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.
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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.
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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.
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[1] Opinion reported, citation pending.
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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.
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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.
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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.
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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.
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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.
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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.
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Reprinted with permission from the December 2025 issue of The PIOGA Press. All rights reserved.
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[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.
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Reprinted with permission from the December 11, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.
The Legal Intelligencer
(by Casey Alan Coyle and Ryan McCann)
Pleadings are the opening act of litigation—setting the stage, defining the cast, and signaling the story to come. But Bernavage v. Green Ridge Healthcare Group, LLC, et al., No. 1576 MDA 2023 (Pa. Super. Ct.), which is pending on appeal before the en banc Superior Court, presents a plot twist: what happens when a plaintiff introduces an entirely new theory just as the curtain is about to fall and the house lights begin to rise? Specifically, the appeal poses the question of whether a plaintiff is permitted to amend her complaint in the middle of trial to add allegations of the defendants’ recklessness and request an award of punitive damages.
Standard to Amend Pleadings
Rule 1033 of the Pennsylvania Rules of Civil Procedure governs amended complaints. It states, in relevant part, that a party may amend a pleading—whether to “change the form of action, add a person as a party, correct the name of a party, or otherwise amend the pleading”— “at any time” “either by filed consent of the adverse party or by leave of court.” Pa.R.Civ.P. 1033(a). On its face, Rule 1033 does not impose a time limit on when a pleading such as a complaint must be amended. Indeed, the Superior Court has held that a complaint may be amended “at the discretion of the trial court after pleadings are closed, while a motion for judgment on the pleadings is pending, at trial, after judgment, or after an award has been made and an appeal take therefrom.” Biglan v. Biglan, 479 A.2d 1021, 1025–1026 (Pa. Super. Ct. 1984); see, e.g., Wilson v. Howard Johnson Rest., 219 A.2d 676, 679 (Pa. 1966) (amendments to pleadings “should be liberally granted at any stage of the proceedings” (citation and quotation marks omitted)).
That is not to say that the timeliness of a request to amend a pleading is wholly irrelevant. While the denial of a request to amend a pleading is an abuse of discretion when based on nothing more than unreasonable delay, see, e.g., Gutierrez v. Pa. Gas & Water Co., 507 A.2d 1230, 1233 (Pa. Super. Ct. 1986), the timeliness of the request is a proper consideration “insofar as it presents a question of prejudice to the opposing party.” Capobianchi v. BIC Corp., 666 A.2d 344, 347 (Pa. Super. Ct. 1995). The Pennsylvania Supreme Court has addressed prejudice in this context, writing:
If the amendment contains allegations which would have been allowed inclusion in the original pleading (the usual case), then the question of prejudice is presented by the Time at which it is offered rather than by the substance of what is offered. The possible prejudice, in other words, must stem from the fact that the new allegations are offered late rather than in the original pleading, and not from the fact that the opponent may lose his case on the merits if the pleading is allowed[.]
Bata v. Central-Penn Nat’l Bank of Phila., 293 A.2d 343, 357 (Pa. 1972) (citation and quotation marks omitted).
Applying that standard, Pennsylvania courts traditionally have looked unfavorably upon the late introduction of new theories of recovery. See, e.g., W. Penn Power Co. v. Bethlehem Steel Corp., 384 A.2d 144 (Pa. Super. Ct. 1975); Newcomer v. Civil Serv. Comm’n of Fairchance Borough, 515 A.2d 108 (Pa. Commw. Ct. 1986); Smith v. Athens Twp. Auth., 685 A.2d 651 (Pa. Commw. Ct. 1996).
The Bernavage Decision
The Bernavage case arose from a fall sustained by an elderly woman while being transferred at a long-term care facility. The woman subsequently passed away from unrelated causes. Thereafter, her daughter filed a professional negligence claim against two healthcare providers on her mother’s behalf. Notably, the complaint did not include any allegations of recklessness or willful or wanton misconduct. The matter was eventually tried to verdict before two different juries. During the first trial, the daughter elicited testimony from two of the defendants’ employees that the defendants’ conduct was reckless. The daughter then moved for a directed verdict on the issues of negligence and recklessness based on the employees’ admissions. The daughter also made a request to file an amended complaint to conform with the evidence elicited at trial, specifically, to characterize the defendants’ mental state as reckless and to make a claim for punitive damages. The trial court denied the daughter’s request for a directed verdict but granted her request for leave to file an amended complaint. In doing so, the trial court severed the issues related to the factfinder’s consideration of whether punitive damages should be awarded.
