Smart Business
(by Adam Burroughs with Molly Meacham)
As states begin to relax restrictions on social gatherings, businesses are trying to reopen in a manner that is safe for their employees, vendors, customers and clients. They’re also trying insulate themselves from the legal exposures they face as they work out a plan to get their business up and running.
“I’m getting a lot of questions from employers who want to do right on all of those fronts,” says Molly Meacham, a shareholder at Babst Calland. “They are really working hard, thinking through the issues, listening to state, local and federal government advice, all while trying to keep their businesses running.”
Smart Business spoke with Meacham about addressing the legal risks that come with operating during the pandemic.
What legal concerns do companies have as they reopen?
The most significant concern is that a company will have an outbreak at their workplace. If that happens, it means considering the company benefits employees should be entitled to, such as sick leave or short-term disability, if they are eligible for leave under the Family and Medical Leave Act (FMLA), if they are covered by Families First Coronavirus Response Act (FFCRA) and eligible for those leaves, or if they’re entitled to any accommodation under the Americans with Disabilities Act.
Another risk is that contracting the illness could lead to a lawsuit or workers’ compensation claim. In a classic workers’ compensation scenario, the employee would need to prove they contracted the virus at the workplace. Some states are reducing employees’ burden of proof, or covering COVID-19 illness for certain groups of employees. For those states that are not making changes, whether or not COVID-19 is covered by workers’ compensation is likely to be a hotly litigated issue.
The regulatory and legal burden on employers has increased dramatically with this pandemic. For example, the Department of Labor has hired a number of new Wage and Hour Division investigators to enforce wage and hour laws, including the new FFCRA. The increased regulatory burden and increased enforcement could lead to administrative action or civil liability for companies found to be in violation.
How can companies reduce their litigation exposure?
Some companies are looking at COVID-19 exposure liability waivers to provide some legal insulation. Those waivers are of limited utility against employee claims, as an employer typically cannot compel employees to waive future rights, their rights under workers’ compensation, or their right to make an OSHA complaint for an unsafe workplace. Therefore, employee waivers are likely to generate bad will and skepticism without much return.
The effectiveness and enforceability of waivers for customers, clients and third parties who are accessing a company’s premises depends on state law and the specifics of the waiver. Although those waivers may ultimately be enforceable in certain states, for some businesses the limited potential legal protection may be outweighed by the negative impact on the company’s business relationships. In addition, in some states those waivers may ultimately be unnecessary, as some states are passing legislation granting businesses immunity from liability for harm caused by COVID-19.
How can companies keep people safe and insulate themselves from legal repercussions?
It’s important to have a response plan in place. If there’s an incident or exposure in the workplace, the company should first care for the impacted employee, then ensure that other potentially impacted employees are promptly notified and removed from the workplace if necessary, and that steps are taken to disinfect the workplace.
For companies that have a plan in place that is compliant with federal, state and local guidelines and regulations, and the company clearly communicated that plan to employees and customers, it will be difficult for a court to second-guess those steps and say that a company should have done more.
These are difficult times. Through preparation, companies can balance safety with continued operations and maintain the safest possible premises for employees and third parties, such as vendors, customers and clients.
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For the PDF, click here.
EmTech Law Blog
(by Justine Kasznica)
An artist’s rendering of NASA’s VIPER rover, which will roam the Moon’s south pole looking for water ice.
(Source: NASA)
Today, we are thrilled to celebrate with Astrobotic Technology, Inc., a Pittsburgh-based space robotics and lunar transportation and logistics company, on receiving a $199.5 NASA award to send the NASA Volatiles Investigating Polar Exploration Rover (VIPER) to the lunar surface in 2023 to search for water-ice. Not only is this a historically significant mission, as it is the first “resource-mapping” mission of its kind, this is an amazing achievement for a company that that has worked tirelessly for 13 years to prove a new commercial space market. For more information, click here.
Our Emerging Technologies attorneys are fortunate to work with incredible innovators, entrepreneurs and visionaries pushing the frontiers of technology and industry. We love to showcase our clients, especially when they hit notable milestones that may be of interest to our entire Babst Calland EmTech family.
Our newly launched EmTech Blog will enable us to do more of these Client Spotlights, so stay tuned! If you would like your company to be featured, please send accomplishments or highlights to jkasznica@babstcalland.com.
Tags: Emerging Technology, Industry News, Innovation, NASA, Robotics, Technology
The Legal Intelligencer
(by Lisa Bruderly and Daniel Hido)
The Pennsylvania Department of Environmental Protection (PADEP) is proposing significant revisions to its regulations and guidance regarding the permitting of obstructions and encroachments of waters of the commonwealth under 25 Pa. Code Chapter 105. The regulatory revisions, if promulgated, are expected to significantly change the Chapter 105 permitting process by increasing the level of required effort to complete an individual (joint) permit application and potentially increasing the time for the PADEP to review such applications.
The PADEP has presented the regulations and guidance to several of its advisory committees, including, most recently, the Water Resources Advisory Committee (WRAC) on May 28. Later this year, the proposed revisions are expected to be presented to the Environmental Quality Board, with a public comment period to follow. The PADEP’s “draft final” technical guidance document (TGD) on alternatives analysis requirements is expected to be finalized and published in coordination with the proposed regulatory revisions.
Proposed Regulatory Changes to Chapter 105
Proposed revisions to Chapter 105 include the following:
Permit Waivers—Addition of six new permit waivers to 25 Pa. Code Section 105.12, including new waivers for temporary environmental investigation activities and for temporary mats and pads used to minimize erosion and sedimentation at wetland crossings.
Alternatives Analysis—Addition of criteria to the alternatives analysis requirements at 25 Pa. Code Section 105.13(e)(viii), including identification of the effects of “reasonably foreseeable future development” within the wetland or watercourse upstream and immediately downstream of the proposed project and demonstration that project alternatives impacting other regulated waters would meet the requirements of 25 Pa. Code Section 105.16, regarding environmental, social and economic balancing.
Impacts Analysis—Addition of requirements for impacts analyses under 25 Pa. Code Section 105.13(e)(x), including detailed analysis of the “potential secondary impacts” (undefined) of a proposed project on an expanded list of resources, including public water supplies, natural areas, areas or structures of cultural significance, parks, recreational areas, historical sites and certain designated streams.
Projects would also require a “narrative discussion and analysis” on water dependency. Projects affecting a wetland would require a narrative discussion of the wetland delineation process, an analysis of whether a wetland is exceptional value, and a demonstration that the requirements for permitting structures or activities in wetlands under 25 Pa. Code Section 105.18a have been met.
Antidegradation—Addition of a requirement under 25 Pa. Code Section 105.13(e)(xii) to demonstrate that the proposed project is consistent with antidegradation requirements under applicable Pennsylvania regulations and the Clean Water Act.
Cumulative Impacts—Addition of a requirement under 25 Pa. Code Section 105.13(e)(xiii) to perform a “projectwide cumulative wetland impact analysis,” including a demonstration that the proposed project does not result in an impairment of wetland resources or major impairment of the wetlands under 25 Pa. Code Section 105.18a.
Environmental Assessment for Aquatic Resource Restoration—Creation of new PADEP criteria to evaluate environmental assessments of projects involving aquatic resource restoration under 25 Pa. Code Section 105.15(a)(4), including consideration of the project’s goals and objectives, wetland delineation and watercourse reports, the resource type and uses, historic and modern land uses, the anticipated aquatic resource restoration improvement and benefit, and various geomorphic, geologic and geotechnical information.
Compensatory Mitigation—Replacement of existing wetland mitigation criteria under 25 Pa. Code Section 105.20a with more expansive provisions applying to all regulated waters of the commonwealth. Rather than specific ratios, compensatory mitigation for unavoidable impacts would require “replacing the resource functions that will be impacted” or providing substitute resources. The amount of compensatory mitigation would be determined by the PADEP based on new criteria, including the direct, indirect and secondary impacts of the project and the value of the proposed mitigation actions to “reestablish and rehabilitate environmental resources.”
The PADEP would also be required to “track wetland losses and gains” occurring through Chapter 105, with the goal of ensuring “no net loss of wetland resources within the service areas.” Although “service areas” are not defined, compensatory mitigation could be achieved through a PADEP-approved mitigation bank, in-lieu fee program or permittee responsible mitigation site, so long as the mitigation site is located within the same state water plan sub-basin as the project impacts or within the designated watershed boundaries identified by the PADEP.
Draft Final Guidance Regarding Chapter 105 Alternatives Analysis
Among other information, the 21-page Chapter 105 Alternatives Analysis TGD provides an overview of the alternatives analysis process and a template checklist of the items the PADEP expects to be submitted as part of the alternatives analysis demonstration. Example tables for the submittal of information are also provided. The PADEP has indicated that the TGD may be issued for public comment in the second half of 2020. A trenchless technology TGD has also been drafted and is expected to be finalized with the alternatives analysis TGD.
Key Takeaways
The proposed revisions would create expansive new requirements, almost certainly increasing the time and effort required to complete individual/joint Chapter 105 permit applications. These new requirements, if promulgated, will also likely increase PADEP application review times, particularly at the outset when the agency and the regulated community are becoming familiar with the new requirements. Additionally, revised compensatory mitigation criteria could expand the extent of mitigation required for a project. On the other hand, the addition of six new permit waivers means that certain projects may no longer be required to obtain a Chapter 105 permit.
For the full article, click here.
Reprinted with permission from the June 11, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.
RMMLF Mineral Law Newsletter
(By Joseph K. Reinhart, Sean M. McGovern and Casey Snyder)
On January 22, 2020, the Pennsylvania Supreme Court affirmed that the rule of capture, a 150-year-old legal doctrine that applies when a well drains oil and gas from a reservoir that crosses multiple properties, can be applied to hydraulic fracturing of unconventional wells. See Briggs v. Sw. Energy Prod. Co., 224 A.3d 334 (Pa. 2020). The decision reverses the April 2, 2018, ruling by the Pennsylvania Superior Court that the rule of capture did not apply to hydraulic fracturing. Briggs v. Sw. Energy Prod. Co., 184 A.3d 153 (Pa. Super. 2018); see Vol. XXXV, No. 2 (2018) of this Newsletter.
