FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina F. Buchman)
On July 22, 2023, the Pennsylvania Department of Environmental Protection (PADEP) published its semi-annual Regulatory Update, which summarizes the current status of regulations under development or consideration (and includes recently completed regulations). See 53 Pa. Bull. 3905 (July 22, 2023). The Regulatory Update highlighted agency progress on two proposed rulemakings to amend 25 Pa. Code ch. 78, the regulations governing conventional oil and gas well operations, that have been in development since 2020.
The first proposed rulemaking, “Environmental Protection Performance Standards for Conventional Oil and Gas Operators” (#7-539), proposes to amend 25 Pa. Code ch. 78 to update the environmental protection performance standards for surface activities at conventional oil and gas well sites. Among other things, it would amend the chapter 78 regulations to update well reporting requirements and protection and replacement of public or private water supply regulations to align them with Act 13 of 2012 (which amended Pennsylvania’s Oil and Gas Act, 58 Pa. Cons. Stat. §§ 2301–3504). The proposed rule would also amend bonding requirements to align with Act 57 of 1997 (which amended the Administrative Code of 1929) and amends the regulations regarding well inactive status designations. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This proposed rulemaking was most recently presented at the December 16, 2021, Pennsylvania Grade Crude Development Advisory Council (CDAC) meeting and the proposed date of promulgation is Q4 2023. See 53 Pa. Bull. 3905 (July 22, 2023).
The second proposed rulemaking, “Waste Management and Related Issues at Conventional Oil and Gas Well Sites” (#7-540), addressed the proper management of waste at conventional oil and gas well sites. This rulemaking would amend chapter 78 to require operators to establish an area of review prior to initiating operations to identify any wells within certain distances of the planned operations, would require operators to develop preparedness, prevention, and contingency plans, and addresses proper handling, storage, processing, and disposal of waste generated by conventional oil and gas operations. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This proposed rulemaking was most recently presented at the February 16, 2023, CDAC meeting and the proposed date of promulgation is the first quarter of 2024.
As noted, PADEP’s Regulatory Update also highlighted completed regulations. Those included “Control of Emissions from Conventional Oil and Natural Gas Sources” (#7-580), a rulemaking to amend 25 Pa. Code ch. 129 to establish emissions limitations and reasonably available control technology requirements for volatile organic compounds and other pollutants applicable to existing conventional oil and natural gas operations. Pennsylvania’s Independent Regulatory Review Commission (IRRC) approved this rule on April 20, 2023. See IRRC, Approval Order, Regulation No. 7-580 (Apr. 20, 2023).
Copyright © 2023, 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 and Christina M. Puhnaty)
In May 2023, Governor Shapiro awarded $7.8 million resulting from the federal Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021), to fund projects for the reclamation of abandoned mine land, abatement of acid mine drainage through reclamation, or treatment of acid mine drainage through the construction, operation, or maintenance of an acid mine drainage treatment facility. See Press Release, Pa. Dep’t of Env’t Prot. (PADEP), “The Shapiro Administration Awards $7.8 Million Dollars in Grants for Environmental Restoration Projects” (May 26, 2023). As a result of the award, PADEP’s Bureau of Abandoned Mine Reclamation announced 16 projects across 12 Pennsylvania counties that PADEP will soon initiate. See id.; see also Guidance, PADEP, “2023 Abandoned Mine Land and Acid Mine Drainage Grant Program,” https://files.dep.state.pa.us/Mining/Abandoned%20Mine%20Reclamation/AbandonedMinePortalFiles/AML_AMD_GRANT_PROGRAM_GUIDANCE.pdf.
Copyright © 2023, 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 and Christina M. Puhnaty)
In early July 2023, the Pennsylvania Department of Environmental Protection (PADEP) issued a draft general permit, GP-21, and an accompanying technical support document for the regulation of emissions from coal mine methane enclosed flares. See PADEP’s Draft Permit and Technical Support Document at http://www.depgreenport.state.pa.us/elibrary/GetFolder?FolderID=860346. PADEP cites sections 6.1 and 6.6 of the Pennsylvania Air Pollution Control Act, 35 Pa. Stat. §§ 4006.1, .6, and section 504(d) of the Clean Air Act, 42 U.S.C. § 7661c(d), as its authority for regulating coal mine methane enclosed flares.
The draft GP-21 sets forth standardized terms and conditions related to best available technology (BAT), compliance certification, notification, recordkeeping, reporting, and source testing requirements for coal mine methane enclosed flares at natural minor facilities. The GP-21 would authorize the construction, modification, and/or operation of coal mine methane enclosed flares that have actual emissions greater than what PADEP considers de minimis emissions:
- 4 tons per year (tpy) of carbon monoxide from a single source and 20 tpy of carbon monoxide at the facility;
- 1 tpy of nitrogen oxide (NOx) from a single source and 5 tpy of NOx at the facility;
- 6 tpy of oxides of sulfur from a single source and 8 tpy of oxides of sulfur at the facility; 0.6 tpy of PM10 from a single source and 3 tpy of PM10 at the facility;
- 1 tpy of volatile organic compounds (VOCs) from a single source and 5 tpy of VOCs at the facility; and
- 5 tpy of a single hazardous air pollutant (HAP) from a single source and 1 tpy of multiple HAPs at the facility. The HAPs may not contain polychlorinated biphenyls, chromium, mercury, lead, polycyclic organic matter, dioxins, or furans.
BAT compliance requirements for sources covered by a GP-21 includes operating the flare according to vendor/manufacturer design standards designed to limit NOx emissions to be less than or equal to 0.08 lb/MMBtu and limit carbon monoxide emissions to less than or equal to 0.30 lb/MMBtu. The GP-21 will also require malfunction reporting, monthly visible emissions testing using EPA Method 22, and quarterly fractional gas analysis. If a coal mine methane enclosed flare cannot meet the requirements of the GP-21, a plan approval and/or operating permit issued in accordance with 25 Pa. Code ch. 127, subch. B and/or subch. F, will be required.
Copyright © 2023, 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 and Christina M. Puhnaty)
As previously reported in Vol. 39, No. 2 (2022) of this Newsletter, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule, or RGGI Rule, which links the commonwealth’s cap-and-trade program to the Regional Greenhouse Gas Initiative (RGGI), was published in the Pennsylvania Bulletin in April 2022. See 52 Pa. Bull. 2471 (Apr. 23, 2022). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid.
On May 24, 2023, the Pennsylvania Supreme Court heard arguments on whether a lower court was right to prevent Pennsylvania’s participation in RGGI. One of the predominant topics at oral argument was the issue of whether the credits that power plants would have to purchase under the regulation are considered a tax or a fee. The petitioners believe the credits to be an unconditional tax while the Commonwealth contends that the credits are a fee as authorized under the Air Pollution Control Act.
The corresponding lower court case was filed on April 25, 2022, by owners of coal-fired power plants and other stakeholders requesting review and a temporary injunction, which was initially granted. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022); Vol. 39, No. 3 (2022) of this Newsletter. On March 24, 2023, the Supreme Court of Pennsylvania granted requests to dismiss the preliminary injunction because the petitioners had failed to pay the bond required to secure the preliminary injunction. See Vol. 40, No. 2 (2023) of this Newsletter. Petitioner Bowfin KeyCon Holdings, LLC, which has an interest in some of the subject coal-fired power plants, filed an appeal of the bond amount in summer 2022, claiming that the bond was infeasible or impossible to pay and asked the court to reduce it to a negligible amount.
The state’s future plans for its RGGI regulation remain unclear, but it is unlikely to take action prior to a decision on the merits. Further information regarding the rule and the history of the rulemaking can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
Babst Calland today published its 13th annual energy industry report: The 2023 Babst Calland Report – Legal & Regulatory Perspectives for the Energy Industry. The Report provides insights on some of the most critical issues facing the industry.
