Firm Alert
(by Ember Holmes and Justine Kasznica)
On July 10, 2023, the European Commission (EC) adopted the European Union-United States Data Privacy Framework (DPF), an adequacy decision concluding that the U.S. has adequate data privacy and security infrastructure in place for secure transfer of personal data from the European Economic Area (EEA), which is comprised of the 27 European Union Member States, Norway, Iceland, and Liechtenstein, into the U.S. Prior to the adoption of the DPF, in order to transfer data from the EEA to the U.S., organizations in the U.S. were required to use one of the EC-approved safeguards, such as standard contractual clauses or binding corporate rules. These safeguards, set forth in Article 46 of the General Data Protection Regulation (GDPR), are onerous and complicated. The DPF allows for the safe and secure flow of data for U.S. multinational corporations and organizations doing business with those in the EEA. The importance of this data flow cannot be overstated – organizations across all sectors, whether large or small, will have equal opportunity to participate in the digital economy and to engage in streamlined international commerce.
There are three branches of the DPF – the EU-U.S. DPF, the Swiss-U.S. DPF, and the UK Extension to the EU-U.S. DPF. With the July adoption of the EU-U.S. DPF by the EC, the EU-U.S. DPF permits flow of information from the E.U. to the U.S. The Swiss-U.S. DPF and UK Extension to the EU-U.S. DPF will enable personal data transfers from those jurisdictions if and when the Swiss and UK Governments officially recognize the adequacy decision.
In the U.S., the DPF is implemented and administered by the U.S. Department of Commerce (DOC), and on July 17, 2023, the DOC launched the Data Privacy Framework program website. On this website, users can apply for their organization to participate in the DPF and be listed on the Data Privacy Framework List, the public record of all DPF participants that is published on the DPF Program website. Users may join the list via two methods: self-certification, or Outside Compliance Review. Organizations may self-certify that their organization meets the criteria set forth in the DPF and is committed to adhering to the principles of the DPF. The self-certification process requires users to provide basic information about the organization and contact information for someone within the organization who will handle complaints, access requests, and other issues concerning compliance with the DPF. Additionally, users must provide descriptions of:
- their organization’s activities with regard to all personal data received from the EEA;
- the independent recourse mechanism that will be used to investigate unresolved complaints; and
- a description of the organization’s privacy policy, as well as a draft of the compliant policy.
Alternatively, organizations that do not wish to self-certify can opt to undergo an Outside Compliance Review by engaging a third-party that conducts such reviews, and providing the identity and website address of the third party. This is a good option for organizations that may lack the institutional knowledge and legal guidance required to self-certify. Most organizations will choose to self-certify; in fact, by 5:00 p.m. on July 17, 2023, over 260 organizations joined the Data Privacy Framework List by self-certifying.
If this all sounds familiar, that is because this is the third adequacy decision that has been adopted by the EC with regard to EU data transfers to the U.S. The first, called the Safe Harbor, was adopted in 2000, but was challenged at the EU Court of Justice (CJEU) by privacy activist Max Schrems in 2014, on the grounds that surveillance programs in the U.S. were overly-broad and did not conform to EU privacy law, a discovery catalyzed by Edward Snowden’s disclosures regarding U.S. surveillance practices. Ultimately, the CJEU invalidated the Safe Harbor in October 2015, in C-362/14 (“Schrems I”). In 2016, the EU and U.S. reached another agreement, and the EC adopted the second adequacy decision, called the Privacy Shield. Schrems challenged this decision at the CJEU, on the grounds that the U.S. did not make any substantive improvements or enhancements to its surveillance or data privacy infrastructure. In July 2020, the CJEU invalidated the Privacy Shield in C-311/18 (“Schrems II”). In response to the adoption of the DPF, Schrems has indicated that he will challenge the third adequacy decision on the grounds that the framework is essentially a copy of the failed Privacy Shield. This process will likely take one or two years, reaching the CJEU in 2024 or 2025.
In the meantime, organizations that become certified will be able to immediately rely on the DPF in facilitating cross-border transfers of personal data. Further, organizations that participated in the Privacy Shield may immediately consider themselves certified and rely on the DPF, but will have to self-certify under the DPF by October 10, 2023.
While we are excited by the adoption of the DPF, we recognize that the framework may not be here to stay. In the event that it suffers the same fate as its predecessors, we are advising clients to exercise caution when making changes to their data privacy and security practices – a complete overhaul of the systems currently in place may have to be walked back in a year or two. Even so, we encourage our clients to take advantage of the streamlined DPF process, and we are prepared to assist our clients with the self-certification process, and to counsel on matters relating to the DPF.
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Litigation Alert
(By Christina Manfredi McKinley and Joseph Schaeffer)
The 14th Amendment to the United States Constitution provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” U.S. Const. Am. XIV § 1. For corporations, the question of what constitutes due process—and specifically, where the corporation can be sued for conduct unrelated to corporation’s conduct in the forum (i.e., “general personal jurisdiction”)—has continued to evolve. Indeed, over the last century, the Supreme Court’s jurisprudence has contracted the available fora in which a corporation can be subjected to general personal jurisdiction, culminating in 2014 with the concept that there are only two locations in which a corporation is “at home” for general jurisdiction purposes: where it is incorporated or where it maintains its principal place of business. This test has been a practical one, and has provided both (some degree of) certainty to corporate defendants and a disincentive to otherwise-inclined forum shoppers.
At the close of this past term, however, the Supreme Court in Mallory v. Norfolk Southern Railway Co.[1] rejected a due process challenge to a Pennsylvania law that requires out-of-state corporations to submit to general jurisdiction in the Commonwealth as a condition of registering to do business within Pennsylvania.
The concept of “personal jurisdiction” is an important one in the law. It refers to the ability of a court to take an action that is binding on parties in front of it.[2] A court that has “general jurisdiction” over a defendant can entertain any cause of action against that defendant, irrespective of whether the defendant’s complained-of conduct has a nexus to the forum.[3] A court that only has “specific jurisdiction” over a defendant, by contrast, can entertain only those causes of action that arise out of or relate to that defendant’s complained-of conduct in the forum state.[4] This distinction has been part of the legal canon since the Supreme Court’s landmark 1945 decision in International Shoe Co. v. Washington.[5]
When Robert Mallory sued Norfolk Southern in Philadelphia County, Pennsylvania for alleged workplace injuries, he did not allege either general or specific jurisdiction. Norfolk Southern was not incorporated in Pennsylvania, nor did it maintain its principal place of business there. And Mallory, a Virginia resident, alleged workplace exposures as having occurred only in Ohio and Virginia. But Mallory alleged instead that Philadelphia County, known for its large jury verdicts, was proper for a separate reason.
Mallory asserted that Philadelphia County had personal jurisdiction over Norfolk Southern because the company had registered to do business in Pennsylvania. Under Pennsylvania law, a corporation doing business in Pennsylvania must register to do business in the state. 15 Pa. C.S. § 411(a). But Pennsylvania’s unique corporate registration scheme then takes it one step further: under 42 Pa. C.S. § 5301(b), any corporation that registers to do business in Pennsylvania necessarily consents that “any cause of action may be asserted against him” in the Commonwealth’s courts, irrespective of whether the complained-of conduct has any nexus to the forum. In essence, Mallory argued that § 5301(b) provided an additional ground for exercising personal jurisdiction beyond those identified in International Shoe—that is, jurisdiction by consent.
Norfolk Southern disputed the enforceability of § 5301(b). It argued that International Shoe established the only two circumstances under which general jurisdiction can be imposed on a corporation within the limits of constitutional due process. When the issue reached the Pennsylvania Supreme Court, that court agreed and limited the application of § 5301(b) to be consistent with International Shoe. The Pennsylvania Supreme Court then affirmed the dismissal of Mallory’s suit for lack of personal jurisdiction.
After granting certiorari, the United States Supreme Court reversed. Writing for a four-justice plurality, Justice Gorsuch concluded that the case was controlled by Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining and Milling Co.[6] In Pennsylvania Fire, decided nearly 30 years before International Shoe, the Supreme Court unanimously rejected a due process challenge to a Missouri law that, similar to § 5301(b), required an out-of-state corporation desiring to transact business in Missouri to consent to personal jurisdiction on any suit.[7] Justice Gorsuch’s opinion saw no distinction between the Pennsylvania and Missouri statutes and no conflict with International Shoe. In Justice Gorsuch’s interpretation, International Shoe only established the due process limits of personal jurisdiction when an out-of-state corporation had not registered to do business in the forum state. Nothing in International Shoe or the Supreme Court’s subsequent cases, according to Justice Gorsuch, precluded an out-of-state corporation from consenting to general personal jurisdiction—as Norfolk Southern did when it registered to do business in Pennsylvania.
Justice Barrett, joined by Chief Justice Roberts and Justices Kagan and Kavanaugh, dissented. In the dissenters’ view, International Shoe had overruled Pennsylvania Fire and established the outer due process limits of general jurisdiction over out-of-state corporations.[8] And because Norfolk Southern was neither incorporated in Pennsylvania, nor maintaining its principal place of business there, the dissent would have ruled that Pennsylvania lacked general jurisdiction to hear Mallory’s case.