In Briggs, the plaintiffs owned property adjacent to land owned by Southwestern Energy Production Co. (Southwestern). Southwestern used hydraulic fracturing for natural gas extraction from the Marcellus Shale formation, and wells were drilled on and fluids injected only beneath its land. Briggs, 224 A.3d at 339, 343.
The court ruled that the rule of capture was applicable to hydraulic fracturing as it is to any other means of artificially stimulating the flow of oil and gas. Id. at 352. It emphasized that the application of the rule of capture did not rest on the distinction between using natural flow and hydraulic fracturing. However, the court did not answer the question of whether horizontal hydraulic fracturing could constitute a trespass by physical intrusion of properties adjacent to a well site. Id. at 350–51. The court remanded the case to the superior court to determine whether or not the plaintiffs’ claims could move forward in light of what it said were pleading deficiencies in the complaint for failing to allege a physical intrusion. Id. at 351–52.
After remand, Southwestern was granted leave in April 2020 to file a supplemental brief. See Supplemental Brief of Appellee, Briggs v. Sw. Energy Prod. Co., No. 1351 MDA 2017 (Pa. Super. Ct. filed Apr. 23, 2020). The superior court denied Southwestern’s request for oral argument and en banc review. See Order Denying Request for Oral Argument and En Banc Review Comment, Briggs, No. 1351 MDA 2017 (Pa. Super. Ct. Apr. 16, 2020).
PENNSYLVANIA MOVES FORWARD WITH RULE INCREASING UNCONVENTIONAL WELL APPLICATION FEE
On February 14, 2020, the Independent Regulatory Review Commission (IRRC), a state agency responsible for reviewing proposed regulations from most state agencies, received the Pennsylvania Department of Environmental Protection’s (PADEP) final regulation increasing the well application fee for vertical and non-vertical unconventional wells. Previously, the Pennsylvania Environmental Quality Board (EQB) voted to adopt the draft regulations as final on January 21, 2020. The final-form regulation can be viewed on the IRRC’s website at http://www.irrc.state. pa.us/regulations/RegSrchRslts.cfm?ID=3217. The IRRC was scheduled to hold a public meeting on the draft regulation on May 21, 2020, in Harrisburg, Pennsylvania. That meeting was subsequently canceled due to the ongoing COVID-19 pandemic and the May 21 agenda items have been tentatively set for the next public meeting on June 3, 2020. A copy of the May 21 agenda is available at http://www.irrc.state.pa.us/documents/uploads/meetings/05-21-2020_Agenda.pdf.
Every three years, PADEP is required to evaluate the unconventional well permit application fees and recommend regulatory amendments to the EQB to address any disparity between the cost of funding PADEP’s oil and gas program and income from the well permit application fees. See 25 Pa. Code § 78a.19(b). The fees were last amended in 2014. See Oil and Gas Well Fee Amendments, 44 Pa. Bull. 3517 (June 14, 2014). The final regulation increases well permit application fees from $5,000 for nonvertical unconventional wells and $4,200 for vertical unconventional wells to $12,500 for all unconventional well permit applications. See 25 Pa. Code § 78a.19(a) (current unconventional well permit application fees). It also removes definitions for “nonvertical unconventional well” and “vertical unconventional well” related to well permit applications, as well permit application fees will now be the same for all unconventional well permit applications. According to the preamble of the rule, PADEP determined the fee increase is necessary to maintain the administration of its Office of Oil and Gas Management by sustaining current staff level and operating costs despite recent staff reductions and the implementation of cost-saving measures. PADEP found that at the current well permit application fees, it would need to receive 5,000 nonvertical unconventional well permit applications a year to sustain the program. However, it anticipated only receiving approximately 2,000 based on recent annual totals, causing it to recommend raising the fees to $12,500.
The rulemaking must still be approved by the House and Senate environmental committees and the IRRC prior to publication. The final rulemaking will be effective upon publication in the Pennsylvania Bulletin.
PENNSYLVANIA HOUSE CONSIDERING PROPOSED CONVENTIONAL OIL AND GAS WELLS ACT
The Pennsylvania House of Representatives continues to deliberate legislation that would largely remove Pennsylvania conventional oil and gas operations from the requirements of the state’s current oil and gas law, Act 13 of 2012 (Act 13), 58 Pa. Cons. Stat. §§ 2301–3504.
On April 20, 2020, the House laid Senate Bill 790 (SB 790), titled “Conventional Oil and Gas Wells Act,” on the table for consideration but removed it the same day. Previously, in January 2020, the Pennsylvania House Environmental Resources and Energy Committee voted to report SB 790 to the House for a final vote. The Pennsylvania Senate passed SB 790 in October 2019.
Due to the differences in conventional and unconventional operations, there have been legislative efforts since Act 13’s replacement of the 1984 Oil and Gas Act (Act 223) to remove conventional operations from Act 13 jurisdiction and revert to the standards under Act 223. SB 790 would accomplish this by repealing all provisions of Act 13 as they relate to conventional wells, except the underground gas storage provisions of subchapter C. SB 709 would change several aspects of the Act 13 standards for conventional operators, including:
- the water supply replacement standard;
- the definition of public resources;
- inactive status;
- bonding requirements;
- voluntary plugging incentives;
- area of review; and
- restoration obligations.
A provision that would have permitted the use of produced water to treat roads as a dust suppressant was removed from the SB 790 version reported to and under consideration by the House.
It is unclear whether the bill will pass the House, but Governor Tom Wolf’s office has indicated that the Governor intends to veto the current version of the bill if it does pass in the state legislature.
PENNSYLVANIA SUPREME COURT ACCEPTS APPEAL OF RULING ON OIL AND GAS REVENUE TRANSFERS
Briefing continues on an Environmental Rights Amendment (ERA), Pa. Const. art. I, § 27, challenge to management of income generated from oil and gas leases on public land at the state supreme court level. The litigation stems from a 2017 opinion of the Pennsylvania Supreme Court that enumerated a new standard to determine violations of the ERA based on the text of article I, section 27 of the Pennsylvania Constitution and principles of Pennsylvania trust law. See PEDF v. Commonwealth, 161 A.3d 911 (Pa. 2017); see also Vol. XXXIV, No. 3 (2017) of this Newsletter. Using this standard, the court held that proceeds from the sale of oil and gas from the public trust remain in the trust under the ERA and may only be used to conserve and maintain public natural resources. 161 A.3d at 939.
The Pennsylvania Supreme Court agreed to review a July 29, 2019, commonwealth court ruling that rents and bonuses paid out under leases between the state and natural gas operators were not assets of the public trust established under the ERA because they were not intended as compensation for gas extracted from the ground. See PEDF v. Commonwealth, 214 A.3d 748, 773–74 (Pa. Commw. Ct. 2019). Instead, the rents and bonuses were consideration for the exploration of oil and gas on public land. Id. at 773. The court ruled that because the money did not have to be set aside exclusively for conservation and maintenance of public natural resources under the Pennsylvania Constitution, under statutory language in effect at the time the ERA was adopted one-third of the income from the rents and bonuses could be used for General Fund purposes of the commonwealth. Id. at 774.
The Pennsylvania Environmental Defense Foundation (PEDF) appealed the holding in August 2019. See Notice of Appeal, PEDF v. Commonwealth, No. 64 MAP 2019 (Pa. Aug. 12, 2019). The Pennsylvania Supreme Court agreed to review the case in December 2019, and the respective parties submitted briefs through March 2020. PEDF alleges the commonwealth court opinion ignores the 2017 opinion of the supreme court holding that revenue from oil and gas drilling on state forest land must be held in trust under the ERA and be used for conservation purposes only. See Appellant’s Brief at 43, PEDF v. Commonwealth, No. 64 MAP 2019 (Pa. Jan. 28, 2020). It argues that the bonus and rental payments are solely to find, extract, and transport the natural gas for sale, and, therefore, the payments are solely in exchange for the severance of resources from public land. Id. at 19. To date, oral argument has not been scheduled.
RMMLF Mineral Law Newsletter
(By Joseph K. Reinhart, Sean M. McGovern, Daniel P. Hido and Gina N. Falaschi)
In recent months there have been several notable updates regarding Pennsylvania’s statutory and regulatory provisions on temporary cessation of coal refuse disposal operations.
OSMRE Publishes Proposed Rule Regarding Pennsylvania Regulatory Program
As reported in Vol. XXXVI, No. 4 (2019) of this Newsletter, Act 74, P.L. 452 (2019), amending the 1968 Coal Refuse Disposal Control Act (CRDCA), 52 Pa. Stat. §§ 30.51–.66, went into effect on December 3, 2019. Act 74 amended section 6.1(i) of the CRDCA, 52 Pa. Stat. § 30.56a(i), regarding temporary cessation of operations. Prior to Act 74, section 6.1(i) required operators to install a system for preventing precipitation from contacting coal refuse disposal areas that have reached capacity, permanently ceased operation, or temporarily ceased operation for more than 90 days, but allowed the Pennsylvania Department of Environmental Protection (PADEP) to approve an extension of up to one year for reasons of labor strike or business necessity. Act 74 removed the one-year time limit on temporary cessation and the restriction that an extension beyond 90 days could only be granted for reasons of labor strike or business necessity.
On October 16, 2019, Pennsylvania submitted an amendment to its regulatory program under the Surface Mining Control and Reclamation Act to the Office of Surface Mining Reclamation and Enforcement (OSMRE) for approval. OSMRE published notice of the proposed program amendment in the Federal Register on February 14, 2020. See 85 Fed. Reg. 8494 (proposed Feb. 14, 2020) (to be codified at 30 C.F.R. pt. 938).
The public comment period on the proposed rule closed on March 16, 2020. Only two comments were submitted. OSMRE will now determine whether the proposed amendment should be approved. If OSMRE approves the amendment it will become part of Pennsylvania’s approved regulatory program upon publication of the final rule in the Federal Register.
PADEP Unveils Proposed Changes to Coal Refuse Disposal Regulations
The requirements of section 6.1(i) of the CRDCA are further reflected in PADEP’s coal refuse disposal regulations at 25 Pa. Code § 90.167(d), which will therefore require amendment to conform to the new section 6.1(i). PADEP unveiled an initial draft of proposed amendments to the chapter 90 regulations in advance of the March 16, 2020, meeting of the Mining and Reclamation Advisory Board (MRAB) that would revise section 90.167, in addition to other provisions of chapter 90. The proposed amendments may change based on feedback from MRAB at future meetings.
