Pittsburgh Business Times
(by Jenn Malik featuring Joel Bibby)
There’s no magic pill for weight loss – but many think we’re getting closer to having one with the widespread use of diabetes medications, also known as GLP-1s (glucagon-like peptide analogs). And employers with sponsored health plans are seeing a significant impact on their plan budgets from the increased use of these drugs.
“It used to be that the majority of (a company’s) prescription spend on their health benefits was really in specialty drugs,” said Jenn Malik, an attorney in the employment and labor and public sector groups at the law firm Babst Calland. “But now you’re seeing a shift to these GLP-1s that are really topping the charts.”
Primarily injected, the drug compounds, better known as Ozempic and Mounjaro approved for treating type 2 diabetes, and their approved-for-weight-loss lifestyle counterparts, such as brands commonly known as Wegovy and Zepbound, are made of the same active ingredient as the diabetes version, explained Joel Bibby, a licensed pharmacist and managing director of clinical services for Integrity Pharmaceutical Advisors. They work by affecting an enzyme in your gut that can help you feel full and help your body process blood sugars. In addition to treating diabetes, they can help with issues associated with diabetes, like being overweight, which affect many different body systems.
“Indications for use of these drugs are expanding. In March, they were approved to reduce the risk of certain cardiovascular events, like heart attack and stroke. There are also rumors of Wegovy’s pending approval for help with other conditions,” Malik said.
“The broadening use of GLP-1 medications is also driving employers to rethink their plan designs.
Consider these statistics: one in eight adults say they’ve taken a GLP-1 at some point in their lives and about six percent of adults say they’re currently taking the drug.* Applying these statistics to an employer plan with 1,500 covered lives that has six percent of its members using one of these medications, they could pay anywhere from about$900 to $1,500 per month for each member with a prescription. At $12,000 a year per utilizer – using six percent of a population of 1,500 – that can be more than $1.5 million per year that an employer spends for one drug,” Malik said.
To cover or not to cover
One consideration for employers when deciding to cover GLP-1s – along with the high cost and expanding indications – is determining eligibility for the medications. Some practical and legal ways for managing this while keeping an eye on spending and ensuring the members who need these drugs are getting them include:
- Requiring a diabetes diagnosis before someone is prescribed one of the medications.
- Instituting another type of intervention, like prohibiting a 90-day fill on the initial prescription. “The drugs have a lot of side effects; many people discontinue them,” Bibby said. “If you fill a 90-day prescription for $3,000, someone might go two weeks into taking the medication and have to stop and throw it away.”
- Including prior authorization criteria, like a certain body mass index (BMI), participation in exercise and diet programs or permitting only certain providers to prescribe these medications.
Employers with self-funded plans will likely have more options available to them to help control GLP-1 spend as opposed to fully-insured plans in terms of both controlling costs and determining the impact of GLP-1s on costs. “Prescription drug claims will come through pretty quickly,” Malik said. “So you can see spikes in utilization as they’re starting on almost a monthly basis for self-funded plans and the impact to your budget versus your fully-insured plans where utilization data is reviewed less frequently and health care renewals occur on a yearly basis,” Malik said.
Employers should also track their data – examining their current members’ use of these diabetes medications and the type of population requiring them, especially when it comes to achieving the long-term benefits of covering drugs that may result in reduced weight, less musculoskeletal injuries and improved cardiovascular conditions.
“But if your population is really transient, or you have a lot of turnover, it may not make sense for an employer – at least the weight loss drug component of it –because employers won’t really get the benefit of the cost savings in the form of reduced medical claims down the line,” Malik said.
Also, employers should keep in mind that currently, data doesn’t fully support temporary use of GLP-1 medications. In most cases, use must be continual to achieve ongoing benefits.
“The widespread utilization of GLP-1s cannot be understated,” said Malik.
To help navigate the increased use of GLP-1s, Malik and Bibby encourage employers to review the current utilization in their health care plan and use the resources available to help find the right solutions for their employees.
*According to the Keiser Family Foundation Health Tracking Poll
Business Insights is presented by Babst Calland and the Pittsburgh Business Times.
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The Authority
(by Michael Korns and Amanda Brosy)
Municipal authorities and other public entities in Pennsylvania have long been familiar with the weight and burden of DEP and EPA mandates and regulations. Whether it involves issues with stormwater infiltration, erosion and sediment control, or any number of issues related to water treatment, all too often authorities must correct issues that they did not cause. Given that history, authorities should brace themselves, because new regulations will put them in the crosshairs again.
PFAS – A pollutant that means forever.
The new issue facing authorities relates to a large group of man-made chemicals known as per- and polyfluoroalkyl substances, or “PFAS” for short. PFAS are resistant to heat, oils, stains, and water, and for that reason, PFAS have been incorporated into a wide variety of consumer products and industrial processes since the 1940s. They are ubiquitous in the environment and are known as “forever chemicals” because they do not readily break down in nature. Ongoing research shows a variety of potential health risks related to PFAS exposures.
Pennsylvania has adopted PFAS standards related to drinking water and environmental cleanup, and EPA, which is working to address PFAS pollution on multiple regulatory fronts, recently finalized the first-ever national drinking water standard related to PFAS. In December 2023, DEP also updated its NPDES Individual Industrial Wastewater permit application to include PFAS sampling. Applications going forward are required to include sampling for four PFAS: PFOA, PFOS, PFBS, and HFPO-DA (commonly referred to as GenX) as part of Pollutant Group 1 sampling. Because sampling is required under Pollutant Group 1, all industrial categories are subject to the sampling requirements.