Mallory is undoubtedly a significant development in the Supreme Court’s personal jurisdiction jurisprudence (and a significant shift, depending on perspective). But its practical impact remains to be seen. First, only Pennsylvania has enacted a statute requiring out-of-state corporations to consent to general jurisdiction as a condition for registering to do business in the Commonwealth, and it is far from assured that the other states will follow suit. Second, the Supreme Court entered judgment solely on Norfolk Southern’s due process challenge to § 5301(b). Norfolk Southern also had brought a dormant commerce clause challenge, which the Supreme Court emphasized had not been addressed below and should be considered on remand.[9] And third, Justice Alito, though concurring in judgment, wrote separately to express his view that § 5301(b) would be struck down under that as-yet-undecided dormant commerce clause challenge. In short, there is a fair possibility that § 5301(b) will survive one constitutional challenge only to fall later under another.
Nevertheless, there remains a significant risk that other states will enact similar corporate registration schemes, thereby putting a corporate defendant to an impossible choice: either decline to do business in a foreign (and sometimes far-away) state, or register at the risk of being haled into that state’s courts for conduct wholly unrelated to any activity the corporation might conduct there. It is too soon to tell the ramifications of Mallory, so, for now, the measured approach is best. Corporations doing business outside their states of incorporation and principal places of business should not panic but continue to monitor Mallory’s progress on remand and the evolution of such corporate registrations in other jurisdictions.
If you have any questions about the Mallory decision, or its implications for your business, please contact Christina Manfredi McKinley at 412.394.5432 or cmckinley@babstcalland.com or Joseph V. Schaeffer at 412.394.5499 or jschaeffer@babstcalland.com.
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[1] Mallory v. Norfolk S. R. Co., 600 U.S. — (2023).
[2] See Mallory v. Norfolk S. R. Co., 600 U.S. — (2023) (Barret, J., dissenting) (slip. op. at 2).
[3] Id. at — (slip op. at 13).
[4] Id.
[5] International Shoe Co. v. Washington, 326 U.S. 310 (1945).
[6] Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining and Milling Co., 243 U.S. 93 (1917).
[7] See, generally, id.
[8] Mallory, 600 at — (Barrett, J., dissenting) (slip op. at 15).
[9] Id. at 4 n.2.
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Employment and Labor Alert
(by Alex Farone and Steve Antonelli)
All employers must soon resume physically inspecting the Form I-9 and employment eligibility documentation for new employees, a requirement that has not been strictly enforced since the beginning of the COVID-19 pandemic.
The U.S. Immigration Customs Enforcement (ICE) of the Department of Homeland Security (DHS) had temporarily allowed remote I-9 verification during the pandemic for employees working remotely. After several extensions, these permitted flexibilities are scheduled to end on July 31, 2023. ICE has announced that employers will have a 30-day grace period until August 30, 2023, to reverify in person all employment eligibility documents for employees who were hired after March 20, 2020 with virtual or remote examination. This requirement particularly relates to Section 2 of the Form I-9, where the employer must certify by signature under penalty of perjury that they have examined evidence of the employee’s identity and documentation authorizing them to work in the U.S. within three business days of the employee’s first day of employment, thereby verifying employment eligibility. For all new hires moving forward, the in-person verification requirements will resume on July 31, 2023.
Employers may perform the in-person inspections themselves by requesting that these employees visit the office or by sending another employee to perform the inspection in person. Alternatively, employers are permitted to designate an authorized representative, including non-employees such as third-party notaries, to conduct the in-person inspection on behalf of the employer. In fact, DHS permits any person other than the employee in question to act as an employer’s authorized representative. Some employers utilize third-party services for this function, and others request contact information for a friend or family member of the employee to have them perform this role. Using the employee’s friend or family member in this capacity is certainly the most cost effective and the least administratively burdensome option, but employers should be cautious of potential pitfalls as ICE requires strict compliance and employers will be held liable for any violations, whether intentional or unintentional.
ICE issues thousands of Notices of Inspection to employers every year, and any employer can be subject to inspection. During such an inspection, ICE will review the employer’s I-9 forms and supporting documentation for compliance. While employers are given at least 10 business days to make corrections to any technical violations found on the forms, they are subject to monetary fines for all substantive violations, and uncorrected technical violations. Furthermore, employers that are found to have knowingly hired or continued to employ unauthorized workers will be required to cease the activity and may be civilly fined and/or criminally prosecuted. In 2015, an event planning company in California was fined over $600,000 for technical violations on I-9 forms, with the majority of the violations stemming from the employer’s consistent failure to sign Section 2 of the I-9 form.
Due to the risk of monetary fines, employers should consult an attorney before engaging an authorized representative to perform in-person verification on the employer’s behalf. Employers should also note that some state laws have additional requirements concerning authorized representatives—for example, notaries in California are prohibited by the California Secretary of State from completing or certifying I-9 forms unless they are bonded immigration consultants.
ICE has issued guidance on how to correctly reverify the I-9 forms. Ideally, employers should have been writing “remote inspection completed on [date]” in the Additional Information box in Section 2 of the I-9 form for all remote inspections. If the same person is doing the reverification in person, the verifier should note in the same Additional Information box:
COVID-19
Documents physically examined on [date]
By [verifier initials]
If a different individual is performing the in-person verification than performed the remote verification, the same notation should be made, but with the verifier’s full name and job title instead of initials. If the verifier is an authorized representative rather than an employee of the employer, the title should state “Authorized Representative.”
DHS issued a proposed rule in 2022 that would give the Secretary of Homeland Security the authority to continue to extend flexibilities and provide alternative options for I-9 verification, but notably the proposed rule did not itself extend the flexibilities or create these alternative options. The public comment period for this proposed rule ended in October 2022, and DHS is expected to issue a final rule later this year.
Employers should therefore start planning now to ensure compliance by August 30, 2023. Employers should (1) make a list of all employees hired after March 20, 2020 who only received a remote inspection of their employment eligibility documents, (2) decide whether and how it will use authorized agents to perform the in-person re-inspections, (3) notify the affected employees of what will now be required, and (4) create a plan for dealing with employees who do not make themselves or their documentation available by the deadline. For unionized workforces, employers should notify the union’s representatives about the approaching deadline and the steps the employer plans to take to address reverification for those employees whose papers were verified remotely since March 2020. Detailed instructions should be given to any authorized representatives, and as a best practice the employer should retain a copy of the email or other communication by which the employer assigned someone to act as the authorized representative. If an employer has not performed an I-9 self-audit in the recent past, this would be an ideal time to do so.
If you have any questions about the impact of Form I-9, please contact Alexandra G. Farone at (412) 394-6521 or afarone@babstcalland.com or Stephen A. Antonelli at (412) 394-5668 or santonelli@babstcalland.com.
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Litigation Alert
(by Christina McKinley and Alex Farone)
Last week, the United States Supreme Court ruled that litigants can appeal a summary judgment ruling based on a purely legal issue without filing a post-trial motion to preserve the issue. The unanimous decision authored by Justice Amy Coney Barrett in Dupree v. Younger resolved a significant split among the Circuit Courts of Appeal on this issue. No. 22-210.
For trial practitioners, particularly those who litigate within multiple circuits, Dupree will be a welcome relief, as the ruling comports with the majority of circuits, the Rules of Civil Procedure, and common sense. It will remove one more obstacle from perfecting the appellate record, and it will promote consistency among the circuits. Nevertheless, out of an abundance of caution, counsel should take care to renew their arguments in a post-trial motion even on “legal” summary judgment issues when there may be a question as to whether the issue is “purely legal.”
Prior to Dupree, the First, Fourth, Fifth, Eighth, and Eleventh Circuits had held that when a party is dissatisfied with any summary judgment ruling, that party must file a post-trial motion for judgment as a matter of law, re-raising the issue in order to preserve it for a possible appeal. In contrast, the remaining circuit courts required this preservation exercise only for summary judgment issues decided on factual grounds. With Dupree, the Supreme Court sided with the majority of circuits, drawing a procedural distinction between factual and legal summary judgment determinations. Dupree provides much needed clarity in this procedural arena, where previously, an unwary litigant risked waiver of appellate review if it thought (sensibly) that re-raising a legal issue denied at summary judgment would have been futile.
Requirements of the Federal Rules
Federal Rule of Civil Procedure 56(a) provides that a district court may enter summary judgment on a claim or defense if (1) there is no genuine issue as to any material fact, and (2) the movant is entitled to judgment as a matter of law. Summary judgment motions decided on the first portion of the rule—whether the plaintiff has produced sufficient evidence for a reasonable factfinder to determine that they have met the elements of their claim—are considered factual issue rulings. These types of summary judgment rulings are based on the facts developed at the time of the motion. After a denial of summary judgment, the case moves forward and an additional factual record is established based on presentation of evidence at trial. Because the facts continue to develop leading up to and during trial, the summary judgment factual determinations are rendered stale and moot. As such, if it is dissatisfied with the ultimate determination from a factual standpoint, a party must file a post-trial motion under Federal Rule of Civil Procedure 50 to confirm whether there was sufficient evidence in the trial record to support the verdict.