PADEP has not announced its expected time frame for publishing the proposed rule in the Pennsylvania Bulletin, at which point there will be a public comment period prior to publication of the final rule. The current draft of the proposed rule is available at https://www.dep.pa.gov/PublicParticipation/AdvisoryCommittees/Mining/MiningReclamation/Pages/ 2020.aspx.
EQB FINALIZES FEDERAL CONSISTENCY RULEMAKING
On March 14, 2020, the Pennsylvania Environmental Quality Board (EQB) published a final rule titled “Federal Office of Surface Mining Reclamation and Enforcement Program Consistency” in the Pennsylvania Bulletin. See 50 Pa. Bull. 1508 (Mar. 14, 2020). The rule, which was first proposed on October 27, 2018, amends Pennsylvania’s coal mining regulations at 25 Pa. Code chs. 86–90 to address inconsistencies with federal requirements. See Vol. XXXV, No. 4 (2018) of this Newsletter.
The Pennsylvania Department of Environmental Protection (PADEP) initiated these revisions in response to the Office of Surface Mining Reclamation and Enforcement’s (OSMRE) identification of several state regulations that required revision because they were not as effective as federal requirements. These amendments include:
- The word “augmented,” referring to “augmented seeding,” was removed from the state bonding requirements regulations at 25 Pa. Code § 86.151(d) to clarify that seeding does not restart the period of bond liability.
- Bonding requirements at 25 Pa. Code § 86.158(b) were revised to clarify that PADEP will determine the value of collateral bonds at market value, less any legal and liquidation costs, and will require additional bond if necessary with each permit renewal.
- The definition of “haul road” under the anthracite coal mining regulations at 25 Pa. Code § 88.1 was revised to clarify that the term includes public roads used as an integral part of the mining operation.
While PADEP noted that the following changes were not required by OSMRE, the final rule also revises the following provisions to make them consistent with federal requirements:
Alternative effluent limitations for underground mine passive treatment systems were removed from 25 Pa. Code § 89.52(f).
- The one-year time limit on temporary cessation of surface mining operations was removed from 25 Pa. Code § 87.157. Section 87.157 was further revised to include new provisions regarding information required to be submitted by the operator in connection with temporary cessation and the circumstances under which temporary cessation status would terminate.
- The definition of “surface mining activities” in 25 Pa. Code §§ 86.1 and 87.1 was revised to incorporate by reference the federal definition at 30 C.F.R. § 701.5. Pennsylvania’s regulations previously had a separate definition of surface mining activities that closely followed the federal definition.
- 25 Pa. Code § 86.193, relating to assessment of civil penalties, previously required PADEP to issue a penalty if the calculated penalty amount was $1,100 or more. This provision was revised to instead incorporate the federal system of requiring assessment of a penalty based on a points system, where points then correspond to a dollar amount.
Finally, the final rule also includes the following changes unrelated to federal consistency:
- Tables in 25 Pa. Code chs. 87, 88, and 89 used for calculating the amount of precipitation for a 24-hour storm event were removed and replaced with a reference to data available from the National Oceanic and Atmospheric Administration to reflect updated information. According to the final rule, this change will generally result in calculations of amounts of precipitation lower than what was previously listed in the tables.
- 25 Pa. Code § 86.281, relating to remining financial guarantees, was revised to clarify how PADEP calculates and maintains the amount of the financial guarantee. Section 86.282 was revised to state that an operator is not eligible to participate in the remining financial incentives program if it received a notice of violation related to maintaining bonds within the last three years.
- The definition of a “preferred site” for a coal refuse disposal facility in 25 Pa. Code § 90.201 was revised to include “an area adjacent to or an expansion of an existing coal refuse disposal site,” consistent with a 2010 amendment to the CRDCA.
The Pennsylvania Bulletin notice states that the final rule is effective immediately, although the official version of the regulations has not yet been updated to reflect the changes.
PADEP PRESENTS DRAFT CARBON TRADING REGULATIONS FOLLOWING RGGI MODEL
As previously reported, the Pennsylvania Department of Environmental Protection (PADEP) continues to work toward developing a rule to limit carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators consistent with the Regional Greenhouse Gas Initiative (RGGI) Model Rule and Governor Tom Wolf’s October 2019 Executive Order No. 2019-07, 49 Pa. Bull. 6376 (Oct. 26, 2019). See Vol. XXXVII, No. 1 (2020); Vol. XXXVI, No. 4 (2019) of this Newsletter.
On February 13, 2020, PADEP presented its preliminary draft proposed rulemaking to establish a CO2 budget trading program to the Air Quality Technical Advisory Committee (AQTAC). See Presentation by PADEP to the AQTAC, “Pennsylvania’s Proposed CO2 Budget Trading Program” (Feb. 13, 2020). The draft proposed rule parallels the RGGI Model Rule with a few notable differences, including: (1) the draft proposed rule states that it is designed to reduce CO2 emissions “in a manner that is protective of public health, welfare and the environment and is economically efficient,” while the RGGI Model Rule only mentions economic efficiency in its statement of purpose; and (2) the draft proposed rule does not require the establishment of multi-state allowance auctions, as performed within RGGI, but gives PADEP discretion to hold Pennsylvania-only auctions if it determines, among other things, that its participation in a multi-state auction process would not provide more benefits than costs to Pennsylvania versus a statewide auction. The draft proposed rule is available at https://www.dep.pa.gov/Business/Air/BAQ/AdvisoryGroups/Air-Quality-Technical-Advisory-Commit-tee/Pages/default.aspx.
In response to requests for further opportunities to learn about the program, PADEP held a virtual special joint informational meeting with the AQTAC and the Citizens Advisory Council (CAC) on April 23, 2020. See Presentation by PADEP to the AQTAC, “IPM Modeling Results Discussion Reference Case and RGGI Policy Scenario” (Apr. 23, 2020). At this meeting PADEP presented the modeling results from consulting firm ICF International, Inc. associated with Pennsylvania’s participation in a CO2 budget trading program. PADEP proposes an initial CO2 baseline budget allowance of 78 million short tons of CO2, which would decrease by approximately 2.5 tons annually from 2022 to 2030. The budget of 58 million tons in 2030 would be a 25% decrease from 2020 emission levels.
PADEP asserted during the presentation that joining RGGI is critical to meet greenhouse gas reduction goals for Pennsylvania, and that Pennsylvania would realize “significant CO2 reductions” beginning in 2022 while remaining a leading electricity exporter at roughly historical generation levels for the commonwealth. PADEP also stated that wholesale energy prices would increase only slightly, and that Pennsylvania’s generation mix over the next decade would favor gas over coal. PADEP offered relatively little data in its presentation that would support these assertions.
Further information regarding the CO2 budget trading program regulation was presented at the May 7, 2020, AQTAC meeting, where the AQTAC members voted on the CO2 budget trading program and heard public comment on the proposal. The draft proposed rule was also discussed at the May 19 CAC meeting.
Despite the COVID-19 pandemic, PADEP has stated it still anticipates that the proposed rule will be presented to the EQB on July 21, 2020, and that it will open a public comment period in fall 2020. PADEP then anticipates presenting the final rule to the agency’s advisory committees in spring 2021 and to the EQB in summer 2021, with an anticipated effective date in fall 2021. We will continue to monitor this process and provide updates accordingly.
EPA ROLLS BACK OBAMA-ERA MERCURY RULE FOR COAL REFUSE-FIRED POWER PLANTS
On April 15, 2020, the U.S. Environmental Protection Agency (EPA) released a final rule that creates a new subcategory in the Mercury and Air Toxics Standards (MATS) for certain existing electric utility steam generating units (EGUs) firing eastern bituminous coal refuse (EBCR) and is only for emissions of acid gas hazardous air pollutants (HAPs). See National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired EGUs—Subcategory of Certain Existing EGUs Firing EBCR for Emissions of Acid Gas HAPs, 85 Fed. Reg. 20,838 (Apr. 15, 2020) (to be codified at 40 C.F.R. pt. 63). (EPA released a pre-publication version of another MATS rule entitled “National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review” on April 16, 2020. We do not address that rule here.) The new subcategory and emission standards will affect six existing EGUs (all small units operating in Pennsylvania or West Virginia) that fire EBCR. Id. at 20,847. These EBCR-fired EGUs achieved the new emission standards without the need for downstream acid gas controls. Id. at 20,846. The new emission standards will allow higher acid gas HAP emissions from these facilities compared to the emission standards in the 2012 MATS. Id. at 20,847.
In the original 2012 MATS, EPA determined that there was no basis for this subcategory and finalized hydrochloric acid and sulfur dioxide standards that apply to all coal-fired EGUs. See 77 Fed. Reg. 9304 (Feb. 16, 2012) (to be codified at 40 C.F.R. pts. 60, 63). That rule was challenged and EPA received a petition for reconsideration of the rule, which was also the subject of a legal challenge. See White Stallion Energy Ctr., LLC v. EPA, 748 F.3d 1222 (D.C. Cir. 2014), rev’d sub nom. Michigan v. EPA, 135 S. Ct. 2699 (2015).
In a February 2019 proposed rule, EPA, based on reevaluation of data available when the 2012 MATS was established and new information, determined that there were differences in the HAP emissions of EGUs firing EBCR and those firing other types of coal (including those firing other types of coal refuse, such as anthracite coal refuse) and solicited comment on establishing a subcategory of certain existing EGUs firing EBCR for emissions of acid gas HAPs. See National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired EGUs—Reconsideration of Supplemental Finding and Residual Risk and Technology Review, 84 Fed. Reg. 2670 (proposed Feb. 7, 2019) (to be codified at 40 C.F.R. pt. 63). The April 15, 2020, final rule is the result of EPA’s determination, after reviewing public comments and other information submitted in response to the February 2019 proposal, that such a subcategory is warranted.
Copyright © 2020, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
RMMLF Water Law Newsletter
(by Lisa Bruderly and Dan Hido)
The Pennsylvania Department of Environmental Protection (PADEP) is proposing comprehensive changes to its regulations and guidance regarding the permitting of obstructions and encroachments of waters of the commonwealth. See 25 Pa. Code ch. 105. The regulatory revisions, if promulgated, are expected to significantly change the chapter 105 permitting process by increasing the amount of time and effort necessary to complete an individual (joint) permit application and likely causing delays in obtaining a permit.