The heart of the issue for authorities is this: the elimination of PFAS in drinking water is a regulatory priority for both EPA and DEP. This is an important goal, and with appropriate grant funding, authorities could be an important partner in removing these chemicals from both the natural environment and our own drinking water, as they have done with the elimination of lead water lines. Unfortunately, many of the existing and proposed regulations tend to take a less cooperative approach, requiring regulated entities to ensure that PFAS are eliminated from the material in their possession, regardless of whether that entity created or used the PFAS at issue.
As is immediately obvious to anyone reading this, PFAS regulation presents a massive challenge to municipal water and wastewater authorities. Because PFAS have been used in so many different products and industries, it is very likely that wastewater treatment plants are receiving water that already contains levels of PFAS that would be in violation of the upcoming DEP and EPA standards. Water treatment facilities may also find PFAS in water sources, whether surface or groundwater. Given the ubiquity of PFAS, even water treatment plants fed entirely from natural sources may find PFAS present at unacceptable levels.
Potential Impacts
The list of potential ways in which new PFAS regulations are likely to impact authorities is numerous, but a non-exclusive list includes the following.[1]
National Primary Drinking Water Regulation (NPDWR)
On April 10, 2024, EPA released a final NPDWR that sets legally enforceable limits (maximum contaminant levels, or MCLs) in drinking water for six different PFAS. The federal standard becomes immediately effective in Pennsylvania, replacing the prior Pennsylvania standards. Notably, the rule sets an MCL of 4 parts per trillion (PPT) for PFOA and PFOS. The NPDWR requires public water systems to complete their initial monitoring for the chemicals within three years and notify the public what levels are detected. Where PFAS are found at levels that exceed the new standards, systems must take steps to reduce those levels within five years. To help states implement testing and treatment at public water systems, $1 billion has been made available through the Infrastructure Investment and Jobs Act. With this new rule in place, water utilities and municipalities should begin evaluating the technical and cost implications of conducting testing and installing treatment systems to meet the NPDWR standards.
Pretreatment
The EPA is developing, or plans to develop, effluent limitation guidelines that address PFAS for multiple industries, including landfills and metal finishers. Many authorities accept wastewater from some of these industries. These guidelines are expected to include pretreatment standards that will need to be incorporated into pretreatment programs and reflected in the local limits with which all industrial users must comply.
Biosolids
Some authorities dispose of biosolids at landfills. As part of its PFAS Strategic Roadmap, EPA is currently conducting a biosolids risks assessment for PFOA and PFOS, two of the most studied PFAS. Risk assessments are used to characterize the nature and magnitude of potential harm to human health and the environment as a result of exposure to a chemical. EPA intends to finalize the risk assessment by December 2024. These risk assessments may result in additional testing requirements and/or restrictions for disposal or land application of biosolids.
Superfund Hazardous Substances Designation
On September 6, 2022, EPA published a Proposed Rule to designate PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, aka Superfund). In the Proposed Rule, EPA identifies waste management and wastewater treatment facilities as potentially affected entities. However, EPA has said it will focus its enforcement efforts on manufacturers and other entities that have released PFOA and PFOS into the environment. To that end, EPA is also working on an enforcement discretion and settlement policy that will outline its priorities. The final rule and accompanying policy are expected to be issued sometime this spring. Meanwhile, EPA has also requested public input on whether to designate other types of PFAS, besides PFOA and PFOS, as CERCLA hazardous substances. In light of the Biden administration’s commitment to addressing PFAS issues on multiple fronts, we expect EPA to finalize the Proposed Rule and take steps to develop other rules to address PFAS releases to the environment under CERCLA and other federal environmental statutes.
EPA Information Collection Request
The EPA is working to develop a study of influent to publicly owned treatment works across the nation. The goals of the study are to identify categories of industrial users discharging PFAS; collect data on PFAS in domestic wastewater influent to treatment works; characterize PFAS from industrial users and domestic sources; collect data on adsorbable organic fluorine concentrations in wastewater; and better understand PFAS pass through in treatment works to biosolids and effluent.
What Now?
It is clear that authorities will be impacted by the evolving PFAS regulatory environment in a variety of ways. If finalized, the proposed regulations could require authorities to develop and implement pretreatment protocols for industrial waste and then hold authorities responsible for the PFAS that happen to enter their systems. While the EPA claims that it does not intend to make utilities a target of initial CERCLA enforcement, its proposed “hazardous substances” rule does not absolve utilities from responsibility for the PFAS in their systems that they did not create or use. This is particularly concerning because it may not be possible in all cases to identify the origin of PFAS in the system.
Authorities in Pennsylvania should not wait for potential enforcement to assess threats to their systems. If you are able to identify sources of PFAS, consider review of applicable pretreatment requirements on industrial customers. If there are PFAS in your system that you cannot identify the source for, then your Solicitor should be closely monitoring final approvals of the upcoming regulations to best understand what will be required of your authority in the months and years to come.
As the federal and state governments continue to take action to address PFAS across many program areas, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. For more information on how municipal authorities and other public entities can navigate the uncertainties and better understand the new rules and regulations, please contact Michael Korns at (412) 394-6440 or mkorns@babstcalland.com or Amanda Brosy at (202) 853-3465 or abrosy@babstcalland.com.
[1] This article was submitted for publication on April 12, 2024 and thus does not include any developments after that date.
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Reprinted with permission from
The Wildcatter
(by Nikolas Tysiak)
A few cases to report on this month.