By contrast, summary judgment determinations based on purely legal issues are made when the facts relating to a dispositive legal issue are not in dispute, and lead the court to find in favor of one party as a matter of law. For example, if the facts of a case are not in dispute as to when a certain negligent act occurred and that the plaintiff was immediately aware of the act and the harm that followed, then whether the lawsuit was timely filed within the statute of limitations period is a purely legal issue that could dispose of the case at summary judgment, regardless of whether factual disputes remain as to liability. Prior to Dupree, in a minority of circuits, a defendant who lost a purely legal argument at summary judgment was required to file a post-trial motion to raise the same issue again in order to preserve the issue for appeal, despite no developments at trial to change the court’s analysis or determination on the legal issue. The majority of circuits instead would not have required this post-trial motion to re-assert a pure legal argument raised previously on summary judgment.
Dupree Resolves the Circuit Split
In Dupree, the Supreme Court held that the rationale underlying the requirements for a renewed post-trial motion on sufficiency of the evidence does not support a requirement for a renewed post-trial motion based on a “purely legal” summary judgment determination. Dupree came before the Court after the Fourth Circuit declined to hear a requested appeal that the case should have been dismissed for failure to exhaust administrative remedies. Inmate Kevin Younger was assaulted by corrections officers while being held in pretrial detention. He pursued a civil rights claim under 42 U.S.C. § 1983 against several prison officials including former lieutenant Neil Dupree. Dupree argued at the summary judgment stage that Younger had failed to exhaust his administrative remedies as required by the Prison Litigation Reform Act. The district court denied summary judgment, stating that there was “no dispute” that the prison system had internally investigated the assault, thereby satisfying the exhaustion requirement. At trial, Dupree did not present any evidence relating to the exhaustion defense. After the jury found Dupree liable and awarded Younger $700,000 in damages, Dupree did not file any post-trial motion to re-raise his exhaustion defense. For this reason, the Fourth Circuit dismissed the appeal. The Supreme Court vacated the Fourth Circuit’s determination, holding that it was error to require a purely legal issue resolved at summary judgment to be renewed in a post-trial motion in order to preserve the issue for appeal.
The Court held that a summary judgment motion is sufficient to preserve legal claims, because pure questions of law are not affected by future developments in the case at trial. Requiring a litigant to renew its summary judgment motion on a purely legal issue in a post-trial motion to the district court is a rote and “empty exercise,” the Court reasoned, because a trial has no impact on the legal issues underlying a case.
The Court also rejected arguments that this ruling would be practically unworkable because the line between factual and legal questions allegedly can be “vexing.” In practice, the appellate courts can easily separate factual and legal issues in the majority of instances.
If you have questions about the Dupree decision, or federal or state court appeals in general, please contact Christina Manfredi McKinley at 412.394.5432 or cmckinley@babstcalland.com or Alexandra G. Farone at 412.394.6521 or afarone@babstcalland.com.
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Environmental Alert
(by Lisa Bruderly)
On May 25, 2023, the U.S. Supreme Court issued a highly-anticipated decision that significantly narrows the extent of wetlands within the definition of “waters of the United States” (WOTUS), and, therefore, within the jurisdiction of the federal Clean Water Act (CWA). Under the majority opinion in Sackett v. EPA, the Court held that “waters” are limited to “only those relatively permanent standing or continuously flowing bodies of water” that are described as “streams, oceans, rivers, and lakes” and to “adjacent” wetlands that are “indistinguishable” from those bodies of water. Therefore, a wetland is only a WOTUS (and subject to CWA jurisdiction) if: (1) the adjacent body of water is a WOTUS (i.e., “a relatively permanent body of water connected to a traditional interstate navigable water”); and (2) the wetland has a “continuous surface connection” with that water “making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” As Justice Samuel Alito stated: Federally regulated wetlands “must be indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA. . . . Wetlands that are separate from traditional navigable waters cannot be considered part of those waters, even if they are located nearby.”
The Sackett litigation involves Michael and Chantell Sackett, who have been unable to build a house because the U.S. Environmental Protection Agency (USEPA) and the U.S. Army Corps of Engineers (the Corps) determined that a wetland on their Idaho property was a WOTUS, requiring CWA Section 404 permitting. Both the U.S. District Court for the District of Idaho and the Ninth Circuit sided with the Agencies’ WOTUS determination, citing the “significant nexus” test introduced by Justice Anthony Kennedy in his concurring opinion in the U.S. Supreme Court’s seminal Rapanos v. U.S. decision. Under the “significant nexus” test, a wetland is broadly considered to be a WOTUS if it, alone or in combination with similarly situated lands in the region, significantly affects the chemical, physical and biological integrity of navigable waters.
On appeal, the U.S. Supreme Court agreed to examine whether the Ninth Circuit set forth the proper test to determine whether the Sacketts’ wetlands are WOTUS. The Court disagreed with the Ninth Circuit and, instead, upheld the plurality opinion of Rapanos (drafted by Justice Antonin Scalia), which stated that WOTUS should be limited to relatively permanent bodies of water connected to traditional interstate navigable waters and wetlands with a close physical connection to those waters, such that they are indistinguishable from those waters.
The Court’s majority opinion in Sackett was written by Justice Samuel Alito, with concurring opinions written by Justices Thomas Kavanaugh and Kagan. The Justices unanimously agreed that the wetlands on the Sacketts’ property were not WOTUS and that the “significant nexus” test should not be used to determine federally regulated wetlands. Justice Clarence Thomas’ concurring opinion focused on the meaning of “navigable,” and appeared to advocate for an even more narrowed scope of federal regulation. The two other concurring opinions disagreed with the majority regarding the meaning of “adjacent” and asserted that adjacent wetlands should also include wetlands that are “close to, neighboring or not widely separated” from the covered water. Justice Brett Kavanaugh stated that adjacent wetlands mean “more than adjoining wetlands and also includes wetlands separated from covered waters by man-made dikes or barriers, natural river berms, beach dunes or the like.”
The Sackett ruling has immediate, practical consequences. With the elimination of the “significant nexus” test, the extent of wetlands considered to be WOTUS will markedly decrease, thereby decreasing the need for Corps permitting for land development, pipeline construction and other earth disturbance activities. In addition, the Court’s ruling will likely provide more certainty to the regulated community, as to which wetlands are regulated. Generally speaking, a “continuous surface connection” (or the lack of one) is easier to identify than a “nexus” that was often subjectively determined. However, as acknowledged by the majority, “temporary interruptions in surface connection may sometimes occur because of phenomena like low tides and dry spells.” The Court also seemingly acknowledged and addressed a potential “loophole” for federal regulation by noting that “a landowner cannot carve out wetlands from federal jurisdiction by illegally constructing a barrier on wetlands otherwise covered the CWA.”
Even though Sackett pertains directly to wetlands, it also calls into question the tests used for determining whether “waters” are WOTUS. By rejecting the “significant nexus” test, the Court has effectively weighed in on the appropriate (and more narrow) test for determining whether streams and other waterbodies are federally regulated (i.e., whether the waterbody is relatively permanent).
While Sackett narrowed federal regulation of wetlands, it is important to note that state stream/wetland and earth disturbance laws may still apply to specific projects and development. Typically, states broadly define the waters under their jurisdiction. In light of the broad-reaching implications of Sackett, states may seize this opportunity to develop and/or strengthen their stream and wetland permitting programs.
Other WOTUS Developments
The Sackett decision comes just two months after the Biden administration’s new definition of WOTUS (2023 Rule) became effective. The 2023 Rule defines WOTUS using both the Justice Scalia test for relatively permanent waters and adjacent wetlands, as well as the Justice Kennedy “significant nexus” test. The Biden administration expressed concern that the “Supreme Court’s disappointing decision” would take the country “backwards” with regard to the protection of water quality. In a statement issued just after the publication of the Sackett decision, President Joe Biden stated: “My team will work with the Department of Justice and relevant agencies to carefully review this decision and use every legal authority we have to protect our Nation’s waters for the people and communities that depend on them.” We will be watching to see how USEPA and the Corps react in light of Sackett.
The 2023 Rule has already faced three judicial challenges in Texas, North Dakota and Kentucky. These challenges have resulted in a nationwide split in the current definition of WOTUS, with 23 states using the 2023 Rule and 27 states relying on the WOTUS definition that was in effect prior to the 2023 Rule (i.e., the 1986 definition as influenced by the U.S. Supreme Court decisions from the 2000s, especially Rapanos). As a result, West Virginia and Pennsylvania, for example, currently rely on different WOTUS definitions to determine federal CWA jurisdiction.
Even without the extensive changes associated with Sackett, this nationwide split creates inconsistencies on how CWA jurisdiction is applied from state to state. A water may be regulated under the CWA based on the effective WOTUS definition in one state, while the same water would not be federally-regulated under the WOTUS definition effective in another state.
One thing is certain, the landscape for determining federally-regulated waters is changing again, and the regulated community must stay abreast of these changes.
Babst Calland will continue to stay up-to-date on the developments related to WOTUS and the Clean Water Act, in general. If you have any questions or would like any additional information, please contact Lisa Bruderly at (412) 394-6495 or bruderly@babstcalland.com.