PADEP has presented the regulations and guidance to several of its advisory committees, including, most recently, the Water Resources Advisory Committee (WRAC) on May 28, 2020. The proposed revisions are expected to be presented to the Environmental Quality Board in the second half of 2020, with a 60-day public comment period to follow. PADEP’s draft final technical guidance document (TGD) on alternatives analysis requirements is expected to be finalized and published in coordination with the proposed regulatory revisions. Documents related to the proposed rulemaking are available here.
Proposed Regulatory Changes to Chapter 105
According to PADEP, the proposed chapter 105 revisions are intended to clarify existing requirements, update/delete outdated references, and codify existing practices. The revisions would add or change 18 definitions, revise several existing permit waivers, and add six new waivers under 25 Pa. Code § 105.12, including waivers for temporary environmental investigation activities and for temporary mats and pads used to minimize erosion and sedimentation at a wetland crossing. The proposal would also significantly expand requirements for individual permit applications under 25 Pa. Code § 105.13. Some of the notable proposed revisions are discussed below.
Alternatives Analysis. The proposed revisions would add criteria required for the alternatives analysis accompanying a permit application under section 105.13(e)(1)(viii). For example, project alternatives impacting wetlands would be required to clearly demonstrate compliance with requirements for permitting a structure in a wetland, and project alternatives impacting other regulated waters would be required to demonstrate compliance with the requirements of 25 Pa. Code § 105.16, regarding environmental, social, and economic balancing. Identification of present conditions and the effects of “reasonably foreseeable future development” within the affected wetland or watercourse would also be required.
Impacts Analysis. The proposed revision to section 105.13(e)(1)(x), regarding impacts analysis, would require detailed analysis of the “potential secondary impacts” of a project on an expanded list of resources, including public water supplies, natural areas, wildlife sanctuaries, areas or structures of cultural or archaeological significance, parks, recreational areas, and certain designated streams.
A “narrative discussion and analysis” on a project’s water dependency would also be required, whereas the existing regulations require only a “statement.” Projects affecting wetlands would require a narrative discussion of the wetland delineation process, an analysis of whether a wetland is exceptional value, and a demonstration that the requirements for permitting structures or activities in wetlands under 25 Pa. Code § 105.18a have been met.
Antidegradation. Under the proposed revisions to section 105.13(e)(1)(xii), applicants would be required to demonstrate that the proposed project is consistent with antidegradation requirements under Pennsylvania regulations and the federal Clean Water Act.
Cumulative Impacts. The proposed revisions would add a potentially expansive new requirement under section 105.13(e)(1)(xiii) to perform a “projectwide cumulative wetland impact analysis.” The cumulative impact analysis would require a demonstration that the proposed project and “other potential” obstructions and encroachments would not result in an impairment of wetland resources or major impairment of the wetlands under section 105.18a. Identification of “piecemeal impacts” and consideration of “the wetland resource as part of a complete and interrelated wetland area” would be required.
Environmental Assessment for Aquatic Resource Restoration. The proposed revisions would create new PADEP criteria to evaluate environmental assessments of projects involving aquatic resource restoration under 25 Pa. Code § 105.15(a)(4). The environmental assessment would be required to consider, among other things, the project’s goals and objectives, wetland delineation and watercourse reports, an evaluation of the resource type and uses, historical and modern land uses, the anticipated aquatic resource restoration improvement and benefit, and geomorphic, geologic, and geotechnical data.
Compensatory Mitigation. The revisions propose replacement of existing wetland mitigation criteria under 25 Pa. Code § 105.20a with more comprehensive provisions applying to regulated waters of the commonwealth. Rather than specific ratios, compensatory mitigation for unavoidable impacts would require “replacing the resource functions that will be impacted” or providing substitute resources. The amount of compensatory mitigation would be determined based on new criteria, including the direct, indirect, and secondary impacts of the project, and the value of the proposed mitigation actions to “reestablish and rehabilitate environmental resources.”
PADEP would also be required to “track wetland losses and gains” occurring through chapter 105, with the goal of ensuring “no net loss of wetland resources within the service areas.” Although “service areas” are not defined, compensatory mitigation could be achieved through a PADEP-approved mitigation bank, in-lieu fee program, and/or permittee responsible mitigation site, as long as the mitigation site is located within the same State Water Plan subbasin as the project impacts or within the designated watershed boundaries identified by PADEP.
Draft Final Guidance Regarding Chapter 105 Alternatives Analysis
PADEP has also developed a draft final TGD on alternatives analysis requirements. See Bureau of Waterways Eng’g & Wetlands, PADEP, “Chapter 105 Alternatives Analysis Technical Guidance Document” (Apr. 17, 2020) (draft). The TGD is intended to (1) clarify the level of analysis required to evaluate alternatives to projects requiring an individual chapter 105 permit; (2) provide guidelines for determining whether an alternative is practicable; and (3) establish a “common, complete, and consistent” understanding of the information PADEP requests for review of alternatives analyses. Id. at 1.
The TGD addresses project-specific considerations for land development projects, linear utility projects, transportation projects, and restoration and pollution abatement projects. Among other information, the 21-page TGD provides an overview of the alternatives analysis process and a template checklist of the items PADEP expects to be submitted as part of the alternatives analysis demonstration. Example tables for the submittal of information are also provided. PADEP has indicated that the TGD may be issued for public comment in the second half of 2020 and published in coordination with the chapter 105 revisions.
Copyright ©2020, Rocky Mountain Mineral Law Foundation, Westminster, Colorado.
The Legal Intelligencer
(by John McCreary and Benjamin Wright)
The Community College of Allegheny County (CCAC) recently decided to proceed with construction on its campus. In order to facilitate this project, CCAC entered into a project labor agreement (a PLA) with the Pittsburgh Regional Building and Construction Trades Council of Pittsburgh, AFL-CIO on Feb. 15, 2011. The Associated Builders Association of Western Pennsylvania (ABC) filed a lawsuit on behalf of multiple contractors who operate open shop in Western Pennsylvania seeking to enjoin the CCAC from enforcing the PLA. This suit is the latest in a long series of contentious disputes regarding the utilization of PLAs in the public sector.
In its complaint, the ABC alleges that the terms of the PLA effectively preclude nonunion workers and workers who belong to unions other than those affiliated with the Pittsburgh Regional Building Trades Council from performing construction work, and that the PLA compels workers to associate, join or pay dues to these unions as a condition of employment.
Specifically, the ABC alleges that all contractors have a right under the First and Fourteenth Amendments to determine whether or not to unionize and with which unions to associate. The complaint alleges that the PLA’s requirement that contractors hire their employees through the signatory unions’ hiring halls is a violation of these constitutionally protected rights. The ABC also alleges that this requirement violates the National Labor Relations Act as Section 7 of the Act, 29 U.S.C. Section 157, gives employees the right to decide whether they want union representation. It alleges that the PLA violates the National Labor Relations Act because it requires nonunion members to become union members as the unions will not refer nonmembers through their hiring halls, effectively creating a compulsory union shop in violation of 29 U.S.C. Section 158(a)(3). Finally, the ABC alleges the PLA violates 29 U.S.C. Section 158(e)—the so called “hot cargo” prohibition—which forbids unions and employers from entering into contracts whereby the employer agrees to refrain from ceasing doing business with any other person. The sole exception to this rule is for employers engaged primarily in the building and construction industry, however the ABC alleges this exception does not apply to CCAC. Finally, the ABC alleges that the PLA violates Pennsylvania Competitive-Bidding Laws including Section 3911(a) of the Commonwealth Procurement Code and Article III, Section 22 of the Pennsylvania Constitution because contractors already signatory to agreements with unions affiliated with the Pittsburgh Regional Building Trades Council will be able to use their current workforce and collective bargaining agreements, while open shop contractors would be forced to hire new employees through the unions’ hiring halls. The ABC alleges that this amounts to a violation of the requirement that bidders for a public contract be on equal footing and enjoy the same opportunity for open and fair competition. On these grounds, the ABC seeks declaratory and injunctive relief against the enforcement of the PLA.
Pennsylvania courts have already considered numerous challenges to various project labor agreements in the commonwealth. In A. Pickett Construction v. Luzerne County Convention Center Authority, 738 A.2d 20 (Pa. Cmwlth. 1999), the Luzerne County Convention Center Authority commissioned one O’Neill to evaluate whether to include a PLA in the bidding process for the construction of a civic arena-convention center. O’Neill recommended the inclusion of PLA for multiple reasons, including the avoidance of delays caused by labor disputes, the promotion of labor harmony and the necessity to adhere to an inflexible construction schedule and completion deadline. The PLA required all contractors submitting bids to agree to employ a certain number of union laborers at union wages, regardless of whether the contractor was unionized. Nonunion contractors sought a declaratory judgment that the PLA was invalid under Pennsylvania competitive bidding statutes. The Commonwealth Court upheld the PLA on the grounds it was within the authority’s discretion to consider and take steps to assure the timely completion of the project. The court found that the PLA did not discriminate against nonunion contractors because it permitted the winning bidder to employ its own core personnel, did not contain provisions requiring discrimination based on union affiliation, and opened the bidding process to all union and open shop contractors. The court also determined that the appellants could not establish that the authority abused its discretion in relying upon the O’Neill report in adopting the PLA.
In Sossong v. Shaler Area School District, 945 A.2d 788 (Pa. Cmwlth. 2008), the Shaler Area School District required the successful bidder to execute a PLA with the Pittsburgh Building Trades and argued the PLA was designed to maintain the expeditious completion of the project on-time and on-budget. A contractor sought a preliminary injunction alleging that the PLA prevented nonunion contractors from effectively bidding on the project. The Commonwealth Court cited Pickett and denied the injunction because the PLA contained a “time is of the essence clause” and was related to the need for prompt completion of the project. It also found that there was no need for an expert recommendation of the PLA.
In Glenn O. Hawbaker v. Commonwealth, No. 405 M.D. 2009 (Pa. Cmwlth. 2009), the Commonwealth Court again upheld the inclusion of a PLA, relying on Pickett and Sossong. The court held that the inclusion of the PLA did not violate the requirement to award the contract to the lowest responsible bidder or illegally discriminate against nonunion contractors.