This edition of The Babst Calland Report also features a special video briefing from U.S. Senator Barrasso (R-WY), ranking member of the Senate Committee on Energy and Natural Resources, who is at the forefront on federal energy policy.
Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. energy sector remains as dynamic as ever. New energy policies and legislation are changing the regulatory landscape and affecting all parts of the energy value chain. It is more important than ever for energy executives and their counsel to stay on top of federal, state, and local regulatory developments, legal risks, and the related business implications.”
This year’s Report highlights various challenges and opportunities in the energy sector, including:
- Hydrogen and Carbon Capture and Storage (CCS) are getting a boost as tools for reducing carbon emissions. The 2021 Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act (IRA) provided billions in funding in the form of tax credits, grants, and loans for hydrogen and CCS technologies.
- Climate policy and Environmental, Social and Governance (ESG)-related practices may trigger new reporting requirements imposed by federal and state regulatory agencies. With increased focus on reducing greenhouse gas, particularly methane emissions from the energy industry, several proposed federal agency rules could make ESG reporting mandatory for certain sectors.
- Environmental Justice (EJ) efforts continue to expand as a priority for federal and state agencies following directives from the Biden Administration. The IRA made about $3 billion in funding available for EJ grants. While adoption of the EPA’s proposed budget for 2024 is far from guaranteed, it demonstrates the current administration’s commitment to funding EJ efforts.
- Despite the federal government’s policy drive for growth in the low carbon energy sector, practical issues remain. Grid interconnection and project permitting are driving substantial costs and delays. And many of these problems aren’t limited to just renewables, with permitting headwinds facing all types of energy projects, including CCS, pipelines and oil and gas development. Absent significant reforms to reduce permitting timelines and serial litigation, many of these unprecedented federal incentives may go untapped.
- The Appalachian Basin, like most of the energy producing regions of the U.S., continues to see a variety of novel litigation. The influx of “new” entrants to the energy litigation field has resulted in many new suits asserting variations on traditional energy litigation themes.
- Pennsylvania’s Amended Breach of Personal Information Notification Act (BPINA) went into effect on May 2, 2023. Any companies that do business in Pennsylvania, maintain data belonging to Pennsylvania residents, or do business with the Commonwealth or its agencies, should become familiar with these new data requirements, and review their security-related policies, practices, and incident response plans to ensure compliance with the Amended BPINA.
To request a copy of The 2023 Babst Calland Report, click here.
The Babst Calland Report is provided for informational purposes for our clients and friends and does not constitute legal advice.
Smart Business
(By Adam Burroughs featuring Joseph Pope)
The commercial real estate market is facing a number of challenges. Among the most pressing are the new market realities being reflected in certain property insurance coverages that are affecting borrowers’ new and existing loans.
“Certain long-standing insurance requirements simply are not available any longer or are undergoing significant adjustment,” says Joseph A. Pope, an attorney with Babst Calland. “It’s playing out in real time between borrowers and their attorneys and lenders.”
Smart Business spoke with Pope about how changes in property insurance coverage are affecting commercial real estate lending, and what borrowers need to know about it.
How is property insurance changing?
Certain property insurance coverage is no longer available that had historically been part of lenders’ standard coverage requirements. Sometimes those considerations are geographic. For instance, in Florida there are types of property insurance that are either no longer being offered, or providers won’t cover certain properties as insurance companies have essentially hit their maximum amount of risk in the state. In Midwest and Gulf Coast states, changes to hail, windstorm and named storm coverage policies are affecting deductibles and certain payouts for these specific coverages. Similar changes are affecting property insurance in essentially all U.S. markets, including Pennsylvania, whether by way of loss of coverage, higher deductibles or increased premiums.
What now must be negotiated with lenders?
Property owners with existing loans in affected jurisdictions now must explain to their lenders that they may no longer be able to fulfill certain loan requirements that are predicated on insurance coverage. Lenders have been slow to proactively update their previous standard minimum requirements on property loans and there’s no guaranty they will do so in a borrower-friendly way.
Existing borrowers should talk with their lender about any modifications that need to be made to their insurance requirements because of new market realities before delivering an insurance certificate that doesn’t comply with the lender’s current loan requirements. An attorney can offer the best advice to borrowers that are not able to provide insurance that complies because of a market-forced change.
Borrowers looking for a new commercial property loan will need to address these issues early in the application process because it may require getting a lender to come to grips with the borrower’s ability to secure certain insurance coverage. Having coverage preapproved at the time of application avoids the headache of having to negotiate it later.
Why should borrowers involve their attorney in the application process?
When looking at lenders, companies often look first at interest rates. Given the rise in rates, certain non-bank lenders, such as Life Companies, have been able to offer more appealing rates for commercial property loans. But while the lower rates are attractive, they’re likely to come with more points of legal negotiation upfront, including as early as the application process. This can amount to the application for the loan becoming an enforceable loan document.
With certain lenders, potential borrowers may now expect to receive loan applications that are many pages long with a number of binding boilerplate clauses, many of which were historically negotiated during the loan documentation process. When this is the case, they should run it by their legal counsel to ensure they’re clear on what they’re agreeing to. Counsel who is familiar with these types of documents can identify provisions and exceptions that could be unfavorable to the borrower.
While the lower rate a non-bank lender can offer is preferred, there can be more rigidity in their lending process vs. that of a conduit lender or even a traditional bank. In either case, borrowers should involve their attorney in the process early to avoid inadvertently binding themselves to any kind of loan provisions in the application process. The faster that a borrower can identify, address and negotiate those issues, the more leverage they’ll have to negotiate, and the more likely an efficient, timely closing will occur.
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Legal Intelligencer
(by John McCreary and Janet Meub)
On August 29, 2023, the United States Department of Labor (DOL) published a Notice of Proposed Rulemaking that would permit union representatives and other nonemployees to participate in workplace inspections conducted by Occupational Safety and Health Act Compliance and Safety Officers (CSHOs).
Section 8(e) of the Occupational Safety and Health Act (OSHA) currently allows “a representative of the employer and a representative authorized by employees the opportunity to accompany CHSOs during the physical inspection of the workplace for the purpose of aiding the inspection.” The OSHA and 29 CFR part 1903 give CSHOs the authority to resolve any disputes about who the employer and employee representatives are and to deny any person from participating in the inspection whose conduct interferes with a fair and orderly investigation. The CSHO also has the authority to permit additional employer representatives and representative authorized by employees to participate in the workplace walk-throughs. See 29 CFR 1903.8(a).
OSHA has historically mandated that the representative authorized by employees for a worksite inspection be an actual employee. Over the years, OSHA has offered guidance on its interpretation of section 1903.8(c) and the definition of “representative authorized by employees”. In 2003, OSHA issued a letter of interpretation (the Racic Letter) in response to the question of whether a union representative who files a complaint on behalf of a single worker could act as a walk-through inspection representative in a workplace that had no labor agreement. OSHA determined that there was “no provision for a walkaround representative who has filed a complaint on behalf of an employee of the workplace.” See, ID OSHA – 2023-0008-0002. Ten years later, in 2013, OSHA issued a second letter of interpretation (the Sallman Letter) stating that workers at a worksite without a collective bargaining agreement could designate a union or community organization for purposes of an OHSA walk-through inspection as long as it had been “authorized by employees to serve as their representative”. OSHA then withdrew the Racic Letter as confusing.