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Pipeline Safety Alert
(by Brianne Kurdock, Jim Curry, Gary Steinbauer and Lee Banse)
On May 5, 2023, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released the pre-publication version of a notice of proposed rulemaking (NPRM) titled “Gas Pipeline Leak Detection and Repair.” PHMSA published the NPRM in response to section 113 of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (PIPES Act). Section 113 of the PIPES Act directed PHMSA to promulgate final regulations by December 27, 2021, requiring operators of gas transmission, distribution pipelines, and certain gathering lines to conduct leak detection and repair programs.
PHMSA proposes to amend 49 CFR Parts 191, 192, and 193 to: increase the frequency of leakage survey and patrolling requirements; introduce leakage survey and repair requirements for liquefied natural gas (LNG) facilities; require grading and repairs of leaks; reduce the use of blowdowns and intentional venting; impose design, configuration, and maintenance requirements for relief devices to reduce emissions; expand reporting requirements; and require that Type A, B, and C gathering lines submit geospatial pipeline location data to the National Pipeline Mapping System (NPMS). PHMSA proposes a six-month effective date for this rulemaking.
Comments on the NPRM are due on July 17, 2023.
Scope
Among other notable features of the proposal, the scope of this NPRM extends beyond the Section 113 congressional mandate by including Type C gathering lines, underground natural gas storage facilities, and LNG facilities. The statutory mandate was limited to regulated gathering lines in a Class 2, 3, or 4 location, and new and existing gas transmission and distribution pipelines. The NPRM also includes provisions intended to avoid overlap with existing Environmental Protection Agency (EPA) leak detection and repair (LDAR) regulations at 40 CFR Part 60, Subpart OOOOa, and EPA’s proposed regulations that would be codified at 40 CFR Part 60, Subparts OOOOb and OOOOc. The scope of these anti-overlap provisions is unclear, and the provisions could prove difficult to implement from a practical perspective.
Key aspects of the NPRM include:
Increased Leakage Surveys and Patrols
With the exception of distribution pipelines located within business districts, PHMSA proposes to increase the frequency of leakage surveys and right-of-way patrols for pipeline facilities and introduces these requirements for Type B and C gathering pipelines. PHMSA proposes that transmission operators conduct right-of-way patrols every 45 days with a minimum of 12 patrols each calendar year. The proposal reflects a significant expansion of the current obligations.
PHMSA proposes to expand the leakage survey obligation to all valves, flanges, meters, regulators, tie-ins, and launcher and receiver facilities. Further, the NPRM would restrict leakage surveys that exclusively use human senses to offshore pipelines below the waterline, or, with the prior approval of PHMSA, onshore transmission and gathering lines located outside of high consequence areas or in Class 1 or 2 locations. For all other leakage surveys, an operator must deploy leak detection technologies that meet PHMSA’s proposed detection sensitivity requirements. The proposed frequencies for the leakage surveys vary based on the type and location of the pipeline, valve, flange, tie-in or launcher and receiver facility.
Development of Advanced Leak Detection Programs
PHMSA proposes to require that operators develop a written Advanced Leak Detection Program (ALDP). Operators would need to develop procedures that specify how they intend to perform leakage surveys, as well as pinpoint and investigate leaks. Among other requirements, operators would need to identify the leak detection technology they intend to use in their programs after considering several prescribed factors, and an operator’s ALDP must select a leak detection device that is capable of detecting and pinpointing all leaks that have a sufficient release rate to produce a reading of 5 parts per million when measured from a distance of 5 feet or less from the pipeline or within a wall-to-wall paved area. It is not clear whether this leak detection device sensitivity threshold is practicable or consistent with existing EPA LDAR regulations.
Leak Grade and Repair Requirements
PHMSA proposes stringent leak grade and repair regulations that would require operators to classify and repair all detected leaks on their pipeline systems. Operators would need to determine whether detected leaks qualify as grade 1 (most severe), grade 2, or grade 3 (least severe) based on pre-defined narrative criteria or specified percentages of the lower explosive limit (LEL). For a grade 1 leak, an operator would be required to take immediate and continuous action to repair the leak upon detection. A grade 2 leak would need to be repaired within 6 months of detection, but an operator must also re-evaluate the leak every 30 days until the repair is complete. In addition, an operator would be required to develop procedures to prioritize grade 2 leak repairs, and a grade 2 leak located on a transmission line or Type A gathering line in an HCA, or a Class 3 or 4 location would require repair within 30 days. A grade 3 leak would need to be repaired within 24 months of detection, and re-evaluated every 6 months until the repair is complete, unless the operator replaces the pipeline segment containing the leak within 5 years of detection. The proposal would establish post-repair inspection and leak repair verification requirements, provide for the downgrading and upgrading of leak classifications, and allow an operator to request that PHMSA extend the regulatory deadlines for completing for repairs. We note that PHMSA’s proposed leak grading scheme is not an approach adopted by EPA in its LDAR regulations, which generally include a concentration-based leak definition above which a repair is required.
Exceptions for Compressor Stations
PHMSA would not apply the proposed leakage survey, patrolling, ALDP, leak grade and repair, and personnel qualification requirements to compressor stations on gas transmission or gathering lines if the compressor station is already subject to the EPA’s LDAR standards. More specifically, compressor stations would be exempt from these proposed PHMSA requirements if they are subject to EPA’s methane detection monitoring and repair requirements under 40 CFR Part 60, Subparts OOOOa or OOOOb, or relevant standards in an EPA-approved State Plan or Federal Plan that is at least as stringent as EPA’s proposed requirements at 40 CFR Part 60, Subpart OOOOc. The EPA “requirements” PHMSA references as being in place under 40 CFR Part 60, Subparts OOOOb and OOOOc are the subject of a proposed rulemaking by EPA, and they have not been promulgated in final form. Furthermore, EPA’s proposed greenhouse gas emission guidelines under 40 CFR Part 60, Subpart OOOOc, if finalized, would generally apply to compressor stations constructed prior to November 15, 2021, but these emission guidelines would be implemented directly by states after what could be a lengthy EPA review and approval process.
Reporting
PHMSA is proposing to amend Part 191 to require operators to report estimated emissions attributed to leaks, other estimated emissions from stationary sources, and the number and grade of leaks an operator detects and repairs.
PHMSA is also introducing a new large-volume gas release report that would require an operator to report within 30 days an unintentional or intentional release of 1 million cubic feet or more from a gas pipeline facility.
The NPRM would also require operators to submit data about offshore gas gathering lines, and Type A, Type B, and Type C gas gathering lines to the National Pipeline Mapping System. This provision exceeds the existing statutory mandate for NPMS.
Mitigating Emissions from Venting
To limit methane emissions caused by venting events such as blowdowns and tank boil-off, the NPRM would require operators of gas transmission, Type A gathering, regulated offshore pipelines, and LNG facilities to choose from a list of emission reduction methodologies, such as routing gas to a flare stack or reducing the operating pressure of a line prior to venting. Operators would be required to document the methodologies they choose and describe how the chosen methodologies reduce emissions.
Design, Configuration, and Maintenance of Pressure Relief Devices
The NPRM would require a documented engineering analysis to demonstrate that new, replaced, relocated, or otherwise changed pressure relief and limiting devices on Part 192-regulated pipelines have been designed and configured to minimize unnecessary releases of gas. Operators must also develop operations and maintenance procedures to assess pressure relief devices as well as procedures to provide for the repair or replacement of the devices, if necessary.
Qualifications
The NPRM would require personnel that conduct leakage surveys, leak grading, and leak investigations on certain facilities to be operator qualified under Part 192, subpart N.
LNG Facilities
PHMSA proposes to require operators to conduct quarterly leakage surveys of equipment or components at LNG facilities that contain methane or LNG. The surveys would require use of leak detection equipment capable of detecting a methane leak that produces a reading of at least 5 parts per million when located within 5 feet of the equipment being surveyed.
PHMSA would require LNG facility operators to develop procedures to eliminate leaks and minimize releases of gas, conduct leak surveys and address any methane leaks according to their maintenance procedures or abnormal operating procedures.
PHMSA also proposes that LNG operators adopt blowdown and boiloff emission reduction methodologies from a PHMSA-proposed list. PHMSA’s list includes use of a flare or isolation of smaller piping segments, but also would allow operators to propose their own “alternative method,” if the operator can demonstrate it would reduce emissions by 50% as compared to taking no emission mitigation measures.
Underground Natural Gas Storage Facilities
The NPRM proposes to amend Sec. 192.12(c) to require operator procedural manuals to include procedures for eliminating leaks and minimizing releases of gas from storage facilities.
For a more detailed assessment of how this NPRM could affect specific asset profiles, please contact Brianne Kurdock at bkurdock@babstcalland.com, Jim Curry at jcurry@babstcalland.com, Gary Steinbauer at gsteinbauer@babstcalland.com or Lee Banse at lbanse@babstcalland.com.
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Public Sector Alert
(by Alyssa Golfieri, Anna Hosack and Anna Jewart)
Effective today, municipalities and law enforcement agencies must process record requests seeking criminal history information submitted under Act 134.