The first jury was asked to consider whether the defendants’ conduct fell below the standard of care, and if so, whether their negligence was a factual cause of the mother’s harm. The jury answered both questions in the affirmative and awarded the daughter $300,000 in compensatory damages. The jury was also asked two verdict interrogatories as to whether the defendants acted with the requisite state of mind that would allow for the recovery of punitive damages. The jury answered those questions in the affirmative as well. Based on that verdict, the pleadings were reopened, and the parties proceeded to conduct punitive damages discovery. At the ensuing second trial, the trial court required the parties to proceed using transcripts of the trial testimony for all witnesses called in the first trial; the only new evidence introduced was the wealth of the defendants and their ability to pay a punitive damages award. The second jury ultimately awarded the daughter $2.7 million in punitive damages—nine times the compensatory damages award. The defendants moved for judgment notwithstanding the verdict on punitive damages and the jury’s finding of negligence. The defendants also moved for a new trial. The trial court denied both requests.
On appeal, a Superior Court panel affirmed the award of compensatory damages but vacated the award of punitive damages. With regard to the punitive damages award, the panel determined that this was not a case where a plaintiff simply sought an amendment to conform the complaint to the evidence adduced at trial. “Rather,” the panel continued, “it was an introduction of a new theory of recovery,” because the specific theory of recovery to support the daughter’s punitive damages claim was “substantively different from the theory she developed during discovery and alleged in her complaint.” Bernavage, slip op. at 20. The panel held that this amounted to unfair surprise because, among other reasons, the daughter “never introduced the concept of recklessness into the case” “[i]n the three years prior”; the daughter’s counsel “introduced the concept of recklessness at the latest possible time—during day one of presentation of liability evidence”; “[t]he witnesses used the word reckless at counsel’s prompting”; and the daughter’s counsel “asked questions at trial that he could have, but did not, ask two years prior at the witnesses’ depositions.” Id. at 19, 21. In the process, the panel established the rule that “unfair surprise exists . . . where a negligence plaintiff, without explanation, withholds the precise theory of recovery until the latest possible time.” Id. at 21. The panel concluded its opinion by writing: “And while we ascribe no motive to [the daughter], to reach a different conclusion than the one we reach would be to invite negligence plaintiffs to withhold their theory of recovery, be it negligence, gross negligence, or recklessness, until the last possible minute for the specific purpose of creating unfair surprise.” Id.
The daughter moved for reargument en banc, which the Superior Court granted—resulting in the panel’s opinion being vacated. Briefing is underway, and it is anticipated that oral argument will take place before the en banc Superior Court in the spring of 2026.
What’s Next?
Depending upon how the en banc Superior Court rules, the impact of Bernavage could be far-reaching. Affirming the trial court in its entirety would, in practice, reintroduce trial by ambush, which the Pennsylvania Rules of Civil Procedure “were intended to prevent.” Clark v. Hoerner, 525 A.2d 377, 384 (Pa. Super. Ct. 1987); see Gregury v. Greguras, 196 A.3d 619, 628 (Pa. Super. Ct. 2018) (en banc) (“One of the primary purposes of discovery is to prevent surprise and unfairness of a trial by ambush, in favor of a trial on the merits.”). Plaintiffs would be incentivized to withhold their theory of recovery (and withhold their intention to seek punitive damages or possibly other damages) until the last possible moment, as noted by the panel.
Such a regime undoubtedly would unleash a series of preemptive measures by defendants, including filing motions in limine as a matter of course to bar plaintiffs from introducing evidence or argument on undisclosed theories of recovery or damages at trial to guard against last-minute amendments—although query whether such measures would prove effective if a plaintiff is automatically allowed to amend her complaint, in the middle of trial, to seek damages based on a previously undisclosed theory. Regardless, affirming the trial court, in full, would appear to raise due process concerns for defendants, particularly when punitive damages are sought. Such damages already “pose an acute danger of arbitrary deprivation of property,” Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994), and that danger seemingly would be exacerbated if punitive damages could be introduced for the first time at trial.