In October 2015, OSHA updated its Field Operations Manual (FOM) to incorporate its interpretation of 29 CFR 1903.8(c). In doing so, it stated that there may be instances where workers without a certified or recognized bargaining agent would benefit from a third party representing them at an OSHA inspection. However, in 2016, The National Federation of Independent Business (NFIB), challenged the Sallman Letter by filing suit in the Northern District of Texas arguing that the Sallman Letter was at odds with OSHA regulations, should have been subject to notice and comment rulemaking, and that it exceeded OSHA’s statutory authority. The district court concluded: 1) that the Sallman Letter contradicted §1903.8(c) which clearly required that the employee representative be an employee himself; and 2) that a change to a regulation must be subject to notice and comment rulemaking. The court did, however, reject the NFIB’s argument that the Sallman Letter conflicted with OSHA itself, concluding that OSHA requires the employee’s representative to be authorized by the employees, not necessarily that the representative be an employee himself. See, Nat’l Fed’n of Indep. Bus. v. Dougherty, 2017 WL 1194666 (N.D. Tex. Feb. 3, 2017). In the wake of that decision, OSHA rescinded the Sallman Letter and removed the language referencing it in the FOM.
Having now, engaged in the proper notice and comment rulemaking process, OSHA’s proposed rule change seeks to broaden the types of individuals who may serve as a representative of the employees during OSHA’s physical inspections of the workplace:
- The representative authorized by the employees may be an employee OR a third party (i.e., a union representative, a bilingual interpreter, an expert on a particular piece of equipment, occupational hygienist, etc.).
- A third-party representative authorized by employees may be reasonably necessary to conduct an effective and thorough physical workplace inspection by virtue of her knowledge, skills, or experience.
The proposed change would permit a union representative, even where employees are not represented by a union or in the absence of a collective bargaining agreement, to participate in an OSHA workplace inspection. The DOL and OSHA believe that the rule change strengthens OSHA’s ability to obtain critical information regarding worksite conditions and hazards everywhere – not just in facilities where the employees are represented by unions. Critics of the proposed rule change argue that OSHA is promoting infiltration of private employer property for unionization efforts.
The DOL seeks written comments on the proposed rule change by all stakeholders by October 30, 2023. If you have any questions about the DOL’s proposed rule change or OSHA workplace inspections, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com or Janet K. Meub at (412) 394-6506 or jmeub@babstcalland.com.
John A. McCreary, Jr. is a shareholder in the employment and labor and public sector groups of Babst Calland. His practice spans the full range of issues encountered in the employment setting, including labor contract negotiation and administration, grievance arbitration, benefit plan issues, disputes over hiring practices, wrongful termination claims, as well as litigation over pension and benefit entitlements. Contact him at 412-394-6695 or jmccreary@babstcalland.com.
Janet Meub is senior counsel in the Litigation and Employment and Labor groups of Babst Calland. Ms. Meub has significant experience in the areas of employment and labor law, professional liability defense, insurance coverage and bad faith litigation, toxic tort litigation, nursing home negligence, and medical malpractice defense. She has a diversified practice that includes defending employers, healthcare providers, law enforcement and other professionals, and non-profits, at all levels of civil litigation through trial. Contact her at 412-394-6506 or jmeub@babstcalland.com.
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Reprinted with permission from the September 14, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
PIOGA Press
(By Jessica Deyoe)
On August 17, 2023, U.S. Environmental Protection Agency (EPA) announced its National Enforcement and Compliance Initiatives (NECIs) for Fiscal Years 2024-20271. For over 25 years, EPA has reviewed its priorities and set new enforcement and compliance initiatives every four years. Though EPA is charged with the enforcement of many environmental statutes, it prioritizes certain initiatives to address what it perceives to be the most serious and widespread environmental problems facing the United States.
While the EPA is preparing for the next four-year cycle, it is still enforcing under the current set of NECIs for Fiscal Years 2020-2023. The current six NECIs are:
- Creating Cleaner Air for Communities by Reducing Excess Emissions of Harmful Pollutants from Stationary Sources;
- Reducing Hazardous Air Emissions from Hazardous Waste Facilities;
- Stopping Aftermarket Defeat Devices for Vehicles and Engines;
- Reducing Significant Noncompliance with National Pollutant Discharge Elimination Systems Permits;
- Reducing Noncompliance with Drinking Water Standards at Community Water Systems; and
- Reducing Risks of Accidental Releases at Industrial and Chemical Facilities.
To determine initiatives for FY 2024-2027 cycle, EPA identified three criteria to evaluate the FY 2020-2023 initiatives and to consider new initiatives: (1) the need to address “serious and widespread environmental issues and significant noncompliance,” with particular focus on overburdened and disadvantaged communities; (2) a focus on areas where federal enforcement is needed to “hold polluters accountable” in order to “promote a level playing field”; and (3) alignment with EPA’s Strategic Plan Fiscal Year 2022-2026.
The FY 2024-2027 NECIs selected by EPA focus on three of EPA’s Strategic Plan goals in particular: (1) Tackle the Climate Crisis, (2) Take Decisive Action to Advance Environmental Justice, and (3) Enforce Environmental Laws and Ensure Compliance.
EPA solicited comments on whether to continue current NECIs, modify them, or conclude them. After consideration of public comments, EPA kept three initiatives from the current NECIs and prioritized, for the first time, three new national initiatives: mitigating climate change, PFAS exposure, and protecting communities from carcinogenic coal ash contamination.
In addition, EPA is incorporating environmental justice considerations into all six initiatives for FY 2024-2027.
The Fiscal Year 2024-2027 NECIs, described in greater detail below, are:
- Mitigating Climate Change (new)
- Addressing Exposure to PFAS (new)
- Protecting Communities from Coal Ash Contamination (new)
- Reducing Air Toxics in Overburdened Communities (modified from FY 2020-2023)
- Increasing Compliance with Drinking Water Standards (continued from FY 2020-2023)
- Chemical Accident Risk Reduction (continued from FY 2020-2023)
EPA returned three of its FY 2020-2023 initiatives to the standard “core” enforcement program where they will remain important areas for enforcement and compliance, even though they will no longer be national initiatives.
Fiscal Years 2024-2027 NECIs:
- Mitigating Climate Change
For the first time, climate change is included in EPA’s NECIs as a priority. EPA intends the enforcement and compliance efforts of this initiative to reduce greenhouse gas emissions. This initiative will focus on what EPA considers to be three of the biggest contributors to climate change: (1) methane emissions from the oil and gas industry, (2) methane emissions from landfills, and (3) the use, production, and importation of hydrofluorocarbons.
As part of this initiative, EPA will use its enforcement and compliance tools to reduce greenhouse gas emissions while addressing significant documented noncompliance in these industry sectors. By focusing on enforcement of long-standing air pollution requirements, such as New Source Performance Standards at oil and gas facilities and landfills, EPA aims to achieve the ancillary benefit of reducing methane emissions. Significantly, EPA also indicated that if they promulgate new rules to reduce methane emissions in the future, enforcement of those requirements could be included in this initiative.
- Addressing Exposure to PFAS
Also for the first time, EPA included PFAS contamination as a top priority, in light of the widespread presence of PFAS in air, water, and land throughout the United States. The primary goals of this initiative, are to (1) achieve site characterization, (2) control ongoing releases that pose a threat to human health and the environment, (3) ensure compliance with permits and other agreements to prevent and address PFAs contamination, and (4) address endangerment issues as they arise.
The initial goals outlined by EPA to support their primary goals include (1) identifying and characterizing the extent of PFAS contamination near PFAS manufacturing/use facilities, (2) performing oversight of PFAS characterization and control activities at federal facilities to serve as a model for regulated community, and (3) continuing to address violations and imminent and substantial endangerment situations by major PFAS manufacturers, federal facilities, and other industrial parties who significantly contribute to PFAS contamination. Beginning in FY 2025, EPA will build upon these initial goals by taking additional enforcement actions where appropriate.
