FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Gina Buchman, and Christina Puhnaty)
The Pennsylvania Department of Environmental Protection (PADEP) has reissued BMP GP-104, its General NPDES Permit for Stormwater Discharges Associated with Mining Activities, for a new five-year term with an effective date of March 28, 2026, and an expiration date of March 27, 2031. Pursuant to 25 Pa. Code § 92a.32, a National Pollutant Discharge Elimination System (NPDES) permit is required for stormwater associated with mining activity. BMP GP-104 is intended to provide NPDES permit coverage for eligible coal and noncoal mining and reclamation authorizations to address stormwater associated with mining activities. Both bituminous and anthracite coal mining operations are eligible for coverage under BMP GP-104. Discharges that do not qualify for coverage under BMP GP-104 include discharges from non-stormwater sources, discharges to high quality or exceptional value designated waters, and discharges to exceptional value wetlands. PADEP’s District Mining Offices retain authority to require individual NPDES permits for any other discharges deemed to be more suitably controlled under an individual NPDES permit because of water quality concerns and specific effluent limits that must be applied.
In this renewal of BMP GP-104, PADEP clarified an oversight in the prior version of the general permit that PADEP admits in its 2026 Renewal Fact Sheet likely caused some sites to be overdesigned with respect to erosion and sedimentation controls. The prior BMP GP-104 arguably required all facilities subject to the general permit to meet the 10-year, 24-hour design standard for erosion and sedimentation controls, a more onerous requirement only required by regulation for coal mining and large noncoal permits. The new BMP GP-104 clarifies that the following permit types may meet the less stringent two-year, 24-hour standard specified in 25 Pa. Code ch. 102: small noncoal, noncoal short term construction, bluestone, reclamation of forfeited noncoal mines, and government financed construction contracts. The renewed BMP GP-104 also requires additional operation and maintenance assurances for permanent stormwater control structures that will remain post-mining, a requirement previously reserved only for impervious surfaces remaining post-mining. Finally, the new BMP GP-104 requires permittees to register for electronic submittal of discharge monitoring reports.
The new and prior versions of the BMP GP-104 and supporting documentation are available on PADEP’s eLibrary here.
Copyright © 2026, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Gina Buchman, and Christina Puhnaty)
On January 3, 2026, the Pennsylvania Department of Environmental Protection (PADEP) published its final revised Environmental Justice Policy, as well as updates to the Pennsylvania Environmental Justice Mapping and Screening Tool (PennEnviroScreen) Methodology Documentation. See 56 Pa. Bull. 81 (Jan. 3, 2026); 56 Pa. Bull. 83 (Jan. 3, 2026). The final Environmental Justice Policy (TGD No. 015-0501-002) is now in effect. PADEP had been operating under its Interim-Final Environmental Justice Policy since 2023 while soliciting comments on the policy from the public, as reported in Vol. 40, No. 4 (2023) of this Newsletter. PADEP reported that it received over 700 comments during the comment period and published a Comment Response Document alongside the final policy.
The final policy uses PennEnviroScreen to determine whether facilities are in environmental justice areas based on 32 environmental, health, socioeconomic, and demographic indicators, as explained in the PennEnviroScreen Methodology Documentation (TGD No. 015-0501-003). Environmental effects indicators include proximity to coal mines, abandoned mine lands, land remediation projects, oil and gas wells, and railroads. The data sets contained within PennEnviroScreen are updated on a rolling basis. The Environmental Justice Policy also identifies permit types that require enhanced public participation. “Trigger Projects” that are automatically subject to the policy include various mining permits, including those for bituminous and anthracite underground and surface mines, large industrial mineral surface and underground mines, coal refuse disposal and processing, large coal preparation facilities, and the use of biosolids for reclamation. National Pollutant Discharge Elimination System permits for industrial wastewater facilities discharging at or above 50,000 gallons per day and air permits for new, major sources of hazardous air pollutants or criteria pollutants are also considered trigger projects. On its own initiative or upon request from a community, PADEP may subject other projects to the new policy as “Opt-In Projects.”
The final Environmental Justice Policy now defines environmental justice areas as census block groups with a PennEnviroScreen score equal to or above the 80th percentile score or census block groups lacking overall scores due to data gaps, but with the highest 5% of PennEnviroScreen Pollution Burden Scores. Under the prior Interim-Final policy, only census block groups with a PennEnviroScreen score equal to or above the 80th percentile score were considered environmental justice areas.
PADEP’s Environmental Justice TGDs and the Comment Response Document are available on PADEP’s eLibrary here.
Copyright © 2026, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Gina Buchman, and Christina Puhnaty)
House Bill 416 was signed into law by Governor Josh Shapiro on November 12, 2025. This bill is part of the Pennsylvania budget package for Fiscal Year 2025–26. This bill includes several significant changes to industry regulations, including expedited permitting processes for certain air and water permits, measures to ensure grid reliability, and the repeal of the Regional Greenhouse Gas Initiative (RGGI) regulations.
House Bill 416 repeals the regulation promulgated by the Pennsylvania Department of Environmental Protection (PADEP) for a carbon cap-and-invest program linked to RGGI regulations found in 25 Pa. Code ch. 145, subch. E. PADEP promulgated this regulation in 2022, but it was never implemented due to various legal challenges. For a summary of Pennsylvania’s RGGI rule, see Vol. 39, No. 2 (2022) of this Newsletter. The Pennsylvania Commonwealth Court ruled that the regulation constituted an unconstitutional tax in 2023, which the litigants appealed to the Pennsylvania Supreme Court. For a summary of the commonwealth court’s decision, see Vol. 40, No. 4 (2023) of this Newsletter. Upon the passage of House Bill 416, the Commonwealth filed applications to discontinue its appeal given the legislative abrogation of the regulation at issue. On January 6, 2026, the Pennsylvania Supreme Court issued a per curiam order granting PADEP’s application to discontinue the appeal in light of House Bill 416. See Bowfin v. Dep’t of Env’t Prot., Nos. 106 MAP 2023, 107 MAP 2023, 2025 WL 3854118 (Pa. Jan. 6, 2026) (per curiam) (mem.). The supreme court also dismissed Constellation Energy’s appeal and, in doing so, vacated the commonwealth court’s decision. See Shirley v. Pa. Legis. Ref. Bureau, 113 MAP 2023, 114 MAP 2023, 115 MAP 2023, 116 MAP 2023, 2025 WL 3854690 (Pa. Jan. 6, 2026) (per curiam) (mem.).
The bill also accelerates permitting processes for specific air and water-related general permits. For general permits under the Air Pollution Control Act, PADEP must respond within 20 days, and a final determination must be made within 30 days of the application (if technical deficiencies are addressed within 25 days of submission). If PADEP has not issued a final determination within 30 days of submission, the application is deemed approved and the applicant may proceed under the provisions of the general permit. Similar provisions apply to general National Pollutant Discharge Elimination System permits, where PADEP must respond within 40 days and a final determination must be made within 60 days (if technical deficiencies are addressed within 50 days of submission).
Finally, the bill requires the Pennsylvania Public Utility Commission (PAPUC) to investigate and validate load forecasts submitted by utility companies to the PJM Interconnection. The PAPUC must also coordinate with other states and PJM to ensure accurate system planning. This additional oversight is necessary due to anticipated growth in electricity demand from the construction of new data centers, vehicle and building electrification, and other large load additions.
Copyright © 2026, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
The Legal Intelligencer
(by Casey Alan Coyle and Ryan McCann)
Lee Corso was a fixture in college football for over 60 years, first as a coach and then as an analyst on ESPN’s College GameDay program. Coach Corso is known to many casual sports fans for his headgear segment, where he would put on the head of the mascot of the team he picked to win the signature game of the week—a feat he accomplished 431 times throughout his illustrious broadcasting career. But for diehard College GameDay fans, Coach Corso is synonymous with his catchphrase “Not so fast, my friend!,” which he often employed (with glee) when disagreeing with a pick from another analyst. While the college football season does not kick off for another six months, Coach Corso’s catchphrase is apropos because the reprieve from the heightened standard to enforce online arbitration agreements in Pennsylvania may be short lived.
Chilutti v. Uber
The story begins in 2016, when a woman registered for an Uber rider account. As part of the registration process, the woman agreed to Uber’s hyperlinked terms and conditions, which, in turn, contained an arbitration agreement. Such agreements are commonly referred to as “browsewrap” agreements. In contrast, “clickwrap” agreements are where a website presents users with specified contractual terms on a pop-up screen and users must check a box explicitly stating “I agree” in order to proceed. Three years later, the woman was injured while riding in an Uber. She and her husband subsequently filed a negligence suit against the company and its subsidiaries. The defendants filed a petition to compel arbitration, arguing that the terms and conditions of Uber’s app required the couple to arbitrate their claims. The trial court granted the petition and stayed the matter pending arbitration, and the couple appealed to the Superior Court.
A Superior Court panel reversed, holding for the first time that an order compelling arbitration constitutes a collateral order, and thus, is immediately appealable. See Chilutti v. Uber Technologies, No. 1023 EDA 2021, 2022 WL 6886984, at *5 (Pa. Super. Ct. Oct. 12, 2022) withdrawn (Pa. Super. Ct. Dec. 27, 2022). Turning to the merits, the panel adopted a new, “strict[]” standard “to demonstrate a party’s unambiguous manifestation of assent to arbitration,” under which an online arbitration agreement is only valid if: (1) “explicitly stating on the registration websites and application screens that a consumer is waiving a right to a jury trial when they agree to the company’s ‘terms and conditions,’ and the registration process cannot be completed until the consumer is fully informed of that waiver;” and (2) “when the agreements are available for viewing after a user has clicked on the hyperlink, the waiver should not be hidden in the ‘terms and conditions’ provision but should appear at the top of the first page in bold, capitalized text.” Chilutti, No. 1023 EDA 2021, slip op. at 30. In doing so, however, the panel never addressed the Federal Arbitration Act (“FAA”) beyond a passing reference to the statute. The FAA “places arbitration agreements on equal footing with other contracts.” Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010). Therefore, per the FAA, arbitration agreements may only be invalidated by “generally applicable contract defenses, such as fraud, duress, or unconscionability.” Id. at 68. In other words, the FAA prohibits courts from creating special rules to enforce arbitration agreements.