On November 3, 2022, Pennsylvania Governor Tom Wolf signed into law Act 134 of 2022, which amended the Criminal History Record Information Act (CHRIA), to implement a new statutory process by which victims of crimes and defendants in certain civil actions can obtain criminal history investigative information gathered by law enforcement agencies (Act 134). Act 134 went into effect today, May 2, 2023, and is the latest of several statutory amendments impacting access to law enforcement records.
The important takeaways:
- Similar to the Pennsylvania Right-to-Know Law (RTKL), which governs access to public records, Act 134 provides a process by which certain individuals may request criminal history investigative information from municipalities and law enforcement agencies.
- Act 134 is not, however, an extension of nor an amendment to the RTKL. Act 134 is an independent statutory scheme implemented to provide crime victims and certain defendants in a civil action a definitive, stand-alone right to access criminal history investigative information—information that is generally not subject to access under the RTKL.
- Unlike the RTKL, where the requester’s identity is not relevant, under Act 134, access to records is completely dependent on the requester’s identity. Act 134 makes an explicit distinction with respect to the right to access information between a crime victim and a defendant. Crime victims are entitled to access before or after a civil action is pending in a Pennsylvania court. Defendants are only entitled to access after a civil action is pending. Without a firm understanding of this distinction, municipalities and law enforcement agencies are at significant risk of disclosing confidential and sensitive criminal history investigative information without proper authority.
- An Act 134 request must include or comply with the following:
- A sufficiently specific description of the information sought.
- A statement by the requester (or the requester’s representative), made subject to the penalties of unsworn falsification to authorities, that the information requested (i) is directly related to a civil action pending in Pennsylvania, or (ii) if the requester is a crime victim, is necessary to the investigation or preparation of a civil action in Pennsylvania.
- Submitted to the municipality or law enforcement agency via personal service or certified mail with receipt. Requests submitted via e-mail do not trigger a municipality’s or law enforcement agency’s obligation to respond under Act 134.
- Act 134 requests must be responded to within 60 days from the date of receipt of the request or by the date identified by the requester, whichever is later.
- Act 134 exempts from disclosure certain personal information, including without limitation, social security numbers, driver’s license numbers, financial information, telephone numbers, and e-mail addresses.
- Act 134 authorizes municipalities and law enforcement agencies to redact or deny access to requested information under certain circumstances. For example, an Act 134 request may be redacted or denied if the release of the requested information would endanger a person or public safety, adversely affect an investigation or ongoing prosecution, relates to law enforcement’s use of confidential informants, or would identify a third-party victim of child abuse, domestic violence, or sexual abuse.
Due to the complexities of Act 134 and its interplay with the RTKL, municipalities and law enforcement agencies should consult their legal counsel immediately upon receipt of any request for criminal history investigative information in order to avoid the improper disclosure of sensitive or confidential information. If you have questions about how Act 134 will impact your organization, please contact Alyssa E. Golfieri at 412-773-8701 or agolfieri@babstcalland.com, Anna R. Hosack at 412-394-5406 or ahosack@babstcalland.com, or Anna Skipper Jewart at 412-253-8806 or ajewart@babstcalland.com.
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Environmental Alert
(by Matt Wood and Mackenzie Moyer)
West Virginia is one among many states developing new laws and regulations related to per- and polyfluoroalkyl substances (PFAS). On March 28, 2023, Governor Jim Justice signed House Bill 3189, also known as the PFAS Protection Act (the Act), into law. Broadly, the Act is intended to identify sources of PFAS discharged into waters used for public drinking water and sets forth certain duties and obligations related to public water systems, water treatment systems, and facilities that use PFAS compounds.
The Act is a direct response to Senate Concurrent Resolution 46, passed in 2020, which required the West Virginia Department of Environmental Protection (WVDEP) and the West Virginia Department of Health and Human Resources to initiate a public source-water supply study to sample PFAS for all community water systems in the state. Community water systems are public water systems that pipe water for human consumption to at least 15 service connections used by year-round residents or that regularly serve at least 25 residents. Subsequently, the state agencies contracted with the United States Geological Survey (USGS) to sample and analyze for 26 PFAS compounds from 279 sites consisting of public water systems, including schools and daycares that operate their own water systems. USGS published the final report summarizing the study in July 2022.
PFAS Study Results and Contemporary Federal Actions
The study found that 13 percent of the sampled sources (37/279) exceeded 70 parts per trillion (ppt) for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS) combined, the then-current health advisory established by the U.S. Environmental Protection Agency (USEPA) in 2016. PFOA and PFOS are the most studied PFAS chemicals. Health advisories are unenforceable, non-regulatory thresholds below which adverse health effects are not anticipated to occur over a lifetime of exposure. In June 2022, USEPA published updated interim health advisories for PFOA (0.004 ppt) and PFOS (0.02 ppt) and final health advisories for hexafluoropropylene oxide dimer acid and its ammonium salts (HFPO-DA, commonly known as GenX; 10 ppt) and perfluorobutane sulfonic acid (PFBS; 2,000 ppt). When compared to the updated, interim PFOA and PFOS health advisories, 49 percent (137/279) of sampled sources exceeded these thresholds. Such exceedances on their own do not create obligations for drinking water systems to take action to address PFAS.
At the same time that the West Virginia legislature was developing House Bill 3189, USEPA was moving to regulate PFAS compounds in drinking water at the federal level. For example, on March 14, 2023, USEPA announced a proposed National Primary Drinking Water Regulation setting maximum contaminant levels for six PFAS compounds. More information about the proposed regulation is available at USEPA’s website here. In August 2022, USEPA proposed designating PFOA and PFOS as hazardous substances under CERCLA and the agency is considering applying the same designation to six other PFAS compounds. The West Virginia legislature cited these and other actions as background to passing the Act.
WVDEP and Facility Obligations Under the PFAS Protection Act
The Act obligates WVDEP to take certain actions based on the presence and concentration of PFAS compounds in raw and/or treated water. For every raw water source where USGS detected any of four listed PFAS (PFOA, PFOS, PFBS, or GenX) above the practical quantitation limit (PQL) and above EPA’s applicable health advisory, WVDEP must write a PFAS action plan to identify and address the PFAS sources. The PFAS action plans are due by July 1, 2024. For each raw water source where USGS detected any of the four listed PFAS above the method detection level (MDL), above EPA’s applicable health advisory, and below the PQL, the Act requires WVDEP to sample the finished, treated water at the associated public water system by the end of 2023. For each public water system where any of the four listed PFAS is detected in finished water above the MDL and above EPA’s applicable health advisory, regardless of the concentration in relation to the PQL, the Act requires WVDEP to prepare a PFAS action plan to identify and address sources of PFAS for the public water system’s raw water source(s). For these, the first 50 plans must be completed by the end of 2025 and the remaining plans must be completed by the end of 2026.
As set forth in more detail in the Act, developing the PFAS action plans requires WVDEP to coordinate with affected public water systems and consult with applicable governmental agencies, organizations representing West Virginia public drinking water systems, and other entities with knowledge applicable to identifying and addressing PFAS sources. The Act also directs WVDEP to recommend changes to applicable statutes and/or rules to address the sources of PFAS compounds and to report on its activities annually to the Joint Legislative Oversight Commission on State Water Resources.
The general PFAS approach for federal and state agencies is to obtain the occurrence and exposure data from drinking water systems and take action to reduce and eliminate the sources of PFAS to such systems. The latter component can be seen in the second part of the Act, which requires all facilities that discharge to a surface water under a West Virginia/National Pollutant Discharge Elimination System permit, or to a Publicly Owned Treatment Works under an industrial pretreatment program, and that manufacture or knowingly use or have used one or more PFAS chemicals in their production process since January 1, 2017, to report such use to WVDEP by no later than December 31, 2023. Facilities subject to the reporting requirement must begin quarterly monitoring of the self-reported PFAS chemicals within six months of notification to WVDEP. The Act also requires WVDEP to modify a facility’s applicable permits to require monitoring for the self-reported PFAS chemicals.
The Act does not create any new obligations for either public water systems or publicly owned treatment systems. Looking toward the future, after USEPA finalizes Clean Water Act water quality criteria for any PFAS, WVDEP must propose criteria no more stringent than USEPA’s established criteria in the next regular legislative rulemaking cycle. The Act will be effective on June 8, 2023.
As the federal and state governments continue to take multiple actions 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 Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, or Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.
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Environmental Alert
(by Sloane Anders Wildman and Amanda Brosy)
On April 13, 2023, the U.S. Environmental Protection Agency (EPA) issued an Advance Notice of Proposed Rulemaking (ANPRM) requesting input on the potential designation of additional categories of per and poly-fluoroalkyl substances (PFAS) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund. The ANPRM follows EPA’s September 2022 Proposed Rule, which, if finalized, would designate two of the most common PFAS as CERCLA hazardous substances and represents another step under the “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024,” a plan for taking an agency-wide approach to address PFAS under EPA’s various statutory and regulatory authorities. EPA will be accepting comments on the ANRPM until June 12, 2023.
What Are PFAS?
PFAS are a group of man-made chemicals identified by signature elemental bonds of fluorine and carbon, which are extremely strong and difficult to break down in the environment. As a result, PFAS are persistent and can withstand high temperatures and highly corrosive environments. While the PFAS family of chemicals includes the commonly known and used PFOA, PFOS, and GenX, there are more than 12,000 other compounds that are also classified as PFAS. PFAS can be present in water, soil, air, and food as well as materials found in homes and workplaces.