Griffin v. Toland, 2024 WL 2269941 (W. Va. S. Ct. May 20, 2024). In a memorandum decision (i.e. – without oral arguments), the West Virginia Supreme Court sought to interpret intentions of the parties to a 1976 deed containing oil and gas reservation language. Hazel L. White acquired all the surface and ½ the oil and gas under a tract of 82 acres during her lifetime, one-half the oil and gas having been properly and effectively reserved by a predecessor in title pursuant to a 1943 deed. By deed dated June 29, 1976, Hazel White conveyed the 82 acres to Timmie and Vickie McMillan, with an exception of ½ the oil and gas. The exception language in the June 29, 1976 was reportedly identical to the reservation language used by Hazel White’s predecessor in title to retain the “other” ½ of the oil and gas via the 1943 deed. The 82 acres was purportedly conveyed multiple times following the June 29, 1976 deed, all containing language nearly identical to both the 1943 deed and the June 29, 1976 deed. Griffin, as successor to Hazel White, filed a declaratory judgment action claiming rightful ownership of the ½ oil and gas interest purportedly reserved under the June 29, 1976 deed, as against the current surface owners (Toland). The trial court found in favor of Toland, stating that the June 29, 1976 deed was ambiguous as to Hazel White’s intent – the language does not indicate whether Hazel indicated to retain the “remaining” one half of the oil and gas associated with the 82 acres, ½ of the ½ interest, or none of the oil and gas. After allowing parol evidence, the trial court found that none of the parol evidence regarding Hazel White’s intent at the time of the June 29, 1976 deed was enough to overcome the legal holding that ambiguity in a deed must be construed most strongly against the grantor. The Supreme Court agreed that the June 29, 1976 was ambiguous but further held that the ambiguity presented a material issue of fact, so sustaining a motion for summary judgment regarding the situation was inappropriate. The case was remanded to the trial court for further proceedings.
Callen v. Foertsch, 2024 WL 2176673 (Pa. Super. Ct. May 15, 2024). Also in a memorandum decision (non-precedential), the court was confronted with a question of whether a joint tenant with right of survivorship effectively broke the joint tenancy and created a tenancy in common before her death. Dan Callen and Elaine Callen-Foertsch inherited a tract of land as joint tenants with the right of survivorship in 1990. They jointly leased the land in 2009, each receiving ½ the royalties. After Elaine’s death in November 2021, her daughter, Mae Foertsch, recorded a “Pennsylvania Gift Deed” whereby Elaine purports to convey all her interest in land in Butler County (including the land at issue) to Mae. Dan maintained that, as the surviving joint tenant, all title to the land, and therefore the oil and gas royalties, passed to him by operation of law. Rather than deciding on the facts, the Superior Court issued an order based on the most technical of technicalities, holding that the appeal from the trial court was not appropriate because the appeal occurred before the trial court issued a true final order. The trial court had only quieted title in favor of Dan Callen, but failed to dispose of a counter claim for monetary damages by Mae Foertsch. Consequently, the case was remanded back to the trial court for further proceedings.
In Tera, L.L.C. v. Rice Drilling D, L.L.C. (2024-Ohio-1945), the Ohio Supreme Court faced a “bad-faith” trespass claim by the landowners (Tera) against Rice, claiming that operations in the Point Pleasant formation was a violation of the terms of the executed leases, which only specified the Utica and Marcellus formations as being affected. Both the trial court and intermediate appeals court (Ohio 7th district) agreed with this reasoning, granting and affirming a motion for summary judgment on the issue of trespass, respectively – stating that there was no triable issue of fact based on the language of the leases. The Supreme Court of Ohio disagreed on procedural grounds, finding that a triable issue of fact did exist, as the meaning of the phrase “the formation commonly known as the Utica Shale” could be, and clearly has been, construed to include more than the literal Utica Shale formations. In a great win for the oil and gas industry in Ohio, the motions for summary judgment arising from the bad faith trespass claims were reversed and remanded back to trial to determine what that phrase actually means in Ohio.
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Reprinted with permission from the MLBC June 2024 issue of The Wildcatter. All rights reserved.
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
On March 9, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced the availability of its draft National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges of Stormwater Associated with Construction Activities (draft 2024 General Permit), which would apply to eligible projects proposing earth disturbance greater than or equal to one acre. See 54 Pa. Bull. 1263 (Mar. 9, 2024). PADEP accepted comments on the draft through April 8, 2024. PADEP’s draft 2024 General Permit includes significant changes compared to the PAG-02 General Permit currently in effect, set to expire on December 7, 2024 (2019 General Permit). To supplement these changes, PADEP is expected to update the Erosion and Sediment Module 1 and Post-Construction Stormwater Management (PCSM) Module 2 to be consistent with the draft 2024 General Permit upon reissuance.
The 2019 General Permit requires that proof of the recording of an instrument for post-construction stormwater management (PCSM) best management practices (BMPs), now referred to as stormwater control measures (SCMs), be submitted to PADEP or the County Conservation District (CCD) with the Notice of Termination (NOT) or a Transfer Application. The draft 2024 General Permit would require submission of the full recording and proof of the recording to PADEP before a pre-construction meeting is scheduled, as well as upon the submission of the NOT to ensure compliance. The draft 2024 General Permit would also require the use of a standard form to document the completion of each structural PCSM SCM, which must be signed by a licensed professional and submitted to PADEP or CCD within 30 days of completion of each SCM.
The draft 2024 General Permit would require site inspections to be conducted by qualified personnel only, with PADEP providing three options to demonstrate that a person is qualified. Existing permittees would have one year from the effective date of the 2024 General Permit, December 8, 2024, to implement this provision. PADEP’s draft 2024 General Permit would also require the submission of an annual report by December 7 of each year. This report would require information on the status of the project. For existing permittees, the draft 2024 General Permit would require a renewed NOI to be submitted by December 7, 2024, to remain covered under the reissued PAG-02 General Permit.