Accordingly, the en banc Superior Court must decide in Bernavage whether a last-minute amendment of this magnitude belongs in the final act—or whether it impermissibly rewrites the performance after the audience is already waiting for the final bow.
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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 rmcann@babstcalland.com.
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Reprinted with permission from the December 4, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.
GO-WV
(by Steve Silverman and Katerina Vassil)
There has been much talk within the oil and gas industry about the potential for lithium extraction from produced water, a waste byproduct produced during hydraulic fracturing and drilling. Is this only talk, or are we approaching another extraction revolution? The answer is that the revolution is knocking on the door, but there remain significant practical and legal hurdles to overcome. To become viable, lithium extraction must become both economically and environmentally sustainable. Thus far, these technologies have not proven to be economically scalable, nor could their environmental impacts be justified.
The legal hurdles involving lithium extraction can be summed up in one question: Who owns the lithium? Is it the surface owner, the mineral owner (where the two differ), or the operator? As seen below, the standard lawyer answer applies: it depends.
Incentives for overcoming these hurdles could not be higher. Whoever masters lithium extraction technology from produced water will be able to name their own price for licensing that technology. Just as importantly, the oil and gas industry will be a major contributor to solving the obstacles currently facing the U.S. in sourcing lithium. Current U.S. dependence on foreign suppliers of lithium, especially China, raises significant geo-political concerns that can be cured by sourcing lithium domestically. Current estimates are that 40% of the country’s lithium needs are contained within the Appalachian Basin alone.
Lithium in Context
A. Lithium as a Commodity
Produced water contains a variety of constituents – sediment, salts, hydrocarbons, minerals, and metals. Lithium is one of these constituents, and when extracted and processed, lithium has numerous uses and applications.
Lithium batteries are used to power the cell phone or computer that you’re reading this article on, the alarm system that keeps your home safe, and the electric vehicle that you drive. Lithium batteries power medical devices like pacemakers. If you’re a golfer, your golf cart is likely powered by lithium batteries. If you’re an avid photographer, that digital camera that you use to take photos is powered by lithium batteries. As technology develops and improves, lithium batteries will continue to become even more ubiquitous. In fact, lithium consumption is expected to more than quadruple in the next ten years alone.
B. Lithium: Then & Now
In the 1990’s, the United States was one of the largest producers of lithium. Today, less than 2% of the world’s lithium is produced here. In 2022, the U.S. government designated lithium as a critical mineral, recognizing lithium as essential to economic and national security. The U.S. government has directed that all lithium be produced domestically by 2030, an unrealistic goal. In reality, the U.S. cannot meet current domestic lithium needs and must rely heavily on top producing nations like China, Chile, and Australia.
China currently dominates the lithium market, with vast reserves of lithium and a monopoly over both lithium processing and production of lithium batteries. The U.S government is determined to prioritize critical mineral resource initiatives and has dedicated billions of dollars towards processing lithium and other critical minerals for battery production, with the ultimate goal of reducing dependence on China and other nations. Additional funding has been allocated towards direct lithium extraction initiatives and lithium-ion battery plants.
C. Lithium in the U.S.
Despite the U.S. sourcing the vast majority of its lithium needs from foreign nations, there are numerous lithium sources in our own backyard. Yet, the Albermarle Silver Peak Mine in Nevada is the only active lithium producing mine in the U.S. This site utilizes direct lithium extraction and produces most of the less than 2% of the world’s lithium that comes from the U.S.
In 2024, scientists discovered a massive lithium deposit in wastewater from Marcellus Shale wells in Pennsylvania, with potential for even more in West Virginia and Ohio. As noted above, these untapped Marcellus Shale sources could contain enough lithium to meet up to 40% of current domestic needs.
Another recent discovery in the Smackover Formation in Southwestern Arkansas contains potentially 19 million tons of lithium. There currently is a new pilot lithium extraction site in Northeast Pennsylvania operated by Canadian company Avonlea Lithium. According to Avonlea, a pilot test conducted at this site in June 2025 yielded extremely promising results, producing lithium phosphate solids from produced water with a purity of 94.2% and a lithium recovery rate of 69.3%.