Most recently, the Pennsylvania Commonwealth Court examined the use of a PLA in Allan Myers v. Department of Transportation, 202 A.3d 205 (Pa. Commw. Ct. 2019). In Allan Myers, PennDOT issued bid solicitations for the second phase of a project involving improvements to Markley Street in Montgomery County. The first phase of the Project had no PLA requirement and had been completed ahead of schedule and on budget by a nonunion contractor. For Phase II of the project, however, a report prepared for PennDOT by the Keystone Research Center recommended the use of a PLA. Accordingly, PennDOT’s bid solicitation required contractors to sign a PLA with the Building and Construction Council. Unusually, the PLA provided that if the successful bidder already had a collective bargaining agreement with United Steelworkers (USW), that bidder was not subject to the hiring requirements under the PLA and was permitted to use its United Steelworkers workforce. Allan Myers filed a bid protest and argued that the PLA was discriminatory and unduly favored contractors affiliated with USW. PennDOT dismissed the protest and Allan Myers appealed to the Commonwealth Court.
The Commonwealth Court examined the history of PLA jurisprudence in Pennsylvania and concluded that USW and Building Trades contractors did not bid on equal footing with nonunion contractors. The court also determined that the project did not have a critical deadline, despite the presence of the boilerplate “time is of the essence” language. Thus, the court concluded that “the use of a PLA is permitted where the contracting agency can establish extraordinary circumstances, and PennDOT did not make that demonstration in this case.” On these grounds, the court found that the bid violated Pennsylvania’s competitive bidding laws and cancelled PennDOT’s solicitation.
Based upon this jurisprudence, it is expected that CCAC will raise numerous defenses in its response to the ABC’s complaint. Specifically, CCAC will allege that that the PLA is actually necessary to ensure that the project is completed on time and on budget. CCAC will have to demonstrate that the “time is of the essence” language contained in Article II, Section II of the PLA is more than mere boilerplate and that there exists an actual critical deadline. Further, CCAC will likely attempt to rely upon Article VI, Section 9 of the PLA regarding the exception for “core employees” to bring its PLA into the Pickett line of cases differentiate itself from the PLA in Allan Myers. Notably, however, the CCAC PLA allows a contractor to utilize “core employees” for up to ten percent of its workforce, while the PLA in Pickett permitted between twenty and fifty percent. Finally, CCAC will likely rely on Article VI, Section 8 of the PLA, which contains a “nondiscrimination” provision regarding union membership, as proof that the PLA allows all contractors to bid on equal footing. ABC’s complaint acknowledges this provision but dismisses it as “disingenuous.” Moving forward, ABC will attempt to rely upon the decision in Allan Myers whereas CCAC will look to earlier decisions such as Pickett and Sossong.
As of the date of this article, ABC’s complaint has been filed. Defendants have not yet filed responses to the complaint. Although civil litigation can often last years, the complaint seeks injunctive relief and therefore it is possible the court may conduct a hearing and issue a preliminary ruling on the merits of the plaintiffs’ claims within the next few months.
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Reprinted with permission from the May 28, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.
Smart Business
(by Adam Burroughs with Moore Capito)
Governments offer many funding and other partnership opportunities to assist private enterprises. Businesses can benefit greatly from these public/ private partnerships, but first they need to be aware of what funding is out there. Awareness is often driven by government agencies, and industry and trade associations. However …
“There is no substitute for having a relationship with a trusted adviser who is well educated on both public and private funding mechanisms,” says Moore Capito, a shareholder at Babst Calland.
Smart Business spoke with Capito about public/private partnerships and strategies to better connect businesses with potentially helpful government opportunities.
Why isn’t there more participation in public programs by businesses?
How often or how readily businesses take advantage of government programs can depend on the type of program and the market sector. For example, agricultural businesses are heavy users of government programs — subsidies, for instance — because that’s been inculcated into that business segment. Many recent partnership opportunities have been geared toward the small business sector (i.e. Small Business Administration (SBA) programs; programs for Disadvantaged Business Enterprises; Minority-owned Businesses Enterprises; Women-Owned business Enterprises; and 8(a)/Minority or Women Owned Small Businesses; as well as SBA loans, including recent high-profile SBA loan programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan that were designed to support small businesses through the COVID-19 pandemic). However, there are plenty of existing government programs available to established businesses that are willing to take the time to look.
While lack of awareness can be a barrier, the administrative burden can also discourage participation. There tends to be significant paperwork necessitated by regulations designed for oversight. That takes time, and that can mean time away from day-to-day operations, something that not many businesses are positioned to absorb. Such regulations can frustrate the purpose of the programs because the true targets might find the time costs outweigh the financial benefits.
How has the Paycheck Protection Program increased overall awareness of government partnership opportunities?
The SBA’s PPP, offering forgivable loans to support small business payrolls through eight weeks of the COVID-19 pandemic, has shown that when attractive capital is put before companies, they’re going to snatch it up quickly. The initial PPP funds were exhausted in less than two weeks.
Long-term, a program like this could be something that triggers more interest among businesses in exploring other government programs. Perhaps, the awareness of the PPP loan program will cause businesses to look for other partnership opportunities. So, there’s some tangential learning that is likely to be a byproduct from this that stands to heighten awareness.
How do private businesses typically find out about public programs?
Good sources of information for available public programs are trade associations, chambers of commerce, farm bureaus, and business and industry councils. It’s also a good idea for businesses to call their local representatives, whether
at the state or federal level. Those representatives should be knowledgeable about what programs are out there.
Additionally, there are many tools available at the government level to help businesses succeed, even if they don’t consist of some type of funding. Some of these tools exist just to help steer businesses in the right direction, whether they’re established businesses or startups. Economic development entities are one example.
It’s always to a business’s benefit to be tuned in with what’s going on at the government level. The lesson from the current crisis is that it’s a good idea to develop a relationship with an adviser that can knowledgeably consult on the pros and cons of available programs and partnerships.
For the full article, click here.
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The PIOGA Press
(by Lisa Bruderly and Kevin Garber)
On April 23, the Supreme Court, in a landmark decision, ruled that in certain circumstances discharges of pollutants through groundwater to navigable waters could be required to have an NPDES permit under the Clean Water Act (CWA). While the court remanded the Hawai’i Wildlife Fund v. County of Maui litigation to the Ninth Circuit to reconsider the specific issue of injected wastewater that reached the Pacific Ocean through lava tubes, it more broadly provided a new “functional equivalent” test to address whether the CWA requires an NPDES permit when pollutants originating from a point source are conveyed to navigable waters by a nonpoint source, such as groundwater.
Justice Stephen Breyer, writing for the 6-3 majority, held that an NPDES permit is required “when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge” (emphasis added). The court’s new test for CWA liability has far-reaching implications, creating potential exposure for agency permitting and enforcement and citizen suit pressure under many scenarios where pollutants may intentionally or unintentionally enter surface water by way of groundwater through Class V injection wells, pipeline leaks, spills and releases to ground, waste impoundments/ lagoons, existing groundwater contamination, leaking underground storage tanks and even septic tanks.
New “test” creates more questions than clarity
Subjective, conflicting interpretations of the new “functional equivalent” test are inevitable. Focusing primarily on considerations of time and distance, Justice Breyer offered the following two contrasting examples of how the test might be applied: (1) “where a pipe ends a few feet from navigable waters and the pipe emits pollutants that travel those few feet through groundwater (or over the beach), the permitting requirement clearly applies; and (2) “if a pipe ends 50 miles from navigable waters and the pipe emits pollutants that travel with groundwater, mix with much other material, and end up in navigable waters only many years later, the permitting requirements likely do not apply.”
The court offered that other factors, including the following, “may prove relevant,” depending on the specific circumstances:
- The nature of the material through which the pollutant travels;
- The extent to which the pollutant is diluted or chemically changed as it travels;
- The amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source;
- The manner by or area in which the pollutant enters the navigable waters; and
- The degree to which the pollution (at that point) has maintained its specific identity.
The court also acknowledged that application of this test is not clear, offering that there are “too many potentially relevant factors applicable to factually different cases for this Court now to use more specific language.” Rather, the court seemingly opened the door for interpretations by the lower courts, encouraging them to “provide guidance through decisions in individual cases,” and, where appropriate, to “mitigate any hardship or injustice when they apply the statute’s penalty provision.”
The court also looks to the U.S. Environmental Protection Agency (EPA) to provide “administrative guidance” through issuance of individual permits and promulgation of general permits. However, there is a tension relying on current EPA guidance given the conflict between the court’s “functional equivalent” test and EPA’s April 23, 2019 Interpretive Statement, under which the agency considers releases of pollutants to groundwater to be categorically excluded from CWA permitting requirements. EPA plans to provide additional guidance in response to the court’s opinion.
Dissenting, Justice Samuel Alito captured the frustration and uncertainty likely to be felt by many in the regulated community when he wrote: “If the Court is going to devise its own legal rules, instead of interpreting those enacted by Congress, it might at least adopt rules that can be applied with a modicum of consistency. Here, however, the Court makes up a rule that provides no clear guidance and invites arbitrary and inconsistent application.”
Path forward for regulated entities is unclear
With similar matters currently before several circuit and district courts, interpretations of the “functional equivalent” test are expected to vary greatly, creating more confusion for entities that could now be subject to CWA liability, even if they are already regulated under a federal and/or state program. For example, in the County of Maui case, the injection wells were approved by EPA and the Hawaii Department of Health and had been operating since the 1970s. Similarly, the court’s ruling creates the potential for claims by agencies and citizens groups, even when, for example, groundwater remediation projects with potential surface water connections, are being conducted under a state or federally approved cleanup plan.