EPA also indicated that if EPA designates PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), this NECI will focus on implementing EPA’s PFAS Strategic Roadmap and holding those responsible for significantly contributing to the release of PFAS in the environment. EPA specifically noted that it does not intend to pursue “entities where equitable factors do not support CERCLA responsibility, such as farmers, water utilities, airports, or local fire departments.”
- Protecting Communities from Coal Ash Contamination
The third new initiative for FY 2024-2027 will focus on coal combustion residuals (CCR), which are found throughout the country in onsite landfills, settling ponds, and other coal plant surface impoundments. This initiative will focus on the approximately 300 facilities EPA has identified nationwide that are collectively responsible for approximately 775 coal ash units. As part of this initiative, EPA notes that neighborhoods located near these facilities are often communities with environmental justice concerns. This NECI will focus on conducting investigations, particularly at coal ash facilities impacting overburdened or vulnerable communities, taking enforcement action at coal ash facilities in noncompliance, and protecting/cleaning contaminated groundwater, surface water, and drinking water resources.
- Reducing Air Toxics in Overburdened Communities
This initiative is a modification of EPA’s existing NECI Creating Cleaner Air for Communities. The original initiative addressed the adverse health and environmental effects from exceedances of the National Ambient Air Quality Standard (NAAQS) and health impacts on communities from emissions of hazardous air pollutants (HAPs). Recognizing the need to address environmental justice concerns for communities that suffer impacts from high levels or multiple sources of air pollution, the modified NECI will focus on overburdened communities selected by each EPA Region that are facing high levels of air pollution from HAPs. Each Region will make these determinations in partnership with states based on fenceline monitoring and other tools that detect air pollution. It will target, investigate, and address noncompliance with clean air standards designed to protect public health, with a focus on sources of HAPs in communities already highly burdened with pollution impacts.
- Increasing Compliance with Drinking Water Standards
This initiative, which began in FY 2020, seeks to ensure that the approximately 50,000 regulated drinking water systems, Community Water Systems (CWSs), comply with the Safe Drinking Water Act (SDWA). EPA noted that, while considerable progress has been made in improving SDWA compliance, further improvement of compliance is needed. Therefore, EPA will ramp up its field presence, take impactful enforcement to increase compliance, and offer more compliance assistance to prevent and address public health risks. In addition, EPA will continue to support and work with states, Tribes, territories, local governments, and the regulated community to ensure delivery of safe water to communities.
- Chemical Accident Risk Reduction
This initiative, continued from the FY 2020-2023 cycle, is intended to reduce the likelihood of catastrophic chemical releases, and to address the problem of avoidable chemical incidents that continue to occur throughout the county. EPA has found significant noncompliance by companies that handle hazardous substances and will target companies that do not comply with risk management requirements established to protect public health and safety from hazardous chemical releases. This NECI will focus on inspecting and addressing noncompliance at facilities using two hazardous substances in particular: anhydrous ammonia and hydrogen fluoride. Maintaining an awareness of the NECIs as they are developed and implemented can help the regulated community understand where EPA has identified significant nationwide noncompliance. With this knowledge, companies can identify aspects of their operations that fall within the ambit of the NECIs and evaluate internal compliance programs as appropriate. Additionally, companies should be aware that EPA will occasionally prepare updated guidance documents related to components of the NECIs in an effort to assist the regulated community in complying with the underlying environmental laws and regulations.
1 Memorandum from David M. Ulhmann to Regional Administrators, “FY 2024-2027 National Enforcement and Compliance Initiatives” (Aug. 17, 2023), available at https://www.epa.gov/system/files/documents/2023-08/fy2024-27necis.pdf
EPA, FY2022-2026 Strategic Plan, (March 2022) available at FY 2022-2026 EPA Strategic Plan. (https://www.epa.gov/system/files/documents/2022-03/fy-2022-2026-epa-strategic-plan.pdf)
EPA, PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024, available at https://www.epa.gov/system/files/documents/2021-10/pfas-roadmap_final-508.pdf.
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Reprinted with permission from the September 2023 issue of The PIOGA Press. All rights reserved.
TEQ Magazine
(By Kevin Douglass)
Many business owners are blindsided when a co-owner files a lawsuit against them detailing a list of grievances.
When owners form a new business or an owner is added to an existing ownership group, the stakeholders are typically optimistic about the future. Owners often do not discuss or consider the possibility of future differences and may not address them in their written agreements.
Consequently, when a disagreement inevitably arises, business owners frequently choose to minimize or completely ignore the dispute until considerable damage is done to the owners’ relationship, which allows these matters to fester and eventually disrupt the business. But with the right preventive approach, these challenges can be identified and resolved quickly and cost effectively.
What can trigger disagreements among owners?
One common trigger is finances. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. In contrast, if the business begins to struggle, owners’ compensation, distributions and benefits may need to be decreased, and tough decisions made about the company’s direction.
Other reasons for conflict can include a change in an owner’s level of commitment or job performance, an owner’s desire for more authority and input into company management, or conflicting business strategies. Changes in an owner’s personal life may also spark controversy, such as the involvement of a new family member or owner in the business, changes in an owner’s personal finances or simply the advancing age of the company’s primary manager(s).
What are the risks of ignoring owner disagreements?
Owner disagreements can spill over into a business’s operations and finances. Employees, lenders, customers, vendors and others can easily become aware of, and even embroiled in, the drama. They may be confused about which owner is in charge. If left unchecked, the reputation and health of the business may be threatened. Just as significantly, relationships on a professional, personal and family level may be permanently impacted, if not addressed thoughtfully and with sensitivity.
Some owners resort to litigation to obtain the satisfaction they believe they are entitled to, but the expense, stress and distraction of litigation is rarely the best route to resolve differences.
How can owners resolve their underlying issues quickly?
Do not ignore the issue. Instead, take the necessary steps to resolve potential conflicts as efficiently as possible.
Take the time to understand your legal and strategic options. Consult with an independent attorney who can objectively assess the strength of your position, as well as your goals, risks and opportunities. The company attorney’s primary obligation is to act in the best interest of the business, and therefore, may not be in the best position to give an owner personal legal advice.
After fully vetting an owner’s situation, finding a solution may include answering difficult questions. Do the owners share the same vision for the company’s future? Does the ownership, compensation or governance structure need to be redefined? Are new leaders and investors needed? Do the owners want to continue in business together, or separate via a buyout? Should the business be sold? Should a strategic or succession plan be developed, and if so, what should it look like?
Any resolution of issues involving owner conflict should strive to satisfy, or at least account for, the concerns of all owners and interested parties — even if they involve the buyout of an owner. Although litigation can be an effective way to resolve a dispute as a last resort, owners should seriously explore more cost-effective options to address conflict and strive to develop workable solutions that ensure the protection and preservation of the business.
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Developing Pittsburgh
(By Michael Korns)
It is a tough market for developers, with both supply chain issues and inflation limiting your options. But luckily, you have found a great piece of property to develop. You have the perfect use in mind; you have your financing lined up; your engineers and architects have determined that you should have no issues with stormwater or permitting; utilities are available; and everything is good to go. You are deep into the due diligence period, perhaps even past it, when you get “the call” with news you never want to hear: “Just a heads up, there may be a problem with the zoning.”
Of course, you looked at the zoning already. You checked the Use Table for this zoning, and you saw your use was listed. Or at least, something close enough was listed. And sure, the definition in the ordinance is a bit strange, and there are some nonsensical technical requirements that are confusing, but there must be a solution? But now the municipality is telling you that you are looking at months of hearings and approvals, and you are stuck in limbo and bleeding money with no guarantee this project will ever get off the ground.
