirmative defenses to noncompliance.

Though siding with the petitioners’ position on SSM provisions in most respects, the Court notably upheld the SIP call in two cases. First, the Court determined that EPA could call a SIP to clarify an ambiguous provision that would be unlawful under certain interpretations. In this case, the Court denied the petitions for review as to Tennessee’s overbroad enforcement discretion provision that could be read to allow the state to foreclose EPA enforcement actions and citizens suits. And second, the Court held that states cannot include affirmative defense provisions in their SIPs that limit the available relief for violations of emissions rules, such as provisions that block EPA and citizens from seeking monetary penalties. Doing so would unlawfully remove the authority to determine remedies that Congress vested exclusively in the judiciary.

Environmental Committee’s long-term impact is uncertain.

The Court’s decision preserves SSM provisions for the foreseeable future, and also supports the Clean Air Act’s core principle of cooperative federalism.  The Court reminds the litigants that EPA is obligated to set permissible concentrations of air pollutants and it is the states that determine how they will meet those air quality standards consistent with their particular circumstances and priorities.  Environmental Committee, at *22. The petitioner’s victory here is a reminder to EPA of its constitutional mandate.

But the petitioners’ victory might be short-lived. As Judge Nina Pillard noted in partial dissent, the Court’s partial vacatur of the SIP calls rests on EPA’s failure to establish that operation of emissions rules on a continuous basis (i.e., free from SSM provisions) is “necessary or appropriate” to meet applicable requirements under the Clean Air Act. Environmental Committee, at *27 (Pillard, J., dissenting). Calling this a “low bar,” she speculated that EPA might not even be required to make a factual showing and offered several arguments that EPA might make to support its rejection of SSM provisions. Id. The Court’s rejection of proposed limits on EPA’s authority to issue SIP calls will also help clear the path if EPA were to accept Judge Pillard’s invitation. Whether EPA does so, however, is another matter—particularly with a looming presidential election. And, of course, there is no guarantee that any reissuance of the SIP call would not be met with another legal challenge.

For more information on this decision in the D.C. Circuit or other related Clean Air Act matters, please contact Joseph V. Schaeffer at (412) 394-5499 or jschaeffer@babstcalland.com or Gina Falaschi Buchman at (202) 853-3483 or gbuchman@babstcalland.com.

[1] This conclusion is arguably dicta as the Court determined that EPA met its factual burden even if it were to apply an “as-a-whole” standard.

PFAS and RCRA: EPA’s Latest Proposed Rules Significantly Expand Corrective Action Authority

Environmental Alert

(by Sloane Anders Wildman and Jessica Deyoe)

On February 8, 2024, the U.S. Environmental Protection Agency (EPA) published two proposed rules to address per- and polyfluoroalkyl substances (PFAS) and other emerging contaminants under the authority of the Resource Conservation and Recovery Act (RCRA). Specifically, EPA is proposing to add nine PFAS (including their salts and structural isomers) to the list of “hazardous constituents” in Appendix VIII of 40 C.F.R. Part 261. EPA is also proposing to clarify, by regulation, that emerging contaminants – including PFAS – can be addressed under RCRA’s Corrective Action Program. Comments on the first proposed rule, Listing of Specific PFAS as Hazardous Constituents, are due April 8, 2024, and comments on the second proposed rule, Definition of Hazardous Waste Applicable to Corrective Action for Releases from Solid Waste Management Units, are due March 11, 2024.

EPA first announced its intent to regulate PFAS under RCRA in its 2021 PFAS Strategic Roadmap. This came as a direct response to a petition by New Mexico’s Governor Michelle Lujan Grisham requesting the EPA list PFAS as RCRA Subtitle C hazardous waste, either as a class of chemicals or as individual chemicals. Then, in November 2021, the EPA announced it would initiate rulemaking for two RCRA actions, which have now been published in the Federal Register as proposed rules more than two years later.

RCRA and the Regulation and Cleanup of Hazardous Waste

RCRA gives EPA the authority to control and regulate hazardous waste from “cradle-to-grave” under its Subtitle C regulatory framework. 42 U.S.C. §§ 6921-6934; 40 C.F.R. Parts 260 – 273. RCRA also gives EPA the authority to require cleanup of hazardous waste under its Corrective Action Program. 42 U.S.C. § 6924(u). While both Subtitle C and the Corrective Action Program apply to “hazardous wastes,” the two programs differ in scope because each relies on a different definition of “hazardous waste.”

Scope of RCRA Corrective Action Program

RCRA’s Corrective Action Program applies to a broader category of substances than RCRA’s Subtitle C program because it is not tied to Subtitle C’s regulatory definition of hazardous waste. Specifically, RCRA section 3004(u) provides that any permit issued to a treatment, storage or disposal (TSD) facility under Subtitle C after November 8, 1984 must require corrective action for all releases of hazardous waste or hazardous constituents from solid waste management units at the facility. See 42 U.S.C. § 6924(u). EPA also can require corrective action through the issuance of RCRA administrative orders. The list of hazardous constituents for which EPA requires evaluation and cleanup under the Corrective Action Program is found in 40 C.F.R. Part 261 Appendix VIII. RCRA’s Corrective Action Program is implemented through EPA guidance and policy documents to assist entities conducting cleanups.

Scope of RCRA Subtitle C

In contrast to the Corrective Action Program, Subtitle C governs “hazardous wastes,” as defined under EPA regulations, which is a narrower definition than under the RCRA statute. Under Subtitle C regulations, a material must be classified as a “solid waste” before it can be classified a hazardous waste. Generally, a solid waste is a hazardous waste if it is listed in EPA regulations as such, if it exhibits one of four hazardous characteristics, if it is a mixture of hazardous and non-hazardous waste, or if it is derived from a hazardous waste. See 42 U.S.C. § 6903(5); 40 C.F.R. §§ 261.21–.24 & 261.31–261.33. Subtitle C provides a rigid regulatory framework governing the generation, transportation, treatment, storage and disposal of hazardous wastes, including the permitting of TSD facilities. As noted above, TSD permits are required to include corrective action to address releases of hazardous waste, and those corrective action obligations apply to both hazardous waste and hazardous constituents.

EPA’s Proposed Rules

  1. Listing of Specific PFAS as Hazardous Constituents

EPA is proposing to add nine PFAS (including their salts and structural isomers) to the list of “hazardous constituents” in Appendix VIII of 40 C.F.R. Part 261. If finalized, this rule will expressly identify nine PFAS for consideration in RCRA facility assessments and, where necessary, further investigation and cleanup through the RCRA corrective action process at RCRA TSD facilities. The nine PFAS are: PFOA, PFOS, PFBS, PFNA, PFHxS, PFDA, PFHxA, PFBA, and GenX. EPA estimates that there are 1,740 TSD facilities with solid waste management units that have released or could release any of the nine PFAS proposed to be listed and, as such, could be subject to additional corrective action requirements under this proposed rule. 89 Fed. Reg. at 8607. Notably, EPA is not currently proposing to list any PFAS as “hazardous wastes” subject to RCRA Subtitle C’s full “cradle to grave” regulatory requirements. However, EPA has stated that “[a] hazardous constituent listing is a step toward a potential hazardous waste listing” and that “[i]f finalized, this hazardous constituent listing would form part of the basis for any future action the Agency may take to list these substances as a hazardous waste.” Id. at 8609.

  1. Definition of Hazardous Waste Applicable to Corrective Action for Releases from Solid Waste Management Units

EPA’s second proposed rule would clarify that emerging contaminants can be cleaned up through the RCRA corrective action process and therefore that EPA’s authority to address emerging contaminants is not limited by the narrower regulatory definition of hazardous waste in RCRA Subtitle C. While this proposed rule does not directly address PFAS, it facilitates the use of RCRA corrective action authority to address emerging contaminants, such as PFAS, at RCRA permitted TSD facilities. EPA intends that this revision codify the Agency’s existing interpretation of RCRA, which allows it to address releases from solid waste management units of all substances that meet the broader statutory definition of hazardous waste. Therefore, EPA is proposing to modify 40 C.F.R. § 260.10 to make clear that the statutory definition of hazardous waste applies to corrective action for release of hazardous waste from solid waste management units.

Impact of Proposed Rules

Both rulemakings would vastly expand the universe of sites subject to RCRA corrective action and the universe of substances that would need to be assessed and addressed under RCRA. They also lay the groundwork to regulate PFAS as a hazardous waste, subject to the full suite of RCRA’s Subtitle C hazardous waste management regulations. In addition, if PFAS are designated as hazardous wastes, they would automatically be considered “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund). This, in turn, would result in an even greater expansion of EPA’s authority to require cleanup of PFAS contaminated facilities and potentially result in the re-opening of sites that have already been closed under Superfund.

As the federal and state governments take multiple actions across many programs to address PFAS, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. Visit the PFAS Perspectives webpage for timely legal and regulatory information affecting businesses and industries.

For further information, please contact Sloane Wildman at 202-853-3457 or swildman@babstcalland.com, Jessica Deyoe at 202-853-3489 or jdeyoe@babstcalland.com, or your client service attorney at Babst Calland.