The ruling also creates interesting questions as to whether a court could hold an entity liable for not obtaining an NPDES permit when the discharge to surface water through groundwater is caused by a spill. For example, in Kinder Morgan Energy Partners, L.P. v. Upstate Forever, a pipeline ruptured and, though promptly repaired with state cooperation, resulted in residual gasoline in the soil and groundwater. The Fourth Circuit upheld a citizens’ suit action, concluding that the continued seepage of gasoline into surface water constitutes an “ongoing violation” of the CWA, even if the NPDES point source (i.e., the pipeline) is no longer releasing the pollutant. In deciding this matter, the Fourth Circuit examined whether pollutants in groundwater enter surface water by a “direct hydrological connection.” In response to a petition for writ of certiorari from the Fourth Circuit decision, the Supreme Court on May 4 vacated the Fourth Circuit’s judgment and remanded the matter for further consideration based on the County of Maui decision (i.e., the “functional equivalent” test). This remand demonstrates that, at this time, the Supreme Court does not intend to hear additional arguments regarding CWA liability for groundwater discharges.
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The PIOGA Press
(by Keith Coyle and Ashleigh Krick)
On April 20, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a request for comments on proposed frequently asked questions (FAQs) for the regulation of farm taps under 49 C.F.R. Parts 191 and 192. The proposed FAQs come nearly two years after the agency posted, and then withdrew, an earlier set of farm tap FAQs on its website. Consistent with the Department of Transportation’s policy on guidance documents, PHMSA is seeking public comment before finalizing the latest version of the farm tap FAQs. The deadline for submitting comments is June 19.
Why did PHMSA issue the proposed FAQs?
The regulatory status of farm taps has generated significant controversy in the past decade. In 2010, PHMSA issued FAQs for the new Distribution Integrity Management Program (DIMP) regulations stating that the DIMP requirements applied to farm taps, even though that issue had not been specifically discussed or addressed during the rulemaking process. The agency defended that position in the years that followed, but eventually allowed operators to choose to include farm taps in a DIMP plan or follow the three-year periodic inspection requirement for regulators and overpressure protection equipment.
In January 2018, PHMSA published a set of new FAQs for farm taps on its website. The FAQs addressed a range of topics, including the new three-year periodic inspection requirements, annual reporting requirements, operator identification number (OPID) requirements, regulatory status of existing farm taps and those installed prior to 1960, operator qualification, definitional clarifications, and excess flow valve installation. After receiving significant adverse feedback, the agency withdrew the farm tap FAQs for further review and development. Then in March 2019, the agency issued an Announcement of Enforcement Discretion stating that owners and operators could choose whether to address farm taps under the three-year periodic inspection requirements in 49 C.F.R. § 192.740 or under DIMP requirements.
As discussed in more detail below, the agency’s proposed farm tap FAQs address all the significant developments from the past decade.
What do the proposed FAQs cover?
The following important topics are covered in the proposed farm tap FAQs:
- What is a farm tap? Citing the Part 192 definition of service line, PHMSA states that a farm tap is a distribution service line if any portion “transports gas from a common source of supply to an individual customer, to two adjacent or adjoining residential or small commercial customers, or to multiple residential or small commercial customers served through a meter header or manifold,” regardless of whether a sale of gas occurs. However, the agency also recognizes that a farm tap may be used to refer to other piping applications that do not satisfy the service line definition, including where customer-owned piping connects directly to the first isolation point or the farm tap meets the definition of a transmission line.
- Where does a farm tap begin and end? In an important clarification, PHMSA explains that a farm tap service line “begins at the first point where the downstream service line can be isolated from source piping (e.g. the inlet to a valve or regulator…)” and “terminates at the outlet of the customer’s meter or the connection to a customer’s piping, whichever is further downstream.” Some of the agency’s other guidance in recent years had suggested that the service line classification begins at the tap on the mainline or source piping in a farm tap configuration. Note that PHMSA’s clarification indicates that the valve or regulator at the first isolation point is part of the distribution service line, not the source piping.
- What reporting and notification obligations apply to farm tap operators? If a farm tap is a regulated service line, PHMSA states that the operator must obtain an OPID and submit a distribution annual report form, including operators of production and unregulated gathering lines. PHMSA also explains that only the operator of the service line downstream from the first isolation point is responsible for reporting the service line in its annual reports, and that the most-downstream entity operating the service line is responsible for notifying farm tap customers of their responsibility to maintain customer-owned buried piping under § 192.16(a).
- What are PHMSA’s expectations with respect to testing farm taps under 49 C.F.R. § 192.740? PHMSA states that the three-year inspection requirement in § 192.740 for pressure regulating, limiting, and overpressure protection devices applies to all service lines that directly connect to production, gathering or transmission lines, and which are not part of a distribution system, regardless of installation date. The agency clarifies that the regulation does not require testing regulators for lockup, and that other methods may be used to comply with the regulation. PHMSA also explains that operators can use any practicable method to test regulators with an internal relief, so long as the method is documented in the operator’s O&M Manual. The agency provides examples of practicable methods, such as installing a test port and then a valve downstream from the regulator with an internal relief.
- What design and installation requirements apply to service-line farm taps? Consistent with the nonretroactivity requirement in the Pipeline Safety Act, PHMSA acknowledges that a farm tap installed prior to March 12, 1971, does not need to be redesigned to meet the requirements in § 192.197. However, the agency notes that if the regulators are modified or replaced after the effective date in § 192.13(b) then the affected components must meet the requirements of § 192.197. PHMSA also notes that operators of service-line farm taps must meet the excess flow valve requirements in § 192.381, 192.383, or 192.385, as applicable.
- What are other requirements operators should be aware of? PHMSA states that an operator of a service line must comply with all applicable requirements in Parts 191 and 192. The agency notes that production or unregulated gathering operators with regulated serviceline farm taps are required to comply with the operator qualification requirements in Subpart N for covered tasks performed on the regulated service line and prepare an O&M Manual with respect to the regulated service line. PHMSA also notes that states with certified pipeline safety programs may adopt additional safety regulations applicable to farm taps.
What are the implications of PHMSA’s proposed farm tap FAQs?
The long-running effort by interested stakeholders to clarify the agency’s farm tap policy continues to produce results. After hearing the industry’s concerns with the 2010 DIMP FAQs, particularly the effect of requiring interstate transmission operators and production and unregulated gathering operators to apply DIMP to farm taps, PHMSA added an exception that allowed operators to comply with the three-year inspection requirements in § 192.740 instead of the DIMP regulations. The agency also issued a notice of enforcement discretion in response to continued industry concerns that allows operators to manage farm taps under either § 192.740 or DIMP, which remains in effect today. Finally, the latest version of the proposed farm tap FAQs seeks to accommodate many of the concerns that industry expressed with the prior farm tap FAQs and other recent guidance documents, including with respect to the classification of source or mainline piping and the applicability of certain requirements in the Part 192 regulations. The industry has the opportunity to further influence these FAQs in the pending comment period.
Notably, PHMSA is no longer taking the position that the service line starts at the tap on the mainline in a farm tap configuration. Instead, the FAQs state that the service line starts at the first isolation point (the inlet of the valve or regulator) downstream from the source or mainline piping. That clarification is very important because the agency’s prior guidance indicated that operators had to treat all piping downstream from the tap as a distribution service line in a farm tap scenario, even if all of the other piping in the system was production, gathering, or transmission. Treating all piping downstream from the tap as part of a distribution service line would have imposed significant compliance burdens on operators without producing any meaningful benefits.
PHMSA has never actually analyzed the costs, benefits or other impacts of applying the gas distribution service line regulations to farm taps. The agency has never added a definition of a farm tap to Part 192 or instituted a specific rulemaking proceeding to acknowledge the status of farm taps as gas distribution service lines. Rather, PHMSA adopted that position in letters of interpretation, guidance documents, and through other rulemakings. Operators have the opportunity to provide cost data to PHMSA through this docket, which would invite the agency to consider such data before issuing final FAQs.
PHMSA notes in the request for comments that as part of the agency’s regulatory review process, it is considering changes to the requirements in § 192.740 due to industry comments that PHMSA had underestimated the costs of compliance with the three-year inspection requirements and that existing DIMP requirements, in conjunction with other current requirements such as leak surveys, could provide an equivalent level of safety. PHMSA previously indicated during public meetings that farm taps would be included in the Gas Pipeline Regulatory Reform proposed rule, which is currently under review at the Office of Management and Budget and will likely be published by the agency in the coming months.
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The Legal Intelligencer
(by James Corbelli)
Pennsylvania employs a unique judicial mechanism to resolve legal disputes which arise from final decisions made by the Pennsylvania Department of Environmental Protection (DEP or department). The Environmental Hearing Board (EHB or board) has been hearing appeals from department decisions for almost 50 years. During that time, the EHB has had the exclusive authority to hear and decide appeals from DEP actions. This article will summarize what can be expected in EHB legal proceedings, and highlight certain unique features of EHB litigation. While matters before the board are similar in many ways to matters litigated in state and federal courts, there are written and unwritten aspects of litigation in front of the Board that can only be fully appreciated through experience in matters before the Board.
An initial limitation of the board is that it has limited jurisdiction, as the board can only consider final actions of the department. As a general matter, the department’s issuance of an order, permit or any other DEP final action can be appealed to the board. The DEP action must be a “final” action, which has been the subject of substantial EHB case law.
The final actions before the board can be quite varied and address a wide range of environmental matters, such as DEP decisions that involve oil and gas rights, landfills, mining of coal and noncoal minerals, dams and encroachments, air, drinking water, storage tanks, stormwater management and more. The EHB can hear actions commenced by the DEP, a member of the regulated community, individuals or citizens groups. Matters that are brought before the EHB may involve an appeal of a permit denial, permit approval, order by the DEP for an operator to take a certain action, a penalty assessment for an alleged violation of law, etc. The board sees its role, essentially, as “a buffer between the regulators and the regulated, providing all citizens a forum where they can challenge the actions of the department and receive judicial-like relief.”
The EHB is independent from the DEP. The administrative law judges are appointed by the governor and, after Senate confirmation, have six-year terms. There are currently five EHB judges, and there have been only 24 since the Board’s inception. The judges have considerable subject matter experience, either from prior positions with the department, handling environmental legal matters in the private sector, through years of overseeing cases before the Board, and often a combination of each. As a result, it can be expected by litigants before the Board that the judges will understand and have had substantial experience with similar fact issues, as well as the pertinent environmental statutes and regulations. In contrast, while a state or federal court judge may only rarely hear cases that are governed by an environmental law, the Board only considers matters that are governed by Pennsylvania environmental statutes and regulations. In addition, the board is supported by an experienced staff that equally has considerable experience with Pennsylvania’s environmental laws and the unique characteristics of EHB practice.