Does this sound realistic to you? Unfortunately, as a land use and zoning attorney, it is all too realistic to me. Many times, when a developer calls, they are facing a situation similar to the one described above. Unfortunately, at this stage, there may be no way to save the project. Even if the issue can be resolved, the project can be significantly delayed, and in a business where timing is everything, a “perfect project” can turn into a black hole waiting for the legal process to unfold.
To prevent this, developers need to rethink their approach to land use and zoning. Rather than thinking of zoning as a middle timeline issue, instead, zoning must be one of the very first questions to be considered on any project. After all, zoning can tell you not just what you cannot do with a property, but more importantly what you can do, and developers should be looking at an ordinance with an eye on all options.
Rule 1 – Know Your Use
Only the most inexperienced developer would fail to check the Use Table for the property they want to develop. But a zoning use definition must be parsed very carefully before a commitment of funds. Although there are some commonalities among zoning ordinances, and ordinances can borrow from one another, across Pennsylvania, there are hundreds of zoning ordinances, each with its own quirks, rules, and definitions. Moreover, when each ordinance was adopted, it reflected the priorities of the governing body at that time. In some cases, that can mean certain definitions will be painfully exacting and detailed, likely reflecting some controversy at the time of drafting, while on the other hand, large swaths of the ordinance may have been copied from another municipality with barely a glance.
This situation occurs frequently with new and novel forms of business or entertainment. A zoning ordinance may have a provision for a recreation facility, but does that include a high-end bowling alley? A concert venue? A sports training facility? Does a co-working facility fall under an office definition? What about residential short-term rentals? Is it defined at all? Does it fall under a hotel use? It is critically important that you do not attempt to simply assume what the drafters must have “meant” by the ordinance and focus on what the definition actually says.
As municipal solicitors, we have reviewed many plans and discovered that the applicant had only a vague sense of how the property would be used in practice. While they knew what they wanted to build, they didn’t know how it would be used, which is the critical question when seeking a zoning use approval. We have reviewed applications where the applicant had no answer to questions such as what types of activities would be on the property, whether there would be tournaments or spectators, whether there would be memberships or classes, the number of people to be on the site at any one time, hours of operations, types of equipment, whether food would be permitted, whether alcohol would be permitted, or whether indoor or outdoor activities would occur. Many of these applicants had spent significant funds on property acquisition and site design yet could not provide the municipality with the bare minimum of information necessary to determine whether zoning approval was even possible at this location.
To avoid this, it is usually best to do everything possible to make your project fit the ordinance, rather than the other way around. Look at how the ordinance defines your use, and follow that to the best of your ability, rather than stretch a definition. An early meeting with the municipality to see how they view the use is extremely valuable. If this is early enough in the project, it may be possible to change the project parameters to meet the municipality’s expectations, while later, you may have already applied for other permits or financing which limit your options. One extremely valuable thing to remember is that you can apply for and receive these approvals even before you own the property. So long as you have the permission of the current property owner or a valid sales agreement, you can go through the entire approval process before taking on ownership liability at all.
Rule 2 – Sweat the Small Stuff… Performance Standards Matter
It is very important to understand not just the definition of your use, but also the performance standards that apply. Just to take one very straightforward rule, consider all the issues that can come from a setback requirement. If there is a setback rule that applies to structures, how is a structure defined? Is there a specific definition of “side yard”? If a setback from a road is required, does that apply to an unopened street or abandoned alley? What about easements? What is permitted in the setbacks? Do things like air conditioning units count for setback purposes? None of those are hypothetical questions, and each reflects a question we have been asked to examine on a specific property. There are countless other questions that can be asked for this issue alone, and each performance requirement, whether for landscaping, parking, or stormwater, brings its own set of questions and issues.
Regardless of what is in the zoning ordinance, there is at least one form of relief that is always available: a variance. However, as a variance is a request for relief from a zoning ordinance, the burden for the applicant is very high. We once handled a matter for a developer who had already applied for seven different variances for a single project in the City of Pittsburgh. Besides needing to meet the legal standard for each one, this total list of requested variances gives ammunition to NIMBY (“Not In My Back Yard”) groups eager to argue that the needed variances were entirely out of character for the ordinances. This matter was appealed by a NIMBY property owner.
Rather than continuing the appeal, we did a new review of the project, this time with zoning as a key criterion for how the entire project would be designed. After a full review and analysis of the ordinance and the project, we were able to eliminate six of the seven variances to meet the ordinances’ performance standards and make minor tweaks to the design that did not impact the core project. This allowed us to clearly articulate that we worked within the ordinance and had designed a project that worked with, rather than fought against, the ordinance. When this new design was appealed, we prevailed in the Commonwealth Court. During oral argument, one judge stopped my argument simply to declare, “My gosh, you’ve done everything they asked for. What more can you do?” It was no surprise that we won the case and were approved for a large new commercial project in one of the hardest-to-build neighborhoods in the City of Pittsburgh.
Rule 3 – The Sunk Cost Fallacy
Sometimes, no matter how carefully and creatively you review the ordinance, the truth is, your project is just not going to fit with the ordinance as drafted. In this case, the variance option should be considered. If you are going with this option, it is critical that you have sought the minimum variance possible. If you cannot comply with the ordinance entirely, at least showing that you came as close as possible is still extremely valuable.
But you may find that even seeking a variance is a Hail Mary play. You need to be prepared to walk away. If you do not own the property in question, that may be easier. If you do own the parcel, then you need to look back at the Use Table to see what can be done. Every property has some authorized uses, and if it did not, then you would have an argument that the property has been legally taken by the municipality. Having blocked one project, the municipality may be wary of blocking a second one, particularly if it’s well-tailored to the zoning ordinance. You might also consider a substantive validity challenge, a rezoning, or a curative amendment. Avoid tunnel vision and look to the best use that fits the ordinance, even if it is not what you originally planned.
Conclusion
Navigating the complexities of zoning and land use is an essential endeavor for developers seeking success in their projects. It is crucial for developers to adopt a proactive approach to zoning from the very beginning. By thoroughly understanding the specific rules, definitions, and performance standards within each municipality’s ordinance, developers can avoid potential pitfalls and align their projects with the local requirements. By working together with your land use attorney, you can avoid the nasty pitfalls of a zoning surprise and spare yourself from getting “the call.”
Michael Korns is senior counsel in the law firm Babst Calland. For questions related to the topic addressed in this article, contact Michael Korns at mkorns@babstcalland.com or 412.394.6440.
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Smart Business
(By Adam Burroughs featuring Alex Farone)
Many employers have questions about changes, both made and proposed, to certain onboarding issues — an update to the I-9 verification process as well as proposed federal changes to non-competition agreements.
Smart Business spoke with Alexandra G. Farone, Attorney at Law at Babst Calland, about what employers need to know about the I-9 changes and what’s happening with non-compete agreements.
What’s happening with the I-9 verification process?
The I-9 employment eligibility verification process involves looking at documents to confirm the employee is who they say they are and that they are authorized to work in the U.S. The longstanding requirement that employers review those documents in person was relaxed during the COVID-19 pandemic, allowing it to be done remotely. As of August 1, 2023, the categorical relaxation of the in-person verification requirement ended. Employers now are required to resume in-person I-9 verification for all new employees, whether themselves or via an authorized agent, unless they are a registered user of the web-based platform E-Verify in good standing.
In addition, employers are also now required to re-verify in person anyone who had been verified remotely during the COVID-19 pandemic, and to do so by the end of August.