Additionally, the draft 2024 General Permit identified specific types of non-stormwater discharges that would be authorized during earth disturbance activities to be consistent with other PADEP General Permits for stormwater discharges. The U.S. Environmental Protection Agency’s (EPA) technology-based standards at 40 C.F.R. pt. 450 are incorporated into the effluent limitation requirements, in addition to two new requirements for construction dewatering water. Discharges would be required to be treated by an approved series of at least two BMPs.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
In February 2024, the Pennsylvania Department of Environmental Protection (PADEP) updated its National Pollutant Discharge Elimination System (NPDES) permit application process for Major Sewage Facilities and Individual Industrial Wastewater permits to include per- and polyfluoroalkyl substances (PFAS) sampling. PFAS have historically been used to make products water, stain, and heat resistant and have been a key ingredient in some aqueous film forming foams (AFFF) used to extinguish flammable liquid fires, most commonly found at airports or on military bases. PFAS are known as “forever chemicals” because they do not break down naturally in the environment. Due to these properties and their ubiquitous nature, PFAS have been found in various environmental media, such as groundwater (including drinking water), plants, animals, and humans.
Major Sewage Facilities and Individual Wastewater permit applicants will now need to sample for four PFAS compounds as part of Pollutant Group 1 testing. The compounds required to be tested include perfluorooctanoic acid (PFOA), perfluorooctanesulfonic acid (PFOS), perfluorobutanesulfonic acid (PFBS), and hexafluoropropylene oxide dimer acid (HFPO-DA, commonly known as GenX).
Because PFAS has been added to Pollutant Group 1, all industrial categories are subject to the sampling requirements. Ongoing monitoring may also be required. Applicants with non-detect results or results at or below the Target Quantification Limits (QLs) will be required to monitor annually. Applicants with detections or non-detects above the QL will be required to sample quarterly. The QLs are 4.0 parts per trillion (ppt) for PFOA, 3.7 ppt for PFOS, 3.5 ppt for PFBS, and 6.4 ppt for HFPO-DA.
Ongoing monitoring may be discontinued if there are four consecutive monitoring periods with non-detect results at or below the QLs. Additionally, Module 1 of the Individual Wastewater Permit application, which is required for Industrial Stormwater discharges, has been updated to ask whether AFFF containing PFAS have been used at the facility.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
The Pennsylvania Department of Environment Protection’s (PADEP) Water Resources Advisory Committee (WRAC) met on May 16, 2024, to discuss PADEP’s proposed rulemaking regarding notification requirements for unauthorized discharges to waters of the commonwealth and the draft final Triennial Review of Water Quality Standards (WQSs). Section 91.33 of Title 25 of the Pennsylvania Code requires immediate notification to PADEP if, because of an accident or other activity or incident, a toxic substance or other substance which would endanger downstream users or otherwise result in pollution reaching the waters of the commonwealth, is discharged into waters of the state. The characteristics of unauthorized discharges, such as spills and leaks, are not known prior to the discharge, and there are many site-specific factors affecting the risk of unauthorized discharge. According to PADEP, the purpose of the proposed regulation is to make the notification requirements for unauthorized discharges as straightforward as possible. The requirements do not expand notification obligations but attempt to clarify which unauthorized discharges need to be reported. In PADEP’s presentation to the WRAC, PADEP provided examples of unauthorized discharges that do not need to be reported, discharges that may need to be reported, and discharges that must be reported. For example, releases of materials within secondary containment when there is no possibility of the substance reaching waters of the commonwealth do not need to be reported, spills of non-liquid materials into waters of the commonwealth may not need to be reported, depending on the material, and sanitary sewer overflows that reach waters of the commonwealth must be reported.
WRAC also reviewed the draft final version of the Triennial Review of WQSs regulation. In the regulation, PADEP proposed new or updated WQSs for 17 toxic substances including: acetone, barium, boron, cadmium, carbayl, chloroform, chorophenoxy herbicide, 1,4 dioxane, formaldehyde, methyl isobutyl ketone, metolachlor, resorcinol, 1,2,3 trichloropropae, 1,2,4 trimethylbenzene, 1,3,5 trimethylbenzene, and xylene, among others. According to PADEP, there were no changes between the proposed regulation and the final regulation.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On October 13, 2023, the U.S. Department of Energy (DOE) announced that it had selected seven Regional Clean Hydrogen Hubs (H2Hubs) to negotiate awards for $7 billion in funding allocated under the Biden administration’s Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021). According to DOE, the H2Hubs will “accelerate the commercial-scale deployment of low-cost, clean hydrogen—a valuable energy product that can be produced with zero or near-zero carbon emissions . . . .” Press Release, DOE, “Biden-Harris Administration Announces $7 Billion For America’s First Clean Hydrogen Hubs, Driving Clean Manufacturing and Delivering New Economic Opportunities Nationwide” (Oct. 13, 2023). Two of the H2Hubs are located in Pennsylvania and surrounding states, and other Hub projects are located in California; Texas; Minnesota, North Dakota, and South Dakota; Illinois, Indiana, and Michigan; and Washington, Oregon, and Montana.
The Mid-Atlantic Hydrogen Hub (Selectee: Mid-Atlantic Clean Hydrogen Hub (MACH2)) is located in Pennsylvania, Delaware, and New Jersey. Per DOE, it will repurpose historical oil infrastructure and use existing rights-of-way “to develop renewable hydrogen production facilities from renewables and nuclear electricity using both established and innovative electrolyzer technologies” to reduce energy costs and carbon emissions. Office of Clean Energy Demonstrations, DOE, “Regional Clean Hydrogen Hubs Selections for Award Negotiations,” available here. This Hub anticipates supporting apprenticeship programs, certifications, and other employment support, and creating more than 20,000 jobs (including more than 6,000 permanent jobs). This Hub’s federal cost share is up to $750 million.
The Appalachian Hydrogen Hub (Selectee: Appalachian Regional Clean Hydrogen Hub (ARCH2)) is located in West Virginia, Ohio, and Pennsylvania and will “leverage the region’s ample access to low-cost natural gas to produce low-cost clean hydrogen and permanently store the associated carbon emissions.” Id. This Hub anticipates bringing more than 21,000 jobs (3,000+ permanent) to the Appalachian region, creating equitable workforce opportunities, and creating a Community Benefits Advisory Board, a Community Benefits Plan, and a Community Commitment Fund “to ensure the Hub reenergizes the Appalachian region economically, socially, and environmentally.” Id. This Hub’s federal cost share is up to $925 million.
DOE’s selection of the seven H2Hubs for project negotiation is the first step in a years-long process toward completing the Hubs. Next steps include negotiations, project awards, and implementation, which is divided into four phases: (1) project planning; (2) project development; (3) installation, integration, and construction; and (4) ramping-up and operations. See Office of Clean Energy Demonstrations, DOE, “H2Hubs Local Engagement Opportunities,” available here. During the negotiations phase, reviewers and applicants will review the project organization, management, and budget, and evaluate risk, among other things. After completion of these steps, the reviewers will finalize documents, form awards packages, and review, approve, and issue funding awards. See Office of Clean Energy Demonstrations, DOE, “Award Negotiations.”
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On November 1, 2023, Pennsylvania Governor Josh Shapiro announced the release of “PAyback,” an online tool for Pennsylvania permit, license, and certification applicants. See Press Release, Gov’r Josh Shapiro, “Governor Shapiro Launches First-in-the-Nation Online Money-Back Guarantee System to Bring Increased Accountability & Transparency to Commonwealth Permitting, Licensing, and Certification Processes” (Nov. 1, 2023). Specifically, PAyback allows an applicant to confirm the processing time of its application and request a refund if the application is not processed within the appropriate timeline. Refund eligibility applies to approximately 70% of applications, excluding those that, e.g., do not have an application fee. The refund policy is not retroactive and only applies to applications completed on or after November 1, 2023.
The PAyback tool is one component, and a result of Shapiro’s stated goal of increasing transparency, efficiency, and certainty for Pennsylvanians subject to these processes and requirements. Its development followed Shapiro’s issuance of Executive Order 2023-07, “Building Efficiency in the Commonwealth’s Permitting, Licensing, and Certification Processes” (Jan. 31, 2023), which directed each applicable Executive Agency to “compile a catalog of the types of permits, licenses, or certifications it issues and submit that catalog to the Governor’s Office” within 90 days. Id. Relevant Executive Agencies were tasked with compiling the following information for each permit, license, or certification:
- type, term, and basis (e.g., statutory, regulatory, or other);
- method for receiving applications and when the method was last updated;
- legal authority governing the length of application processing times;
- applicable fees and the underlying authority for same;
- analysis and recommendation of the appropriate length of time to promptly process completed applications; and
- any other relevant information as requested.
In subsequent announcements, Governor Shapiro reported that (1) the Executive Agencies had completed their cataloging efforts, totaling more than 750 licenses, 800 permits, and 360 certifications, and that his office would review and establish efficient application processing times based on agency recommendations; and (2) from related efforts, many state agencies had reduced application backlogs or processing times for their respective applications. See Press Release, Gov’r Josh Shapiro, “Shapiro Administration Announces All Commonwealth Agencies Take Critical Step in Improving Licensing, Permitting, and Certification Processes” (May 5, 2023); Press Release, Gov’r Josh Shapiro, “Governor Shapiro Keeps Commitment to Improve Commonwealth’s Permitting, Licensing, and Certification Processes and Make Government Work Faster for Pennsylvanians” (Oct. 26, 2023). With the PAyback announcement, the Shapiro administration said that future goals include “filling key vacancies, updating the Commonwealth’s IT and technological assets, improving the application processes, and more.” November Press Release, supra. The PAyback tool and more information about it can be found on its website.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On October 18, 2023, Pennsylvania Governor Josh Shapiro’s office announced that the Pennsylvania Department of Environmental Protection (PADEP) and the Shapiro administration had capped and plugged 100 orphaned and abandoned wells since Shapiro took office in January 2023, which surpasses the total number of wells plugged in the previous six years combined. See Press Release, Gov’r Josh Shapiro, “Shapiro Administration Has Plugged 100 Orphaned & Abandoned Wells in Just 10 Months, Surpassing Total Over Previous 6 Years Combined” (Oct. 18, 2023).
In addition to state resources, significant funding to address these wells comes from allocations to Pennsylvania from the federal Infrastructure Investment and Jobs Act (IIJA), Pub. L. No. 117-58, 135 Stat. 429 (2021). Pennsylvania received initial IIJA grant funding totaling $25 million and is eligible for an additional $300+ million in the coming years. See Press Release, U.S. Dep’t of the Interior, “Biden Administration Announces $1.15 Billion for States to Create Jobs Cleaning Up Orphaned Oil and Gas Wells” (Jan. 31, 2022, updated June 5, 2023). According to the Shapiro administration, the IIJA funds are not only being used to cap and plug wells—PADEP has awarded contracts for 224 wells to date—but are also directed toward identifying and inventorying wells, as well as taking enforcement actions against applicable operators.
Approximately 45% of the wells are in environmental justice areas, which is consistent with the Biden administration’s Justice40 Initiative. The goal of the Justice40 Initiative is to direct 40% of the benefits of certain federal investments to disadvantaged communities across one or more of seven areas: climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure. See White House, “Justice40, A Whole of Government Initiative” here.
As of May 16, 2024, 175 wells have been plugged, with 51 remaining wells in progress. More information about this program and PADEP’s progress can be found on the Oil & Gas IIJA Project Tracker website.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On November 2, 2023, Pennsylvania Governor Josh Shapiro and CNX Resources Corp. (CNX) announced a voluntary agreement between Shapiro’s administration and CNX, under which CNX agreed to take certain actions regarding its unconventional oil and gas operations in Pennsylvania. See Press Release, Gov’r Josh Shapiro, “Shapiro Administration and Leading Natural Gas Company CNX Resources Announce First-of-Its-Kind Collaboration on Environmental Monitoring and Chemical Disclosures” (Nov. 2, 2023); see also Statement of Mutual Interests (Nov. 2, 2023). Specifically, CNX agreed to the following:
- “intensive” air and water quality monitoring to assess environmental impacts—data and facts that the Shapiro administration will use (with other applicable facts and data) “to inform the necessity of any additional setbacks or other future policy changes”;
- expand its no-drill zones from 500 feet to 600 feet for all sites and to 2,500 feet for sensitive sites, e.g., schools and hospitals while it is collecting data;
- publicly disclose all chemicals intended for use in drilling and hydraulic fracturing prior to use on-site;
- support regulation of gathering lines to inspect for corrosion;
- support additional safety measures applicable to transporting waste from unconventional well sites; and
- provide open-sourced, real-time emissions information to stakeholders and interested parties.
CNX also agreed not to hire Pennsylvania Department of Environmental Protection (PADEP) employees from regional offices covering CNX operations until two years after such employees leave PADEP. The actions address several recommendations from a 2020 Grand Jury Report on the unconventional oil and gas industry. See Report 1 of the Forty-Third Statewide Investigating Grand Jury (June 2020).
On December 18, 2023, Governor Shapiro announced that CNX had begun publishing real-time air monitoring data at two well sites in Washington and Greene Counties, including chemicals and additives used in drilling operations at the two sites. See Press Release, Gov’r Josh Shapiro, “As Part of Collaboration with Shapiro Administration, CNX Resources Begins Disclosing Names of All Chemicals & Posting Air Monitoring Results Online in Real-Time” (Dec. 18, 2023); see also CNX’s real-time air monitoring data here. CNX plans to expand the program across its operations in Pennsylvania, but has not established a timeframe for doing so.
Per the December Press Release, Governor Shapiro directed PADEP to begin the formal rulemaking process and implement policy changes to match the CNX collaboration, including disclosing drilling chemicals and improved control of methane emissions to align with the U.S. Environmental Protection Agency’s Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review. See 89 Fed. Reg. 16,820 (Mar. 8, 2024) (to be codified at 40 C.F.R. pt. 60). The Shapiro administration stated that its collaboration with CNX is one step in its broader goal to address climate change and protect the right to clean air and pure water “while maintaining our Commonwealth’s legacy as a national energy leader.” December Press Release, supra.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On March 25, 2024, Bucks County, Pennsylvania, filed a complaint in the Bucks County Court of Common Pleas against BP, Chevron, ConocoPhillips, Phillips 66, ExxonMobil, Shell, and the American Petroleum Institute, alleging that the companies deceived the public about the dangers of fossil fuel pollution and the role it has played in increasingly severe, damaging weather. Bucks Cnty. v. BP P.L.C., No. 2024-01836-0000 (Pa. Ct. Common Pleas filed Mar. 25, 2024).
Bucks County Commissioner Vice Chair, Bob Harvie, said in a press release that the complaint, the first of its kind in Pennsylvania, “seeks to shift the financial burden of the climate crisis from the taxpayers of Bucks County to the companies responsible for creating the crisis.” See Press Release, Bucks Cnty., “Bucks County Takes on Big Oil in Climate Crisis Lawsuit” (Mar. 25, 2024). The complaint makes many allegations against the defendants, including a claim that the companies knew about the harmful effects of fossil fuels, but did nothing to mitigate the danger, comparing them to tobacco companies that advertised low-tar and light cigarettes as healthy alternatives to regular cigarettes. The County claims that the companies affirmatively concealed those harms by engaging in a campaign of deception to increase the use of those products.
The County also claims that the companies could have chosen to facilitate a lower-carbon future, but chose corporate profits and continued deceit. The complaint also includes claims regarding misleading advertisements that portrayed the defendants as climate-friendly energy companies and accuses the companies of exacerbating the cost of adapting to and mitigating the effects of the climate crisis. As of the time of this report, the defendant companies have not filed a response.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On January 26, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced that it would implement a policy requiring natural gas well operators to disclose chemicals they use in drilling and hydraulic fracturing operations before the chemicals are used on-site. See Press Release, PADEP, “Shapiro Administration, DEP Requires All Fracking Companies to Be More Transparent About Chemicals Used in Drilling” (Jan. 26, 2024). To accomplish this, PADEP said it would revise the process by which an operator submits its site-specific preparedness, prevention, and contingency plan (PPC Plan). Regulations require that an operator prepare a PPC Plan before it stores, uses, or generates regulated substances on-site, but until this change, an operator was only required to submit its PPC Plan to PADEP upon request.
Now, PADEP’s policy is that operators must submit PPC Plans to the agency prior to conducting drilling operations so PADEP can post them online on its PA Oil and Gas Mapping website. PADEP has informed operators and industry groups of the change, and since January 3, 2024, has included the policy in cover letters attached to issued unconventional well permits. This change appears to respond to one of eight recommendations summarized in the report prepared by Pennsylvania’s 43rd Statewide Investigating Grand Jury on the unconventional oil and gas industry. See Office of the Att’y Gen., Commw. of Pa., Report 1 of the Forty-Third Statewide Investigating Grand Jury (June 2020). The grand jury was convened, and the PPC Plan policy subsequently implemented, under then-Attorney General and current Governor Josh Shapiro.