PFAS have been manufactured and used in a variety of industries around the globe, including in the United States since the 1940s. Because of their ability to repel water and oil, PFAS are used in many different types of products, including firefighting foam known as “AFFF,” stain-resistant carpets, roofing materials, coatings, food packaging, water-resistant outdoor clothing and gear, nonstick cookware, and boots, among others.
What Is EPA Doing to Address PFAS?
EPA’s PFAS Strategic Roadmap sets timelines by which EPA plans to take specific actions related to PFAS across regulatory programs. As previously reported by Babst Calland in September 2022, among numerous other actions, EPA proposed a rule to designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) – the two most common and well-studied PFAS – and their salts and isomers as “hazardous substances” under CERCLA. EPA currently is reviewing comments received on this Proposed Rule and is expected to finalize these listings this summer.
The ANPRM seeks technical input from industry, environmental groups, Tribes, universities, and business groups that will inform EPA’s decision whether to propose to designate as hazardous substances seven additional PFAS, as well as precursors to PFOA, PFOS and the seven additional PFAS.[1]
EPA is soliciting information concerning mobility, persistence, prevalence, and other characteristics to supplement the existing toxicity data for these compounds. EPA is also requesting information regarding the degradation of these substances through environmental processes such as biodegradation, photolysis, and hydrolysis and whether and how EPA should consider the availability of analytical methods when determining whether to designate precursors as CERCLA hazardous substances. Finally, EPA is requesting information on whether categories of PFAS (i.e., groups of PFAS that share similar characteristics such as chemical structure, physical or chemical properties, mode of toxicological action, precursors or degradants, or co-occurrence) could or could not be designated as hazardous substances. Although CERCLA precludes EPA from taking cost into account in designating hazardous substances, EPA is requesting information on potential direct and indirect costs and benefits of designating any of these compounds as hazardous substances, including, in particular, impacts on small entities.
What Are the Next Steps?
EPA states that it intends to carefully review all comments and information received in response to the ANPRM, after which it plans to supplement the collected information with information that the Agency has obtained independently, to determine whether to proceed with a future rulemaking addressing these additional substances.
With respect to CERCLA liability and enforcement, the ANPRM indicates that EPA is separately developing a CERCLA PFAS enforcement discretion and settlement policy. EPA held two public listening sessions in March and sought written comments on public concerns regarding CERCLA PFAS enforcement/liability. EPA will now review and consider those comments as it develops its policy.
As the federal and state governments take action to address PFAS, Babst Calland attorneys will continue to track these developments and are available to assist you with PFAS-related matters. For further information, please contact Sloane Wildman at 202-853-3457 or swildman@babstcalland.com, Amanda Brosy at 202-853-3465 or abrosy@babstcalland.com, or your client service attorney at Babst Calland.
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[1] The seven additional PFAS are Perfluorobutanesulfonic acid (PFBS), CASRN 375–73–5, Perfluorohexanesulfonic acid (PFHxS), CASRN 355–46–4, Perfluorononanoic acid (PFNA), CASRN 375–95–1, Hexafluoropropylene oxide dimer acid (HFPO–DA), CASRN 13252–13– 6 (sometimes called GenX), Perfluorobutanoic acid (PFBA), CASRN 375–22–4, Perfluorohexanoic acid (PFHxA), CASRN 307–24–4, and Perfluorodecanoic acid (PFDA) CASRN 335–76–2.
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Environmental Alert
(by Lisa Bruderly)
Yesterday’s ruling by the U.S. District Court for the District of North Dakota creates a regulatory patchwork across the nation in which the definition of ‘waters of the United States’ (WOTUS), and subsequently, the jurisdiction of the Clean Water Act, now differs by state. For example, West Virginia and Pennsylvania currently having different WOTUS definitions. On Wednesday, April 12, the North Dakota district court granted a preliminary injunction that halted the implementation and enforcement of the Biden administration’s new definition of WOTUS (2023 Rule) in the following 24 states: Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, West Virginia, and Wyoming.
The 2023 Rule became effective on March 20, 2023 in 48 states. A March 19, 2023 preliminary injunction in the U.S. District Court for the Southern District of Texas had already enjoined the new WOTUS definition in Texas and Idaho.
In granting the preliminary injunction, the North Dakota district court had harsh criticism for the 2023 Rule, noting that “the new 2023 Rule is neither understandable nor ‘intelligible,’ and its boundaries are unlimited.” It also stated that the 2023 Rule “raises a litany of other statutory and constitutional concerns.” The district court went further to state that the changing definitions of WOTUS “have created nothing but confusion, uncertainty, unpredictability, and endless litigation.”
At present, the 1986 definition of WOTUS is effective in 26 states and the 2023 Rule is effective in 24 states, creating a nationwide split in how the jurisdiction of the Clean Water Act is interpreted. This split is expected to create further uncertainty as to how the U.S. Environmental Protection Agency (USEPA) and U.S. Army Corps of Engineers (Corps) will delineate WOTUS and permit impacts to WOTUS, especially when, for example, a Corps District includes states with differing definitions.
A third judicial challenge to the 2023 Rule is pending. Last week, the U.S. District Court for the Eastern District of Kentucky denied a motion for preliminary injunction brought by the state and a number of industry groups after determining that they did not currently have standing. The decision is being appealed.
It is unclear whether additional judicial actions will be taken in advance of the highly-anticipated U.S. Supreme Court decision in Sackett v. EPA, which will opine on whether the Ninth Circuit set forth the proper test to determine whether wetlands are WOTUS. The Supreme Court’s decision may significantly affect USEPA’s ability to define WOTUS.
A similar split in the definition of WOTUS occurred when President Barack Obama introduced his administration’s definition of WOTUS in 2015 (referred to as the Clean Water Rule (CWR)). At that time, the North Dakota district court preliminarily enjoined the definition in 13 states, with other judicial actions resulting in the CWR being enjoined in a total of 29 states for a short period of time in 2019. Ultimately, the Trump administration repealed the CWR in its entirety, reverting back to the 1986 definition nationwide.
Babst Calland will continue to stay up-to-date on the developments related to WOTUS and the Clean Water Act, in general. If you have any questions or would like any additional information, please contact Lisa Bruderly at (412) 394-6495 or lbruderly@babstcalland.com.
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Energy Alert
(by Robert Stonestreet and Kip Power)
Five days after upholding a water quality certification issued by the state of Virginia for the Mountain Valley Pipeline (MVP), the same three-judge panel of the federal Fourth Circuit Court of Appeals vacated a similar certification issued by the state of West Virginia. Sierra Club, et al. v. West Virginia Department of Environmental Protection and MVP, Appeal No. 22-1008 (April 3, 2023). Under § 404 of the federal Clean Water Act (CWA), construction activities directly impacting “jurisdictional waters,” such as placing a pipeline through or under a stream, require a “dredge and fill” permit issued by the Corps of Engineers. Before a § 404 permit may take effect, states in which such activities take place must issue a certification under § 401 of the CWA stating that the proposed activities will not violate state water quality standards (assuming compliance with specified conditions). The 34-page opinion identifies four reasons why the panel believes the § 401 certification issued by the West Virginia Department of Environmental Protection (Department) for MVP was “arbitrary and capricious.”
First, the Court concluded that the Department failed to adequately explain why the agency believed MVP’s past permit violations will not continue to occur. According to the Court, the Department was required to impose conditions intended to reasonably assure that “no violations of any applicable water standards would occur” (emphasis in original) and the agency failed to explain how the conditions of the certification would do so. In particular, the Court stressed that even a finding that the MVP project will present “no significant adverse aquatic impacts” does not necessarily show that narrative water quality standards will not be violated (e.g., the prohibition against discharges that cause or contribute to “suspended solids”). Further, despite the Department’s previous assessment of over $569,000 in penalties against MVP for violating permit requirements and water quality standards, the Court rejected arguments that enforcement of existing standards would be sufficient. In light of the “highly deferential” standard applied when evaluating § 401 determinations, delving into the details of the Department’s interpretation and application of its state-specific narrative standards is remarkable to say the least.
Second, the Department did not include a specific condition in the § 401 certification requiring MVP to comply with the terms and conditions of two documents: (1) a general stormwater management permit applicable to certain construction activities associated with oil and gas development (Stormwater Permit); and (2) a “stormwater pollution prevention plan” reflecting specific practices to manage stormwater discharges from areas disturbed by pipeline construction (SWPPP). The Court rejected the Department’s position that the agency has inherent authority to enforce the Stormwater Permit and SWPPP against MVP, and thus including a provision in the § 401 certification requiring compliance with those documents would be redundant. In doing so, the Court seemed to suggest that any state environmental requirement that is not explicitly identified in a § 401 certification may be “preempted” by federal law that governs the authorization of natural gas pipelines.