To address the challenge of re-verifying remote employees, employers who are not registered E-Verify users can designate an ‘authorized agent’ — who can be anyone, regardless of qualification — to act on behalf of the company to verify in person the employee’s identification and work authorization documents. But no matter who acts as the agent, the liability for inaccurate verification remains solely with the employer. So, if an agent verified someone who is not actually authorized to work in the U.S., the employer is going to be penalized.
Additionally, a new I-9 form just went live on August 1. There are several changes to the form, but most relevant is the ability for E-Verify employers to indicate remote examination of I-9 documents. The previous form can be used through October 31, 2023.
What’s happening with non-compete agreements?
Earlier this year, the Federal Trade Commission issued a notice of proposed rulemaking on a potential national ban on non-competes, making the assertion that preliminary findings indicate that non-competes constitute an unfair method of competition, in violation of Section 5 of the Federal Trade Commission Act. Also, the General Counsel for the National Labor Relations Board issued guidance this year that indicates some existing non-compete provisions might violate the National Labor Relations Act. These announcements, along with emerging or imminent bans on non-competes in other jurisdictions have fueled rumors and misunderstandings among employers and employees alike that non-competes are already outlawed nationally.
This is not the case. No changes have been made nationally as to the legality of non-competes. Right now, if an employer’s city or state has not banned non-competes, the status quo is still in place, which is the case for Pennsylvania.
The ban that the FTC is contemplating is very broad. It would apply not only to employees, but also to independent contractors and unpaid volunteers. Existing non-competes would need to be rescinded, as they could legally no longer be in effect.
It looks as if the FTC is going to delay a vote on a final rule until next year. In the meantime, employers that use non-competes should begin thinking strategically about implementing non-disclosure agreements and similar protective measures in case the proposed ban does become law.
Who should employers talk with if they have questions?
Employers that are unsure about what’s happening with these onboarding issues should call their employment attorney because the answers can be nuanced depending on factors such as the type of employer or whether a collective bargaining agreement is in place. It’s best that employers talk with a legal expert to make sure that they’re doing everything correctly at the outset of any onboarding issues, so that they can give the most accurate answers back to their employees and begin to plan for the future.
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Pretrial Practice & Discovery
American Bar Association Litigation Section
(By Christina Manfredi McKinley and Joseph Schaeffer)
Mallory is undoubtedly a significant development in the Supreme Court’s personal jurisdiction jurisprudence, but its practical impact remains to be seen.
The Fourteenth Amendment to the U.S. Constitution provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” U.S. Const. art. XIV, § 1. For corporations, the question of what constitutes due process—and, specifically, where the corporation can be sued for conduct unrelated to the 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 forums 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 and where it maintains its principal place of business. This test has been a practical one and has provided (some degree of) both 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. 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. Mallory, 600 U.S. ____, slip op. (2023).
Personal and General Jurisdiction
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 the parties in front of it. See id. slip op. at 2 (Barret, J., dissenting). 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. Id. at 13. 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. Id. This distinction has been part of the legal canon since the Supreme Court’s landmark 1945 decision in International Shoe Co. v. State of Washington, 326 U.S. 310 (1945).
Overview of Mallory
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 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. Cons. Stat. § 411(a). But Pennsylvania’s unique corporate registration scheme then takes it one step further: under 42 Pa. Cons. Stat. § 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 section 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 section 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 section 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.
Supreme Court Decision in Mallory
After granting certiorari, the U.S. Supreme Court reversed. Writing for a four-justice plurality, Justice Neil Gorsuch concluded that the case was controlled by Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co. Pennsylvania Fire, 243 U.S. 93 (1917). 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 section 5301(b), required an out-of-state corporation desiring to transact business in Missouri to consent to personal jurisdiction over any suit. See generally id.
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 Amy Coney Barrett, joined by Chief Justice John Roberts and Justices Elena Kagan and Brett 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. Mallory, slip op. at 15 (Barrett, J., dissenting). 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.
Limited Impact of Mallory?
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 its state, 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 section 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. Id. at 4 n.2. And third, Justice Samuel Alito, though concurring in judgment, wrote separately to express his view that section 5301(b) would be struck down under that as-yet-undecided dormant Commerce Clause challenge. In short, there is a fair possibility that section 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 presenting a corporate defendant with an impossible choice: either decline to do business in a foreign (and sometimes faraway) 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.
Conclusion
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.
Christina Manfredi McKinley and Joseph Schaeffer are shareholders at Babst Calland in Pittsburgh, Pennsylvania.
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© 2023. Where Can a Corporation Be Sued for, Well, Anything? (An Evolving Test), Pretrial Practice & Discovery, American Bar Association Litigation Section, August 24, 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.
Legal Intelligencer
(by Varun Shekhar)
The U.S. Environmental Protection Agency (EPA) has finalized rulemaking originally proposed in 2016 to remove “emergency” affirmative defense provisions from its Clean Air Act (CAA) permitting regulations for “major sources”. On July 21, 2023, EPA published a Final Rule amending 40 C.F.R. §§ 70.6 and 71.6 to delete the emergency affirmative defense provisions in light of decisions from the U.S. Court of Appeals for the DC Circuit.
The emergency affirmative defense provision under 40 C.F.R. Parts 70 and 71 originated from rulemaking promulgated by EPA in 1992. This rulemaking was intended to implement the 1990 amendments to the CAA which established Title V, including requirements for operating permitting programs as applicable to among other things, “major sources”. The CAA defines a major source as “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant…”. In addition, the CAA also includes as major sources those “that emit[] or ha[ve] the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants.”
As part of the 1992 rulemaking, EPA included at 40 C.F.R. §§ 70.6(g) (for state operating permitting programs) and 71.6(g) (for federal operating permitting programs) provisions allowing for an operator to assert an affirmative defense for any unavoidable noncompliance with technology-based emission limits in the event of “any situation arising from sudden and reasonably unforeseeable events beyond the control of the source, including acts of God, which situation requires immediate corrective action to restore normal operation…”. These provisions also required the operator to keep contemporaneous operating logs or other evidence documenting the occurrence of the emergency event, that the facility was at the time of the event being properly operating, that it took all reasonable steps to minimize emissions, and that notice of the emergency was submitted to the applicable permitting authority within two business days of the exceedance of the emission limit. The operator bore the burden of proving the occurrence of an emergency event.
The emergency affirmative defense provisions themselves, as well as similar provisions elsewhere that provided liability relief during periods of startup, shutdown, or malfunction (SSM) have been somewhat controversial. In 2008, the D.C. Circuit in Sierra Club v. EPA, 551 F.3d 1019 (D.C. Cir. 2008) determined that an EPA rule that exempted sources from CAA Section 112 (hazardous air pollutant) emissions standards during SSM periods violated the CAA’s requirement that such standards apply continuously.
However, the key case underpinning EPA’s current rulemaking to delete §§ 70.6 and 71.6 is Natural Resources Defense Council (NRDC) v. EPA, 749 F.3d 1055 (D.C. Cir. 2014). In that case, a number of groups challenged, among other things, EPA’s rulemaking to create an affirmative defense against citizen suits for violations of CAA Section 112 emissions standards in cases where “unavoidable” malfunctions caused the violation. EPA explained the basis of this provision was to resolve “tension” between the CAA’s requirement that emission standards apply at all times (as noted in Sierra Club) and the fact that operators may exceed emission limits for reasons beyond their control. The rule also restricted federal district courts hearing the citizen suit from assessing penalties unless the operator failed to meet their burden of proving all requirements in the affirmative defense. The court struck down the unavoidable malfunction affirmative defense provision, finding that the rule served to usurp the courts’ role in determining appropriate remedies in a case, and that CAA Sections 113 and 304 did not otherwise support the EPA’s rule.