Pennsylvania Senator Yaw Introduces Bill to Repeal RGGI

Environmental Alert

(By Kevin Garber and Jessica Deyoe)

On February 2, 2024, Pennsylvania Senator Gene Yaw introduced SB 1058 to repeal the Regional Greenhouse Gas Initiative CO2 Budget Trading Program regulation that the Environmental Quality Board promulgated in 2022. Senator Yaw stated that “RGGI is wrong for Pennsylvania” and believes that Pennsylvania would be better suited by an “environmentally responsible energy policy that recognizes and champions Pennsylvania as an energy producer.” He further stated that RGGI would leave thousands of Pennsylvanians struggling to pay their utility bills and would have a detrimental impact on the reliability of the region’s electric grid.

In part, this bill comes as a response to Governor Shapiro’s appeal of a November 2023 ruling by the Pennsylvania Commonwealth Court, which held that the RGGI regulation was an unconstitutional tax and declared the rule to be void. See Bowfin KeyCon Holdings, LLC et al v. Pennsylvania Department of Environmental Protection and Pennsylvania Environmental Quality Board (No. 247 M.D. 2022). It also comes not long after members of the Pennsylvania General Assembly met with members of the Ohio General Assembly to discuss the reliability of the mid-Atlantic power grid PJM manages. PJM is the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. PJM projects 20 percent of its existing capacity will retire before 2030.

Earlier, on December 12, 2023, Senator Yaw introduced SB 832 to create an Independent Energy Office in Pennsylvania.  The Office would be a nonpartisan independent agency committed to providing at least one statewide energy report to each legislative session that reviews the use of fossil fuels, renewable energy, and nuclear power to meet the Commonwealth’s energy needs and working with the General Assembly to establish a statewide energy plan.

For more information on RGGI or other related matters, please contact Kevin Garber at (412) 394-5404 or kgarber@babstcalland.com, Jessica Deyoe at (202) 853-3489 or jdeyoe@babstcalland.com, or any of our other environmental attorneys.

Federal Court Directed to Rule on Challenge to WV Pooling Statute

Energy Alert

(by Robert Stonestreet and Austin Rogers)

A federal appeals court has instructed a lower court to resolve a pending suit challenging the constitutionality of West Virginia’s oil and gas pooling and unitization law.  The federal district court previously declined to resolve certain constitutional issues presented in the suit on the grounds that those issues should be decided by a state court instead of a federal court.

In 2022, the West Virginia Legislature enacted Senate Bill 694 to revise West Virginia law governing the pooling and unitization of oil and gas formations associated with horizontal well development.  Pooling and unitization essentially involves combining separately owned properties into a single “unit” through which one or more horizontal wells are drilled.  The oil and gas produced from the horizontal well is then allocated among all the properties in the unit for purposes of calculating production royalties payable to the mineral owners.

Prior to Senate Bill 694 becoming effective on June 7, 2022, formation of a pooled unit for a horizontal well drilled through “shallow” oil and gas formations, which includes the Marcellus Shale, required consent of 100% of the mineral owners for all the properties to be included in the unit.  This 100% consent requirement did not apply to horizontal wells drilled through “deep formations” such as the Utica Shale.  One of the more significant changes made by SB 694 was to allow the West Virginia Oil and Gas Conservation Commission to approve units for shallow formations where at least 75% of the mineral owners consent, provided other requirements are also satisfied.  This means that up to 25% of a unit could potentially include properties for which the mineral owner did not consent to being part of a unit.

Before Senate Bill 694 became effective, a pair of mineral owners (Scott Sonda and Brian Corwin) filed a lawsuit in the federal District Court for the Northern District of West Virginia seeking to preclude the law from taking effect.  Governor Jim Justice was the only defendant named in the case.  In their suit, Sonda and Corwin alleged that the law was illegal for several reasons, including the claim that the law authorizes the unconstitutional taking of private property without just compensation and deprives landowners of due process of law.

Federal Judge John Preston Bailey initially dismissed all of their claims for two reasons.  First, Judge Bailey concluded that Sonda and Corwin lacked standing to bring the challenge because (a) their property had not been pooled into a unit without their consent and no operator had sought approval of a unit to include their property without their consent; and (b) the Commission, not the Governor, has the power to directly enforce Senate Bill 694.

Second, Judge Bailey ruled that, even if Sonda and Corwin established standing, Governor Justice had constitutional immunity from the suit because he had no direct authority to implement Senate Bill 694.  Rather, the Commission has the authority to implement the law.

Instead of dismissing their suit entirely, Judge Bailey granted leave for Sonda and Corwin to amend their complaint to name the Commission as a defendant instead.  Sonda and Corwin did so, and also named as defendants each person who serves on the Commission.  The amended complaint still does not allege that mineral properties owned by Sonda or Corwin were pooled into a unit without their consent.  Instead, the amended complaint attempts to address the standing issue by alleging that Senate Bill 694 effectively eliminates their ability to challenge whether they are being fairly compensated for oil and gas produced from their property that was pooled into a unit with their consent.

The Commission moved to dismiss the amended complaint for various reasons, including Sonda’s and Corwin’s lack of standing to bring the case.  Judge Bailey did not address the standing issue, but agreed with the Commission with respect to three of the five claims asserted by Sonda and Corwin.  Judge Bailey then abstained from addressing the Commission’s arguments for dismissal of the other two claims, which asserted constitutional violations, because he believed that those issues were more appropriate for resolution by a state court instead of a federal court.

The Commission appealed Judge Bailey’s decision to abstain from addressing the arguments for dismissal of the constitutional claims.  By opinion issued on January 31, 2024, the Fourth Circuit Court of Appeals ruled that Judge Bailey should not have abstained.  The appellate court also directed Judge Bailey to first address the standing issue before addressing any other pending issue.  The opinion does not specify a deadline for Judge Bailey to rule on those issues.  If Judge Bailey finds that Sonda and Corwin continue to lack standing to assert their claims, the case will presumably be dismissed on that ground alone.  If Judge Bailey concludes that Sonda and Corwin have established standing, Judge Bailey will likely address the merits of the Commission’s other arguments for dismissal.

If you have questions about this lawsuit or West Virginia law governing pooling and unitization, please contact either of the following attorneys to learn more: Robert Stonestreet at rstonestreet@babstcalland.com or 681.265.1364 or Austin Rogers at arogers@babstcalland.com or 681.265.1368.

U.S. EPA Releases Second Annual Progress Report Updating its PFAS Strategic Roadmap, Highlighting Progress, Delays, and Future Actions

Environmental Alert

(By Matt Wood)

On December 14, 2023, the U.S. Environmental Protection Agency (EPA) released its Second Annual Progress Report to its 2021 PFAS Strategic Roadmap, summarizing updates on the agency’s actions and goals to address per- and polyfluoroalkyl substances, also known as PFAS.  Although beyond the scope of this Alert, it is notable that many of EPA’s actions and proposed actions described below have faced opposition by various parties.

PFAS, which have garnered increased attention from state and federal regulators over the last few years, are a group of thousands of manmade chemicals that have been widely used for decades in various consumer, commercial, and industrial applications.  Some of the most common PFAS applications include manufacturing water-, stain-, and heat-resistant products and as ingredients in aqueous film forming foams (AFFF) used to extinguish certain kinds of chemical fires.

The 2021 Roadmap highlights EPA’s “whole-of-agency” approach to PFAS, which, with the two Progress Reports, includes proposed actions across multiple program offices focusing on the PFAS “lifecycle,” i.e., manufacturing, processing, distribution in commerce, use, and disposal, as well as addressing PFAS in the environment.  Informing EPA’s focus on the PFAS lifecycle are the 2021 Roadmap’s three central directives: (1) Research; (2) Restrict; and (3) Remediate.  Some of the major highlights from the Second Progress Report include:

  1. In January 2023, EPA released its 15th Effluent Limitations Guidelines (ELG) Plan for setting technology-based standards to address PFAS discharges by industry. Among other things, EPA announced in the ELG Plan that it will be pursuing a rulemaking to address discharges from landfills and implementing a study of influent from Publicly Owned Treatment Works to identify industries that warrant PFAS ELGs.  This rulemaking has not been proposed yet.
  2. On March 29, 2023, EPA published a proposed rule to regulate six PFAS under the Safe Drinking Water Act. This proposed rule would establish enforceable individual maximum contaminant levels (MCLs) for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS), the two most common and well-studied PFAS (4 parts per trillion each) and a hazard index MCL for mixtures containing one or more of four other PFAS.  Subject to an implementation period, this proposed rule would require public water systems to monitor for each of the six PFAS, notify the public of exceedances, and take action to reduce PFAS exceedances in drinking water.  This rule is currently targeted to be finalized in Q1 2024.
  3. On October 11, 2023, EPA published a final rule setting reporting and recordkeeping requirements under the Toxic Substances Control Act (TSCA) for PFAS. The final rule requires those who manufacture (or import) or have manufactured (or imported) PFAS or PFAS-containing articles since January 1, 2011, to report certain information on their PFAS uses, production volumes, disposal, exposures, and hazards.
  4. On October 31, 2023, EPA published a final rule adding increased reporting requirements for PFAS under the Emergency Planning and Community Right-to-Know-Act’s Toxics Release Inventory (TRI) and the Pollution Prevention Act. This final rule designates all PFAS listed, or to be listed, on the TRI as “chemicals of special concern” that are no longer eligible for a de minimis exemption that allows facilities to exclude small concentrations of chemicals in mixtures or other trade name products from release and waste management calculations.  EPA also eliminated a de minimis exemption from Supplier Notification Requirements that exempted suppliers from providing notifications for chemicals of special concern present in mixtures or trade name products at concentrations below 1% of the mixture (or 0.1% for carcinogens).  This rule became effective on November 30, 2023, and will apply to the reporting year beginning on January 1, 2024.

Some of EPA’s actions, e.g., PFAS MCLs for drinking water, have been delayed beyond their originally anticipated timelines.  This includes EPA’s proposed rule to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which would provide EPA and other CERCLA-delegated agencies additional authority to clean up PFOA and PFOS in the environment.  Such authority includes: (1) responding to PFOA/PFOS releases without making an imminent and substantial danger finding; (2) requiring potentially responsible parties (PRPs) to clean up PFOA/PFOS contamination; and (3) recovering cleanup costs from PRPs (private parties could also recover cleanup costs from other PRPs if they meet certain requirements).  The final rule was originally set to be published in 2023 but is currently targeted to be finalized in Q1 2024.

EPA is also developing proposed rulemakings to regulate PFAS under the Resource Conservation and Recovery Act (RCRA) that would designate four PFAS as “hazardous constituents” subject to RCRA corrective action and revise RCRA regulations to address PFAS that are not regulatory “hazardous wastes,” but otherwise meet the definition of “hazardous waste” under RCRA section 1004(5), 42 U.S.C. § 6903(5).  More information on the development of these proposed rules is available here and here.

Other actions touted by EPA include releasing its PFAS Analytic Tools, which provide data and resources regarding PFAS manufacturing, releases, and other information, and investment in research and analysis to better understand and inform decisions regarding PFAS.  EPA noted that its researchers published more than 40 papers on PFAS, presenting new information on measuring PFAS, analyzing human health and ecological effects of PFAS, and other topics.  One of the questions common to certain stakeholders is how to properly dispose of PFAS waste.  At the time of writing, EPA planned to update its “Interim Guidance on Destroying and Disposing of Certain PFAS and PFAS-Containing Materials That Are Not Consumer Products” by December 2023.  EPA reiterated in the Second Progress Report that continued research, sampling, and coordination between governments, industry, academia, and communities is necessary to better understand the PFAS lifecycle.

Broadly, the 2021 Roadmap and its two Progress Reports highlight the breadth of EPA’s actions and goals to address PFAS and regulatory actions and enforcement measures should be expected to increase as EPA and stakeholders learn more about PFAS.  Understandably, these EPA documents do not account for specific actions that states have taken or plan to take to address PFAS, including developing their own drinking water MCLs and cleanup standards, banning the use of PFAS-containing AFFF, and/or banning the use of PFAS in other products.  Given the differences between how states and the federal government have addressed PFAS, it will continue to be important for affected parties to understand their potentially separate obligations under federal and state law.

As the federal government and states continue to take action to address PFAS across many program areas, Babst Calland attorneys will track these developments and are available to assist you with PFAS-related matters.  For more information on this development or related matters, please contact Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, or any of our other environmental attorneys.  For additional resources and more information on other PFAS developments, please visit Babst Calland’s PFAS Perspectives page, here.

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Recent Developments in Artificial Intelligence Governance

Emerging Technologies Alert

(By Susanna Bagdasarova, Mary Binker, Chris Farmakis and Justine Kasznica)

As the development of artificial intelligence (AI) systems accelerates globally and the benefits and risks of their use become evident, calls for government regulation in the U.S. and abroad have accelerated. Two significant governmental developments occurred in the past month to respond to these calls. In an executive order issued at the end of October, President Joe Biden revealed a comprehensive set of guidelines and policy goals for the future of AI development and regulation. Less than a month later, the U.S., U.K., and more than a dozen other countries unveiled the first international agreement on AI safety and security. Though differing in scope and actionable initiatives, the two documents reflect an international acknowledgment of the global impact and risks posed by AI systems, as well as an urgency to create proactive policies for their regulation.

Key Takeaways

  • President Biden issued Executive Order 14110 on “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” on October 30, 2023, with the goals of establishing standards for AI safety and security; protecting privacy, consumer, and worker rights; advancing equity; promoting global innovation and competition; and advancing American leadership around the world.
  • The Order sets forth various policy goals, tasks, and guidance for federal agencies to implement in the next year.
  • Federal agencies are directed to use their regulatory powers to monitor and mitigate risks, create guidelines to shape industry standards, develop uses for AI technology, and implement such technologies safely.
  • On November 27, 2023, the U.S., U.K., and 16 other countries entered into a landmark international agreement on cybersecurity in AI, emphasizing a “secure by design” approach to AI systems development.
  • The non-binding agreement consists of a set of guidelines addressing four key areas of the AI system development life cycle (secure design, secure development, secure deployment, and secure operation and maintenance) and outlines recommendations to reduce overall risk.
  • The first of its kind, the agreement recognizes the importance of international collaboration in guiding AI development and establishing a cohesive framework for responsible AI practices.

White House Executive Order on Artificial Intelligence

On October 30, 2023, President Biden issued Executive Order 14110 on “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,”1 taking a significant step toward shaping the future of AI2 and its regulation. The Order, which reflects growing calls for federal guidance on AI from public and private stakeholders, focuses on establishing a framework for safe, secure, and trustworthy AI development, focusing on ethical innovation, national security, and global cooperation. The Order builds on the White House’s October 2022 “Blueprint for an AI Bill of Rights”3 and the National Institute of Standards & Technology’s (NIST) January 2023 “Artificial Intelligence Risk Management Framework.”4

The Order is broad in scope, covering a spectrum of industries and issues, including the establishment of new standards for AI safety and security; protection of privacy; advancement of equity and civil rights; support of consumers, patients, and employees; and promotion of innovation and competition.

Although the Order is primarily applicable to federal agencies, it reflects a vision and roadmap for AI regulation intended to guide both industry standards and future federal legislation.

The Order sets out eight principles and priorities to guide policymaking on AI systems:

  • AI must be safe and secure, requiring robust, reliable, repeatable, and standardized evaluations of AI systems, as well as mechanisms to test, understand, and mitigate risks.
  • The U.S. should promote responsible innovation, competition, and collaboration through investments in AI-related education, training, development, research, and capacity as well as by opposing monopolies and unlawful collusion with respect to key assets.
  • The responsible development and use of AI require a commitment to supporting American workers through job training and education, both to prevent AI systems from being deployed in ways that negatively impact employee rights and to use AI in ways that increase human productivity.
  • AI policies must be consistent with the Biden administration’s policy of advancing equity and civil rights and be structured to prevent deepening inequities, new types of harmful discrimination, and online and physical harms.
  • The federal government must enforce existing consumer protection policies and enact appropriate safeguards against fraud, bias, discrimination, and privacy infringement to protect Americans who are increasingly using AI and AI-enabled products, particularly in critical fields such as healthcare, financial services, education, housing, law, and transportation.
  • Policies and tools must be developed to protect Americans’ privacy and civil liberties to ensure that personal data collection, use, and retention is done in a lawful and secure manner that mitigates privacy and confidentiality risks.
  • The risks arising from the federal government’s own use of AI must be mitigated, and it must increase its ability to internally regulate, govern, and support responsible use of AI including, but not limited to, the recruitment of AI professionals.
  • The U.S. should be a global leader for societal, economic, and technological progress, and responsibly deploy technology through engagement with its international allies and partners to develop an AI governance framework and ensure that AI benefits the world rather than increasing or exacerbating existing harms and inequities.

Building on this foundation, Sections 4 through 11 of the Order each correspond to one of the eight guiding principles, setting out a host of practical policy goals, tasks and guidance for federal agencies to implement in the next year. The lengthy Order contains directives for nearly all 15 executive departments to use their regulatory powers to monitor and mitigate risks, develop uses for AI technology, and implement such technologies safely. Certain directives are highlighted below:

  • The Order tasks NIST with establishing a series of guidelines for AI use and development, including (i) best practices to promote industry standards for safe, secure and trustworthy AI systems, (ii) a companion to the AI Risk Management Framework for generative AI, (iii) a companion to the Secure Software Development Framework for generative AI and dual-use foundation models,5 (iv) AI auditing and evaluation guidelines with a focus on cybersecurity and biosecurity, and (v) procedures and processes for AI developers to conduct red-team testing6 of dual-use foundation models.
  • The Order imposes recordkeeping and reporting requirements on developers of dual-use foundation models, including reporting of red-team safety test results and other critical information on model training and physical and cybersecurity measures. Developers will also be required to report the acquisition, development, or possession of large-scale computing clusters, including their location and the total amount of computing power available in each. Infrastructure as a Service (IaaS) products tested or sold by foreign persons will also be subject to recordkeeping and reporting requirements.
  • Various agencies with regulatory authority over critical industries are directed to assess and develop mitigation strategies for AI-related critical infrastructure vulnerabilities, including critical failures, physical attacks and cyberattacks.
  • The Department of Commerce is tasked with creating guidance for content authentication and watermarking of AI-generated content in government communications, in order to increase transparency and public trust and encourage adoption of such standards by the private sector.
  • The Department of Labor is instructed to create best practices for employers to mitigate AI risks and maximize AI benefits in the workforce, paying careful attention to the intersection of AI and worker protections.
  • The State Department and Department of Commerce must establish international frameworks for AI regulation, and the White House plans to collaborate with international partners and organizations for global and consistent AI regulation. The initial results of such collaboration are evident in the international agreement recently entered into by the U.S., as discussed below.
  • The Order also calls on Congress to enact federal data privacy legislation and establishes a White House Artificial Intelligence Council to coordinate the implementation of AI-related policies by executive agencies.

Sweeping in its scope, the Order seeks to be comprehensive and consistent in addressing topics and sectors most keenly affected by the development and use of AI systems. Such directives will inevitably impact federal procurement policy and requirements for government contractors, a historically powerful tool to develop industry standards, even without legislative action. Given the constant and evolving nature of AI development, governments around the world are struggling to legislatively address the risks posed by this technology at a speed that matches AI development. By presenting a coherent set of guidelines and practical and strategic goals, as well as implementation deadlines for federal agencies and departments (some as short as 90 to 270 days), the Order proactively seeks to mitigate risks before the potential harms of AI technology become entrenched. Federal agencies are already working on executing their directives under the Order, with the White House Office of Management and Budget releasing a draft policy7 on Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence on November 1 and the U.S. Cybersecurity and Infrastructure Security Agency (CISA) releasing its implementation plan, “Roadmap for Artificial Intelligence”8 on November 14.

International Agreement on Guidelines for Secure AI System Development

On November 27, 2023, the U.S., U.K., and 16 other countries9 entered into a landmark international agreement on cybersecurity in AI systems.10 The 20-page document titled “Guidelines for Secure AI System Development” is a non-binding series of general guidelines and recommendations emphasizing a “secure by design” approach to AI systems development. The Guidelines were collaboratively developed by CISA, the U.K. National Cyber Security Center, and cybersecurity agencies from each signatory nation, in partnership with industry experts, including Amazon, Google and OpenAI, and other organizations such as the Software Engineering Institute at Carnegie Mellon University. The Guidelines reaffirm an increasing understanding that international collaboration in guiding AI development and the creation of a cohesive framework for responsible AI practices are necessary for international cybersecurity.

The release of the Guidelines follows the AI Safety Summit hosted by the U.K. in early November, which was attended by Vice President Kamala Harris, as well as other international leaders, technology executives, and industry experts. The Summit established the Bletchley Declaration on AI Safety.11 Signed by leaders of 29 countries, the Bletchley Declaration affirms a joint commitment to developing AI safely and responsibly and acknowledges a shared responsibility in addressing the risks posed by AI. Although China was a signatory to the Bletchley Declaration, it is notably absent from the Guidelines themselves.

The Guidelines identify four key areas of the AI system development life cycle: secure design, secure development, secure deployment, and secure operation and maintenance. AI developers are to consider the Guidelines along with industry best practices in the areas of cybersecurity, risk management, and incident response. The use of both the Guidelines and best practices is the international community’s effort to ensure AI systems “function as intended, are available when needed, and work without revealing sensitive data to unauthorized parties.” Cybersecurity is therefore both a pre-condition to AI system safety and also a necessary component of the development process from beginning to end. This approach places the responsibility for downstream security outcomes on the providers of AI components.

Each of the four key areas are supported by a series of “considerations and mitigations” intended to reduce overall risk in AI system development. These considerations include monitoring of AI systems for potential threats and abuse (including hacking), securing of the AI supply chain and vetting of hardware and software components developers, identification of AI vulnerabilities and data tampering opportunities, development of robust incident management procedures, the release of AI products to users only after security testing, and collaboration across the global AI-ecosystem to share best practices across industry, academia, and government.

The significance of the Guidelines is summarized by CISA Director Jen Easterly:

“The release of the Guidelines for Secure AI System Development marks a key milestone in our collective commitment—by governments across the world—to ensure the development and deployment of artificial intelligence capabilities that are secure by design…The domestic and international unity in advancing secure by design principles and cultivating a resilient foundation for the safe development of AI systems worldwide could not come at a more important time in our shared technology revolution. This joint effort reaffirms our mission to protect critical infrastructure and reinforces the importance of international partnership in securing our digital future.”12

This landmark agreement seemingly marks the first of many international commitments to development of consistent AI-systems standards, providing the basic cybersecurity component of an international framework on AI.

1 Full text available at Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.
2 The definition of “artificial intelligence,” or “AI,” is as set forth in 15 U.S.C. 9401(3): “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments.” The Order is therefore broad in scope, applying to any machine-based system that makes predictions, recommendations or decisions, not only generative AI.
3 Full text available at Blueprint for an AI Bill of Rights.
4 Full text available at Artificial Intelligence Risk Management Framework.
5 Defined as “an AI model that is trained on broad data; generally uses self-supervision; contains at least tens of billions of parameters; is applicable across a wide range of contexts; and that exhibits, or could be easily modified to exhibit, high levels of performance at tasks that pose a serious risk to security, national economic security, national public health or safety, or any combination of those matters…”
6 Defined as “a structured testing effort to find flaws and vulnerabilities in an AI system, often in a controlled environment and in collaboration with developers of AI…[it] is most often performed by dedicated “red teams” that adopt adversarial methods to identify flaws and vulnerabilities, such as harmful or discriminatory outputs from an AI system, unforeseen or undesirable system behaviors, limitations, or potential risks associated with the misuse of the system.”
7 Full text available at Proposed Memorandum for the Heads of Executive Departments and Agencies.
8 Full text available at Roadmap for Artificial Intelligence.
9 Australia, Canada, Chile, Czechia, Estonia, France, Germany, Israel, Italy, Japan, New Zealand, Nigeria, Norway, Poland, the Republic of Korea, and Singapore.
10 Full text available at Guidelines For Secure AI System Development.
11 Full text available at The Bletchley Declaration.
12 See DHS/CISA and UK NCSC Release Joint Guidelines for Secure AI System Development.

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A Methane Mixed Bag: EPA Finalizes Methane Rule for New and Existing Oil and Gas Facilities

Energy Alert

(by Gary Steinbauer and Christina Puhnaty)

On December 2, 2023, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its final Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (Final Rule). The Final Rule comes more than two years after EPA published its initial proposal on November 15, 2021 (Initial Proposal) and a supplemental proposal on December 6, 2022 (Supplemental Proposal) (collectively, the “Proposals”). According to EPA, the agency received over one million comments on the Proposals.  For information on the Proposals, please see our November 11, 2021 and December 12, 2022 Alerts. This Alert focuses on critical aspects of the Final Rule, including key changes that EPA made since issuing the Proposals.[1]

Brief Overview of Methane Rule

The Methane Rule is comprised of four separate actions proposed under sections 111(b) and 111(d) of the Clean Air Act. EPA currently regulates emissions of volatile organic compounds (VOCs) and methane from oil and natural gas facilities under 40 C.F.R. Part 60 Subparts OOOO[2] and OOOOa.[3] First, through this Final Rule, EPA will regulate oil and natural gas facilities constructed, modified, or reconstructed after December 6, 2022, under a new Subpart OOOOb.  The requirements in OOOOb will apply to affected facilities 60 days after the rule is published in the Federal Register.  Second, under a new Subpart OOOOc, EPA finalized emissions guidelines that are intended to inform states in the development, submittal, and implementation of state plans to establish standards of performance for greenhouse gases (in the form of limitations on methane) from sources existing on or before December 6, 2022.  Under the Final Rule, states and tribes are required to submit plans to EPA for review within 24 months of the publication of the Final Rule in the Federal Register, with a compliance deadline for existing sources that is no later than 36 months after the deadline to submit the plan to EPA.  Third, the Final Rule amends OOOOa in response to Congress’ June 2021 revocation of regulatory amendments made by EPA under the Trump administration. Fourth, the Final Rule also includes “Appendix K,” a protocol for determining leaks using Optical Gas Imaging (OGI) that EPA now requires at natural gas processing plants regulated by OOOOb or OOOOc.

Key Requirements of Methane Rule

Significant changes from the existing OOOO and OOOOa regulatory frameworks include:

  • Super Emitter Program: The Final Rule will allow certified third parties to monitor well sites, centralized production facilities, and compressor stations regulated by OOOO, OOOOa, OOOOb, or OOOOc using specific remote detection technologies for “super-emitter emission events,” which are defined as emission events resulting in 100 kilograms (220.5 pounds) per hour or more of methane. These third parties are required to submit notifications of super emitter events to EPA’s Super Emitter Program Portal within 15 calendar days of the observation. Upon receipt of a notification by a third party, owners and operators of these facilities would be required to initiate an investigation within five days and report the results of that investigation to EPA within 15 days. EPA plans to publish online the information that EPA receives through the Super Emitter Response Program, which will include an identification of the operator responsible for the super emitter event after giving the operator the opportunity to respond to EPA regarding the event.
  • Storage Vessel Applicability Threshold Now Applies to Tank Batteries: EPA has finalized its proposed expansion of its regulation of oil and gas-related storage vessels under both Subparts OOOOb and OOOOc. Currently, Subpart OOOOa storage vessel regulations are limited to VOC emissions and based on a VOC potential to emit (PTE) of 6 tons per year (tpy) for a single storage vessel. Under Subpart OOOOb, EPA includes the same 6 tpy VOC PTE applicability threshold, adds a methane applicability threshold of 20 tpy, and applies these thresholds to a single storage vessel or the aggregate potential emissions from a “tank battery,” i.e., a group of storage vessels that are adjacent and receive fluids from the same operation or are manifolded together. As for storage vessels at existing facilities, EPA will regulate existing tank batteries meeting the 20 tpy methane threshold. For storage vessels meeting these threshold requirements, EPA requires a 95% reduction of VOC and methane by routing emissions through a closed vent system to a control device.
  • Fugitive Emissions Monitoring Required at All Well Sites: At 40 CFR § 60.5397a(1), OOOOa currently excludes low-production well sites from fugitive emissions monitoring requirements. The Final Rule, however, requires fugitive emissions monitoring at all well sites, though the frequency and level of monitoring varies by site based on its configuration and the presence, if any, of production equipment. For example, single wellhead-only and small well sites must conduct quarterly audio, visual and olfactory (AVO) inspections, while multi-wellhead only well sites must do semiannual OGI inspections in addition to quarterly AVO inspections. Well sites with major production and processing equipment must conduct AVO inspections every other month and quarterly OGI inspections. Compressor stations are required to conduct monthly AVO inspections and quarterly OGI inspections.
  • First-time Requirements for Oil Wells with Associated Gas: For the first time, EPA will require that associated gas from new, reconstructed, or modified oil wells be routed directly to a sales line. In situations where gas-producing oil wells do not have access to a sales line, associated gas would need to be used on-site as a fuel source, used for another purpose that a purchased fuel or raw material would service, or be routed to a flare or other control device achieving 95 percent reduction of methane and VOC emissions. The Final Rule separates new associated gas wells into multiple groups based on when construction is commenced to establish a two-year “phase-in” period for the application of the final standards. EPA requires that these same standards apply to existing oil wells with associated gas.
  • Well Closure Plans: The Final Rule includes a new suite of well closure requirements.  Under these requirements, owners and operators of well sites are required to submit a closure plan to EPA within 30 days of the cessation of production and a notification to EPA 60 days before well closure activities begin. The contents of the well closure plan would need to include the steps necessary to permanently plug all wells, a description of financial requirements and assurance to complete closure, and the schedule for completing closure. Well surveys using OGI are required at the well site following well closure activities.

Additional notable requirements include the use of zero-emission pneumatic controllers and pneumatic pumps, a “no identifiable emissions” standard for closed vent systems, and the use of best management practices aimed to minimize or eliminate VOC or methane emissions during well liquids unloading.

If you have any questions about the applicability of the Final Rule to your operations, please contact Gary E. Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com or Christina Puhnaty at (412) 394-6514 or cpuhnaty@babstcalland.com.

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[1] The Final Rule is 1690 pages, which does not include the Regulatory Impact Analysis and other documents in the rulemaking record. A detailed evaluation of each potentially applicable requirement is warranted, and this Alert provides only a high-level summary of certain provisions.

[2]  Specified affected facilities constructed, reconstructed, or modified after August 23, 2011 and on or before September 18, 2015 are regulated under Subpart OOOO.

[3]  Specified affected facilities constructed, reconstructed, or modified after September 18, 2015 and on or before November 15, 2021 are regulated under Subpart OOOOa.

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Hangey v. Husqvarna Professional Products: Pennsylvania Supreme Court Closes Another Off-Ramp for Corporate Defendants Sued in Pennsylvania

Litigation Alert

(By Joseph Schaeffer and Stefanie Pitcavage Mekilo)

Last week, the Pennsylvania Supreme Court issued its much-anticipated decision in Hangey v. Husqvarna Professional Products, Inc., No. 14 EAP 2022 (Pa. 2023).[1] The Court held that the percentage of a corporate defendant’s national revenue derived from a forum county is not sufficient, on its own, to support a finding that the defendant does not “regularly conduct business” there for purposes of Pennsylvania’s venue rules. The decision has potential far-reaching consequences for corporate defendants sued in the Commonwealth. Indeed, the plaintiffs’ lawyers in Hangey already are cheering the ruling as “one of if not the most impactful venue decisions in the last 20 years.”[2]

The background of Hangey is straightforward. Ronald Hangey was injured while using a Husqvarna lawnmower purchased in Bucks County on his property in Wayne County. The Hangeys thereafter sued Husqvarna Professional Products, Inc. (HPP), and others on various tort claims in Philadelphia County. Discovery revealed that HPP sold products through just two authorized dealers in Philadelphia County and derived only 0.005% of its national revenue from those business activities.

HPP challenged venue under Pennsylvania Rule of Civil Procedure 2179(a), which provides that suit against a corporation may be brought in “a county where…the corporation or similar entity regularly conducts business.” Under Pennsylvania’s two-pronged “quality-quantity” test for evaluating whether a defendant is regularly conducting business in the forum county, the “quality” prong is met when a defendant’s activities in a county “directly…further[]” or are “essential to” the defendant’s business objectives, while the “quantity” prong is satisfied by activities that are “so continuous and sufficient to be general or habitual.”[3] The trial court held the quality prong was satisfied because HPP’s sale of its products to two authorized dealers in Philadelphia County furthered its business objectives. On the quantity prong, however, the trial court held that the 0.005% of national revenue HPP derived from those sales was “de minimis,” and not indicative of “general” and “habitual” contact, so it transferred the case to Bucks County. The Hangeys appealed, and the case made its way to the Pennsylvania Supreme Court.

The Supreme Court held that the trial court abused its discretion in focusing its quantity analysis exclusively on the percentage of national revenue HPP derived from Philadelphia County. According to the Court, percentage of revenue does not alone control the quantity inquiry; rather, it is but one “data point” a court may consider—if it deems the percentage relevant—in a broader assessment of how “regular” a defendant’s business activities are in a forum.[4] The Court identified potential non-revenue data points to include the number of “days out of the year a business is open to the public,…units of product sold, or…hours billed by employees.”[5]

Importantly, rather than remanding the case to the trial court for further review, the majority applied its gloss of the quality-quantity test to hold that venue was proper for HPP in Philadelphia County as a matter of law. The majority notes only that HPP’s sales to two authorized dealers in Philadelphia County had been “consistent” and without “interruption” during the relevant period, and that HPP was “at least trying to make sales in Philadelphia, regularly and continuously.”[6] The majority concluded that so long as “a company maintains a constant physical presence in the forum county” in furtherance of its business objectives—even if only through an authorized dealer and without much success—venue is appropriate in that county as a matter of law.[7] Notably, the majority does not mention percentage of revenue, nor any of the other quantitative metrics it had identified, in its analysis.

It is fair to wonder what (if anything) remains of the “quantity” prong of the quality-quantity test after Hangey. Indeed, under the majority’s reasoning, it is hard to imagine a scenario in which quantity will not follow quality in lockstep. Justice Kevin Brobson suggested as much in dissent. He agreed that percentage of revenue is not alone dispositive, but he believed the proper approach would have been a remand to the trial court for further review given that clarification. Justice Brobson also expressed “concern[]” that the majority opinion “could be construed as holding that, as a matter of law, a corporation’s mere presence in a county is sufficient to establish that venue is proper in that county.”[8]

The decision is all the more concerning when considered alongside litigation patterns in the Commonwealth—namely, plaintiffs’ strategic channeling of lawsuits to notoriously plaintiff-friendly venues like Philadelphia and Allegheny County, and their success in achieving (and seeing appellate courts affirm) nuclear and thermonuclear verdicts in those venues[9]—and judicial trends winnowing available “off ramps” for corporate defendants haled into Pennsylvania courts. In its recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023), the U.S. Supreme Court rejected a due-process challenge to Pennsylvania’s consent-by-registration statute, holding that the Due Process Clause allows states to require corporations to consent to their general jurisdiction as a condition of doing business there; the decision green-lights lawsuits filed in the Commonwealth by plaintiffs with no ties to Pennsylvania, for conduct occurring beyond its borders. And while the doctrine of forum non conveniens once provided a reliable safety valve for defendants sued in forum-shopped venues, recent decisions from the Pennsylvania Superior Court have sown uncertainty into the doctrine, with some decisions appearing to increase the burden on defendants seeking transfer out of oppressive and vexatious forums.[10]

Nonetheless, the final word has not yet been said on many of these jurisprudential shifts. Other challenges to the consent-by-jurisdiction statute, remain pending; appeals seeking clarity (and reaffirmance of the long-settled status quo) regarding forum non conveniens are making their way to Pennsylvania appellate courts; and it is too early to predict how Pennsylvania courts will read and apply Hangey. In the immediate future, however, the Hangey decision likely will only exacerbate the forum-shopping problem already plaguing corporate defendants sued in Pennsylvania and overburdening Pennsylvania’s busiest trial courts. As a result, all businesses—and small businesses in particular—should proceed with caution in considering whether the potential revenue stream to be derived from placing products in Pennsylvania’s most plaintiff-friendly counties is worth the attendant litigation risk.

If you have questions about the Hangey decision, or its implications for your business, please contact Stefanie Pitcavage Mekilo at 570-590-8781 or smekilo@babstcalland.com or Joseph V. Schaeffer at 412-394-5499 or jschaeffer@babstcalland.com.

To read the full Law360 Expert Analysis, click here.

To view the PDF, click here.

[1] Hangey v. Husqvarna Prof’l Prods. Inc., No. 14 EAP 2022, slip op. at 44 n.23 (Pa. 2023).
[2] Aleeza Furman, Pa. High Court Rejects ‘Percentage of Revenue’ Venue Defense, The Legal Intelligencer (Nov. 22, 2023), https://www.law.com/thelegalintelligencer/2023/11/22/pa-high-court-rejects-percentage-of-revenue-venue-defense/.
[3] Purcell v. Bryn Mawr Hosp., 579 A.2d 1282, 1285 (Pa. 1990) (quoting Shambe v. Del. & Hudson R.R. CO., 135 A. 755, 757 (Pa. 1927)).
[4] Hangey, slip op. at 39.
[5] Id.
[6] Id. at 45.
[7] Id. at 44.
[8] Hangey, slip op. at 4 & n.2 (Brobson, J., dissenting).
[9] See, e.g., Amagasu v. Mitsubishi Motors N. Am., No. 181102406 (Phila. Cnty. Ct. Com. Pl.) ($908 million Philadelphia jury verdict); Caranci v. Monsanto, No. 210602213 (Phila. Cnty. Ct. Com. Pl.) ($175 million Philadelphia verdict); see also Nuclear Verdicts Trends, Causes, and Solutions, U.S. CHAMBER OF COM. INST. FOR LEGAL REFORM (Sept. 2022) (noting “[m]ore than half” of Commonwealth’s nuclear verdicts are returned in Philadelphia County).
[10] See, e.g., Ehmer v. Maxin Crane Works, L.P., 296 A.3d 1202 (Pa. Super. Ct. 2023); Tranter v. Z&D Tour, Inc., ___ A.3d ___, 2023 WL 6613731 (Pa. Super. Ct. 2023).

States Continue to Adopt the “Continuous-Trigger” Theory of “Occurrence” Under Commercial General Liability Insurance Policies

Litigation Alert

(by Mychal Schulz and Erin Hamilton)

A growing number of states, including Ohio, Pennsylvania, and Virginia, and most recently, West Virginia, now follow the “continuous-trigger” theory when examining coverage under an occurrence-based Commercial General Liability (CGL) insurance policy.

The West Virginia Supreme Court of Appeals recently confirmed in Westfield Ins. Co. v. Sistersville Tank Works, Inc., No. 22-848 (Nov. 8, 2023), that West Virginia law recognizes the “continuous trigger” theory to determine when insurance coverage is activated under a CGL policy that is ambiguous as to when coverage is triggered.

In 2016 and 2017, former employees of Sistersville Tank Works, Inc. (STW), filed three separate civil lawsuits West Virginia state court alleging personal injuries as the result of exposure to various cancer-causing chemicals while working around tanks that STW supposedly installed, manufactured, inspected, repaired or maintained between 1960 and 2006. STW purchased CGL policies from Westfield each year for the period 1985 to 2010. Typical of virtually all CGL policies, the Westfield CGL policies issued to STW were occurrence-based and provided coverage for bodily injury and property damage “which occurs during the policy period.”  Under the Westfield CGL policies, the bodily injury or property damage must be caused by an “occurrence,” defined under the policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

Westfield denied coverage for the three underlying lawsuits and filed a declaratory judgment complaint in the United States District Court for the Northern District of West Virginia seeking a declaration that it owed no duty to provide a defense or indemnification to STW because the former employees were diagnosed after the expiration of the last CGL policy, and, therefore, STW could not establish that an “occurrence” happened within the policy period.

The District Court granted summary judgment to STW and found that Westfield owed a duty to defend and indemnify under all the Westfield CGL policies in effect between 1985 and 2010. Specifically, the District Court concluded that Westfield’s obligation to cover a bodily injury that “occurs during the policy period” was ambiguous because the language in Westfield’s CGL policies did not clearly identify when coverage was “triggered” when a claimant alleged repeated chemical exposures and the gradual development of a disease over numerous policy periods. The District Court predicted that the West Virginia Supreme Court of Appeals would apply the continuous-trigger theory to clarify the ambiguous language in the policies at issue, which resulted in each occurrence-based CGL policy insuring the risk from the initial exposure through the date of manifestation being triggered.

Westfield appealed to the United Stated Court of Appeals for the Fourth Circuit and argued that a “manifestation trigger” of coverage should apply to determine coverage, under which only the CGL policy in effect when an injury is diagnosed, discovered, or manifested provides coverage for the claim. The Fourth Circuit, recognizing that West Virginia had not address the issue, then certified the following question to the West Virginia Supreme Court of Appeals:

At what point in time does bodily injury occur to trigger insurance coverage for claims stemming from chemical exposure or other analogous harm that contributed to development of a latent illness?

The West Virginia Supreme Court began its analysis of the certified question by observing that “in the context of latent or progressive diseases,” the definition of “occurrence” was ambiguous and subject to interpretation by the Court. The Court then examined the history of the insurance industry’s adoption of “occurrence” language in CGL policies in the 1960s including the specific intent of drafters of the “occurrence” language to include “cases involving progressive or repeated injury” in which “multiple policies could be called into play.”

The Court also observed that most courts that have examined the “continuous-trigger” theory have expressly adopted it, including Ohio (Owens-Corning Fiberglas Corp. v. Am. Centennial Ins. Co., 660 N.E.2d 770, 791 (Ohio Com. Pl. 1995); Pennsylvania (J.H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 506 (Pa. 1993); and Virginia (C.E. Thurston & Sons, Inc. v. Chi. Ins. Co., No. 2:97 CV 1034 (E.D. Va., Oct. 2, 1998)). Conversely, the Court noted that no jurisdiction has adopted the “manifestation” trigger advocated by Westfield.

The Court concluded by expressly adopting the “continuous-trigger” theory of coverage to determine when coverage is activated under the insuring agreement of an occurrence-based CGL policy “if the policy is ambiguous as to when coverage is triggered.”  In doing so, the Court observed that the continuous trigger theory of coverage “has the effect of spreading the risk of loss widely to all of the occurrence-based insurance policies in effect during the entire process of injury or damage[,]” which includes the time of “the initial exposure, through the latency and development period, and up to the manifestation of the bodily injury, sickness, or disease[.]”

The Westfield decision ensures that West Virginia law concerning the activation of coverage under occurrence-based CGL policies aligns with the law in other states around the country. It also should be a reminder to businesses that purchase occurrence-based CGL policies to establish and maintain a repository of insurance policies for as long as possible, and especially for businesses that may be subject to personal injury claims that involve long latency periods between exposure and manifestation. Having copies of those policies will increase the chance of finding at least one insurer (and potentially more) that owes a defense and indemnification for such claims.

If you have questions about the “continuous-trigger” theory when examining coverage under a CGL insurance policy, please contact Mychal Schulz at 681-265-1363 or mschulz@babstcalland.com or Erin Hamilton at 412-394-6978 or ehamilton@babstcalland.com.

Appealing a Collateral Order? Fresh Guidance on Rule 313

Litigation Legal Perspective

(By Jenn Malik)

Pennsylvania Rule of Appellate Procedure 313 provides for appeals as of right from a collateral order of a trial court. 210 Pa.Code Rule 313(b) defines an appealable collateral order as “an order separable from and collateral to the main cause of action where the right involved is too important to be denied review and the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost.” The following is a summary of recent appellate decisions on the collateral order doctrine.

First, the Commonwealth Court, in Bethke v. City of Philadelphia, No. 406 CD 2022, 2023 WL 3295555 (Pa. Cmwlth., May 8, 2023) (memorandum), Bethke v. City of Philadelphia, 406 C.D. 2022, considered the collateral-order doctrine in a matter involving an untimely response to a Pennsylvania Right-to-Know Law (RTKL) request.  After the City did not respond to the request, resulting in a deemed denial, the requester appealed to the Pennsylvania Office of Open Records (OOR), which held that that there were no applicable exceptions under the RTKL and ordered the City to produce the records. Id. at 1.  After failing to timely appeal the OOR’s decision to the Court of Common Pleas, the City produced redacted documents; the requester then filed an action in mandamus seeking the unredacted records. Id.  Of note, the trial court ordered the City to file a motion nunc pro tunc to appeal retroactively the OOR’s determination, which order the requester appealed to the Commonwealth Court. Id. at 1-2.  On appeal, the Commonwealth Court held that the matter was immediately appealable as a collateral order and that the trial court lacked jurisdiction over an untimely appeal of the OOR’s determination, which could not be remedied by nunc pro tunc relief.

Practice Point: Trial court orders attempting to grant nunc pro tunc relief can be appealed under the collateral order doctrine.

In Chilutti v. Uber Technologies, Inc., 2023 PA Super. 126 (Pa. Super., July 19, 2023), Chilutti v. Uber Techs., 2023 Pa. Super. 126, the Superior Court considered the appealability of an order compelling arbitration based on the terms of a browse wrap agreement, in a negligence action against a ride-sharing company. Judge McCaffery, writing for the majority, first stated the three-part test for determining a collateral order’s appealability: (1) the order is separable from and collateral to the main cause of action; (2) the right involved is too important to be denied review; and (3) if review is postponed until final judgment, the right will be irreparably lost. Id. at 7, citing Cmwlth. v. Wells, 719 A.2d 729, 739 (Pa. 1998).  The Court’s analysis focused on the third prong, that an order compelling arbitration is appealable because postponing review would result in irreparable loss of the claim that the arbitration provision was unenforceable.  Chilutti, slip op. at 8. “We disagree that the collateral order doctrine as applied to arbitration agreements is impenetrable.  We reiterate there are times when a party is forced out of court because the arbitration provision either failed to meet basic contract principles or violated a party’s constitutional right to a jury trial…and where the arbitration award is deemed fair, and therefore unreviewable, even if there was no agreement to arbitrate between the parties, which would result in the irreparable loss to the party.” Id. at 12. Judge Stabile’s dissent disagreed, stating that an arbitrator’s decision to assert jurisdiction over objection, as opposed to an arbitration award itself, is subject to much broader judicial review than an award on the merits. Id. at 41.

Practice Point: An order compelling arbitration may be appealable under the collateral order doctrine if the arbitration provision in question fails to meet basic contract principles or violates the right to a jury trial. 

In Rivas v. Villegas, 2023 PA Super. 135 (Pa. Super., July 27, 2023), Rivas, M. v. Villegas, J. :: 2023 :: Pennsylvania Superior Court Decisions :: Pennsylvania Case Law :: Pennsylvania Law :: US Law :: Justia, the Superior Court considered whether, in a child custody action, a grandmother could appeal an order denying her petition for special relief, which petition sought specific fact-findings that would permit her grandchild to seek special immigrant juvenile status under the Immigration and Nationality Act.  Relying on Orozco v. Tecu, 284 A.3d 474, 476 (Pa. Super. 2022), the Court held that the order was appealable because: (1) it was separate and apart from the grandmother’s custody action; (2) it involved a right that was too important to be denied review, since deportation proceedings were pending against the child; and (3) the grandmother’s right to pursue special immigrant juvenile status for the child would be lost forever if relief were not granted. Rivas, slip at 19.

Practice Point: Orders in custody actions involving the child’s immigration status are immediately appealable collateral orders.

In Ford-Bey v. Professional Anesthesia Services, 2023 PA Super. 163 (Pa.Super., September 12, 2023), the co-defendant hospital appealed a discovery order to produce documents of its “root cause analysis” process regarding the plaintiff’s decedent’s decline after surgery, leading to a comatose state then death. The hospital claimed privilege under Pennsylvania’s Medical Care and Reduction of Error Act (MCARE). Noting that appeals of collateral orders raise a jurisdictional issue and a question of law, the Superior Court reiterated that they are given plenary review de novo. Ford-Bey, slip op. at 6, citing Calabretta v. Guidi Homes, Inc., 241 A.3d 436, 441 (Pa.Super. 2020). The discovery order in Ford-Bey, for documents protected by MCARE’s privilege and confidentiality terms, was appealable under Rule 313. Ford-Bey, slip op. at 10.

Two days later, in Betz v. UPMC Pinnacle West Shore Hospital, et al., 2023 PA Super. 1166 (Pa. Super., September 14, 2023), Betz, J. v. UPMC Pinnacle West Shore Hosp. :: 2023 :: Pennsylvania Superior Court Decisions :: Pennsylvania Case Law :: Pennsylvania Law :: US Law :: Justia, the Superior Court considered a comparable issue: a hospital’s appeal of a trial court order in a wrongful death and survival action directing it to identify the author of an anonymous report concerning the care and death of the decedent.   The hospital appealed on the basis that identifying the author would violate MCARE’s whistleblower protections. Betz, slip op. at 1-2.  After the trial court denied the hospital’s request to amend the order to allow an appeal by permission under 42 Pa.C.S. 702(b), the hospital appealed under the collateral order doctrine. Betz at 4, n. 2.  Quoting Farrell v. Regola, 150 A.3d 87, 95 (Pa. Super. 2016), the Court found that “[w]hen a party is ordered to produce materials purportedly subject to a privilege, we have jurisdiction under Pa.R.A.P. 313.” Betz at 2, n.1.

Practice Point:  Orders to produce privileged material are appealable collateral orders. 

Most recently, our Supreme Court, in J.C.D., III and A.M.D.  v. A.L.R. and T.A.D-R., No. 13 MAP 2023 (Pa., October 18, 2023), addressed an order on grandparents’ custody. A couple moved in with the wife’s parents. They had two children, but all four moved out after a family dispute. The grandparents sought shared legal and partial physical custody. The parents preliminarily objected, asserting that the grandparents lacked standing. Slip op. at 1-2. The trial court first agreed, then issued a Standing Order granting the grandparents standing to seek partial physical custody. On the parents’ appeal, the Superior Court issued a rule to show cause why the appeal should not be quashed, where claims remained pending in the trial court. After the parents responded, the Court quashed.

The parents then petitioned for discretionary appeal to the Supreme Court, which that Court granted, limited to the question whether it should grant appeal as of right under Rule 313. J.C.D. at 3-4. The Court noted that a party may seek permission to appeal an interlocutory order under Rule 312, J.C.D. at 5; it also cited Rule 1311 regarding appeal by permission of orders certified by the trial court under 42 Pa.C.S.A. §702. J.C.D. at 15. Here, the parents satisfied the first two prongs of the collateral-order test: the Standing Order was separable from the main cause of action – legal and physical custody – and involved the grandparents’ significant interest, as set forth in several Supreme Court decisions on parents’ and grandparents’ rights in custody matters. Id. at 6-8 (citations omitted). However, there was no irreparable harm, where the Standing Order did not indicate that it had to be appealed within 30 days, or that appeal could not be had after a final custody order. Id. at 10.

Justice Wecht concurred, stating that the time and cost burdens of custody litigation, while undeniable, did not result in irreparable harm. However, he noted K.W. v. S.L., 157 A.3d 498 (Pa.Super. 2017), where the Superior Court found appealable a collateral order granting standing to prospective adoptive parents. In K.W., the father did not know of the mother’s pregnancy nor her decision to place the child for adoption; he had the “right to be free of custody litigation involving third parties” such as the prospective adopters. (Justice Wecht’s concurring opinion discusses several United States Supreme Court and Pennsylvania decisions on parents’ and grandparents’ rights, and the federal and Commonwealth constitutional provisions applied in those cases.). Chief Justice Todd, joined by Justice Donohue, dissented, finding that the parents’ claim would be irreparably lost, citing parents’ constitutional right to direct the care, custody and control of their children, adversely affected by the financial and emotional burden, cost and strain of custody litigation, including strain on the children.

Practice Points: (1) All three elements of the collateral-order doctrine must be met; (2) would-be appellants should consider proceeding under Rule 312 and/or Rule 1311 and §702; and (3) in custody matters, counsel should research whether particular facts in the case, as in K.W., support an appealability argument.

If you have any questions about Pennsylvania Rule of Appellate Procedure 313, please contact Jenn Malik at 412.394.5490 or jmalik@babstcalland.com.

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Divided Commonwealth Court Holds Local Agencies are Prohibited from Adding Non-Emergency and Non-De Minimis Agenda Items to the Posted Agenda

Public Sector Alert

(By Max Junker and Anna Jewart)

On June 30, 2021, Governor Tom Wolf signed Senate Bill 554 into law as Act 65 of 2021 which amended the Pennsylvania Sunshine Act, 65 Pa.C.S. §§701-716, (Sunshine Act) to require that agencies subject to the Act make their meeting agendas available to the public, and set restrictions on taking official action on any item not listed on the agenda as published. These changes took effect on August 30, 2021.

Act 65 amended Section 709 of the Sunshine Act to require that agencies post a copy of the agenda for the meeting, including a listing of each matter of agency business that will be or may be the subject of deliberation or official action on its official website, at the meeting location, and at its principal office no later than 24 hours in advance of the time of the convening of the meeting. In addition, Act 65 added a new Section 712.1 which identified the instances in which official action could be taken on an item not included in the posted agenda. Early interpretations of Section 712.1 indicated that the new subsection (e) could be used to add any item to the agenda so long as it was added by majority vote and the agenda was revised and reposted within 24 hours of the meeting.  Schmidt v. Ringgold School District, No. 2022-0128 (Ct. Comm. Pls. Washington Co. Dec. 9, 2022).