Third, the Court faulted the Department for citing stormwater management standards published by the federal Environmental Protection Agency (EPA) applicable to activities in upland areas as support for the requirements that were imposed on MVP’s in-stream construction activities. The Department observed that EPA’s standards were “nearly identical” to the standards set forth in the Stormwater Permit, and that it viewed the EPA standards as applicable to both upland and in-stream activities. Nevertheless, the Court held that the Department’s § 401 certification must be struck down due to the absence of “a more thoroughly reasoned analysis to place beyond doubt that it had made a rational connection between EPA’s [stormwater standards] for upland construction and the certification of MVP’s in-stream construction.”
Lastly, the Department did not conduct location-specific reviews to determine whether MVP’s stream crossing construction activities would degrade water quality. Also known as “anti-degradation review,” the CWA generally requires a determination that construction activities in or near streams will not degrade water quality. The Department reasoned that location-specific evaluations were not required because compliance with the Stormwater Permit and SWPPP would prevent water quality degradation, or at least limit any degradation to temporary conditions. The Court observed that such a conclusion would be reasonable if the Department had required compliance with the Stormwater Permit and SWPPP as conditions of the certification. Nonetheless, because the Department failed to include such conditions in the § 401 certification, its reliance on the SWPPP and the Stormwater Permit was deemed to be arbitrary and capricious.
The April 3, 2023 ruling constitutes the third opinion issued by the Fourth Circuit in the past five years concerning CWA § 401 certification actions by the Department. In 2018, the Court ruled that the Department did not follow the proper procedures to waive its authority to issue an individual CWA § 401 certification for MVP. In 2020, the Court precluded the Corps of Engineers from certifying MVP’s eligibility for a “nationwide” CWA § 404 dredge and fill permit because the Department, according to the Court, lacked the authority to modify a previously issued general § 401 certification for the “nationwide” § 404 permits to incorporate provisions addressing pipelines like MVP.
While the Court’s decision will likely cause further delay in completing MVP, the identified deficiencies do not appear insurmountable. Bolstering compliance requirements and enforcement incentives should be sufficient to address MVP’s violation history. Simply including a condition in a new § 401 certification requiring compliance with the Stormwater Permit and SWPPP should address two of the four deficiencies. Lastly, “a more thoroughly reasoned analysis” explaining the connection between EPA’s stormwater standards for construction in upland areas and MVP’s in-stream construction should address the last deficiency.
Five days earlier, the same three judge panel issued an opinion upholding such a certification for MVP issued by the Virginia State Water Control Board, at the recommendation of the Virginia Department of Environmental Quality (VADEQ). Sierra Club, et al. v. State Water Control Board, et al. and MVP, Appeal No. 21-2425 (March 29, 2023). In that decision, the Court determined that the Water Control Board’s decision to certify a Corps’ authorization under CWA § 404 for the pipeline’s 236 surface water crossings in Virginia was neither arbitrary nor capricious. Among other reasons, the Court noted that the VADEQ had conducted a thorough public comment process and prepared a detailed “Final Fact Sheet,” addressing all major issues raised by commenters. VADEQ had explained its individual consideration of each crossing (something not required by state law) and its determination that the location of the pipeline represented the “least environmentally damaging practicable alternative.” As the Court explained, the Board and VADEQ were simply required to show that they had “considered the relevant data and provided a satisfactory explanation for their conclusion.” The record demonstrated that it had done so, and none of the Petitioners’ arguments was sufficient to support a contrary determination under the deferential standard of review that applies.
If you have any questions about these decisions or the Clean Water Act in general, please contact Robert M. Stonestreet at rstonestreet@babstcalland.com or 681-265-1364 or Christopher B. “Kip” Power at cpower@babstcalland.com or 681-265-1362.
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Environmental Alert
(by Sean McGovern and Amanda Brosy)
On March 23, 2023, Acting Pennsylvania DEP Secretary Richard Negrin spoke at length about his views on environmental justice (EJ) during the House Appropriations Committee hearing on DEP’s FY 2023-24 budget request. Among other things, Acting Secretary Negrin discussed the importance of taking an expansive approach to environmental justice (EJ), noting that in the past, EJ issues were framed in terms of race, and impacts on communities of color. While he acknowledged that systemic racism and discussions about race are an important part of EJ, he stated that EJ “is not just an issue for those of us who are people of color. It’s an issue for the poor and rural” as well. Specifically, Acting Secretary Negrin mentioned that he considers residents near the site of the Norfolk Southern train derailment, and residents impacted by a leaking abandoned natural gas well outside of Pittsburgh, to be EJ communities. As he noted, this is a broader interpretation of EJ than the Biden administration has espoused.
Acting Secretary Negrin also announced that he had named Fernando Treviño to the new position of Special Deputy Secretary for Environmental Justice. According to Acting Secretary Negrin, Mr. Treviño has acted as a “community engagement professional” for a number of years, last serving as the Regional Political Director for the National Democratic Redistricting Committee. Previously, Mr. Treviño served as the Deputy Executive Director of the Mayor’s Office of Immigrant and Multicultural Affairs in Philadelphia. Mr. Treviño graduated from the UANL School of Law in Mexico, and later received a Certificate on International and Comparative Law from Temple University’s law school. Mr. Treviño will be supported by additional EJ staff in DEP offices throughout the Commonwealth. Acting Secretary Negrin indicated that he plans to place an EJ coordinator within “every single regional office of DEP across the entire state, in six of our offices, full-time employees.” Two coordinators will serve as “floaters,” tasked with targeted outreach to the Asian and Latino communities, respectively.
The Acting Secretary’s comments are all in accordance with the Commonwealth’s efforts to bolster its EJ efforts over the last several years. Starting in 2021 with Governor Tom Wolf’s adoption of an executive order formally establishing the Office of Environmental Justice (OEJ) within DEP, to today, as DEP works to update the state’s existing 2004 EJ Policy, EJ issues continue to be a priority for DEP. With the Biden administration steadily funding EJ grant programs for state governments and community groups, this trend shows no sign of subsiding (see Babst Calland’s recent article in PIOGA regarding EJ for more details).
Babst Calland’s energy and environmental attorneys continue to track environmental justice developments and their implications for industry.
For more information, contact Sean McGovern at 412-394-5439 or smcgovern@babstcalland.com or Amanda Brosy at 202-853-3465 or abrosy@babstcalland.com.
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Pretrial Practice & Discovery
American Bar Association Litigation Section
(By Joseph Schaeffer)
Parties that act with civility in litigation are more likely to be seen as credible than those that do not.
Most lawyers are likely to have encountered an appeal to “civility.” But what is civility? It is a nebulous concept that escapes easy definition and is most often identified by its absence. Take, for example, a motion to strike a summary judgment response that was recently filed in a case pending in the U.S. District Court for the Northern District of Alabama. Whithworth v. Mezrano, No. 2:20-cv-00756 (N.D. Ala. Jan. 13, 2023). The underlying infraction? Perhaps the plaintiff relied on a sham affidavit? Or perhaps the plaintiff included scandalous and impertinent material of no relevance to the case? No, none of those things. The plaintiff had filed her opposition brief at 5:15 p.m.—15 minutes after the 5:00 p.m. deadline.
The district court was not amused. Finding no prejudice to the defendants from the plaintiff’s 15-minute delay, it denied the motion, but not before taking counsel to task for a pettiness that represented a further lowering of the bar for professionalism in an already contentious case. The defendants’ attempt to take advantage of their opponent’s mistake thus backfired by damaging their own credibility with the district court.
The defendants’ error here was thinking that every infraction deserves a remedy. The defendants would have done better to let such a trivial delay pass by unremarked and count on the district court identifying it on its own. Or if commentary were truly necessary, the defendants should at least have acted proportionally—noting the issue briefly in reply, rather than seeking what would presumably be a case-dispositive sanction for such a minor issue.
Arguments in litigation are colored by the behavior of the parties presenting them, and parties that act with civility in litigation are more likely to be seen as credible than those that do not. Avoiding petty fights over minor rules infractions accordingly not only avoids needless expense, but it is also good litigation strategy, too.
Joseph Schaeffer is a shareholder with Babst, Calland, Clements & Zomnir, P.C. in Pittsburgh, Pennsylvania.
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© 2023. More Than a Buzzword: Why “Civility” Can Be Sound Litigation Strategy, Pretrial Practice & Discovery, American Bar Association Litigation Section, March 21, 2023 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
(By Daniel Bates featuring Justine Kasznica)
Pittsburgh Business Times
One of the first tasks of the Pittsburgh-based Keystone Space Collaborative was commissioning a market report to tally up all the tech companies and organizations from across the region — Pennsylvania, Ohio, and West Virginia — which are receiving funds from NASA or space-related grants from the Department of Defense.
“The numbers of space projects and participants in the region was impressive,” said Justine Kasznica, the industry group’s board chair and a founding member. “We had about 550 participants from across the tri-state region, and this without any dedicated cross-region political championship for the space industry.” Those companies brought more than $2 billion in government funding into the region, the 2021 market report showed. “That number puts us very squarely on the map. It’s a baseline,” she said, “from which to evaluate our future growth.”
With the Keystone Space Collaborative, she hopes to organize and promote space-relevant technology companies across the tri-state region — which are more plentiful and promising than most people realize, Kasznica said.
Kasznica is a tech and corporate attorney, and Chair of the law firm Babst Calland’s Emerging Technology Practice and leading advocate for the region’s space economy.