The D.C. Circuit reaffirmed its decision in NRDC two years later in the case U.S. Sugar Corp. v. EPA, 830 F.3d 579 (D.C. Cir. 2016). There, industry groups challenged CAA Section 112 emission standards on the basis that the standards were too onerous because they were developed by EPA without taking malfunction events into account. The court sided with EPA, reiterating its holding in NRDC that had EPA established an affirmative defense provision against citizen suits for violations of the emission standard during malfunctions, it would constitute an “impermissible intrusion on the judiciary’s role.” Instead, the court found EPA’s approach to developing the standard and reserving the right to exercise enforcement discretion during malfunction events as a reasonable interpretation of the CAA.
The EPA’s current rulemaking to remove the emergency affirmative defense provisions from 40 C.F.R. §§ 70.6 and 71.6 was initially proposed by EPA on the heels of these cases. During the 2016 proposed rule’s comment period, several commenters argued that EPA was reading the NRDC and other cases too broadly, since none of them involved consideration of the Title V program or its implementing regulations. Moreover, some expressed the position that there was a distinction between the affirmative defense provision under consideration in NRDC, which affected citizen suits under CAA Section 304, and the emergency affirmative defense provision, which made no reference to Section 304. Others contended that there was a fundamental difference between emergencies, which often occur through forces outside the boundaries of a facility, and malfunctions which were at issue in NRDC.
The EPA disagreed with these comments, stating that NRDC was fundamentally based on CAA Sections 113 and 304, which pertain to enforcement generally, and are not specific to hazardous air pollutant standards. In addition, EPA reiterated its position in Sugar Corp. that an affirmative defense provision is unnecessary because it will use its case-by-case enforcement discretion to determine whether to initiate enforcement, as appropriate. And, according to EPA, removal of the emergency affirmative defense “would harmonize the EPA’s treatment of affirmative defenses across different” regulatory programs under the CAA.
Although this rulemaking does not directly apply to regulated sources, it will have an indirect effect on them. Specifically, state permitting programs under Title V will have to delete such affirmative defenses from its regulations by August 2024. Moreover, any Title V permits issued by states will eventually need to have removed from them any emergency affirmative defense provisions, although these will most likely occur during subsequent renewals or reissuances of the permit.
Although EPA suggests that the impact of the deletion of the emergency affirmative defense provisions on the regulated community may not be significant, it is important to note that operators will no longer be able to rely upon explicit provisions in their Title V permits to shield them from liability for emissions violations in cases of events like natural disasters or power outages. Case-by-case enforcement discretion is a matter of agency policy but is not binding upon agencies themselves, which in some cases can lead to disparate penalties or other enforcement results among facilities. Nonetheless, operators still may find it useful to continue to implement the recordkeeping provisions of the emergency affirmative defense provisions to assist in developing its case for an agency to exercise enforcement discretion in its favor during an emergency event.
Varun Shekhar is a shareholder in Babst, Calland, Clements and Zomnir’s Environmental Group. His environmental practice emphasizes federal, state and local regulatory matters arising under the Clean Air Act (CAA). He counsels facilities across the country regarding permitting, compliance determination and assurance, CAA Section 114 information requests, environmental audits, and emerging air quality issues including climate change and regulation of greenhouse gas emissions. Contact him at vshekhar@babstcalland.com.
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Reprinted with permission from the August 24, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Legal Intelligencer
(by Harley Stone and Anna Jewart)
Have Facebook and TikTok become the new forum for conducting political debates by public officials? That’s at least one of the questions faced by the Commonwealth Court in two recent decisions, Penncrest School District v. Cagle, 293 A.3d 783 (Pa. Cmwlth. 2023), and Wyoming Borough v. Boyer, No. 715 C.D. 2021 (Pa. Cmwlth. July 27, 2023). As public engagement continues to move “online” the topic of how to treat public officials’ emails, text messages and social media pages has become a hot button topic. Earlier this year, in Penncrest, the Court considered what to do about these developing issues. In a June 2021 RTKL request, the requester in Penncrest sought Facebook posts and comments “related to homosexuality and Penncrest School District, its officials, employees, or students or its curriculum, physical [resources], or electronic resources… including posts or comments removed” or deleted by two specific members of the school board for a specific time period. The respondent district denied the request on the basis that no such posts or comments existed for any Penncrest-owned Facebook accounts. On appeal, the OOR determined it was immaterial as to whether the agency controlled the Facebook page, but that it would review the contents of the page to determine whether it was used as a significant platform by an elected official or employee to conduct or discuss official business. The lower court affirmed and reasoned it did not matter if the posts were made on the district’s Facebook account or a member’s private account. The court reasoned that the posts became a “record” if created by persons acting as school board members and if they contained information related to school business.
Penncrest appealed to Commonwealth Court raising three issues: (1) that social media posts and comments from board members’ personal social media accounts are not related to the business of the board or the district; (2) that board members acting in their private capacity as private citizens are able to express their personal opinions by posting or commenting on matters of personal interest via personal social media without creating a record subject to disclosure; and (3) that public attendees of a board meeting who opined about the members’ social media posts and comments do not create a record.
As discussed by the Court in Penncrest, the RTKL defines a “record” as “[i]nformation, regardless of physical form or characteristics, that documents a transaction or activity of an agency and that is created, received or retained pursuant to law or in connection with a transaction, business or activity of the agency.” 65 P.S. §67.102. The Court looked back at its prior consideration of the phrases “documents a transaction or activity of an agency”, “in connection with a transaction, business or activity”, and “of the agency”. It reviewed its prior treatment of emails of public employees and officials, offering an interpretation of several prior holdings related to the same, noting the tension between its decisions in Easton Area School District v. Baxter, 35 A.3d 1259, (Pa. Cmwlth. 2012) and Barkleyville Borough v. Stearns, 35 A.3d 91 (Pa. Cmwlth. 2012) and those in Mollick v. Township of Worcester, 32 A.3d 859 (Pa. Cmwlth. 2011) and In re Silberstein, 11 A.3d 629 (Pa. Cmwlth. 2011). Ultimately, the Court concluded that strict application of principles extracted from its email cases to social media activity may be unwise and instead opted to examine the disclosure of social media postings under the RTKL with a fresh lens.
Prior to Penncrest, no Pennsylvania court had addressed a RTKL request for social media postings, so the Court went on to review the Office of Open Record’s determinations in Purdy v. Borough of Chambersburg, OOR Dkt. No. AP 2017-1229 (Aug 16, 2017) and Boyer v. Wyoming Borough, OOR Dkt. No. AP 2018-1110 (Sept. 5, 2018). Boyer was on appeal before the Court at the time of its decision in Penncrest and the Court issued a decision on the same, discussed further below, on July 27, 2023. In both cases, the OOR granted a request for access to social media posts. In Penncrest the Court attempted to reconcile its own prior decisions related to emails, the OOR’s determinations in Boyer and Purdy, and certain federal case law regarding treatment of social media outside the open records context.
Returning to the definition of “record” the Court in Penncrest determined that to constitute a record the social media postings in question need to meet three criteria: “(1) it must prove, support, or evidence an agency’s transaction or activity; (2) it must have been created, received, or retained in connection with an agency’s transaction, business, or activity; and (3) must have been created by, originated with, or possessed by the agency.” The Court grappled with how to apply these criteria, noting that official posts on the agency’s official, authorized social media account are presumptively public; however, if a public official posts about a private matter on the public agency account, those posts likely would not be “records” of the agency. In Penncrest the issue was a request for a public official’s public post on his personal social media account. Therefore, the inquiry focused on whether the posts documented a transaction or activity of the school board.