The Superior Court subsequently granted reargument and withdrew the panel’s opinion. By a vote of 6-3, the en banc Superior Court vacated the trial court’s order, with the majority effectively adopting the panel’s withdrawn opinion as its own. Chilutti v. Uber Techs., Inc., 300 A.3d 430, 439 (Pa. Super. Ct. 2023) (“Chilutti I”), rev’d, ___ A.3d ___, 2026 WL 156181 (Pa. 2026) (“Chilutti II”). Uber sought further review from the Pennsylvania Supreme Court, and on August 27, 2024, the Supreme Court granted Uber’s Petition for Allowance of Appeal.
Cobb v. Tesla
Approximately a month later, on September 26, 2024, the Philadelphia County Court of Common Pleas issued its Order and Opinion in Cobb v. Tesla, Inc., Case ID 231202254. There, an employee filed a class action against Tesla following a data breach at the company where the personal identifying information of the employee and others were stolen. Tesla responded by filing a petition to compel arbitration based on an arbitration provision contained in an employment agreement that the employee signed digitally before starting at the company. The trial court denied the petition, and in the process, extended the novel Chilutti I standard beyond the browsewrap agreement context. Relying on Chilutti I, the trial court held that the arbitration provision failed to provide “reasonably conspicuous notice” of the terms that would bind the employee, and therefore, was unenforceable, because the provision “is in small font, is not underlined, capitalized or bolded, and is not set off with a heading or in a different font color,” among other reasons. Cobb, slip op. at 4. The trial court further held, albeit in a conclusory manner, that the “FAA does not preempt” the elevated standard established by Chilutti I. Id. at 6. However, at least two federal district courts reached the opposite conclusion in separate thorough and well-reasoned decisions. Dieffenbach v. Upgrade, Inc., No. 4:23-CV-1427, 2025 WL 1239238, at *8 (M.D. Pa. Apr. 29, 2025) (per Munley, J.) (Chilutti I “is . . . in conflict with the language of the FAA”); Happy v. Marlette Funding, LLC, 744 F.Supp.3d 403, 412 (W.D. Pa. 2024) (per Paradise Baxter, J.) (finding the precedential effect of the Superior Court’s decision in Chilutti I “questionable for a number of reasons,” including that “the FAA preempts state laws that condition [] the enforceability of an arbitration clause upon a specific notice requirement” (internal citation and quotation marks omitted)).
Tesla appealed the decision to the Superior Court, which, unlike the plaintiff in Chilutti I, it had the ability to do as of right. The case was argued before a three-judge panel on October 21, 2025. While that decision was pending, the Pennsylvania Supreme Court issued its long awaited opinion in Chilutti II on January 21, 2026, reversing the en banc Superior Court and holding that the trial court’s order granting Uber’s petition to compel arbitration and staying court proceedings does not qualify as a collateral order. 2026 WL 156181, at *7. Because the Supreme Court ruled that the Superior Court lacked jurisdiction over the appeal, it did not address the substantive issues raised in Chilutti I, namely, whether the “strict[]” standard adopted by the Superior Court to enforce online arbitration agreements violated the FAA.
Then, on February 18, 2026, the Superior Court issued its non-precedential opinion in Cobb, holding that the trial court erred in denying Tesla’s petition to compel arbitration. No. 2879 EDA 2024, 2026 WL 458470, at *4 (Pa. Super. Ct. Feb. 18, 2026). The panel began by acknowledging that, while the trial court was influenced by its reading of Chilutti I, “Chilutti I is no longer controlling law.” Id. at *3 n.5. The panel therefore applied what it termed as the “well-established test” for determining whether a valid agreement to arbitrate exists—namely, that “courts apply state law principles of contract law.” Id. at *4. When applying those principles, the panel held that there was a valid agreement. However, the trial court did not address whether the parties’ dispute falls within the scope of the arbitration agreement—which is the second part of the two-part test to determine whether to compel arbitration—and according to the panel, neither party offered “substantive advocacy on the issue or provided “any pertinent legal authority.” Id. at *5. The panel thus remanded the matter to the trial court for consideration of that issue.
But the most significant passage of the panel’s opinion was reserved to a footnote. In footnote 6, the panel wrote: “Assuming arguendo that the general principles articulated by this Court in Chilutti I represent the current state of the law, notwithstanding the fact that the case has been overturned, we do not find that the particularized requirements for conspicuity of arbitration agreements outlined in that case apply here” because Chilutti I “arose from, and pertained to, a specific context, namely, a browsewrap agreements.” Id. at *4 n.6. As such, “even if the legal analysis underlying Chilutti I is sound as to the enforceability of browsewrap agreements, it simply has no bearing outside that peculiar context.” Id. At least one other Pennsylvania court similarly interpreted the now vacated decision in Chilutti I as applying to browsewrap agreements only. Eichlin v. GHK Co., 746 F. Supp. 3d 247, 255 (E.D. Pa. 2024) (“The Court finds that Chilutti has no import on the instant case because the decision in Chilutti is framed in the context of lengthy and hidden browsewrap agreements, not two-page written buyer’s orders like the one at bar.”).
What’s Next
Many in the defense bar gave a “sigh of relief” after the Supreme Court’s ruling in Chilutti II. Riley Brennan, “Arbitration Law in Pa. Sees ‘Reset’ Following High Court’s Uber Decision, Lawyers Say,” The Legal Intelligencer (Jan. 27, 2026). But that excitement may soon be short lived because the Superior Court’s panel in Cobb provides a pathway to revive the now defunct standard in Chilutti I. Therefore, and with the possibility of further appellate review in Cobb (the respective deadlines for reargument and allocatur have yet to expire), the reprieve afforded by Chulitti II may prove temporary. Cue Lee Corso.
—————–
Casey Alan Coyle is a shareholder at Babst, Calland, Clements and Zomnir, P.C. He focuses his practice on appellate law and complex commercial litigation. Coyle is a former law clerk to Chief Justice Emeritus Thomas G. Saylor of the Pennsylvania Supreme Court. Contact him at 267-939-5832 or ccoyle@babstcalland.com.
Ryan McCann is a litigation associate at the firm. He focuses his practice on complex commercial litigation, environmental litigation, and construction disputes. Contact him at 412-773-8710 or rmccann@babstcalland.com.
To view the full article, click here.
Reprinted with permission from the February 26, 2026 edition of The Legal Intelligencer© 2026 ALM Media Properties, LLC. All rights reserved.
PIOGA Press
(by Gary Steinbauer, Gina Falaschi Buchman, and Christina Puhnaty)
In response to President Trump’s Executive Order 14179, “Removing Barriers to American Leadership in Artificial Intelligence (AI),” EPA announced this week a new EPA webpage dedicated to compiling agency resources related to the Clean Air Act requirements potentially applicable to the development of data centers and AI facilities across the United States. The webpage, Clean Air Act Resources for Data Centers, is intended to promote transparency by aiding developers and other interested parties in locating various agency resources, including Clean Air Act regulations, interpretative guidance, and technical tools, that may assist with Clean Air Act permitting and air quality modeling during project development.
In addition to linking to potentially applicable EPA regulations, the webpage provides in one place various historical EPA guidance documents relating to the federal New Source Review (“NSR”) and Title V permitting programs. These guidance documents include interpretation letters and memoranda related to calculating and limiting a source’s potential to emit, assessing whether multiple projects must be aggregated for purposes of determining major NSR applicability, and determining when an operator may initiate construction activities of a major NSR source prior to obtaining a construction permit. The webpage also includes a News and Updates section that houses recent EPA announcements relating to data center and AI facility development.
Notably, the webpage explains that in an effort to advance cooperative federalism, EPA’s Office of Air and Radiation (“OAR”) staff are “available to consult with permit reviewing authorities and individual sources on a case-by-case basis to identify existing data, models, and tools to demonstrate compliance and, as appropriate, exercise discretion and flexibilities in the permitting processes.” The webpage encourages both permitting authorities and permit applicants to contact their EPA Regional Offices and EPA’s Data Centers Team to engage OAR staff members on projects.
EPA notes it is continuing to advance rulemakings to streamline permitting and end burdensome requirements inhibiting the development of data centers and AI facilities. Babst Calland’s Environmental Practice attorneys are closely tracking these developments and are available to provide guidance on how these actions affect your business. For more information, please contact Gary Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com, Gina Buchman at (202) 853-3483 or gbuchman@babstcalland.com, Christina Puhnaty at (412) 394-6514 or cpuhnaty@babstcalland.com, or a member of Babst Calland’s Data Center Development team.
To view the full article, click here.
Reprinted with permission from the February 2026 issue of The PIOGA Press. All rights reserved.
TEQ Hub
(by Jenn Malik and Peter Zittel)
Most companies would never allow an unknown third party to sit in on executive level strategy sessions, legal consultations, or sensitive personnel discussions. Yet AI meeting assistants now perform a functional equivalent of that role, often without formal approval, policy guidance, or executive awareness. What may at first appear to be a simple productivity tool can, in practice, create significant legal and financial exposure. These AI meeting assistants are increasingly transforming ordinary business conversations into permanent, searchable data sets, in turn raising issues of privilege waiver, regulatory compliance, and potential litigation cost that many organizations have not yet confronted.