Leveraging Pittsburgh’s robotics hub.
She has worked with Pittsburgh robotics companies for 14 years. For the last decade, she has served as outside general counsel to Astrobotic Technology, an aerospace robotics company spun out of Carnegie Mellon University that has acquired more than $500 million in NASA contracts and worked on three missions to the lunar surface.
As the Pittsburgh region developed into a robotics hub, it organically gathered the kind of companies whose work is valued by NASA, the DOD and the growing sphere of private spaceflight companies, all of which need more than rockets and rovers.
“Our region brings [together] robotics, advanced technology, advanced manufacturing expertise, material science work, software development, and life sciences research,” Kasznica said. “These are all core pieces of a vibrant future new space economy. So as I look to the future — three to five, or 10 years from now — I really see this region emerging or reemerging at the forefront of the new space economy.”
The global space industry grew to $469 billion in 2021, according to the Space Foundation, and is expected to expand to $1 trillion by 2040.
This growth was not impacted much by the Covid-19 pandemic, and space technology is sheltered during economic downturns, said Kasznica. “Space, because of its historical connection to the public sector and public funding — particularly defense and NASA spending — is somewhat insulated, in terms of its contribution to national security needs.”
Thanks in large part to her work with Astrobotic, Kasznica developed a law practice in space technology. “Over the past decade, I’ve gotten to know and build relationships with a number of space legal mentors, regulatory experts, a community of fantastic industry professionals, folks from NASA, folks from the DOD, and really have immersed myself in the space industry,” she said.
Space industry needs regulatory and commercial legal support.
The industry’s legal needs can be complex. “I saw a real need for sophisticated regulatory and commercial legal needs by the space companies,” Kasznica said. “They have export control issues. They have regulatory issues. They have a slew of sophisticated commercial issues. But many of these are nascent companies with limited resources.”
New companies in the expanding field may not be able to afford the kind of legal expertise bought by longtime aerospace and defense contracting giants. This is a need Kasznica and Babst Calland are addressing, she said.
“We now have a team of lawyers who are training up … to really be able to offer a much better value at the same sophistication, same ability to problem solve, but at a rate that is commensurate with this region’s expectations.”
Keystone Space Collaborative is the centerpiece.
The Keystone Space Collaborative, of which Babst Calland is a founding sponsor, provides networking opportunities, advocacy and promotion and an “ecosystem map,” which is especially valuable because the space technology industry is supported through relationships with universities, military research institutions and federal agencies. The Keystone Space Collaborative hopes to strengthen those bonds.
Last year, the group held its first annual conference, which brought more than 250 participants to Pittsburgh, including NASA administrators, the Pennsylvania governor and senators and congressional representatives from the tri-state region. Excitement is already building for this year’s conference, to be held in Pittsburgh on June 1st and 2nd.
“We are catching a wave,” Kasznica said, “and I think, because of the crossover to other sectors that this region is known for, the space industry really has an opportunity here.”
The space economy has gone through “a paradigmatic shift,” she said. “The cost of access to space has decreased by tenfold, thanks, in part, to some of the commercial players like SpaceX, Blue Origin and the like.” This
has “created an opportunity in low Earth orbit for commercialization of new technology.”
The environment of low Earth orbit offers a test lab for new technologies, particularly in material science, advanced manufacturing techniques and biotech, said Kasznica. “The in-space development of organoids and other biomaterials, the study of cellular structures as well as new drug development are just a few examples
of R&D activities that can benefit from this unique space environment,” said Kasznica, “The anticipated commercialization of low Earth orbit will create a tremendous opportunity that amplifies the industry beyond just the traditional space aspects of it, and this region is well positioned to take advantage of this opportunity.”
Though her focus has widened, Kasznica said that the client that started her on this path, Astrobotic, will play a prominent role in the industry’s future. “I see Astrobotic as a critical linchpin and an anchor for the region,” she said. “It has been a classic emerging technology success story.” She noted the company went from “literally two” employees to a team of more than 200.
She is helping the company create a permanent campus on Pittsburgh’s North Side that will house the larger Keystone Space Innovation Center and AFWERX/SPACEWRX Innovation Hub, which will serve as a focal point for convening and engaging the region’s space and defense innovation technology entrepreneurs.
It will be a space industry hub, Kasznica said, the kind that fosters creative synergy. “Those of us who study the innovation economy know that innovation clusters are born and are best nourished and grown with like-minded adjacent companies working collaboratively together, having those coffee stand conversations and being able to interact with one another. The greatest innovations and growth happens within clustered environments.”
Kasznica shared a vision of the site, which could act as a capitol for the tri-state region’s space economy.
“Crystal ball: 10 years from now, you go down to the North Side, and you sip a space-themed coffee drink while preparing an investment pitch deck, or scheduling on-site business development meetings with various space companies both from Pittsburgh and outside of the region, while your kids are visiting the Moonshot Museum and Carnegie Science Center and learning about how they can someday participate in the new space economy. What I see is a vibrant diverse community built around space and defense innovation.”
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Environmental Alert
(By Christopher (Kip) Power and Robert Stonestreet)
On February 10, 2023, 12 separate civil actions were filed (by more than 20 individual plaintiffs) in the U.S. District Court for the Northern District of West Virginia, challenging the construction and operation of the Black Rock Wind Farm (BRWF) located in Grant and Mineral Counties, West Virginia. Defendants include the developer of the facility, Clearway Energy Group, LLC, and its wholly-owned subsidiary, Black Rock Wind Force, LLC. Presumably seeking to satisfy the statute of limitations on one or more of plaintiffs’ common law causes of action, the complaints allege that they were filed exactly one year after the BRWF began operation.
The BRWF was authorized by an “Order Granting a Site Certificate” issued by the West Virginia Public Service Commission (PSC) on November 19, 2019. (As noted in that Order, Clearway Energy also owns the Pinnacle Wind Farm in Mineral County, West Virginia.) The application filed with the PSC sought approval to construct up to 29 wind turbines (each with a nameplate capacity between 3.6 MW and 5.8 MW), to be mounted at a hub height of 352.6 feet. Due to an existing 110 MW interconnection limit in Black Rock’s proposed agreement with PJM Interconnection LLC (the regional transmission organization that coordinates the movement of wholesale electricity for West Virginia and 12 other states), only 23 turbines were authorized to be constructed by the PSC Order.
Plaintiffs assert that the operation of the 23-turbine BRWF has “substantially and unreasonably” affected the “serenity, ambience, wildlife viewing and aesthetic nature” of their real property, and that it has harmed their “personal mental, emotional and physical wellbeing” in a variety of ways. Though the complaints do not mention it, it appears that virtually all the conditions identified as the cause of plaintiffs’ alleged injuries (excessive noise, vibration, shadow/light flicker, acoustic energy, and impaired viewsheds) were addressed in studies and testimony submitted by Black Rock to the PSC, and by the PSC Order. The PSC Order noted that, as of the date of its issuance, the owners of approximately 60 of the 193 occupied dwellings located within a one-mile radius of the facility had entered into or were negotiating “Neighbor Agreements” with Black Rock. The PSC also noted that existing wind turbines were visible in five of the nine viewpoints used in the analysis of the project’s potential visual effects.
Each of the 12 complaints is virtually identical except for the identity of the plaintiffs and the respective properties at issue. Each complaint asserts two claims. First, the complaints allege that the BRWF constitutes a nuisance. Under West Virginia law, there are two types of nuisance claims. A private nuisance is a substantial and unreasonable interference with the private use and enjoyment of another’s land. West Virginia law also recognizes claims for public nuisance, which is a claim alleging that certain conduct adversely impacts the public at large. Public nuisance claims generally cannot be asserted by private citizens unless they can demonstrate a “special injury” they suffered that is different than the alleged impact of the condition on the general public.
A bill is currently pending before the West Virginia Legislature that would restrict the scope of public nuisance claims. Senate Bill 572 would prohibit public nuisance claims based on an action or condition “that is permitted, authorized, approved, or mandated by a statute, ordinance, regulation, permit, order, rule, court order, or other similar measure issued, adopted, promulgated, or approved by a federal, state, or local governmental entity.” If passed, Senate Bill 572 would not likely affect the nuisance claims against the BRWF, because those claims appear to be for private nuisance (impacts on just the named plaintiffs’ properties) rather than a public nuisance (impacts on the public at large).
The second claim in the complaints alleges that the defendants were negligent in “siting, constructing and operating” the BRWF, knowing that the sound generated by the turbines would cause various physical ailments to nearby residents, including headaches, dizziness, rapid heartbeat, sleeplessness, and other adverse conditions. Although they may not be enough to prevent the claim from being heard, the studies submitted for purposes of obtaining the PSC Site Certificate for the BRWF will presumably also be important in evaluating the merits of this claim.
The complaints request entry of an injunction order to abate the nuisance (which would presumably require the BRWF to cease operations) and an award of damages to compensate the plaintiffs for diminution of value of their properties and their personal injuries. Responses to the complaints will be due within 21 days after the named defendants are formally served with them.
For questions about renewable energy projects in West Virginia, and the defense of common law or statutory claims based on alleged environmental impacts, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, or Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com.
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