The Court in Penncrest developed a set of nonexclusive factors to determine whether an agency member’s social media post was a post “of the agency” under the RTKL. First, the court must examine the social media account itself, including the private or public status of the account, as well as whether the account has the “trappings” of an official agency account, and whether the official has an actual or apparent duty to operate the account, or whether the authority of the public office itself is required to run the account. Second, it examines the social media posts themselves and then consider whether the posts prove, support, or evidence a transaction or activity of an agency, taking into consideration whether they were merely informational in nature, or were created, received, or retained by law in connection with a transaction, business or activity of the agency. Finally, it must consider “official capacity” with regard to the account and posts, noting that the information must have been created, received, or retained by the public official in their official capacity or scope of employment as public officials, which may be evidenced by whether the agency required the posts, directed the posts, or whether they further the agency’s interest. The Court in Penncrest remanded to the trial court to expand the record to address whether the social media activity at issue constituted a record under the framework established.
Having utilized the OOR’s determination in Boyer to develop the applicable factors in Penncrest, the Cour then turned around and used the Penncrest factors to decide the requester’s appeal in Boyer. In Boyer the requester sought records related to a Facebook page named “Joseph Dominick Mayor of Wyoming” including removed or blocked comments; messages sent and received, and posts made to the page or “liked” by the administrator of the page. The request was deemed denied by the Borough which later clarified that the page was private and the items requested did not exist. The OOR concluded the page was a “record” of the Borough. The Court of Common Pleas reversed on the basis that the items requested were not “public records.” On appeal by the requester, the Commonwealth Court revisited its recent decision in Penncrest. It determined that Penncrest’s discussion of “official capacity” was particularly instructive in Boyer and found that there were strong implications that Mr. Dominick used the page in an “official capacity” in his role as mayor of the Borough. However, it concluded that given its reasoning in Penncrest, the cases cited by the lower court did not control its disposition of the appeal in Boyer, and it was required to remand to the Court of Common Pleas for application of Penncrest’s analytical framework.
Penncrest attempted to develop an analysis for agencies and the OOR to utilize to determine when records related to social media pages are or are not “public records” under the RTKL. Boyer shows that these factors are mandatory and apparently here to stay. Both Penncrest and Boyer are pending on appeal before their respective courts of common pleas. How the lower courts apply the Penncrest factors in these cases will hopefully shed some light on how these factors work in a practical sense and whether or not they in fact provide clarity, or further confusion, in the developing area of public figure social media posts under the RTKL.
Harlan S. Stone is a Shareholder in the Public Sector Services and Energy and Natural Resources groups of the Pittsburgh law firm of Babst, Calland, Clements & Zomnir. Anna S. Jewart is an associate in Babst Calland’s Public Sector Services group and focuses her practice on zoning, subdivision, land development, and general municipal matters. Contact them at hstone@babstcalland.com and ajewart@babstcalland.com.
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Reprinted with permission from the August 17, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Babst Calland is pleased to announce that five lawyers were selected as 2024 Best Lawyers in America® “Lawyer of the Year” in Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.
Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2024 Best Lawyers in America® “Lawyer of the Year” include:
James V. Corbelli – Litigation – Environmental in Pittsburgh, Pa.
Blaine A. Lucas, Municipal Law “Lawyer of the Year” in Pittsburgh, Pa.
Kevin J. Garber – Natural Resources Law in Pittsburgh, Pa.
Steven B. Silverman – Information Technology Law in Pittsburgh, Pa.
Christopher “Kip” Power – Mining Law in Charleston, W.Va.
View the award recipients here.
In addition, 37 Babst Calland lawyers were selected for inclusion in the 2024 edition of The Best Lawyers in America® (by BL Rankings), the most respected peer-reviewed publications in the legal profession:
- Chester R. Babst III – Environmental Law, Litigation – Environmental
- Donald C. Bluedorn II – Environmental Law, Litigation – Environmental, Water Law
- Joseph G. Bunn – Commercial Transactions / UCC Law, Mining Law, Banking and Finance Law, Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law, Business Organizations (including LLCs and Partnerships), Corporate Law, Mergers and Acquisitions Law
- Dean A. Calland – Environmental Law
- Matthew S. Casto – Commercial Litigation, Litigation – Environmental
- Frank J. Clements – Corporate Law
- Kathy K. Condo – Commercial Litigation
- James V. Corbelli – Commercial Litigation, Litigation – Environmental
- James Curry – Energy Law, Oil and Gas Law
- Julie R. Domike – Environmental Law, Litigation – Environmental
- Kevin K. Douglass – Natural Resources Law
- Christian A. Farmakis – Corporate Law, Real Estate Law
- Leonard Fornella – Admiralty and Maritime Law, Mass Tort Litigation / Class Actions – Defendants, Personal Injury Litigation – Defendants
- Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental, Water Law
- Steven M. Green – Energy Law
- Jennifer Hicks – Energy Law
- Lindsay P. Howard – Environmental Law, Litigation – Environmental
- Robert Max Junker – Land Use and Zoning Law
- Stephen I. Korbel – Litigation – Labor and Employment
- Blaine A. Lucas – Energy Law, Land Use and Zoning Law, Municipal Law, Litigation – Land Use and Zoning
- Christina Manfredi McKinley – Commercial Litigation
- John A. McCreary – Labor Law – Management
- Janet L. McQuaid – Environmental Law
- Timothy M. Miller – Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental
- Jean M. Mosites – Environmental Law
- Christopher B. “Kip” Power – Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal, Arbitration
- Joseph K. Reinhart – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental
- Bruce F. Rudoy – Corporate Law
- Charles F.W. Saffer – Real Estate Law
- Peter H. Schnore – Real Estate Law
- Mychal Sommer Schulz – Litigation – ERISA
- Mark D. Shepard – Commercial Litigation, Bet-the-Company Litigation, Litigation – Environmental
- Steven B. Silverman – Information Technology Law, Commercial Litigation
- Laura Stone – Corporate Law
- Robert M. Stonestreet – Environmental Law, Energy Law, Commercial Litigation
- David E. White – Construction Law, Litigation – Construction
- Michael H. Winek – Environmental Law
View the award recipients here.
18 Babst Calland lawyers were also named to the 2024 Best Lawyers: Ones to Watch® in America which recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States:
- Susanna Badgasarova – Corporate Law
- Mary H. Binker – Corporate Law, Real Estate Law, Energy Law
- Katrina N. Bowers – Energy Law, Environmental Law
- Carla M. Castello – Commercial Litigation, Litigation – Labor and Employment, Mass Tort Litigation / Class Actions – Defendants
- Andrew C. DeGory – Commercial Litigation
- Nicholas M. Faas – Administrative / Regulatory Law, Government Relations Practice
- Alexandra G. Farone – Commercial Litigation, Litigation – Labor and Employment
- Marc J. Felezzola – Commercial Litigation, Litigation – Construction
- Michael E. Fink – Corporate Governance and Compliance Law, Corporate Law, Mergers and Acquisitions Law
- Alyssa Golfieri – Land Use and Zoning Law, Municipal Law
- Chelsea R. Heinz – Energy Law
- Sean R. Keegan – Commercial Litigation, Litigation – Labor and Employment
- Benjamin A. Kift – Commercial Litigation
- Jennifer L. Malik – Land Use and Zoning Law, Municipal Law
- James D. Mazzocco – Litigation – Environmental, Transportation Law, Construction Law
- Joseph V. Schaeffer – Commercial Litigation
- Joshua S. Snyder – Commercial Litigation, Energy Law
- Eric Spada – Commercial Litigation
View the award recipients here.
Best Lawyers undergoes an authentication process, and inclusion in The Best Lawyers in America® is based solely on peer review and is divided by geographic region and practice areas. The list has published for more than three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 65 countries.