However, in a reported decision issued November 8, 2023, the Commonwealth Court, in Coleman v. Parkland School District, No. 1416 C.D. 2022 (Pa. Cmwlth. Nov. 8, 2023) rejected this interpretation and determined that in order for official action to be taken on an item not included on the agenda posted in accordance with Section 709 of the Sunshine Act, the issue must meet one of the three enumerated exceptions identified in Sections 712.1(b),(c) or (d) of the Sunshine Act.

Under Coleman and Section 712.1(a) of the Sunshine Act, 65 P.S. §712.1(a), an agency may not take official action on a matter of agency business if that matter was not included in the posted agenda unless it qualifies as:

712.1(b): a matter that relates to a real or potential emergency involving a clear and present danger to life or property; or

712.1(c): a matter brought to the attention of the agency within the 24-hour period prior to the meeting, provided the matter is de minimis in nature and does not involve the expenditure of funds or entering into any contract or agreement; or

712.1(d): a matter raised by a resident or taxpayer at the meeting to be considered for the purposes of referring it to staff, researching it for inclusion at a later meeting, or for full consideration where it is de minimis and does not involve the expenditure of funds or entering into any contract or agreement.

The Court in Coleman clarified that in order for an agency to add an item to its agenda for official action it must first qualify under Sections 712.1(b), (c) or (d) and then the agency must vote to add the item to the agenda, by majority vote, in accordance with Section 712.1(e) which states:

Upon majority vote of the individuals present and voting during the conduct of a meeting, an agency may add a matter of agency business to the agenda. The reasons for the changes to the agenda shall be announced at the meeting before any vote is conducted to make the changes to the agenda. The agency may subsequently take official action on the matter added to the agenda. The agency shall post the amended agenda on the agency’s publicly accessible Internet website, if available, and at the agency’s principal office location no later than the first business day following the meeting at which the agenda was changed.

Impact and Considerations.

Many agencies have been operating under the interpretation that Section 712.1(e) is a “catch-all” provision allowing any item to be added to an agenda by majority vote, regardless of whether it meets Sections 712.1(b), (c), or (d). Based on the Court’s analysis in Coleman, this practice is now improper and can be considered a violation of the Sunshine Act.

Under Section 713 of the Act, a challenge to any violation must be filed within 30 days from the date of the meeting at which the alleged violation occurred (or 30 days from the date the violation was discovered if the meeting was not open to the public). In no instance can a legal challenge be commenced more than one year from the date of that meeting. Therefore, agencies do not need to cure any defective actions taken at open meetings prior to October 8, 2023. However, agencies should consider ratifying any action taken on an item added by majority vote in the past 30 days by adding the ratification motion to the agenda of their next public meeting.

Any member of an agency who participates in a meeting with the intent and purpose of violating the Sunshine Act may be found to have committed a summary offense and may be sentenced to fines of up to $1,000 for a first offense or $2,000 for a second. In addition, under Section 713, if a court determines that a meeting did not meet the requirements of the Sunshine Act, it may in its discretion find that any or all official action taken at that meeting was invalid. Therefore, it is important that any agency subject to the Act prepare to put in place procedures for posting its agendas in advance of any public meeting, and only take official action on business included in the agenda posted at least 24 hours prior to the meeting unless one of the exceptions above are met.

If you have questions about Sections 712.1(b),(c) or (d) of the Sunshine Act, please contact Robert (Max) Junker at 412-773-8722 or rjunker@babstcalland.com or Anna Skipper Jewart at 412-253-8806 or ajewart@babstcalland.com.

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Trick or Treat? EPA Tightens Reporting Requirements for PFAS and other Chemicals of Special Concern

Environmental Alert

(By Joseph Schaeffer and Jessica Deyoe)

In a final rule published in the Federal Register this Halloween, which we previewed at the time of proposal, Environmental Protection Agency (EPA) increased the reporting requirements for per-and-polyfluoroalkyl substances (PFAS) and other chemicals of special concern under the Emergency Planning and Community Right-to-Know-Act, 42 U.S.C. §§ 11001-11050 (EPCRA), and the Pollution Prevention Act, 42 U.S.C. §§ 13101-13109 (PPA). 88 Fed. Reg. 74360. EPA believes that these changes will provide regulators, industry, and the public with more insight into the presence of these chemicals. The rule will take effect on November 30, 2023, and will apply to the reporting year beginning on January 1, 2024.

EPCRA § 313 establishes a toxics release inventory (TRI) that requires certain facilities manufacturing, processing, or using chemicals above certain threshold amounts to report environmental releases and waste management activities for those chemicals on an annual basis. PPA § 6607 requires facilities to report pollution prevention and recycling data for chemicals listed on the TRI, as well. Among the chemicals listed on the TRI, EPA has designated certain chemicals as “chemicals of special concern.” See 40 C.F.R. 372.28. Chemicals of special concern are excluded from de minimis exemptions, as well as the use of simplified reporting forms and range reporting. Historically, chemicals of special concern were those that EPA had identified as persistent, bioaccumulative, and toxic.

As part of the National Defense Authorization Act for Fiscal Year 2020 (NDAA), Congress established two methods for adding PFAS to the TRI. Section 7321(b) of the NDAA added 14 PFAS by name or Chemical Abstract Service Registry Number and other PFAS that met specified criteria. Section 7321(c) of the NDAA provided that additional PFAS would be automatically added to the TRI effective January 1 of the calendar year subsequent to the occurrence of one of the following enumerated triggers: (1) EPA finalizes a toxicity value for the PFAS; (2) EPA makes a covered determination for the PFAS, i.e., a determination made by rule under the Toxic Substances Control Act (TSCA) section 5(a)(2) that a use of a PFAS or a class of PFAS is a significant new use; (3) the PFAS is added to a list of substances covered by a covered determination; or (4) the PFAS to which a covered determination applies is added to the list published under section 8(b)(1) of TSCA and is designated as an active chemical substance under TSCA § 8(b)(5)(B). Section 8(b) of TSCA requires EPA to compile a list of each chemical substance manufactured, processed, or imported in the United States. To date, 189 PFAS have been added to the TRI.

The final rule designates all PFAS listed, or to be listed, on the TRI as chemicals of special concern. This means that PFAS are no longer eligible to rely on the de minimis exemption that allows facilities to exclude small concentrations of chemicals in mixtures or other trade name products from release and waste management calculations. It also means that facilities can no longer rely on reporting ranges for releases or waste management transfers of less than 1,000 pounds but must, instead, report whole numbers. And it means further that facilities can no longer use the simplified Form A, which does not require reporting of release or waste management volumes, but must instead use the more detailed Form R.

In addition to designating PFAS as chemicals of special concern, EPA also eliminated a de minimis exemption in Supplier Notification Requirements that exempted suppliers from providing notifications for chemicals of special concern in mixtures or trade name products if the chemicals of special concern were present at concentrations below 1% of the mixture (or 0.1% for carcinogens). Because the de minimis exemption was based on concentration rather than amount, a mixture could include chemicals of special concern in excess of reporting thresholds without the purchaser being aware. A 100,000 pound mixture with a 0.9% concentration of PFAS, for instance, would include 900 pounds of PFAS—nine times the reporting threshold established under the NDAA—without imposing supplier notification requirements. Notably, elimination of this de minimis exemption affects not only PFAS but all chemicals of special concern.

The final rule will significantly increase visibility into the use of PFAS. By eliminating the de minimis exemption for chemicals of special concern in Supplier Notification Requirements, purchasers will have information about PFAS concentrations in mixtures and other trade name products used in their own businesses. And by eliminating the de minimis reporting exemption, as well as the availability of other burden reduction tools for chemicals of special concern, both the number and accuracy of reports should increase.

As for the burden of this increased visibility, EPA estimates that it will affect between 623 to 2,015 entities (of which 486 to 1,333 are estimated to be small businesses) and cost between $3.32-$10.73 million in the first reporting year and between $1.58-$5.11 million in each subsequent reporting year. EPA projects that the average cost per small firm will be $7,413-$7,520, depending on discount rate, and will not exceed 1% of annualized cost impacts for even the smallest firms.

Opinions on the reasonableness of the final rule, and particularly its cost estimates, are likely to diverge widely, and litigation challenging the final rule is always possible. What the final rule signals, however, is that EPA under the current administration has identified PFAS as a priority area for regulation, and industry should plan accordingly. Indeed, under its 2021 PFAS Strategic Roadmap (available here), EPA has taken a “whole-of-the-agency approach” to address PFAS with primary directives to (1) research; (2) restrict; and (3) remediate PFAS.

As the federal and state governments continue to take action to address PFAS across many program areas, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. For more information on this development and other remediation matters, please contact Joseph V. Schaeffer at (412) 394-5499 or jschaeffer@babstcalland.com, Jessica L. Deyoe at (202) 853-3489 or jdeyoe@babstcalland.com, or any of our other environmental attorneys.

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