The EHB is not part of Pennsylvania’s judicial system, yet in almost every way, the board acts like a court. While the board generally follows the Pennsylvania Rules of Civil Procedure, it also has its own rules, and has developed and regularly updates a detailed practice manual, with citations to opinions, that any practitioner before the Board must regularly consult.
A matter before the board is generally commenced through a notice of appeal, which acts to challenge an action by the DEP and is in some ways similar to a complaint. While there is generally no equivalent to an answer, the progress of an appeal before the EHB proceeds much like a case pursued in state or federal court, although often at a quicker pace. A single EHB judge will be assigned with primary responsibility for each appeal. The board, through the assigned judge, requires that the parties engage in some effort to discuss early settlement and report to the board that such an effort has been made. Of course, many state courts do not require such efforts. Throughout an EHB proceeding, the Board may seek to promote settlement discussions, but there is typically no additional formal process or requirement for the parties to seek an agreed resolution in a case.
Discovery can be robust in matters before the EHB. The board requires that the parties consider electronic discovery issues early in the case, and develop a plan to address electronically stored information. Written discovery is permitted, and generally the Pennsylvania Rules of Civil Procedure apply to the methods and types of discovery. It can also be expected that parties will engage in fact depositions of parties and non-parties. The board will set a pre-hearing discovery schedule at the inception of an appeal, which establishes most pre-hearing deadlines, such as the close of fact discovery and the filing of summary judgment motions. It is generally expected that expert reports will be provided during the fact discovery period, although the EHB rules do not make it clear when expert reports are to be exchanged. Expert depositions are not to be expected in matters before the EHB.
Although the EHB does not conduct what it calls a trial, the Board holds fact hearings, which are in every meaningful way a bench trial. Juries are not available in matters before the board. The EHB does require pre-hearing submissions, which are detailed pleadings which set forth the proposed key facts and legal theories expected to be presented and relied upon at the hearing, the witnesses to appear at the hearing and the documents to be introduced as evidence at the hearing. Parties also have the ability to file motions in limine. The hearing itself is a bench trial before the judge assigned to the appeal. EHB judges are experienced trial judges, with vast experience handling evidence and expert issues. The Pennsylvania Rules of Evidence will typically, but not always, apply and the trial lawyer must be prepared to take the proper steps to introduce evidence, present testimony through witnesses and develop a case theory like they would in any court. Depending on the nature of the appeal, it is common for the judge to request or agree to a site visit. Finally, matters before the board are almost always complex and require expert testimony. As a result of the nature of the disputes before the EHB, a variety scientific disciplines are typically behind the DEP’s final action and need to be evaluated by the board. As a result, expert testimony and the quality of the expert opinions often are the most critical advocacy components of an EHB appeal.
One of the unique features before the EHB is that it hears cases in a de novo capacity. As a result, the Board renders decisions based on evidence presented at the hearing, and is not limited to facts considered by the DEP when the Department decided the final action under appeal. By way of example, if the DEP failed to consider information that the EHB later considered pertinent, the board could consider new evidence at the hearing that had not been before the DEP and then substitute its own discretion for the department’s. The board can also remand the matter back to the department for the department to take additional action. As a result of the de novo nature of EHB appeals, creative lawyering opportunities exist to address possible weaknesses in final actions made by the department.
Following a hearing, parties to an appeal will be required to submit post-hearing briefs, which will include arguments of the parties based on the evidence presented. The board then prepares a detailed adjudication, which sets forth the ruling of the board, including the factual findings and legal conclusions reached by the board. EHB adjudications, which are often quite lengthy and detailed, are determined by all five EHB judges, although an adjudication need not be unanimous. Decisions by the EHB may be appealed to the Commonwealth Court.
In sum, the EHB provides a critical judicial function in important environmental matters in the commonwealth. There is often much at stake for the regulated community, the department and other interested parties. While appeals before the board are frequently complex, the most effective advocacy is found in the presentation of understandable and straightforward fact and expert evidence. Even within the framework of detailed and often convoluted Pennsylvania environmental laws and regulations, the trial lawyer’s role is to present a compelling a story. Classic trial skills, in conjunction with a thorough understanding of the underlying environmental laws and an awareness of the distinctive practice and procedural rules of the board, written and unwritten, are critical in advocating before the EHB.
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Reprinted with permission from the May 7, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.
Smart Business
(by SBN Staff with Justine Kasznica)
There is global consensus that large companies across various sectors need to innovate, be agile and anticipate new technologies, new markets and new demand cycles to stay competitive.
“We are seeing a paradigmatic shift among large companies,” says Justine M. Kasznica, a shareholder at Babst Calland. “Not only are these companies seeking to attract a diverse and innovative workforce, they are pursuing business-optimizing innovation and solutions, which are often found outside their walls.”
Smart Business spoke with Kasznica about how established companies are finding and taking control of technologies that set them up for a bright future.
How does internal innovation offer large companies a competitive advantage?
While large companies have traditionally innovated from within, recently this model has matured. Now large companies are creating R&D labs with a tech transfer capability designed to be more agile than the parent company. These innovation centers have a distinct culture that’s more agile, nimble, able to sustain high growth. In this model, the company funds and owns the innovations outright and can decide the best course of action to bring them to commercial life — as an asset of the company or a spinout entity that licenses the technology from the parent company and grows independently.
What should companies consider when acquiring companies for their technologies?
As an alternative way to innovate, many large companies search for and acquire companies to bring their technology and innovators in-house through M&A. In this model, due diligence is critical. In addition to financial assessment, it requires an evaluation of whatever technology is being purchased and whether the intellectual property (IP) is sufficiently protected. It further requires a review of employment, confidentiality and licensing agreements to ensure that the acquirer will be free to commercialize and develop the acquired technology assets.
How can companies leverage external innovation to add value?
Increasingly, large companies search for and identify technologies and technology companies in the early and high-growth stages outside of their organization and work with them as commercial partners, often as a prelude to acquisition. Using short-term evaluation agreements, large companies can evaluate a particular technology and test its commercial viability through the successful achievement of key performance indicators (KPIs) or other milestone-based criteria. These types of arrangements typically include inbound licensing of the IP.
When entering into a pilot or evaluation agreement, both parties are encouraged to protect their investment in the relationship by setting it up to convert to a long-term agreement if certain performance indicators are met. These KPI ‘gates’ present each party with an ability to shape the relationship, share in the development and enjoy the benefits of the innovative output. They also help each party mitigate the risks of overcommitting, with each gate presenting a chance to walk away.
Of course, contractual safeguards must be put in place to ensure the security of company IP, data and customer information, as well as regulatory compliance and other risk-mitigating protections.
How does strategic investment enable access to new technologies and innovations?
Some large companies establish investment divisions or entities, often run independent of the company, that operate under a venture capital model. These strategic corporate investment groups scour the world for high-growth, disruptive technologies and innovations, which they then invest in. Some corporate venture arms invest in high-growth targets as a way to make money for the company and broaden its value base through revenue. More commonly, they invest in companies developing technologies or innovations that strategically align with the parent company’s interest, where the portfolio company, if successful, becomes an acquisition target for the parent company.
Whatever the approach, large companies should work to understand the innovation landscape and the ways they can leverage it to stay ahead of the competition.
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The PIOGA Press
(by Kevin Garber, Sean McGovern and Jean Mosites)
On March 6, Governor Tom Wolf issued a Proclamation of Disaster Emergency throughout the Commonwealth under the Pennsylvania Emergency Management Services Code in response to the expanding COVID-19 coronavirus pandemic. On March 13, President Donald Trump declared a state of national emergency. Many other states and local governments are following suit. These government actions may be a basis to invoke the force majeure clause of consent orders and consent decrees between regulated parties and the Pennsylvania Department of Environmental Protection, other state and local environmental regulatory agencies or the U.S. Environmental Protection Agency.
The standard force majeure provision of most DEP consent orders and agreements allows deadlines in the order to be extended if circumstances beyond the reasonable control of the regulated party prevent compliance with the order. Similar provisions are often found in consent agreements with EPA and in consent decrees approved by federal and state courts.
These force majeure provisions typically require the affected party to notify the agency of the force majeure event when the party becomes aware or reasonably should have become aware of the event impeding performance. For example, the model DEP Consent Order and Agreement requires telephone notice within five working days and written notice, in some circumstances by notarized affidavit, within 10 working days describing the reasons for the delay, the expected duration of the delay, and the efforts being taken to mitigate the effects of the event and length of the delay. This model provision states that failure to comply with the timing and notice requirements invalidates a force majeure extension.
There are compelling reasons why the coronavirus pandemic, which is unlike any event experienced in this country, is beyond the contemplated scope of agency force majeure clauses such that strict adherence to the timing and notice provisions should be excused and extensions should be granted as necessary. If the pandemic is interfering or threatening to interfere with your ability to comply with requirements or deadlines in a consent order or consent agreement, because of a limited availability of employees, vendors, supplies or otherwise, consider potential options within the force majeure clause of the agreement. Also consider an application of force majeure principles to pandemicrelated difficulties complying with environmental permits.
Babst Calland’s environmental attorneys are available to help you with your situation and recommend the best course of action for proceeding in these uncertain times. For more information, please contact Kevin J. Garber at 412-394-5404 or kgarber@babstcalland.com, Sean M. McGovern at 412-394-5439 or smcgovern@babstcalland.com, or Jean M. Mosites at 412-394-6468 or jmosites@babstcalland.com.
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The PIOGA Press
(by Lisa Bruderly and Daniel Hido)
As businesses in Pennsylvania struggle to deal with significant disruptions and challenges to their operations caused by the COVID-19 pandemic, environmental agencies have recognized the challenges the pandemic presents to achieving compliance with environmental obligations. For example, on March 26 the U.S. Environmental Protection Agency issued a temporary policy for excusing COVID-19-related noncompliance (see accompanying article). Similarly, on March 31 the Pennsylvania Department of Environmental Protection issued an alert (www.dep.pa.gov/Pages/AlertDetails.aspx) announcing that it would consider requests to temporarily suspend certain regulatory, permit, and/or other legal requirements due to COVID-19. DEP also provided the form needed to make such a request.