Specifically, the grand jury recommended “that all chemicals employed in any stage of the unconventional oil and gas process must be publicly disclosed before they can be used.” Id. at 95. Among other things, the grand jury also recommended expanding no-drill zones, aggregating smaller sources together for the purpose of assessing air pollution, and implementing a “cooling off” period during which former PADEP employees are restricted from being employed by oil and gas operators. Id. at 10–11.
At the moment, PADEP’s change to the PPC Plan submission process appears to be strictly policy-based and unconnected to existing or proposed regulations. However, the change follows the Shapiro administration’s voluntary agreement with CNX Resources Corp. (CNX), whereby CNX announced its intention to publicly disclose chemicals and additives used in drilling operations at two of its wells, real-time air monitoring data, and other information. See Press Release, Gov’r Josh Shapiro, “Shapiro Administration and Leading Natural Gas Company CNX Resources Announce First-of-Its-Kind Collaboration on Environmental Monitoring and Chemical Disclosures” (Nov. 2, 2023); “Statement of Mutual Interests” (Nov. 2, 2023). These actions broadly mirror many of the grand jury’s recommendations.
In the announcements for both the CNX collaboration and the PPC Plan change, the Shapiro administration said that it has directed PADEP to implement formal rulemaking and policy changes mirroring the collaboration, including improved control of methane emissions to align with federal standards for oil and gas emissions sources, stronger drilling waste protections, and protections for gathering lines that transport natural gas. As such, new or revised regulations to respond to the recommendations summarized in the grand jury report and applicable to the oil and gas industry may be forthcoming.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)
On February 22, 2024, the Pennsylvania Public Utility Commission (PUC) issued a Final Form Rulemaking Order (Order) that would set public utility safety standards for the transportation of hazardous liquids by pipeline in intrastate commerce. See Rulemaking Regarding Hazardous Liquid Public Utility Safety Standards at 52 Pa. Code Chapter 59, No. L-2019-3010267. In the Order, the PUC states that the goal of the safety standards is “to deter inadvertent returns, leaks, subsidence events, and water supply contamination events related to the construction, operation, and maintenance of [highly volatile liquids (HVL)] pipelines by hazardous liquid public utilities within Pennsylvania.” Id. at 2. In addition to already applicable federal standards, the rule establishes state-specific standards for hazardous liquid public utilities for the design, construction, operation, and maintenance of pipelines transporting hazardous liquids within Pennsylvania.
These include, but are not limited to:
- requirements regarding the timing and content of submitting failure analysis reports, root cause analysis reports, and accident reports;
- notifying the Pipeline Safety Section of certain activities within specified timeframes, e.g., proposed major construction, major reconstruction, or major maintenance;
- submit annually to the Pipeline Safety Division an annual report for each type of hazardous liquid pipeline facility operated at the end of the previous year;
- develop a written preparedness, prevention, and contingency plan that addresses, among other things, potential environmental impacts from drilling fluid discharges; and
- provide the Pipeline Safety Section with design plans, project costs, geotechnical reports, proof of notifications, estimated start, and completion dates.
Specifically, the rule will apply to two existing PUC certificated hazardous liquid public utilities involved in intrastate service in Pennsylvania—Sunoco Pipeline, L.P. (including the Mariner East Pipelines) and Laurel Pipe Line Company, L.P.—and to other intrastate HVL pipelines constructed in the future. The rule will not apply retroactively to existing facilities with respect to design and construction regulations (when the rule becomes effective). However, operations and maintenance, accident reporting, and public awareness requirements will apply to existing hazardous liquid pipeline facilities. The Order amends 52 Pa. Code ch. 59, but does not apply to pipelines regulated by Act 127 of 2011 (the Gas and Hazardous Liquid Pipeline Act) or interstate hazardous liquid pipelines.
After the PUC adopted and entered the Order, the Independent Regulatory Review Commission (IRRC) added the Order to its April 18, 2024, public agenda. In response to public comments submitted to the IRRC, the PUC withdrew the Order for further review. See Withdrawal Letter (Apr. 16, 2024). On April 25, 2024, the PUC entered a Revised Final Form Rulemaking Order (Revised Order), with clarifying revisions to the preamble and regulatory language, which it delivered to applicable legislative committees and the IRRC the following day. See Regulatory Analysis Form and Revised Final Form Rulemaking Order (Apr. 25, 2024). The IRRC has scheduled a public meeting on the Revised Order on June 20, 2024. If the rule proceeds further, it will be reviewed by the Office of Attorney General (for form and legality) and by the Office of Budget (to assess its fiscal impact), followed by its delivery to the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. The rule’s effective date is 60 days after publication in the Pennsylvania Bulletin.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Christina M. Puhnaty)
On March 16, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced in the Pennsylvania Bulletin an opportunity to submit public comments on the proposed revised General Plan Approval and/or General Operating Permit BAQ-GPA/GP-21, Coal-Mine Methane Enclosed Flare (Revised GP-21). See 54 Pa. Bull. 1429 (Mar. 16, 2024). As reported in Vol. 40, No. 3 (2023) of this Newsletter, PADEP previously published a final version of the General Plan Approval and/or General Operating Permit BAQ-GPA/GP-21, Coal-Mine Methane Enclosed Flare (GP-21) on September 23, 2023, which industry groups appealed.