Additional lithium extraction methods currently being developed and refined include Solar Evaporation Brine Extraction, Direct Lithium Extraction, Solar Transpiration-Powered Lithium Extraction and Storage, and Redox-Couple Electrodialysis. However, seemingly successful processes like the “Closed Loop” process used at Eureka Resources’ site in Williamsport, Pennsylvania have faced significant challenges. This method was initially successful, extracting 97% pure lithium carbonate from oil and natural gas brine with an up to 90% success rate. But the plant was subsequently closed in 2024 and cited for numerous permit and OSHA violations, workplace safety issues, and environmental violations. This illustrates how some promising lithium extraction methods face significant scalability, economic, and environmental issues that may impede their viability.
D. Lithium Ownership: Title and Lease Rights
The starting point as to who owns the produced water’s lithium requires determining whether there has been a severance of the mineral rights. In other words, has a prior owner of those mineral rights somewhere in a chain of title reserved or retained ownership of those minerals in the course of transferring ownership of their surface rights. As with any title examination, the specific language in the severance deed determines exactly what the surface owner retained: minerals, oil, gas or some combination of the three.
If there has been a severance of the mineral rights, then it is unlikely that the current surface owners own the lithium under their property. More importantly, the current surface owners likely have no legal authority to lease the lithium to an operator. Thus, the operator must lease that lithium from its true “severed” owner instead.
But even if an operator has a lease with the lithium owner, they still may not have the right to extract it unless the lease’s granting clause arguably includes lithium. Granting clauses can contain a variety of terminology to identify what rights the lessor is being given. These include “oil,” “gas,” “their constituents,” “hydrocarbons” and even the generic “minerals.”
Note, however, that a “mineral” can have different legal definitions in different states. For instance, in Texas “mineral” includes oil, gas, uranium and sulphur. In both West Virginia and California, the definition is even broader and includes sand and gravel. Oklahoma defines only hydrocarbons as a mineral. Ohio excludes coal but includes oil and gas within its definition of a mineral, while Pennsylvania excludes both of those from its definition.
While no court has yet to explicitly rule on whether lithium is a mineral, that is the most likely conclusion, particularly since lithium is a metal and certainly not a hydrocarbon. Thus, unless a lease’s granting clause explicitly identifies lithium, it should at least include “minerals” if the lessor is to claim rights to the lessee’s lithium.
E. Rights to the Produced Water
So, is an operator who doesn’t own lease rights to lithium out of luck? The answer is maybe not because that operator may still be able to argue ownership of the produced water within which the lithium resides.
As of this writing, only one case has specifically addressed who owns the produced water. In June of this year, in Cactus Water Services, LLC v. COG Operating, LLC, the Texas Supreme Court held that produced water is a waste byproduct of the oil and gas drilling process “product stream” and therefore owned by the operator.
The facts of the case are somewhat involved, but can be simplified as follows: The operator, COG, had an oil and gas lease with the severed mineral owner. Cactus Water, however, entered into a “produced water lease” with the surface owner for the same acreage to pay royalties for monetizing that produced water. In contrast, COG’s lease made no mention of the produced water, yet it still claimed ownership of that water. The Texas Supreme Court agreed with COG. Yet it also noted that COG’s lessor could have expressly reserved ownership of the produced water in its lease.
The case’s unique facts, combined with the Court’s strained rationale behind its decision, raise doubts as to whether Cactus Water’s decision will be adopted in less oil and gas friendly states.
Takeaways
The economic and political upsides to lithium extraction are simply far too great to ignore. Investors are showing an increasing willingness to dedicate the necessary resources to overcome economic scalability and environmental sustainability challenges.
The legal impediments surrounding lithium should be easier to overcome. Operators must perform their title analysis with an eye specifically geared to determining lithium ownership rights. New leases must contain language explicitly granting rights to lithium. Where operators lack defensible positions that their existing leases grant such rights, they should consider lease amendments explicitly doing so. Where lithium remains owned by surface owners not subject to oil and gas leases, operators should enter into separate leases with those surface owners to monetize their produced water. Finally, all of these agreements and leases should plainly state that royalties paid for extracting lithium, as well as other possibly valuable constituents from produced water, must be paid on a net basis so an operator can deduct its extraction expenses.
Thus, there can be no doubt that the lithium extraction revolution is coming. The ability to successfully extract lithium from produced water is not a question of “if,” but rather of “when.”