For business leaders, this realization raises an uncomfortable reality: what was assumed to be a confidential internal discussion may now exist as a permanent data record outside the organization’s control.
In August 2025, similar circumstances gave rise to a nationwide class action lawsuit alleging that an AI meeting assistant unlawfully intercepted and recorded private video-conference meetings without obtaining consent from all participants. The plaintiffs in Brewer v. Otter.ai claim the AI tool joined meetings as an autonomous participant, transmitted conversations to third-party servers for transcription, recorded individuals who were not account holders, provided limited or unclear notice, and placed the burden of obtaining consent on meeting hosts. The lawsuit further alleges that recordings were retained indefinitely and used to train AI models, including the voices of individuals who were unaware they were being recorded. While the legal claims are still unfolding, the case underscores a broader and more immediate concern for business owners: AI meeting assistants can quietly convert everyday business conversations into legally consequential data assets, creating exposure well beyond what most organizations anticipate.
AI meeting assistants promise real benefits. They allow participants to stay engaged rather than take notes, generate meeting summaries and action items, promote consistency across teams, and even identify speakers automatically. For busy executives and businesspeople, these tools can feel indispensable. What is less obvious is that AI meeting assistants introduce a third party into conversations that have historically been governed by expectations of privacy, confidentiality, and limited retention. That shift has significant implications for attorney–client privilege, compliance with wiretap and privacy laws, and litigation exposure. From a business perspective, the issue is not whether these tools are useful, but whether they are being deployed with appropriate governance and risk awareness.
Attorney-Client Privilege
Attorney–client privilege is among the most powerful legal protections available to businesses. It shields confidential communications between lawyers and clients made for the purpose of obtaining or providing legal advice. However, that protection depends on confidentiality, and it can be waived through voluntary disclosure to third parties. Attorney–client privilege, which is held by the client, rests on four requirements: (1) there must be a communication, (2) made in confidence, (3) between privileged persons (lawyers and clients), (4) for the purpose of obtaining or providing legal advice.
AI meeting assistants are operated by third-party vendors. These tools typically route audio and text through external servers, and vendor terms of service often reserve rights to retain, access, or process the data. Even if no human listens to the recordings, the presence of an outside platform can undermine the confidentiality required for privilege to attach.
For business owners, the risk is apparent. Board meetings, executive strategy sessions, HR investigations, compliance reviews, and legal consultations increasingly occur over video platforms. Introducing an AI transcription tool into those conversations can create a credible argument that privileged communications were disclosed to a third party, weakening or eliminating the ability to shield them from discovery later. In short, convenience-driven use of AI meeting assistants can unintentionally expose the most sensitive communications a business has.
Wiretap Laws
AI meeting assistants also create risk under state and federal wiretap statutes, which regulate when audio recordings are lawful. While some states permit recording with consent from only one participant, others require consent from all participants. The distinction is critical. Remote work amplifies this risk. Virtual meetings often include participants located in multiple states, and businesses may not know where every attendee is physically located at the time of a call. Because wiretap laws generally focus on the speaker’s location, the presence of even one participant in an all-party consent state can trigger heightened consent requirements for the entire meeting.
AI meeting assistants further complicate compliance because they do more than create a local recording. They transmit audio to third-party servers for processing, which may cause the AI provider itself to be treated as an intercepting party. Many platforms rely on vague or inconsistent disclosures that do not clearly explain who is recording, how the data will be used, or where it will be stored. Courts evaluating wiretap claims often require knowing and voluntary consent, and passive or unclear notice may not satisfy that standard.
For businesses, this means wiretap exposure can arise without bad intent, simply because an AI assistant was enabled by default or added to a call without affirmative consent from all participants.
Privacy Laws
Many AI meeting platforms acknowledge, often in dense privacy policies, that recorded conversations may be retained and used to train speech-recognition or generative AI models. What begins as a routine business meeting can therefore become part of a long-term dataset used for purposes unrelated to the original discussion. From a business perspective, the most underappreciated risk is loss of control. Voices, speech patterns, job titles, project references, and contextual details can make so-called “de-identified” data traceable back to individuals or organizations. Once recordings are incorporated into training pipelines, deletion may be difficult or impossible.
This practice raises serious concerns under a range of privacy regimes. Healthcare-related discussions may implicate HIPAA restrictions. International operations may trigger GDPR obligations related to purpose limitation, data minimization, and deletion rights. Even California’s privacy laws grant individuals enhanced rights to transparency and restrictions on secondary uses of their data, including undisclosed AI training.
Discovery Exposure
AI-generated transcripts also carry significant litigation risk. Unlike traditional handwritten notes or informal summaries, AI transcripts are permanent, detailed, searchable, and time-stamped. In litigation, these records can become prime discovery targets. Opposing counsel may seek years of internal meeting transcripts, searching for statements taken out of context or distorted by transcription errors. The existence of extensive AI-generated records can materially increase legal expenditures, expand discovery disputes, and weaken negotiating leverage, often regardless of the merits of the underlying claims. What begins as a productivity tool can, in practice, create a vast and expensive new category of discoverable material.
Conclusion
AI meeting assistants are not merely efficiency tools; they fundamentally alter how business conversations are captured, stored, and regulated. By converting human speech into portable and persistent data assets, these platforms can trigger privilege waivers, wiretap violations, privacy compliance obligations, and expanded discovery exposure, often without any deliberate decision by business leadership.
The lesson is not that businesses should abandon AI innovation. Rather, they must recognize that these tools require governance. Privileged legal communications should remain free from third-party transcription. Outside that context, organizations should implement clear policies governing when AI meeting assistants may be used, how consent is obtained, how data is retained or deleted, and which meetings are categorically off-limits.
Until legislatures and courts provide clearer guidance, the burden rests squarely on organizations to manage these risks. In some high-stakes settings, the most compliant option may remain the simplest one: keep AI out of the meeting entirely. Convenience may sell AI meeting assistants, but governance is what prevents convenience from becoming liability.
Jenn L. Malik is a shareholder in the firm’s Corporate and Commercial, Employment and Labor, and Public Sector groups, focusing her practice on healthcare benefits, data privacy, insurance coverage, and appellate law. Contact her at 412-394-5490 or jmalik@babstcalland.com.
Peter D. Zittel is an associate at the firm, focusing his practice primarily on municipal and land use law. Contact him at 412-773-8711 or pzittel@babstcalland.com.
To view the full article, click here.
The Legal Intelligencer
(by Max Junker and Anna Jewart)
In general, Pennsylvania municipalities have broad discretion over land-use regulations. Typically, so long as a municipality acts within the parameters of the Pennsylvania Municipalities Planning Code, 53 P.S. §10101 et seq. (“MPC”), it is relatively free to regulate where any given land use can operate within its boundaries. At times, the courts may step in where a regulation is unreasonable, arbitrary, or confiscatory, but the legislature has been reluctant to interfere with local control over land use and development. One rare exception to the rule is farming, where the legislature has stepped in to protect “normal agricultural operations” from unreasonable local regulation. The Right to Farm Act, 3 P.S. §§ 951-958 (“RTFA”) was adopted to limit “the circumstances under which agricultural operations may be subject matter of nuisance suits and ordinances”. The RTFA works in tandem with the Agricultural Communities and Rural Environment Act (“ACRE”), 3 Pa.C.S. § 101 et seq. As described by the Pennsylvania Farm Bureau, ACRE provides a means for farmers burdened by ordinances that illegally inhibit farming practices to initiate a process to challenge and invalidate the ordinance.
Both ACRE and the RTFA only protect “normal agricultural operations”, a statutory definition under Section 2 of the RTFA which includes the “activities, practices, equipment and procedures that farmers adopt, use or engage in the production and preparation for market of poultry, livestock and their products and in the production, harvesting and preparation for market or use of agricultural, agronomic, horticultural, silvicultural and aquacultural crops and commodities. . .” 3 P.S. §952. The activity must not be less than 10 contiguous acres, or in the alternative, have a yearly gross income of at least $10,000. In addition, the definition expressly “includes new activities, practices, equipment and procedures consistent with technological development within the agricultural industry”.
ACRE, in relevant part, prohibits the adoption or enforcement of “unauthorized local ordinance [s]” which includes an ordinance that prohibits or limits a normal agricultural operation (unless otherwise allowed by law) or restricts or limits the ownership structure of a normal agricultural operation. See 3 Pa. C.S. §312. As the Pennsylvania Supreme Court has stated, the term “normal agricultural operation” is intended to be read expansively in order to take into account new developments in the farming industry. In certain instances, courts have read the RTFA as protecting (at the time) “new” farming practices over protest from neighbors. See e.g. Gilbert v. Synagro Cent., LLC, 131 A.3d 1 (Pa. 2015) (finding application of recycled biosolids to be a “normal agricultural operation”). As new technologies develop, and formerly cutting-edge practices become mainstream, the question arises as to whether and when they are entitled to the protections afforded to “normal agricultural operations”.
This question has come to the fore where agricultural production collides with energy production. Agrivoltaics, the practice of combining photovoltaic electric generation with agricultural production, dates back to the early 1980s. However, it has gained regional popularity in the past decade as Pennsylvania has scrambled to meet its renewable energy generation targets. To solar developers, farmland often offers the best physical characteristics for photovoltaic generation. It is generally vacant, already cleared of trees, and flat. To many farmland owners, the promotion of agrivoltaics offers potential for expanded economic opportunities not available in the traditional agricultural sector. Many see a solar lease as a financial lifeline for the family farm. More and more often, when use of agricultural land is proposed to be used for solar generation, the landowner maintains the right to continue to crop-farm (“agrovoltaics”), or to allow livestock grazing (“rangevoltaics”) on the property. In modern industrial spaces, solar and agriculture are often considered compatible uses. So, where agrivoltaics are proposed, could the solar component be entitled to protection under RTFA and ACRE?
The question remains outstanding, but a recent decision from the Commonwealth Court indicates that the Court, at least, is not ready to come to that conclusion. On January 15, 2026, the Court in West Lampeter Solar 1, LLC v. West Lampeter Township Zoning Hearing Board, 2026 WL 110932, No. 76 C.D. 2025 (Pa. Cmwth. Jan. 15, 2026)[1] rejected a developer’s assertion that its proposed “agrivoltaics solar farm” was an “agricultural use” for purposes of zoning approval. While the issue was not expressly before the Court, it opined that the “Department of agriculture specifically advises that a ‘commercial scale solar’ or ‘solar farm’ does not meet the definition of normal agricultural operation under the Right to Farm Act, . . . and therefore, it will not receive protection from local ordinances, otherwise given to agricultural operations.” West Lampeter Solar, supra. The Court noted that the applicant argued that agrivoltaics constituted a “technological development within the agricultural industry” an argument to which it responded “[w]e disagree.” The Court ended its analysis of the issue by stating the “Zoning Board’s conclusion that ‘agrivoltaics’ does not constitute an agricultural use [was] unassailable.” Id.
In its reasoning, the Court found it notable that the energy generated by the proposed solar panels would not be used to prepare or market any crop or livestock products and would not “advance the sheep grazing enterprise” contemplated. Looking to the definition of “agricultural operation” under the MPC as well, it stated that “there must be a connection between the technological advance and the preparation of agricultural products,” and found none. As noted above, the issue of whether or not agrivoltaics constituted a “normal agricultural operation” under the RTFA or ACRE was not before the Court, in West Lampeter Solar, but its treatment of the ordinance interpretation matter before it is illustrative. For now, it appears that, despite becoming increasingly common, agrivoltaics may not be “normal” enough to warrant statutory protection.
Robert Max Junker is a shareholder in the public sector, energy and natural resources, and employment and labor groups of Babst Calland. Robert Max Junker is a shareholder in the public sector, energy and natural resources, and employment and labor groups of Babst Calland. Contact him at 412-773-8722 or rjunker@babstcalland.com.
Anna S. Jewart is an associate at the firm and focuses her practice primarily on municipal and land use law with a subject matter focus in renewable energy. Contact her at 412-699-6118 or ajewart@babstcalland.com.
______________________
[1] Opinion reported, citation pending.
To view the full article, click here.
Reprinted with permission from the February 12, 2026 edition of The Legal Intelligencer© 2026 ALM Media Properties, LLC. All rights reserved.
The Wildcatter
(by Nik Tysiak)
Just a few cases to report this time.
Property Tax Assessment and Pipeline Valuation
The West Virginia Intermediate Court of Appeals in Lemley v. MarkWest Liberty Midstream & Resources, LLC, — S.E.2d —-(2025) established significant precedent for oil and gas transportation infrastructure taxation. The court affirmed the Office of Tax Appeals’ application of a 35% reduction in assessed value for 20-inch natural gas liquid pipelines due to economic obsolescence. The court held that external market forces beyond an operator’s control, including COVID-19 pandemic impacts, can justify substantial economic obsolescence adjustments when pipelines operate significantly below design capacity.
The decision recognized that beginning in 2018, MarkWest installed 20-inch NGL lines anticipating increased production that never materialized due to market conditions that lessened demand for NGLs and led to scaling back of planned natural gas processing facilities. The court found that calculations showing pipeline utilization at only 28%, 36%, and 47% of design capacity demonstrated that economic obsolescence was necessary to fairly value the pipelines. This represents a significant shift in how underutilized oil and gas transportation infrastructure may be assessed for property tax purposes.
The court also confirmed important procedural changes affecting oil and gas operators challenging property tax assessments. Effective January 1, 2023, the West Virginia Legislature transferred jurisdiction over contested property tax matters from county commissions to the Office of Tax Appeals, establishing OTA as an independent quasi-judicial agency with de novo hearing authority. Most significantly, the Legislature reduced the burden of proof for taxpayers from “clear and convincing evidence” to a “preponderance of the evidence” standard, representing a substantial reduction in the evidentiary burden for oil and gas operators disputing tax assessments.
Compulsory Unitization and Good Faith Standards
In Haughtland Resources, LLC v. SWN Production Company, LLC, Not Reported in S.E. Rptr. (2025), the West Virginia Intermediate Court of Appeals addressed the application of the state’s compulsory unitization statute under West Virginia Code § 22C-9-7a. The court established important precedent regarding good faith requirements for operators seeking to force pool non-consenting mineral owners for horizontal drilling projects.
The court rejected the appellant’s argument for adopting specific good faith standards requiring offers based on prevailing lease terms with other unit owners, as found in Texas, Oklahoma, and Colorado. The court held that West Virginia Code § 22C-9-7a does not require offers to unitize to be based on other leases or that an applicant disclose its lease terms with other interest owners within a proposed unit. Instead, the court applied the general good faith standard defined by the West Virginia Supreme Court as “an intangible and abstract quality with no technical meaning or statutory definition” that “encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage”.
The decision also clarified important limitations on the Oil and Gas Conservation Commission’s authority. The court found that the Commission lacks authority to make legal determinations regarding the status of a lease as “leased” or “unleased” in compulsory unitization proceedings, noting that such disputes remain open matters not determined by the Commission in its orders. This limitation preserves contractual interpretation issues for courts with proper jurisdiction over such matters.
West Virginia Tax Sale Deed Authority
The West Virginia Intermediate Court of Appeals issued an important ruling in U.S. Bank Tr. Nat’l Ass’n v. Duncan Homes, LLC, decided November 13, 2025, establishing that “when tax sale deed is duly obtained and recorded by purchaser of tax sale lien, purchaser is vested with all interest and title to subject property.” The court held that parties holding interests in deeds of trust at the time of tax sale were entitled to notice and right of redemption, but once proper procedures were followed, the tax sale conveyed clear title to the purchaser.
Transportation Issues
East Ohio Gas Company v. Croce, 2026-Ohio-75, is an Ohio Supreme Court decision that established the Public Utilities Commission of Ohio’s (PUCO) exclusive jurisdiction over claims involving utility tariff interpretation and gas measurement reconciliation processes. The court held that natural gas producers’ tort claims against Dominion Energy for allegedly selling excess gas without compensation fell within PUCO’s exclusive regulatory authority, even when framed as common law conversion and unjust enrichment claims.
Factual Background and Procedural Posture
Three natural gas producers filed a class action lawsuit against East Ohio Gas Company d.b.a. Dominion Energy Ohio in Summit County Court of Common Pleas, alleging conversion and unjust enrichment claims. The producers participated in Ohio’s Energy Choice Program, which allows natural gas customers to purchase gas either from Dominion Energy directly or from independent choice suppliers. All gas from the producers’ wells flowed into Dominion Energy’s pipeline system regardless of the purchaser arrangement.
The producers alleged that choice suppliers only compensated them for estimated gas volumes communicated through a process called “nomination,” while Dominion Energy allegedly sold or benefited from excess gas volumes without proper compensation through the required reconciliation process outlined in Dominion Energy’s tariff. Judge Croce granted Dominion Energy’s motion to dismiss in part, dismissing the conversion claim under Civil Rule 12(B)(6) but denying the motion as to other claims, concluding that the common pleas court had jurisdiction.
After the Ninth District dismissed Dominion Energy’s appeal for lack of finality, Dominion Energy sought a writ of prohibition in the Ninth District against Judge Croce. The Ninth District granted the writ, ordering Judge Croce to cease exercising jurisdiction over the class action on grounds that PUCO had exclusive jurisdiction.
Legal Framework and Analysis
The Ohio Supreme Court applied the established Allstate two-part test to determine whether claims fall within PUCO’s exclusive. This test examines: (1) whether PUCO’s administrative expertise is required to resolve the dispute, and (2) whether the complained-of conduct constitutes a practice normally authorized by the utility. A negative answer to either question suggests the claim does not fall within PUCO’s exclusive jurisdiction.
Administrative Expertise Requirement
The court found that resolving the producers’ claims required determining whether Dominion Energy correctly carried out the reconciliation process set forth in Section 12 of its energy-choice pooling-service tariff. The court explained that the producers explicitly based their unjust enrichment, conversion, and other claims on Dominion Energy’s alleged failure to correctly reconcile the difference between gas volumes delivered into the pipeline system and the choice suppliers’ nominations.
The court characterized the gravamen of the complaint as an allegation that Dominion Energy’s measurement or reconciliation practices were “unreasonable, unjust, or insufficient” in connection with services it furnishes. This type of complaint falls directly within the scope of Ohio Revised Code Section 4905.26, which the legislature explicitly placed under PUCO’s jurisdiction. The court noted that questions regarding whether there was excess natural gas not covered by the tariff or whether Dominion Energy improperly retained and sold excess gas through incorrect reconciliation processes are matters requiring PUCO’s specialized regulatory expertise.
‘Normally Authorized Practice’ Analysis
The court determined that gas measurement, reconciliation processes, and natural gas sales constitute practices normally authorized by utilities. PUCO regulations specifically require utility tariffs to address nomination processes and measurement of delivered gas under Ohio Administrative Code 4901:1-13-14(A)(1) and (4). Additionally, PUCO’s approval of Dominion Energy’s energy-choice pooling-service tariff demonstrated that these practices fall within normal utility operations subject to regulatory oversight.
The court distinguished this case from property rights disputes involving easement interpretation, emphasizing that the underlying dispute concerned tariff interpretation rather than property rights enforcement. Unlike cases involving easement disputes, the disposition of these claims depended on interpreting a PUCO-regulated tariff governing utility operations.
Solar Power Generation Legal Developments
In re Application of South Branch Solar, L.L.C., — N.E.3d —- (2025), the Ohio Supreme Court established important precedent for solar facility siting requirements. The court affirmed the Ohio Power Siting Board’s approval of a certificate for a 130-megawatt solar facility in Hancock County, rejecting a neighbor’s challenge to the project approval.
The court applied the standard that it “will reverse, vacate, or modify an order of the board only when, upon consideration of the record, we conclude that the order was unlawful or unreasonable.” This deferential standard of review emphasizes judicial restraint in reviewing Power Siting Board decisions while maintaining oversight authority.
The decision addressed six key areas of solar facility regulation. First, regarding environmental impact assessment, the court held that sufficient evidence supported the Board’s determination of the project’s probable impact to wildlife and that the project represented minimum adverse environmental impact. Second, the court found that the Board properly required flood analysis for the facility’s project area as part of environmental impact determination. Third, the court approved setback requirements of 300 feet from nonparticipating residences, 150 feet from public roads, and 50 feet from nonparticipating property lines.
Fourth, the court held that sufficient evidence supported the Board’s finding that the facility served the public interest, convenience, and necessity, noting the Board identified specific benefits including “generation of zero emission energy, increases in local revenues, including the local school district, and enhancements to the state and local economy.” Fifth, regarding economic impact analysis, the court rejected arguments that applicants must provide analysis of specific negative impacts, finding that rules require only that applicants “provide an estimate of the economic impact on local commercial and industrial activities.” Finally, the court approved the Board’s acceptance of a joint stipulation between the applicant, board staff, county commissioners,
and farm bureau recommending certificate issuance.
To view the full article, click here.
To view the PDF, click here.
Reprinted with permission from the MLBC February 2026 issue of The Wildcatter. All rights reserved.
TEQ Hub
(featuring Justine Kasznica)
The rapid growth of data centers – driven by cloud computing, artificial intelligence, and the need for low-latency digital infrastructure – has transformed what were once primarily real estate projects into some of the most complex developments in the energy and infrastructure sectors in our region.
At the core of modern data center development is power. Securing sufficient, reliable, and resilient electricity has become one of the defining challenges for developers, particularly as grid congestion, interconnection delays, and regulatory scrutiny increase. Many projects now require sophisticated power purchase agreements (PPAs), power generation agreements (PGAs), and on-site or co-located generation solutions to meet capacity and uptime requirements.
Today’s data center projects sit at the intersection of power generation, environmental regulation, land use, construction, and technology governance, requiring coordinated legal strategies across multiple disciplines. Babst Calland’s legal team has become increasingly involved from the earliest stages of development on projects – advising on site acquisition and control, evaluating water and energy access, and assessing regulatory and permitting risks across state and federal jurisdictions, and land use and zoning approvals, including variances and conditional use permits, often require public hearings and coordination with local governments, which often add another layer of complexity and potential delay.
Behind-the-Meter Power and Islanded Systems Gain Momentum
Grounded in active, large-scale work, Babst Calland is currently guiding the development of well over 3,000 megawatts of new power generation capacity tied to data center projects across Pennsylvania and West Virginia. These projects range from hyperscale campuses to smaller modular facilities encompassing the design, permitting, interconnection, and financing of both behind-the-meter generation assets, such as natural gas turbines and solar paired with battery storage, as well as fully islanded power systems.
These islanded systems are designed to provide baseload power, redundancy, and resiliency, supporting mission-critical workloads that cannot tolerate downtime. By considering both conventional and emerging energy solutions, companies are now navigating the technical and legal complexities of meeting power demand while maintaining operational flexibility.
Attorney Justine Kasznica, team leader of Babst Calland’s data center development practice, outlined the various near-term challenges and opportunities facing the industry.
Site Selection & Development
Data Center companies look for large-scale sites with an emphasis on water and energy access, infrastructure alignment, regulatory compliance, and risk analysis on co-located energy infrastructure, including gas pipelines, electric transmission, solar generation, and battery energy storage systems (BESS). Companies also need to be concerned about land use and zoning matters, variances, conditional use approvals, and public hearings when developing new or expanded facilities.
Contracts Drive Risk Allocation and Performance
Contracting has become a central risk-management tool in data center development. Engineering, Procurement and Construction (EPC), design-build, and modular construction contracts must address accelerated schedules, supply-chain constraints, and performance guarantees tied to uptime and efficiency. On the operational side, agreements governing power supply, cooling systems, and maintenance increasingly focus on redundancy, preventative maintenance, and vendor accountability.
Leasing and colocation agreements must also address power allocation, connectivity, shared infrastructure, and scalability. For operators and tenants alike, service-level agreements (SLAs) and enterprise technology contracts—covering SaaS, IaaS, and software licensing—are critical to ensuring performance standards are met as infrastructure becomes more virtualized and cloud-based.
Energy-related contracting continues to evolve as well. Solar PPAs, BESS service agreements, and SREC contracts now routinely include detailed provisions governing pricing mechanisms, dispatch rights, performance guarantees, and risk allocation among developers, operators, utilities, and investors.
Permitting, Regulatory Compliance, and Workforce Considerations
Beyond construction and power, data center development raises broader compliance issues. Environmental permitting at the federal, state, and local levels remains a key consideration, particularly for projects involving on-site generation or significant land disturbance. At the same time, operators must navigate data privacy, cybersecurity, and cross-border compliance requirements – especially when structuring public, private, or hybrid cloud environments.
Workforce issues are also gaining attention. Skilled labor shortages, safety compliance, and employment regulations affect both construction and long-term operations, making workforce planning an increasingly important component of development strategy.
When disputes arise, they often span multiple areas of law, including commercial contracts, zoning and environmental compliance, and cybersecurity or data-privacy incidents – underscoring the interconnected nature of today’s data center projects.
A Rapidly Evolving Sector
As data centers grow in scale and strategic importance, development has become less about standalone facilities and more about integrated infrastructure ecosystems. Power generation, land use, technology, and regulatory compliance are no longer parallel tracks – they are deeply interdependent.
The result is a shift toward multidisciplinary legal and advisory models that mirror the complexity of the projects themselves. For developers, investors, and operators, success increasingly depends on addressing these issues holistically, from site selection and power strategy through long-term operation and eventual decommissioning.
Guiding hyperscale and modular projects across Pennsylvania and West Virginia, Babst Calland is helping shape the power-secure future of this mission-critical infrastructure.
To view the full article, click here.
Breaking Ground
(by Marc Felezzola and Ryan McCann)
I. Blueprints for Disaster: Foundational Failures of a Different Kind
In construction, the biggest threat isn’t a faulty foundation, it’s a compromised inbox. Courts nationwide have seen a surge in cases involving fraudulent wire-transfer instructions due to bad actors inserting themselves into legitimate transactions and siphoning funds before anyone notices. Because progress payments routinely travel by wire and project timelines depend on fast, clean transfers, the construction industry is becoming an increasingly attractive target. Understanding how these schemes work, how to guard against them, and what remedies remain once the money disappears is now essential for every member of the industry.
II. How Wire-Fraud Schemes Operate
In 2024 and 2025, wire transfers were the payment method most frequently targeted by business email compromise scams. These schemes often unfold quietly: a hacker slips into a company’s email system, studies the back-and-forth between parties negotiating a payment, and waits until transfer of funds is imminent. Then the hacker intervenes—diverting legitimate emails, impersonating one party by using a near-identical address, and sending counterfeit wire instructions in the hope that the recipient won’t spot the subtle switch. Most businesses usually do not become aware of the fraud until it is too late. Additionally, scammers have found success through sending deceptive emails that appear to come from a trusted source to trick recipients into providing sensitive information. Similarly, hackers have also begun sending fake invoices that closely resemble legitimate ones from real suppliers leading companies to wire money directly into the scammer’s account.
III. Why the Construction Industry is Uniquely Vulnerable
Despite the availability of safeguards, many construction companies operate without them, making the industry uniquely susceptible to the very risks these practices are designed to prevent. Few industries move money with the frequency, speed, and decentralization of construction. On any given project, payments may flow from owners to prime contractors, primes to subcontractors, subcontractors to suppliers, and all parties to equipment rental companies or specialty vendors. To further add to the problem, construction is perpetual, with new projects starting every day, and owners and contractors are continuously answering emails and making decisions while on the move. This creates an environment with several points of entry for fraud. In short, construction companies face a perfect storm: lots of money moving quickly, through lots of hands, via communication channels designed for convenience—not security.
IV. Prevention: Practical Safeguards for Construction Companies
Preventing these schemes takes more than luck—it requires clear processes and vigilance. Employees, especially those handling payments, should be trained to spot suspicious emails, and wire instructions should be verified by phone or require dual approvals. A review of recent decisions contains numerous cases where saving millions of dollars in fraud losses was just one phone call away. Strong email security, including multi-factor authentication and regular monitoring, is critical, as are written policies, segregation of duties, and escalation protocols to prevent any one employee from having unchecked control over wire transfers. But even if all these actions are undertaken, wire fraud may still occur. That’s why it is crucial to understand the potential remedies in the unfortunate event that a construction company falls subject to these schemes.
V. Remedies: Laying the Foundation for Recovery
Remedies for wire fraud depend on whether the claim is asserted against the banks that sent or received the wire, or against a separate entity whose compromised systems set the fraud in motion.
Remedies against the banks are typically covered by the Uniform Commercial Code (UCC). Prior to the enactment of the UCC, every state had its own laws governing commercial transactions. This created significant confusion and complexity for businesses operating across state lines. Thus, the UCC was enacted to harmonize commercial laws nationwide and establish a uniform legal framework across the United States. Coincidentally, Pennsylvania was the first state to adopt the UCC in 1953. There are nine separate articles in the UCC ranging from the sale of goods, bulk sales and auctions, warehouse and shipping transactions, secured transactions and most importantly for this issue: funds transfers.
When initiating a cause of action against a bank, parties should look first and foremost to Article 4-A for guidance in bringing and resolving their claims. Article 4A was added to the UCC in large part due to the drastic increase in wire transfers between financial institutions and other commercial entities in the latter stages of the 20th century. Because it was specifically added to the UCC for the purpose of combatting jurisdictional disputes and a lack of judicial authority, it is intended to be the exclusive means of determining the rights, duties and liabilities of the affected parties. However, this does not mean that it is the only remedy afforded to wire fraud victims. Instead, the analysis is simple: if a provision in Article 4 of the UCC squarely applies to the issue, any other remedies are preempted by the UCC, and Article 4 of the UCC provides the exclusive remedy. However, if the alleged action is not addressed by the UCC, then a plaintiff may seek remedies at common law.
Because Article 4A’s scope is both technical and specific, and its application is largely decided on a case-by-case basis, its boundaries cannot be explored comprehensively in a single article. At a high level, Article 4A governs conduct occurring between the moment a payment order is initiated, and the moment the beneficiary’s bank accepts that order. Within this window, the UCC governs disputes involving, among other things: (1) payment orders issued to nonexistent or unidentifiable beneficiaries; (2) situations where a beneficiary’s bank executes a transfer based on an account number that does not match the named beneficiary; (3) whether a payment order was authorized by the originator; (4) payment orders fraudulently issued in the name of a legitimate customer; and (5) customer-initiated orders that were intercepted and altered by a fraudster prior to acceptance.
By contrast, claims that are based on alleged conduct occurring before or after the funds transfer are not governed by the UCC and therefore are not preempted. Instead, those actions would be governed by common law remedies such as negligence, breach of contract, aiding and abetting fraud, and the like. Thus, the UCC does not apply to: (1) failures to properly verify the identity of an individual opening an account under a false name; (2) failures to adopt reasonable safeguards before allowing withdrawals from an account; or (3) post-transfer actions, such as lifting a freeze on a fraudulent account, permitting the withdrawal of already-misappropriated funds, or a failure of a bank to attempt to retrieve funds after the fraudulent wire has been completed. These common-law claims are viable but not without obstacles. Nevertheless, they remain essential avenues when Article 4A does not apply.
Additionally, there is a separate analysis when bringing claims against another entity that was hacked. For instance, suppose Contractor regularly buys construction materials from Supplier. Contractor sends a purchase order to Supplier and the parties engage in negotiations over price via email. During the negotiations, Supplier is hacked and a person purporting to be Supplier sends Contractor fraudulent wire instructions. The parties agree upon the price, and Contractor pays the invoice, but Supplier never receives the payment. Supplier alleges that Contractor breached the contract because Supplier delivered the goods but was never sent payment. In response, Contractor argues that it met its contractual obligations by paying money according to the instructions it received and that it had no independent obligation to ensure that the instructions were accurate. Thus, according to Contractor, it should be able to keep the goods without further payment. Who is correct?
In this scenario, courts have routinely held that the answer depends on which party was best able to avoid the fraud. In the example above, Contractor would argue that Supplier should have employed better security measures to prevent it from becoming hacked. Conversely, Supplier would argue that Contractor should have taken additional measures to ensure the transaction was valid, such as calling Supplier to confirm the transaction and the wire instructions. In short, whoever was in the best position to prevent the fraud will be held liable. This is ultimately a factual question which will be determined by looking at the totality of the circumstances on a case-by-case basis.
VI. Reinforcing the Foundation: Staying Ahead of Wire Fraud
Whether a company can recover after being victim to wire transfer fraud is a difficult and fact intensive inquiry. The ideal solution is one that mirrors good practice in the construction industry: be diligent, proactive not reactive, and make sure it is correct the first time around. However, anyone familiar with the construction practice knows that mistakes happen. With the fast-paced environment surrounding the construction industry, it is only a matter of time before construction companies are subject to more direct and clever attacks. Thus, while it may be impossible to eliminate fraud entirely, remaining vigilant and ensuring you are employing best practices should help ensure that if fraud does occur, you will not be the party who bears the financial consequences of it.
Mark J. Felezzola is a shareholder at Babst Calland. He focuses his practice on complex construction-related and environmental matters. Felezzola serves as outside general counsel for owners, developers, design professionals, and construction companies, and frequently represents them in a variety of commercial and construction-related disputes including construction bid protests, construction defect claims, differing site condition claims, delay and inefficiency claims, payment and performance bond claims, mechanics’ lien claims, as well as all other types of payment and contract performance disputes. Contact Mark at 412-773-8705 or mfelezzola@babstcalland.com.
Ryan McCann is a litigation associate at the firm. He focuses his practice on complex commercial litigation, environmental litigation, and construction disputes. Contact Ryan at 412-773-8710 or rmcann@babstcalland.com.
To view the full article, click here.
To view the PDF, click here.
Babst Calland recently named Tiffany M. Arbaugh, Alexandra G. Farone and Stefanie Pitcavage Mekilo shareholders.
Tiffany Arbaugh practices in the Firm’s Charleston, W.Va. office and is a member of the Energy and Natural Resources and Litigation groups. Tiffany has more than twenty years of experience and focuses her practice on representing corporations in a variety of litigation matters with an emphasis in corporate transactions and all facets of energy-related litigation including mineral title, real estate, trespass, fraud, title curative, personal injury and toxic torts. Her practice also includes advising clients in customary business operations, litigation avoidance strategies and litigation preparedness. Tiffany is a 2005 graduate of Appalachian School of Law.
Alexandra Farone practices in the Firm’s Pittsburgh, Pa. office and is a member of the Employment and Labor, Litigation, and Emerging Technologies groups. Alex has extensive experience advising and representing corporate, technology, municipal, and energy clients in employment and labor law and complex commercial litigation. Her practice includes comprehensive human resources counseling and litigation for employers ranging from Fortune 500 companies and startups to municipalities, police departments, family-owned businesses, healthcare providers, financial services and technology companies. She advises on restrictive covenants, discrimination and harassment, disability accommodation, grievances, personnel best practices, contract negotiations, wage and hour issues, and collective bargaining, and litigates matters involving complex commercial disputes, trade secrets, employment discrimination, restrictive covenants, product liability, and toxic torts. Alex also has additional experience litigating matters concerning technology, insurance, construction, class actions, maritime, environmental, and oil and gas law. She is a 2017 graduate of the University of Pittsburgh School of Law.
Stefanie Pitcavage Mekilo practices in the Firm’s Harrisburg, Pa. office. Stefanie is a civil litigator who draws on more than a decade of trial-court experience in the federal judiciary to guide clients through all aspects of the litigation process. She focuses her practice on complex commercial litigation, environmental litigation, and energy litigation, regularly representing businesses in high-stakes disputes in state and federal courts throughout the country. Stefanie also represents clients before state and federal agencies and in proceedings seeking judicial review of agency action in state and federal courts. In addition, she has extensive experience with disputes involving breach of restrictive covenants; breach of fiduciary duties, tortious interference, and related business tort claims; employment discrimination; civil and constitutional rights; and emergency injunction litigation, as well as in the areas of antitrust, securities, trademark infringement, product liability, class action, and multidistrict litigation. Stefanie is a 2011 graduate of Widener University Commonwealth Law School.
The Legal Intelligencer
(by Jenn Malik and Peter Zittel)
Imagine sitting down for a virtual meeting where sensitive legal matters are being discussed and internal strategy decisions are unfolding, with everyone assuming the conversation is confidential and limited to the people on the call. Only later does someone in the meeting realize that a small “note-taker” icon was glowing in the corner of the screen, an artificial intelligence tool was present, recording and transcribing every word that was said. In that moment, the participants realize that what they assumed was a confidential discussion may indeed, not be so private.
These are the exact events that resulted in the filing of a nationwide class action in August 2025. In Brewer v. Otter.ai, plaintiffs allege that Otter.ai’s “Notetaker” and “OtterPilot” tools unlawfully intercepted and recorded private video-conference meetings without obtaining consent from all participants. The complaint claims the AI assistant joins calls as an autonomous participant, transmits conversations to Otter’s servers for transcription, records even non-account holders, provides little or no participant notice, and shifts responsibility for consent onto meeting hosts. Plaintiffs further allege Otter retained recordings indefinitely and used captured communications to train its AI models, including voices of individuals who were unaware they were being recorded. The lawsuit asserts federal wiretap and computer-access violations, multiple California privacy law violations, and common-law claims for intrusion and conversion, casting AI notetakers not as neutral productivity tools but as unauthorized third-party surveillance operating inside private meetings.
AI meeting assistants offer numerous benefits, including allowing participants who would otherwise be taking notes to stay fully engaged, automatically generating meeting summaries and action items, producing uniform and unbiased notes for all participants, and even identifying speakers by their voices. But what many users do not fully appreciate is that these tools introduce a third party into conversations historically governed by strict privacy and confidentiality rules, a shift that carries profound consequences for attorney–client privilege, wiretap compliance, compliance with privacy laws, Pennsylvania’s Right to Know Law (“RTKL”), and discovery exposure.
- Attorney-Client Privilege
Attorney–client privilege, which is held by the client, rests on four requirements: (1) there must be a communication, (2) made in confidence, (3) between privileged persons (lawyers and clients), (4) for the purpose of obtaining or providing legal advice. That protection is incredibly powerful, preventing discovery of sensitive conversations even in the midst of intense litigation. However, the privilege can be waived through voluntary disclosure to third parties, and AI transcription tools are owned by third parties. These AI meeting assistant tools typically route audio and text through third-party servers or cloud-based servers, and even if no employee actively “listens,” the vendors often retain access rights under their terms of service, storage practices, or model-training procedures to the information disclosed. As people increasingly rely on these tools to summarize privileged meetings, process attorney emails, or analyze legal memoranda, they are placing sensitive communications into systems operated by outside vendors, and consequently, could be waiving attorney-client privilege. Additionally, many of these vendors may log inputs, retain data, or use uploaded content to improve their AI models. Introducing an AI platform into a legal discussion under these conditions can undermine the confidentiality required for privilege to attach and may severely weaken any later claim that the communications were intended to remain private.