According to PADEP’s technical support document (TSD) for the Revised GP-21, PADEP “was presented additional source and site-specific information after September 23, 2023, and upon review, decided certain changes were warranted to address the new information and intended use of GP-21.” TSD for the Revised GP-21, at 2. Although the TSD references changes to address the appellants’ concerns, it does not provide specific details about the appeal.
In the Revised GP-21, PADEP proposes to raise the best available technology (BAT) compliance requirement to limit NOx emissions to less than or equal to 0.15 lb/MMBtu, up from 0.08 lb/MMBtu. As explained in the TSD, PADEP determined that the 0.08 lb/MMBtu limit finalized in September was “not appropriate at the variable site conditions and the concentration of methane present in Pennsylvania mines.” Id. at 3. The Revised GP-21 also allows operators to install and operate methane gas monitors to continuously measure and record the coal-mine gas methane concentration. This option permits operators to forgo the prior requirement under GP-21 that they conduct quarterly gas analysis at the inlet gas stream to the enclosed flare to monitor heat input to the flare. PADEP explains in the TSD that it made this change in response to cost concerns raised by appellants and that the continuous monitoring option meets the intent of PADEP’s quarterly analysis requirement. Comments on the Revised GP-21 were due to PADEP by April 29, 2024.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Christina M. Puhnaty)
Pennsylvania Governor Josh Shapiro recently announced two pieces of legislation as part of his “commonsense energy plan” that would replace state efforts to join the Regional Greenhouse Gas Initiative (RGGI): (1) the Pennsylvania Climate Emissions Reduction Act (PACER) and (2) the Pennsylvania Reliable Energy Sustainability Standard (PRESS). Press Release, Gov’r Josh Shapiro, “Governor Josh Shapiro’s Energy Plan Builds on Pennsylvania’s Legacy of Energy Leadership by Protecting and Creating Energy Jobs and Lowering Electricity Costs for Consumers” (Mar. 13, 2024). According to the Shapiro administration, these Pennsylvania-specific programs are aimed at reducing greenhouse gas emissions, lowering utility bills for consumers, and creating and protecting jobs in the Commonwealth.
PACER was introduced as House Bill 2275 by Representative Aerion Abney and as Senate Bill 1191 by Senator Carolyn Comitta on May 8, 2024, along with many cosponsors. The legislation proposes to establish a Pennsylvania-run CO2 Budget Trading Program with its own auction of CO2 allowances. The bill directs the Pennsylvania Department of Environmental Protection (PADEP) to administer this program in accordance with parts of the regulation promulgated to implement the commonwealth’s participation in RGGI, 25 Pa. Code ch. 145, subch. E (CO2 Budget Trading Program), with some changes. “Budget sources”—fossil fuel-fired electricity generators with a nameplate capacity of 25 MW or more—would be required to comply with the program under PACER and purchase allowances (authorization to emit one ton of VOCs) equal to the tons of CO2 emitted annually.
The legislation also directs PADEP to review the base budget—the number of allowances available for auction set in the CO2 Budget Trading Program regulation—and consider the impact of the budget on jobs, consumers, and the environment to determine whether revisions to the budget are necessary.
If PADEP determines that budget revisions are needed, it would recommend a revised budget to the Environmental Hearing Board. The Environmental Hearing Board is permitted under the legislation to promulgate a final-omitted regulation under the Regulatory Review Act, effectively bypassing the typical rulemaking process, to amend 25 Pa. Code § 145.341 and adopt the recommended PACER emissions budget.
The proceeds from the auction of allowances would remain in Pennsylvania. The legislation requires that 70% of the proceeds be given to Pennsylvania consumers through an electric bill rebate. The remaining 30% of the proceeds would support projects to reduce air pollution, further reduce electric bills for low-income households, and invest in clean energy projects like carbon capture and storage.
PRESS was also introduced on May 8, 2024, as House Bill 2277 by Representative Danielle Friel Otten and as Senate Bill 1190 by Senator Steve Santarsiero, along with many cosponsors. PRESS will significantly increase the amount of renewable energy that utilities in Pennsylvania use by modifying and expanding Pennsylvania’s Alternative Energy Portfolio Standards (AEPS) first implemented two decades ago. The bill would add nuclear power and next-generation technologies like fusion to AEPS, as well as incentivize lower emissions for gas-fired power plants.
PRESS also provides for the investment of $5.1 billion in advanced energy technologies by 2035, incentivizing new development in Pennsylvania, with a focus on specific forms of energy development—primary battery storage, natural gas, and nuclear power—to establish reliable base-load power. PRESS establishes a target of 35% Tier I energy generation by 2035, with 10% Tier II generation and 5% Tier III generation.
Tier I includes solar photovoltaic and solar thermal energy, wind power, low-impact hydropower, geothermal energy, and biologically derived fugitive emissions. Tier II, which is limited to in-state resources, includes Tier I reliable energy sources in Pennsylvania, non-solar distributed generation systems, combined heat and power, demand-side management, large-scale hydropower, natural gas or coal using clean hydrogen (80%) co-fired blend or equivalent carbon intensity reduction technologies, fuel cells, biomass energy, and 24-hour storage co-located with a Tier I resource. Tier III, which is also limited to in-state resources, includes natural gas or coal using clean hydrogen (20%) co-fired blend or equivalent carbon intensity reduction technologies, waste coal, municipal solid waste, integrated combined coal gasification technology, and generation of electricity utilizing by-products of the pulping process and wood manufacturing process.
The Governor’s office anticipates that PRESS and PACER will create nearly 15,000 energy jobs and save Pennsylvania ratepayers $252 million during the first five years after passage. This legislation is still pending in the Pennsylvania General Assembly.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