Steven B. Silverman is a shareholder in the Litigation and Energy and Natural Resources groups of law firm Babst, Calland, Clements, and Zomnir, P.C. His practice focuses on commercial litigation, with an emphasis on natural gas title and lease disputes and other energy-related cases. Steve is licensed to practice law in Pennsylvania and Ohio. Contact him at 412-253-8818 or ssilverman@babstcalland.com.
Katerina P. Vassil is an associate in the Litigation Group of law firm Babst, Calland, Clements, and Zomnir, P.C. She represents clients in a variety of litigation practice areas, including commercial, energy and natural resources, environmental, and employment and labor. Katerina is licensed to practice law in Pennsylvania and Ohio. Contact her at 412-394-6428 or kvassil@babstcalland.com.
Click here, to view the article online in the December issue of GO-WV News.
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Ethan Johnson)
In response to supply shortfalls due to data center demand, the largest regional transmissional operation in the United States, PJM Interconnection (PJM), has submitted its Expedited Interconnection Track (EIT) proposal to allow new generators to bypass the traditional interconnection queue. PJM is a regional transmission organization that coordinates the movement of wholesale electricity in 13 states and the District of Columbia. The EIT proposal operates in parallel to the standard PJM Cycle Process. PJM estimates a 10-month timeframe for the new, expedited process, whereas the standard Cycle Process can take up to four years or longer. PJM modified the EIT proposal based on stakeholder feedback, with key modifications including enhanced demand-side participation, better load forecasting, and improvements to the interconnection process. Eligible projects may be of any fuel type, but must:
- have a capacity larger than 500MW;
- be sponsored by a state within the PJM coverage;
- request Capacity Interconnection Rights simultaneously;
- achieve commercial operations within three years of submitting their application;
- submit a large non-refundable study deposit (> $500,000) and readiness deposit ($10k/MW); and
- provide three full years of site control for 100% of generating site & interconnection facilities at time of application.
If a project does not meet the eligibility criteria for the expedited track, an application may be submitted for the Cycle Process. Gas-fired generation made up 69% of the projects that PJM selected for interconnection review in May 2025. PJM forecasted that peak load across its footprint would grow 32 gigawatts (GW) from 2024 to 2030, with 30GW attributed to data centers. PJM also forecasts increased demand could lead to a 5% bill increase for rate payers by June 2026. PJM faces mounting pressure to curb rate increases. On November 5, 2025, Members of Congress representing the Mid-Atlantic region sent a letter to PJM urging more action to control increasing energy demand and electricity costs, primarily driven by data center growth.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Ethan Johnson)
On September 11, 2025, the Pennsylvania Public Utility Commission (PUC), stressing the need to address aging infrastructure, approved a final order that will speed up the process of identifying and replacing older, at-risk plastic pipe materials in natural gas systems. The final order builds on the PUC’s August 26, 2024, tentative order on the same subject. Under the order, natural gas utilities must catalog older materials identified by federal authorities as being prone to cracking and add mitigation and replacement of these older materials to their management plans. Beyond that, the PUC’s Bureau of Technical Utility Services will require utilities to provide detailed inventories of older plastic pipes and components and explain how they will differentiate the older pipe from the newer pipe.
The PUC’s action comes after several advisory bulletins, dating back to 1998, issued by the U.S. Department of Transportation on pre-1982 plastic pipe materials and a 2023 bipartisan bill introduced to Congress aimed at addressing older piping known to fail. The bill, H.R. 5638, or the Aldyl-A Hazard Reduction and Community Safety Act, was introduced in response to the deadly 2023 natural gas explosion at the R.M. Palmer Co. chocolate factory in West Reading, Pennsylvania. The National Transportation Safety Board, which released its investigation report in March 2025, confirmed that the point of failure was from a retired 1982 service tee made from DuPont Aldyl-A plastic.
The PUC emphasized that utilities that failed to respond to data requests on this issue in the past will be referred for enforcement action. Speaking on the final order in the PUC’s announcement, PUC Chairman Stephen M. DeFrank said that “[s]afety is the foundation of our work as regulators and today’s action underscores the Commission’s commitment to addressing risks wherever they may be found—including in older plastic materials that have been linked to failures across the country.” The PUC acknowledged competing priorities and the high cost of replacing infrastructure, but made clear that the enhanced replacement efforts were necessary to safeguard the public.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