- Wiretap Laws
AI meeting assistants may also run afoul of state and federal wiretap statutes. Generally, wiretapping statutes regulate when recording is lawful, and the core requirement is consent. Some states permit recording with consent from only one participant, while others require all participants to agree. That distinction is critical: a lawful recording in a one-party consent state may become illegal if even a single participant joins from an all-party consent jurisdiction.
Remote work amplifies this problem. Virtual meetings routinely include participants located across multiple states, often without anyone knowing where other attendees are physically calling in from. Because wiretap laws generally focus on the speaker’s location, the presence of just one participant in an all-party consent state can trigger heightened consent requirements for the entire meeting.
AI meeting assistants further complicate compliance because they are not simple local recordings. They transmit audio to third-party servers for processing, which means the AI provider itself may be deemed an intercepting party. Many platforms rely on vague, optional, or inconsistent disclosures that fail to clearly explain who is recording, where data is sent, or how it will be used. Courts applying wiretap laws require knowing and voluntary consent, and these weak notices may not satisfy that standard, leaving organizations exposed to wiretap liability when participants never affirmatively agreed to third-party recording.
- Privacy Laws
Several AI meeting platforms acknowledge, often buried in privacy policies, that recorded conversations may be retained and used to train speech-recognition and generative AI models. What begins as a routine business meeting can therefore become a permanent training dataset outside the control of the speakers. Although vendors describe this data as “de-identified,” true anonymization is difficult: voices, speech patterns, job titles, project references, geographic markers, and health or employment details can readily link recordings back to individuals. Once content enters training pipelines, deletion is usually impractical, converting what participants assumed was a fleeting exchange into a lasting data asset.
The practice runs afoul of many privacy laws. HIPAA severely restricts disclosures tied to patient health information and limits even permitted disclosures to the minimum necessary required to achieve the intended purpose of the disclosure. The GDPR requires narrow purpose limitation, data minimization, and enforceable rights of access and deletion, standards difficult to reconcile with open-ended AI training uses. California’s consumer privacy laws further heighten risk by granting individuals rights to transparency, restrictions on data processing, and challenges to undisclosed secondary uses such as model training. As a result, a single unnoticed recording can escalate from a brief compliance lapse into ongoing multi-regulatory exposure, with regulatory, litigation, and class-action consequences.
- Pennsylvania’s RTKL
For Pennsylvania government agencies, AI meeting assistants present an additional and often overlooked risk under the RTKL. The RTKL broadly defines “records” to include any information documenting the transaction or activity of an agency, regardless of format. When an AI assistant generates verbatim transcripts of meetings involving municipal officials, staff, or boards, those transcripts may constitute public records subject to disclosure, even if no written minutes were otherwise required or intended to exist. Traditional meeting notes or informal recollections are limited and often transient, but AI transcripts create fixed, searchable, and highly detailed records that can be requested by any member of the public. This dramatically expands the volume of potentially responsive materials municipalities may have to review, redact, and produce. It also increases the risk that preliminary discussions, off-the-cuff remarks, or partially formed deliberations may become accessible through RTKL requests. Once created, these transcripts cannot easily be undone, and municipal agencies could find themselves responsible for preserving and disclosing extensive datasets that carry both administrative cost and legal risk, especially when multiple transcripts span years of internal meetings, planning sessions, or executive discussions.
- Discovery Exposure
For similar reasons as those enunciated above with respect to the RTKL, discovery risk also increases dramatically when meetings are recorded by default because AI transcripts differ fundamentally from traditional human notes. While handwritten or typed summaries are selective, imperfect, and often discarded, AI-generated transcripts are permanent, detailed, searchable, and time-stamped, making them powerful litigation targets. In lawsuits, opposing counsel can demand production of entire datasets documenting years of internal corporate communications, combing transcripts for statements taken out of context or distorted by transcription errors to use in depositions and motion practice. What begins as a tool meant to improve productivity can, in practice, create vast new discovery burden and sharply increase litigation costs.
Conclusion
Collectively, these risks reveal a sobering reality, that AI notetakers convert private human speech into portable, persistent data assets that can trigger legal ramifications far more complex than most organizations realize. The rise of AI meeting assistants is not simply a question of workplace efficiency, it is a fundamental shift in how conversations are captured, stored, and regulated.
However, the lesson here is not to abandon the innovation that AI brings to the workplace but to acknowledge its legal consequences. Privileged attorney/client communications require the highest degree of confidentiality and should remain free from third-party transcription entirely. Outside the privilege context, organizations must nonetheless recognize that AI-generated transcripts can trigger wiretapping statutes, create new public-record obligations, broaden discovery exposure, and generate ongoing privacy compliance duties that far exceed typical internal note-taking practices.
Until legislatures and courts provide clearer guidance on how legal protections apply to artificial intelligence in real time communications, the burden rests squarely on organizations to govern these tools. AI notetaking programs should be subject to targeted policies, restricted use cases, robust oversight, and strict deletion practices. In high-risk settings, the most compliant option may remain the most straightforward one: keep AI out of the meeting entirely.
Convenience may be what sells AI meeting assistants, but governance is what prevents convenience from becoming liability.
Jenn L. Malik is a shareholder in the firm’s Corporate and Commercial, Employment and Labor, and Public Sector groups, focusing her practice on healthcare benefits, administration, insurance coverage, and appellate law. Contact her at 412-394-5490 or jmalik@babstcalland.com.
Peter D. Zittel is an associate at the firm, focusing his practice primarily on municipal and land use law. Contact him at 412-773-8711 or pzittel@babstcalland.com.
To view the full article, click here.
Reprinted with permission from the December 24, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.
PIOGA Press
(by Lisa Bruderly and Ethan Johnson)
On November 17, 2025, the U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers (the Corps) proposed a revised definition of “waters of the United States” (WOTUS) under the Clean Water Act (Proposed Rule). The Trump administration announced that the Proposed Rule would “provide greater regulatory certainty and increase Clean Water Act program predictability and consistency.”
The new definition is expected to reduce the number of streams and wetlands that are regulated under the Clean Water Act and will impact several federal regulatory programs, including Section 404 permitting of impacts to regulated waters. The agencies drafted the Proposed Rule to closely mirror the U.S. Supreme Court’s 2023 decision in Sackett v. EPA, which held that the Clean Water Act extends to “relatively permanent” bodies of water connected to traditional navigable waters and wetlands with a “continuous surface connection” to those waters.
The Proposed Rule adds definitions for several terms, including “relatively permanent,” “tributary,” “continuous surface connection,” “prior converted cropland,” and “ditch.”
The public comment period will begin when the Proposed Rule is published in the Federal Register. If finalized, it will replace the Biden administration’s 2023 definition of WOTUS. The definition of WOTUS has changed several times in the last decade. Each new definition has been challenged in the courts.
Babst Calland will stay up to date on WOTUS developments and the Clean Water Act, in general. If you have any questions or would like any additional information, please contact Lisa Bruderly at (412) 394-6495 or lbruderly@babstcalland.com, or Ethan Johnson at (202) 853-3465 or ejohnson@babstcalland.com.
To view the full article, click here.
Reprinted with permission from the December 2025 issue of The PIOGA Press. All rights reserved.
PIOGA Press
(by Kevin Garber and Alex Graf)
On November 12, 2025, Governor Josh Shapiro signed House Bill 416, a Fiscal Code Bill and a segment of the Pennsylvania budget package for Fiscal Year 2025-26. The Fiscal Code has several important implications for industry regulation, including the abrogation of the Regional Greenhouse Gas Initiative regulations, permitting relief through expedited review schedules for certain air and water general permits, and provisions to ensure grid reliability.
The Fiscal Code abrogates the RGGI provisions contained in 25 Pa. Code Chapter 145, Subchapter E, known as the CO2 budget trading program. The RGGI regulations were promulgated in 2022 but have not yet been implemented in Pennsylvania because of ongoing legal challenges. In November 2023, the Pennsylvania Commonwealth Court ruled that RGGI is an unconstitutional, unenforceable tax. Governor Shapiro and many other parties appealed that ruling to the Pennsylvania Supreme Court, where the case was fully briefed and argued last May. Although the Court’s course of action remains uncertain now that RGGI has been abrogated, the Court could dismiss the appeal as moot and decline to issue an opinion.
The Fiscal Code also expedites permitting for certain air and water-related general permits. The Pennsylvania Department of Environmental Protection now must respond within 20 days of submission to an application under the Air Pollution Control Act for coverage under a general plan approval or general permit. If the applicant addresses the technical deficiencies within 25 days, DEP must issue a final determination on the application within 30 days thereafter. However, if DEP misses this deadline, the application is deemed to have been approved. DEP may seek a one-time, 5-day extension to respond if the applicant agrees.
The Fiscal Code contains similar provisions for NPDES general permits.[1] DEP must respond to an application to renew an NPDES general permit issued under 25 Pa. Code § 92a.54 within 40 days of submission, and if the applicant addresses each identified technical deficiency within 50 days, DEP must issue a final determination on the renewal application within 60 days thereafter. If DEP misses this deadline, the application is deemed to have been approved.
To improve transparency in the permitting process among DEP and other state agencies, the new law requires all state agencies to compile and maintain, by February 10, 2026, publicly available lists of all types of permits issued by that agency. State agencies must notify applicants within five days of receiving a permit application and direct them to the new tracking system to follow the status of their applications. This system must include the processing time for each permit application, the date of receipt of each application, the estimated time remaining to complete the application process, and the contact information for the relevant agency reviewer.
Finally, the new law requires the Pennsylvania Public Utility Commission to investigate and validate load forecasts submitted by Pennsylvania utility companies to PJM Interconnection, coordinate with PJM and other states so that system planning reflects accurate information, and obtain access to confidential materials that are necessary to perform this oversight. PJM relies on load forecasts submitted by Pennsylvania utility companies to plan system needs and set capacity requirements that affect costs to consumers. The Fiscal Code states that PUC oversight of load forecasts is necessary to provide information on projections for significant growth in electricity demand driven by data centers, vehicle and building electrification, and other large load additions.
For more information on the implications of the 2025 Fiscal Code or other related matters, please contact Kevin Garber at (412) 394-5404 or kgarber@babstcalland.com, or Alexandra Graf at (412) 394-6438 or agraf@babstcalland.com.
To view the full article, click here.
Reprinted with permission from the December 2025 issue of The PIOGA Press. All rights reserved.
_______________
[1] This section of the Fiscal Code applies to NPDES general permits issued for specific categories of point sources, including discharges of stormwater associated with industrial activities, discharges from small-flow treatment facilities, discharges from petroleum product contaminated groundwater remediation systems, and wet weather overflow discharges from combined sewer systems.
The Legal Intelligencer
(by Janet Meub)
When can an employee hold its employer liable for harassment by a third-party? For instance, can a concierge hold a hotel liable for the inappropriate conduct of a paying guest? The consensus in many circuit courts, heavily influenced by the Equal Employment Opportunity Commission’s (EEOCs) guidance and procedural regulations, is that negligence is enough to answer that question in the affirmative. If an employer knew or should have known of the third-party harassment and failed to take immediate action, the employer can be held liable. However, the Sixth Circuit recently strayed from the path of the negligence theory of liability, and in Bivens v. Zep, Inc., 147 F. 4th 635 (Aug 8, 2025), held that Title VII “imposes liability for non-employee harassment only where the employer intends for the harassment to occur.”
To establish a sex-based hostile work environment claim under Title VII, a plaintiff must establish that (1) she is a member of a protected class (2) who faced unwelcome harassment, which (3) was based on her sex and (4) created a work environment that reasonably interfered with her work performance, for which (5) her employer is responsible. Employers can be held directly liable for the actions of their agents, whether those of a supervisor who can bind the company or those of a lower-level employee whose intentional acts are within the scope of employment can result in vicarious liability for the employer. Because sexual harassment does not serve any business purpose, most circuit courts have interpreted Title VII to require a showing that the harasser was either “aided in accomplishing the tort by the existence of the agency relationship” or that the employer was negligent in letting the employee commit the tort. When a third-party harasses an employee, most courts invoke the same negligence theory to hold the employer liable. That is, until the Sixth Circuit tackled the issue in August.
Facts of Bivens
In Bivens, the plaintiff worked as a territory sale representative for a manufacturer and distributor of cleaning products. As part of her job, Bivens made sales calls to retail and commercial clients to sell products and maintain client relationships. Not long after she was hired, Bivens called on a motel client. During their meeting, the motel’s manager asked to speak to Bivens in his office. While Bivens was in the motel manager’s office, the manager locked the office door behind her and twice asked Bivens out on a date. Bivens declined the awkward invitation and explained that she was married. She then asked the manager to unlock the office door and ended the meeting.
Bivens reported the incident to her supervisor, who reassigned the motel client to a different sales team, so that Bivens would not have to interact with the client again. Around this same time, in response to fluctuating business due to the COVID-19 pandemic, Bivens’ position with the company was eliminated as part of a reduction in force.
Bivens filed suit, alleging hostile work environment harassment, retaliation, and discrimination by claiming that she had been subjected to a hostile work environment and that she had been fired either because she complained about the client’s improper advances or because of her race. The District Court granted Zep’s motion for summary judgment on each of Bivens’ claims, prompting Bivens to appeal.
Sixth Circuit Says Liability for Third-Party Harassment Requires Employer Intent
In addressing the issue as to whether her employer could be liable for the motel manager’s actions, the Sixth Circuit examined the history and purpose of Title VII and the interpretations of Title VII by both its sister circuits and the EEOC. The Court noted that when Congress passed Title VII, it created a federal species of intentional tort, distinguishing Title VII from torts based on mere negligent action. “Consistent with that congressional design, the key ‘factual question’ in a Title VII disparate treatment claim is whether ‘the defendant intentionally discriminated against the plaintiff’.” The Court noted that Title VII’s definition of the term employer includes agents of the company. Because agency law presumes the company controls its agent, an agent’s wrongful intent may be imputed to an employer on whose behalf the agent acts. Thus, a company can be held liable for discriminatory conduct of its employee acting in the scope of their employment.
However, if the harasser is not an employee, there is no agency, no furthering of the employer’s business interests, and no imputed intent up the chain of command. As a result, the Court held that Zep was not liable for the motel manager’s actions because Zep did not intend for Bivens to be harassed. It reasoned that, to hold an employer liable for the acts of third parties, the employer must desire an unlawful consequence from its actions or is “’substantially certain’ that it will result.” It must be the “intentional decision of the employer to expose women to [discriminatory] working conditions.”
In its opinion, the Court also held that, while the EEOC is authorized to issue procedural regulations for pursuing Title VII, its substantive interpretive guidelines have no controlling effect. Thus, the EEOC’s negligence standard – i.e., that an employer knew or should have known of the third-party harassment – is not enough to impose liability because the EEOC’s interpretive guidelines have no controlling effect on the Sixth Circuit’s analysis of Title VII. Though many sister circuits similarly use the negligence standard to impose liability on the employer for non-employee harassment, the Sixth Circuit admitted that it does not “lose any sleep standing nearly alone” in its interpretation of Title VII, which is true to Congress’ design. In doing so, the Court acknowledged that other circuits applying the negligence standard would likely reach the same decision it reached in Bivens.
The Sixth Circuit may not go it alone for long in its adoption of the desired intent standard. In late October, the U.S. District Court for the Eastern District of Pennsylvania found the Bivens decision to be persuasive and commended its “careful review of agency law” in O’Neill v. Trustees of the University of Pennsylvania, 2025 WL 3047884 (Oct 31, 2025).
Facts of O’Neill
In O’Neill, the University of Pennsylvania (University) awarded Sophia O’Neill a master’s degree in Robotics and Autonomous Systems in 2022. Shortly thereafter, O’Neill began working for the University in two roles – as a full-time Lab Manager in the School of Design, and as a Teaching Assistant in the Robotics and Autonomous Systems program. In these roles, O’Neill was required to work in person in the lab and to help students with their assignments.
In the fall of 2022, eight students in the program made complaints about the aggressive conduct of a six foot four-inch, male student (“Student HR”) in the lab. On one occasion during the second semester, O’Neill experienced Student HR’s behavior when he blocked her from her desk in the lab and hovered over her desk, demanding answers to an assignment. On another occasion, Student HR waited outside the lab for O’Neill to arrive at work and then, later that day, he blocked her path when she was exiting a room, refusing to move until she asked him to do so.
Upon returning to her desk and opening her emails, O’Neill discovered that Student HR had sent her several messages, including a middle of the night call on the messaging platform Discord. The messages stated that Student HR was in the middle of a “depressive psychotic episode,” asked O’Neill to come stay with him, and told her “Love you so much babe” with heart and kissing face emojis. O’Neill immediately reported Student HR’s behavior to the University.
In response, the University developed a safety plan for O’Neill after speaking with her and with Student HR. As a result of this plan, Student HR would only be permitted to attend the lab when the male lab manager worked, and he was prohibited from contacting O’Neill outside of an academic setting. Student HR agreed to the plan, acknowledging that he would face disciplinary proceedings if he violated it. O’Neill, however, sought a guarantee that she would never interact with Student HR, including prohibiting Student HR from accessing the Robotics lab even when she was not present.
O’Neill did not return to work, though the University continued to pay her and provide her with benefits. The University gave O’Neill a deadline to either return to work or formally request a leave of absence. O’Neill confirmed that she would not return to work and filed a complaint against the University with the Philadelphia Commission on Human Relations for forcing her to interact with her accused harasser. O’Neill then sued the University in the Eastern District of Pennsylvania for “creating and fostering a sex-based hostile work environment, for constructive discharge, and for retaliation under both Title VII and the Philadelphia Fair Practices Act.
The District Court determined that O’Neill had not adduced evidence to show that the University or its employees knew Student HR had physically intimidated or confessed unreciprocated romantic feelings for her until she reported his behavior. In its opinion, the Court called the negligence standard and the Bivens standard “almost-identical” and indicated that both approaches would have reached the same conclusion. The Court predicted that the Third Circuit will align with the Sixth Circuit’s approach in Bivens.
Employers should be aware of the O’Neill case to determine which standard the Third Circuit applies in the event of an appeal. Will the Third Circuit adopt Bivens’ desired intent standard for imposing liability in the context of harassment by non-employees and prove the District Court in O’Neill prophetic? Stay tuned.
Janet Meub is senior counsel in the Litigation and Employment and Labor groups of Babst Calland. She routinely counsels corporate clients on employment matters including discrimination, accommodations, wage and hour, discipline and termination, severance agreements, non-compete/non-solicitation agreements, unemployment compensation, and employee handbook and corporate policy updates. Janet also conducts workplace investigations and performs corporate trainings on employment “hot topics.” She may be contacted at jmeub@babstcalland.com or 412-394-6506.
To view the full article, click here.
Reprinted with permission from the December 11, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.