This announcement reflects a thought change from DEP’s previous assertion that COVID-19’s impact on businesses in Pennsylvania would not excuse compliance with environmental laws, stating that “[a]ll permittees and operators are expected to meet all terms andconditions of their environmental permits, including conditions applicable to cessation of operations.”
What is required to request a temporary suspension?
Unlike EPA’s temporary policy, which does not require regulated entities to submit documentation regarding an inability to meet routine compliance obligations, DEP is requiring submittal of the request form. While DEP did not elaborate on how it will review requests for suspension, it will generally evaluate (1) the reasons for the request in light of the COVID-19 pandemic, and (2) the risk of harm to the environment or public health if the request is or is not granted.
Importantly, it will not be enough for entities to show that COVID-19 has restricted their ability to comply with regulatory, permit or other legal requirements; entities must demonstrate that strict compliance would prevent, hinder or delay necessary action in coping with the COVID-19 emergency. This standard reflects the language of Governor Tom Wolf’s March 6 Proclamation of Disaster Emergency and 35 Pa. C.S. § 7301, which DEP cited as authority for granting temporary suspensions.
The two-page request form asks 16 questions regarding topics including the following:
- Alternate compliance options that have been explored;
- Length of time the entity expects to be unable to comply and the necessary circumstances to return to compliance;
- Extent of risk of additional pollution and/or how such increased pollution will be avoided;
- Public health and safety benefits from granting the suspension; and
- Negative consequences to the entity’s operations and the Commonwealth’s response to the COVID-19 emergency if the suspension is not granted. Some of the more interesting, and potentially controversial, questions asked by DEP include the following:
- Do you believe cost gouging or supply hoarding is negatively affecting your ability to comply?
- Would you possess a unique advantage over your competitors, or others in the same industry, if a suspension is granted?
It is not clear whether DEP will be receptive to entities requesting suspensions from settlement agreement requirements using the request form, or whether the department will expect entities to rely primarily on the force majeure provisions typically provided in those agreements. However, the request form does allow entities to request suspension of regulatory, permit “or other requirement(s),” indicating that entities may be able to request suspension of settlement agreement requirements using this recentlyintroduced process.
When are suspensions expected to be granted?
DEP has not announced its expected time frame for responding to the likely large number of requests for suspension. The department also did not explain how it will evaluate and balance the factors outlined in the request form. April 2020 | The PIOGA Press 7 However, in multiple places the form emphasizes that the entity should provide detailed and specific responses. DEP stated that suspensions will initially not be granted beyond June 30, 2020.
We note that this procedure applies only to requests for suspension of state regulatory or permit requirements and requirements under federal programs delegated to Pennsylvania. Entities seeking relief from federal requirements, under only federal authority, are to contact EPA Region III and consult EPA’s March 26 policy.
Additional guidance on conducting Chapter 102 earth disturbance activities
At the same time as providing the temporary suspension request form, DEP also issued COVID-19-related guidance for permittees and operators conducting permitted earth disturbance activities under Chapter 102 of the Pennsylvania regulations.
Entities considered “life-sustaining businesses” under Governor Wolf’s March 19 order, which required all “non-life-sustaining businesses” to close their physical locations, may continue to conduct earth disturbance activities to the extent such activities are in support of the operation of the life-sustaining business.
However, “non-life-sustaining businesses” must cease earth disturbance activities. Upon doing so, the entity must implement temporary or permanent stabilization measures as required by the permit and applicable regulatory requirements. Once required stabilization measures are implemented, the entity is relieved from requirements to perform weekly routine inspections, but still must conduct other inspections required by the permit, such as Post-Storm Event and Corrective Action inspections. DEP stated that it considers such inspections to be critical operational functions and not in violation of the March 19 order.
Babst Calland’s environmental attorneys are available to help you develop requests for temporary suspensions and guide you through the process. For more information, please contact Lisa M. Bruderly at 412-394-6495 or lbruderly@babstcalland.com or Daniel P. Hido at 412-394-6580 or dhido@babstcalland.com.
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The Legal Intelligencer
(by Alana Fortna)
While there are several interesting environmental cases currently before the U.S. Supreme Court, two cases are particularly relevant for any legal practitioner handling Superfund cases, whether they involve site remediation issues or litigation over the cleanup costs. The two cases to watch are Atlantic Richfield v. Christian, Case No. 17-1498, and County of Maui v. Hawaii Wildlife Fund, Case No. 18-0260. Respectively, these two cases deal with the important legal questions of preemption and how groundwater discharges can be regulated and enforced. Both issues could have a significant impact on the scope of remediation and potential litigation at Superfund sites. CERCLA practitioners should watch for the opinions in these two cases.
The Atlantic Richfield appeal came out of the Montana Supreme Court, and it asks the court whether the Comprehensive Environmental Response, Compensation and Recovery Act (CERCLA), 42 U.S.C. Section 9601 preempts state common law remedies. The case involves the Anaconda Smelter Site, a Superfund site covering 300 square miles of property impacted by historical smelter and ore processing operations. The U.S. Environmental Protection Agency (EPA) placed the site on the National Priorities List in 1983 and identified Atlantic Richfield Co. as a potentially responsible party (PRP). After years of remedial investigation under EPA oversight, the EPA approved a remedial action plan for the cleanup of the site. The respondents in the appeal are a group of landowners who sued Atlantic Richfield alleging common law tort claims seeking more traditional damages, such as monetary damages and diminution of property value. However, the respondents also sought relief in the form of restoration, asking that Atlantic Richfield remediate or pay for remediation above and beyond the EPA-approved remedy. The respondents argued that Montana law supports their requested relief and requires Atlantic Richfield to restore the property to its pre-contamination state before the on-set of historical smelting operations. The critical question presented to the court is whether CERCLA preempts state common law claims for restoration that seek clean-up remedies that conflict with EPA-ordered remedies. The Montana Supreme Court held that landowners can pursue common law claims for restoration despite the conflict with EPA’s remedy.
Before the U.S. Supreme Court, Atlantic Richfield argued that the lawsuit and the restoration relief requested is barred by Section 113 of CERCLA, which deprives courts of the ability to hear challenges to the EPA’s remedial action plans. This is a critical component of CERCLA because it prevents parties from disrupting the remedial process and trying to impose a different remedy than what was approved by the agency with authority and experience. With respect to the preemption issue, Atlantic Richfield argued that in order to comply with the alleged state law duty to restore the property, it would have to defy the EPA order implementing the chosen remedial action. This creates a clear and stark conflict between state law and CERCLA. Numerous parties filed amicus curiae briefs in the appeal, including the Chamber of Commerce of the United States. The U.S. Supreme Court also invited the Solicitor General to file a brief expressing the views of the United States, and the Solicitor General also participated in oral argument before the court on Dec. 3, 2019.
The potential impacts of a decision affirming the Montana Supreme Court could be far-reaching. Such a decision could open the door to litigation by any displeased property owner in the vicinity of a Superfund site who believes that the EPA’s selected remedy is insufficient. Such litigation, if successful, would disrupt the regulatory framework of CERCLA, make remediations even more costly, and undercut the certainty and protections afforded to PRPs who work with EPA to clean up contaminated sites. Remedial investigations under CERCLA follow a certain process that evaluates the nature and extent of contamination and evaluates the feasibility of various alternatives for remedial action. CERCLA already includes public notice and comment requirements to allow the community to weigh in on the efforts at a given site. However, a ruling that affirms the Montana Supreme Court would allow private parties to try to dip their hands into the remediation process by filing a private action that was never contemplated by CERCLA or its regulatory framework.
The second case of interest is the County of Maui appeal out of the U.S. Court of Appeals for the Ninth Circuit, which involves how discharges to groundwater are regulated. While several federal cases have addressed the issue of the indirect discharge of pollutants into jurisdictional waters via groundwater transport, the U.S. Supreme Court granted certiorari in the County of Maui case. The case involves discharges to wastewater treatment plant wells that eventually reached the Pacific Ocean. The Ninth Circuit found Clean Water Act liability based on indirect discharges but limited coverage to instances where “the pollutants are fairly traceable from the point source to a navigable water such that the discharge is the functional equivalent of a discharge into the navigable water” and the pollutants that reach the surface water are more than “de minimis.” This is an important issue with far-reaching ramifications because it is generally understood that all groundwater that is not otherwise removed (i.e., pumped for drinking water supply) will eventually discharge to a surface water. The Clean Water Act prohibits discharges of pollutants from a “point source” without a NPDES permit.
The U.S. Supreme Court granted the petition from the Ninth Circuit case as to the following question: “Whether the Clean Water Act requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, such as groundwater.” Numerous amicus curiae briefs were filed from a variety of parties, including former U.S. EPA officials and administrators, several states, and other interested organizations, which shows the importance of the question involved. The county argued that the Clean Water Act very deliberately controls pollution from “point sources” differently from “non-point sources.” Only discharges from “point sources” are regulated by the Clean Water Act and require a permit. The county argued that this position is unambiguously supported by the text, structure, context, history and purpose of the Clean Water Act. Oral argument occurred on Nov. 6, 2019, and an opinion is expected sometime this year.
How does a case about regulation under the Clean Water Act potentially affect liability at contaminated Superfund sites being remediated under CERCLA or the Resource Conservation and Recovery Act (RCRA)? Similar to the Atlantic Richfield case, a decision from the U.S. Supreme Court affirming the Ninth Circuit could threaten to disrupt the regulatory process for remediating sites. Such a decision could open up PRPs to unanticipated liability under the Clean Water Act, which includes a citizen suit provision. Both CERCLA and RCRA cleanups are based on an evaluation of risk. For example, under CERCLA, a PRP in conjunction with EPA evaluates remedial action alternatives, which may not include absolute source control. Acceptable alternatives may allow for some form of natural attenuation or institutional controls related to groundwater contamination. Moreover, CERCLA and RCRA include a mechanism for a determination that removal of certain contamination in groundwater is technically infeasible. If a PRP has not achieved complete source control, then it could arguably face additional liability under the Clean Water Act for contamination that is migrating from the source area into groundwater and ultimately to a navigable water. This is not what was intended by the Clean Water Act. Therefore, the groundwater conduit theory could potentially disrupt the regulatory framework and semblance of predictability at Superfund sites while opening PRPs up to additional, unintended litigation.
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Reprinted with permission from the April 2, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved.