The Legal Intelligencer
(by Casey Alan Coyle)
The music genre hip-hop recently celebrated its 50th anniversary. According to PBS, “no song announced hip-hop’s entrance into the mainstream louder” than the 1997 single “Mo Money Mo Problems” by Brooklyn-born Rapper Christopher Wallace, better known by his stage names “Notorious B.I.G.” and “Biggie.” https://www.pbs.org/wgbh/americanexperience/features/songs-of-the-summer-1997/. Built on a sample of Diana Ross’s “I’m Coming Out,” the track featured the chorus: “I don’t know what, they want from me/ It’s like the more money we come across/ The more problems we see.” Now, nearly three decades later, that hook captures an emerging trend in the law.
The Fourteenth Amendment’s Due Process Clause “prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor.” State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). While this concern precipitated the creation of a framework to assess the constitutionality of punitive damages awards over 30 years ago, no such rubric exists to determine whether compensatory damages awards comport with due process. Pennsylvania litigants are therefore left to challenge excessive compensatory damages awards under the common law. But as noneconomic damages awards continue to grow, so do concerns over their constitutionality, especially where they dwarf the economic damages, if any, awarded. This begs the question: when it comes to noneconomic damages, is it a case of mo money, mo problems?
Compensatory v. Punitive Damages
Compensatory and punitive damages, though typically awarded at the same trial, serve distinct purposes. Compensatory damages compensate for proven injury or loss. They aim to redress the concrete loss that the plaintiff suffered because of the defendant’s conduct and include both economic harm (such as lost wages or out-of-pocket expenses) and noneconomic harm (like mental anguish, pain and suffering, and embarrassment and humiliation). Punitive damages, on the other hand, focus on deterrence and retribution. They have been characterized as “quasi-criminal” or “private fines.” Bert Co. v. Turk, 298 A.3d 44, 58 (Pa. 2023). “Unlike compensatory damages, which serve to allocate an existing loss between two parties, punitive damages are specifically designed to exact punishment in excess of actual harm to make clear that the defendant’s misconduct was especially reprehensible.” Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 54 (1991) (O’Connor, J., dissenting).
Compensatory damages awards are presumed valid under Pennsylvania law regardless of their size. To that end, Pennsylvania courts have often stated that large verdicts “are not necessarily excessive verdicts; each case is unique and dependent on its own special circumstances,” Hyrcza v. W. Penn Allegheny Health Sys., Inc., 978 A.2d 961, 979 (Pa. Super. Ct. 2009), adding that reviewing courts are “reluctant to reverse a jury verdict that bears a reasonable resemblance to the damages proven,” Crespo v. Hughes, 167 A.3d 168, 189 (Pa. Super. Ct. 2017). In contrast, punitive damages awards are closely scrutinized by reviewing courts because they “pose an acute danger of arbitrary deprivation of property.” Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994). Closer examination is needed because “juries assess punitive damages in wholly unpredictable amounts bearing no necessary relation to the actual harm caused.” Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974).
Because of this concern and to ensure that “the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and the general damages recovered,” in BMW of North America, Inc. v. Gore, the U.S. Supreme Court established a framework—commonly referred to as the “Gore guideposts”—for courts to consider when reviewing the constitutionality of a punitive damages award. 517 U.S. 559, 574–575 (1996). The guideposts are: (1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages awarded; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. Id. Later, in Campbell, the Court articulated five subfactors that applied to an examination of the first Gore guidepost.
But neither the U.S. Supreme Court nor Pennsylvania’s appellate courts have established a test for evaluating the constitutionality of compensatory damages awards. For its part, the Pennsylvania Supreme Court has simply stated that a compensatory damages award “will not be upset unless it is so excessive as to shock the conscience of the court or it is clearly based on partiality, prejudice or passion.” See, e.g., Bailets v. Pa. Turnpike Comm’n, 181 A.3d 324, 336 (Pa. 2018). But it has not articulated a corresponding standard for determining excessiveness. Amid this void, the Pennsylvania Superior Court has held that reviewing courts may consider the following non-exhaustive factors in assessing whether a verdict is excessive: (1) the severity of the injury; (2) whether the injury is manifested by objective physical evidence or solely revealed by the plaintiff’s’ subjective testimony; (3) whether the injury is permanent; (4) whether the plaintiff can continue with their employment; (5) the size of the plaintiff’s out-of-pocket expenses; and (6) the amount demanded in the plaintiff’s original complaint. See, e.g., Brown v. End Zone, Inc., 259 A.3d 473, 486 (Pa. Super. Ct. 2021).
The Noneconomic Damages Dilemma
The test fashioned by the Superior Court may prove useful for assessing the excessiveness of a verdict consisting entirely of economic damages. But its utility is less clear in cases involving noneconomic damages, to which just three of the six factors seemingly apply (specifically, the first, second, and third). Indeed, without considering the relationship between the noneconomic damages and the economic damages awarded and comparable cases involving similar noneconomic damages awards, judicial review of a noneconomic damages award would seem illusory. And absent meaningful judicial review, nothing stops a jury from awarding punitive damages under the guise of noneconomic damages, thereby eluding constitutional review.
Two recent cases highlight this concern. In Caranci v. Monsanto Co., No. 210602213 (Phila. Cnty. Ct. Com. Pl.), a husband and wife filed a products liability action against Monsanto, alleging the husband’s use of Roundup caused him to develop non-Hodgkin’s lymphoma. The jury found the product was defective and awarded the couple $25 million in compensatory damages and $150 million in punitive damages. However, because the couple withdrew their request for economic damages, the compensatory damages consisted entirely of noneconomic damages. On appeal, the Superior Court panel applied the above six-factor test and found that the verdict was not excessive. Caranci v. Monsanto Co., ___ A.3d ___, 2025 WL 1340970, at *16 (Pa. Super. Ct. May 8, 2025). In doing so, however, the Court did not address the fifth and sixth factors. The panel also did not respond to Monsanto’s contention that the compensatory damages award was significantly higher than other large products-liability verdicts involving serious illnesses in Pennsylvania and compensatory damages awards against Monsanto in other jurisdictions—considerations required under the third Gore guidepost and, in any event, ones that would seem to be part and parcel of an assessment of whether a verdict shocks the conscience. And beyond summarily dismissing it as “mere conjecture and not grounds for relief,” id., the panel did not address Monsanto’s argument that the $25 million noneconomic damages award contained a punitive element given the couple’s withdrawal of their request for economic damages and the attendant due process concerns.
More recently, in Gill v. ExxonMobil Corp., No. 200501803 (Phila. Cnty. Ct. Com. Pl.), a husband and wife filed a products liability action against ExxonMobil and other defendants, alleging the husband developed acute myeloid leukemia from supposed years-long exposure to multiple products. The jury found for the couple and awarded them $725 million in compensatory damages consisting solely of noneconomic damages. ExxonMobil filed a post-trial motion, arguing that the verdict was excessive, among other things. Notably, ExxonMobil contended that “[t]he size and nature of the compensatory damages presents constitutional issues related to Due Process and excessive fines under both the Pennsylvania and United States Constitutions, despite punitive damages not being an element of available damages to Plaintiffs. Indeed, the extraordinary damages award here cannot be understood as anything [other] than a punitive damages award in disguise.” (Def. Exxon Mobil Corp.’s Br. in Supp. of Mot. for Post-Trial Relief at 52 n.34.) The trial court denied the motion. In its ensuing Rule 1925 opinion, the court acknowledged that “at trial there was no economic harm alleged, and … only noneconomic harm was considered by the jury” (Op. at 351), which would seem to weigh in favor of a finding of excessiveness. Likewise, the court noted that the plaintiff demanded the jurisdictional threshold—$50,000—in the original complaint (id.), meaning the noneconomic damages award exceeded the demand by a factor of 14,000. Nonetheless, the trial court reiterated its belief that the jury verdict was not excessive.
What’s Next
Monsanto filed a reargument application in Caranci on May 22, 2025, and merits briefing before the Superior Court will begin on June 23, 2025, in Gill. But regardless of the outcome of those appeals, they have brought to the fore the due process concerns posed by large verdicts involving noneconomic damages. Only time will tell if Biggie was right.
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Casey Alan Coyle is a shareholder at Babst, Calland, Clements and Zomnir, P.C. He focuses his practice on appellate law and complex commercial litigation. Coyle is also a former law clerk to Chief Justice Emeritus Thomas G. Saylor of the Pennsylvania Supreme Court. Contact Coyle at 267-939-5832 or ccoyle@babstcalland.com.
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Reprinted with permission from the June 12, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.
Legal Intelligencer
(by Morgan Madden and Steve Antonelli)
In the ever complex and evolving landscape of employment law, some of the most effective compliance tools are not found in case law or federal regulations but in routine and consistent documentation. Job descriptions, performance evaluations, and disciplinary writings are three foundational tools that can play a crucial yet often underestimated role in shaping and defending employers’ decisions. These documents are not standalone checkboxes, rather their effectiveness lies in their interconnectedness. Job descriptions lay the groundwork for expectations, performance evaluations track whether and how those expectations are met, and disciplinary writings memorialize any shortcomings or failures to meet them.
The proper use and maintenance of these documents can bolster compliance with key employment statutes. In the event of litigation, these records almost always become central to the body of evidence considered by a factfinder. Employers that use them regularly and consistently are often in a far stronger position to defend against claims and to demonstrate legitimate, nondiscriminatory reasons for adverse employment actions.
Job Descriptions: The Foundation of Employment Expectations
Job descriptions are more than administrative formalities—they define the who, what, and why of a role. A well-crafted job description outlines an employee’s essential functions, required qualifications, and reporting relationships. As an employer’s expectations change, so too should corresponding job descriptions. For example, how many employers allowed remote/hybrid work before March 2020?
Accurate and up to date job descriptions benefit both employers and employees because they help guide hiring decisions, compensation structures, and employee development. They can also play a pivotal role in litigation. They help delineate essential job functions and impact whether an employee’s accommodation request is reasonable in an ADA case, and they have a significant bearing on whether a position is exempt from overtime laws in a wage and hour case, to name a few examples.
To be legally useful and operationally effective, job descriptions should: (1) use objective, clear language that describes observable duties and requirements; (2) align with actual work performed, not just idealized roles or inherited templates; and (3) be updated regularly to reflect pertinent changes in the role.
Written Performance Evaluations: The Roadmap of Employee Progress
Performance evaluations are the primary method by which employers track and communicate an employee’s progress toward fulfilling the expectations set forth in the job description. Just as is the case with job descriptions, specificity and consistency in evaluations and performance reviews are critical.
Evaluations that praise (or criticize) an employee in vague or overly broad terms can create problems later when and if disciplinary action becomes necessary. Specific feedback about an employee’s performance is worth far more than general qualifiers – both in terms of employee engagement and success, and potential claim defensibility. For example, if a performance review simply states that an employee is “exceeding” or even “meeting” expectations, it could become difficult to justify a subsequent adverse employment action absent a clear record of interim performance problems. Instead of general praise, or criticism, employers should aim to evaluate performance as specifically as they can.
While formal performance reviews occur periodically (often annually), evaluation of employees’ performance should be fluid and ongoing. Informal or interim reviews, which can provide a more dynamic view of performance, are particularly useful when issues arise mid-year. It is possible for an employee to have a strong annual review followed by a drop in performance, and employers should refrain from waiting for the balance of the year to address the regression. An informal or interim review (and documentation thereof) can help right the proverbial ship by helping the employee to address the shortcoming and improve their performance and by putting the employer in position to support a negative review or defend an adverse employment action that follows a positive formal review.
In litigation, inconsistent performance evaluations can damage an employer’s credibility and can even allow a plaintiff to argue that an employer’s stated reason for an adverse employment action is pretextual.
To ensure evaluations serve both legal and operational goals, employers should: (1) tie evaluation criteria to the duties in the job description; (2) train managers on how to write effective evaluations that are honest, objective, and constructive; and (3) complete evaluations promptly and review them for consistency with other employment records.
Disciplinary Records: The Anchor of Employment Decisions
In the event of litigation, whether before a judge or an arbitrator, disciplinary documentation is often the most scrutinized aspect of the employment record with exceedingly high evidentiary value. It serves as the employer’s front-line defense as to both the explanation for and timing of the adverse employment action, as well as the evidence of any prior notices and opportunities to improve. Disciplinary records can also play a key role in other adversarial proceedings such as unemployment compensation hearings and union grievances, where the employer may have to justify that a termination or suspension was for either willful misconduct or just cause, respectively. In those settings, disciplinary records should be especially robust and involve specific language and allowances as the supporting documentation often serves as the tipping point in these matters.
Progressive discipline policies are an excellent tool in guiding disciplinary decisions. They allow employers to document each step taken – verbal warnings, written warnings, improvement plans, and suspensions – to demonstrate fair and consistent disciplinary actions.
Effective disciplinary documents should follow some basic principles. They should be issued promptly following the performance shortcoming or incident giving rise to the discipline. They should also: (1) refer to expectations set forth in the job description and/or previous performance evaluations; (2) contain details and be free from emotional or subjective language; and (3) demonstrate consistency across employees in similar circumstances.
Each of these three tools – job descriptions, performance evaluations, and disciplinary records – serves a distinct purpose. When aligned, they form a comprehensive and cohesive employment record that benefits both employers and employees by setting expectations, tracking performance, and documenting corrective actions. Strategically aligning these tools establishes a fair and transparent employment framework. For employees, it promotes understanding of expectations and how performance is measured. For employers, it builds a documented history that is invaluable both in day-to-day management of an operationally effective workforce, and in the event of litigation.
Employers should not wait for a lawsuit to evaluate their HR documentation practices. Instead, they should regularly review their job descriptions and align those documents with current duties and expectations so that performance evaluations can be conducted consistently.
By treating these basic HR documents as a strategic defense rather than administrative chores, employers can significantly reduce legal exposure while promoting a culture of clarity, fairness, and accountability.
Morgan M. Madden is an associate in Babst Calland’s Public Sector, Energy and Natural Resources, and Employment and Labor groups and focuses her practice on land use, zoning, planning, labor and employment advice, and litigation. Contact her at mmadden@babstcalland.com.
Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers of all sizes, from Fortune 500 companies and large healthcare organizations to non-profit organizations and family-owned businesses. He represents clients, in all phases of employment and labor law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling. Contact him at santonelli@babstcalland.com.
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Reprinted with permission from the June 5, 2025 edition of The Legal Intelligencer© 2025 ALM Media Properties, LLC. All rights reserved.
Babst Calland announced that Attorney Natalie Baughman has joined the firm’s Washington, DC office as a shareholder and member of its Environmental practice group.
Natalie Baughman has a deep expertise in CERCLA site remediation, particularly in complex, multi-party cleanups involving decades of contamination. Her practice also includes representing clients in enforcement actions, environmental litigation, and permitting and compliance matters arising under the Clean Water Act, Safe Drinking Water Act, and state environmental laws.
Prior to joining Babst Calland, Ms. Baughman worked in the U.S. Department of Justice’s Environmental Enforcement Section and the District of Columbia’s Department of Energy and Environment, where she oversaw the agency’s work on the CERCLA cleanup of the Anacostia River and numerous other contaminated sites. Ms. Baughman has represented clients in administrative and civil judicial enforcement cases in both government positions.
Ms. Baughman earned her B.S. from Northwestern University in 2002. She received her J.D. from the University of Maryland School of Law in 2009.
Ms. Baughman is admitted to practice in the District of Columbia and Maryland.
The Wildcatter
(by Nikolas Tysiak)
Cavallo Mineral Partners LLC v. EQT Production Company, 2025 WL 800433 (Pa. Super., March 13, 2025). In this case, landowner Des Moine Field conveyed his 200 acre tract in Washington Twp., Greene County, PA to the McChesneys in 1990, using the following language: “ALSO EXCEPTING AND RESERVING, for the benefit of Grantees, his heirs and assigns, all oil and gas not previously excepted, reserved or conveyed, together with the right to mine and operate for the same . . .” (emphasis added). Field eventually purported to convey his oil and gas rights to Cavallo Mineral Partners. The McChesneys leased their oil and gas rights to EQT, which eventually included these interests in an oil and gas production unit. Cavallo eventually brought a quiet title declaratory action suit, alleging ownership of the oil and gas rights. EQT (and other co-defendants) eventually won on procedural grounds following competing motions for summary judgment, and the suit was dismissed without prejudice. In that decision, the court pointed out that Cavallo still had claims that could be made regarding the apparent Scrivener’s Error regarding the use of the term “grantees” in the reservation, and Cavallo was instructed to amend its complaint accordingly, which it failed to timely do. Instead, it further appealed the underlying case on procedural grounds. The Superior Court found that Cavallo could only succeed on its procedural claims if it were likely to succeed on the merits of its case. The court determined, based on the existing claims and record, that Cavallo was unlikely to succeed on the merits because the deed from Fields to the McChesneys did not properly except or reserve the oil and gas rights for the benefit of Fields or his heirs, successors and assigns. The attempted appeal was therefore quashed, but it appears that Cavallo is still able to amend its complaint to argue for a scrivener’s error reformation of the 1990 deed.
Antero Resources Corporation v. Pike, 914 S.E.2d 757 (W. Va. Inter. Ct., 2025). In this case, landowners excepted and reserved oil and gas from under 2 tracts, totaling 97 acres, in 1895. By 1942, the oil and gas became divided as follows: Rufus G. Fordyce, Edna L. Fordyce and Margaret Fordyce Pike (as joint tenants with the right of survivorship) – ½ interest; Daisy G. Broadwater – ½ interest. In 1949, Rufus, Edna and Daisy conveyed their interests in the 97 acres to Dora Jewell. The 1949 deed makes no reference to the interest of Margaret F. Pike, or to the deed where she acquired her interest. In 1976, successors to Jewell leased the oil and gas under the land, which eventually came into the possession of Antero Resources. Various wells were apparently timely drilled under the terms of the lease. Antero brought suit in 2019, seeking a declaratory judgment, asking the court to find that the successors to Jewell had effectively adversely possessed the 97 acres as against the potential interests of Margaret Fordyce Pike and her heirs at law. The Pike heirs counterclaimed, alleging intentional trespass, conversion, and demanding forfeiture of Antero’s oil and gas infrastructure. The trial court found Antero had not established that the non-Pike heirs and successors had successfully adversely possessed the Pike heirs’ oil and gas rights, as the requirements of ouster, specifically the right under ouster to receive actual notice of such ouster, had been fulfilled. The Intermediate court disagreed with this, citing caselaw indicating that actual notice of an ouster is not affirmatively required, but instead constructive notice can be relied upon IF the adverse possession is clearly in opposition and detriment to the rights of party to be deemed ousted (i.e., clear exclusive possession in an open, hostile and notorious manner). The intermediate court therefore overturned the trial court decision and remanded the case for additional proceedings in the trial court.
Miller v. Bunting, 2025 Pa. Super. 80 (April 8, 2025). This involves a suit where the plaintiff claimed ownership of coal rights under a tract of land containing 14.1219 acres pursuant to a deed that purportedly clearly excepted and reserved such coal rights. The Superior Court noted that the language of the deed clearly reserved such coal rights. In addition, the court produced a lengthy analysis of the intent of the parties regarding the coal rights and further concluded that the plaintiffs’ claims to the coal were “without merit.” Later, the court entertained the plaintiffs’ claim regarding Doctrine of Merger argument, where it was claimed that the coal estate and the surface estate merged under the ownership of the plaintiffs’ grantors, causing the plaintiffs’ to receive such coal rights by their deed. The court rejected this argument, pointing out that the Doctrine of Merger in Pennsylvania “is now practically extinct,” and can only occur under equitable grounds as necessary to prevent injustice. In other words, the parties involved must intend for a merger of titles to occur. The court further pointed out that traditionally, merger involves a greater estate subsuming a lesser estate. In this case, the two estates involved, covering the surface and the coal rights, were both for “fee simple” and neither estate could be construed as greater or lesser than the other. Finally, the court found that “expert reports” on interpretation of deeds is irrelevant as an issue of fact, because the meaning of deeds is strictly a matter of law for a court to decide. The orders granting summary judgment for the defendants below were affirmed.
Golden Eagle Resources II, LLC v. EQT Production Company, 2025 WL 874413 (Pa. Super. Ct. March 20, 2025). This suit involves the interpretation of competing clauses in an oil and gas lease regarding settling disputes. The lease from Golden Eagle to EQT’s predecessor included a clause requiring arbitration of disputes. However, the associated addendum to the lease allowed the parties to bring suit in any appropriate court. In addition, the addendum indicated that any conflict between the lease document form and the addendum should be settled in favor of the addendum. Golden Eagle made several arguments regarding the interplay of these clauses, but ultimately the court determined that the language of the addendum controlled, and no arbitration could be compelled. The court was particularly influenced by the fact that Golden Eagle had instigated the suit, implying that the more appropriate time to seek arbitration would have been before the filing of their lawsuit, and not on appeal.
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Reprinted with permission from the MLBC June 2025 issue of The Wildcatter. All rights reserved.
Pittsburgh Business Times
(by Moore Capito featuring Matt Smith)
With the surge of artificial intelligence, the demand for data centers to support that computing power is growing fast. “One of the challenges is that we as human beings and as businesses require so much more computing power than we ever have,” said A.A. Moore Capito, a shareholder specializing in energy and emerging technologies with the law firm Babst Calland. “That growth has continued consistently over the past 50 years, but at this current moment, we are seeing an exponential increase in demand.”
Yet, with this rapid growth comes significant challenges as businesses compete for power and land. With a wealth of energy resources, affordable land, and proximity to densely populated areas, this region is right in the thick of the trend.
Capito recently joined Allegheny Conference on Community Development Chief Growth Officer Matt Smith in the Pittsburgh Business Times offices for a conversation about the opportunities and challenges for the region, when it comes to data center growth.
Surging demand for power
Data centers are energy giants. They require a massive amount of power to process information, particularly as artificial intelligence capabilities expand. In February, Goldman Sachs Research predicted global power demand from data centers will increase 50 percent by 2027 and up to 165 percent by the end of 2029.
This spike in demand is forcing businesses and industry to rethink how to power their operations. Traditional reliance on the energy grid alone may no longer suffice.
“What I would consider the biggest challenge today is providing the power to sustain the growth that we need,” Capito said.
“A lot of these folks in the tech sector are saying we can’t rely on the grid anymore. We have to find alternative ways to power these very necessary components of our business and life, frankly, in today’s age.”
Because it offers several alternatives to the power issue, the region is positioned to attract data center projects, Smith and Capito said.
“Interestingly, we do a lot of work in our region with nuclear companies that are really at the cutting-edge of small modular reactors (SMRs), micro reactors, some even larger,” said Smith, noting how nuclear and natural gas combined can solve our energy shortage.
In a move that made international headlines, Constellation Energy and Microsoft announced plans last fall to restart a unit of the Three Mile Island nuclear plant to power the tech company’s data center use for 20 years. And Amazon Web Services is reported to be buying a data center campus in Salem Township in Westmoreland County that is collocated with a nuclear power generation plant.
Nuclear is far from the only option. Capito said Pennsylvania, West Virginia and Ohio’s rich natural gas resources have been underleveraged in data center planning so far.
“A lot of these developers see it as a nuclear play, but we know that doesn’t happen fast,” he said, which means they need an energy source to bridge that gap. “It’s got to be natural gas, and that is why we have an incredible opportunity here.”
There are a number of collaborative projects in play that lean on the region’s natural gas resources, Smith said.
In April, for example, Homer City Redevelopment and Kiewit Power Constructors Co. announced plans to turn what had once been the largest coal-burning power plant in Pennsylvania into a natural gas-powered data center campus. The new Homer City Energy Campus will deliver up to 4.5 gigawatts of power to support AI-driven hyperscale data centers.
Similarly, Liberty Energy Inc., Imperial Land Corp. and Range Resources have created a strategic alliance to support the development of a power generation facility within the Fort Cherry Development District in Washington County to serve data centers, industrial facilities and other high-energy-use businesses in Pennsylvania.
Finding ready-to-go sites
To attract AI and data center developers, this region doesn’t just offer abundant energy that can be drawn upon; it also has “ready-to-go” sites where projects can start quickly and operate efficiently, unique higher education assets like Carnegie Mellon University and the University of Pittsburgh, and access to key North American markets.
“It’s like walking into a hotel room,” Capito said. “You want the bed made. You want the towels on the rack, and you want the remote right beside you. You want it ready to go. And that’s the same way that developers want it.”
Our industrial legacy is serving us well in this regard. Southwestern Pennsylvania is already home to ample industrial sites tied to the power grid. These well-connected locations offer developers the infrastructure they need to hit the ground running.
“Because of our rich legacy of manufacturing and industrial strengths in Southwestern Pennsylvania, we have a lot of sites, we have abundant energy resources, and we have a highly skilled workforce,” Smith said. “We also have a lot of those sites specifically tied into the grid. This region will lead the way in ensuring our nation is energy dominant.”
Another example of seizing our region’s opportunity is the recent request by the Allegheny Conference and more than 20 organizations to the U.S. Department of Energy’s Office of Policy for using DOE land for AI infrastructure that would support data center demand and the administration’s goals.
We’re seeing the attractiveness of the region’s assets in recent moves by manufacturers that support the energy industry’s supply chain, Smith and Capito said.
Mitsubishi Electric Power Products Inc., for example, is building an $86 million manufacturing facility and testing lab in Beaver County, where it will make gas-insulated and vacuum circuit breakers, an important component for modernizing electric grids.
And the Switzerland-based power grid technology company Hitachi Energy has announced a $70 million expansion of its three manufacturing facilities in Westmoreland County. It makes high-voltage technologies, including switchgears, circuit breakers, generator circuit breakers and other products needed in power grids. Pennsylvania is supporting the expansion with a $184,000 Pennsylvania First grant and a $145,000 WEDnetPA grant to train employees.
That’s good news for the industry, which will need a steady, reliable supply of parts, Smith said.
“The reason you’re seeing this is that there is a huge power generation demand coming and large-scale investment is needed to meet that demand. Southwestern Pennsylvania is positioned to address that looming demand for power,” he said. “We stand at the center of energy resources and building the component parts that are essential to the grid supply chain.”
Cutting red tape
Business-friendly regulation is also giving this region an edge, Smith and Capito said.
Dealing with the regulatory environments and local, state and federal government to navigate those regulations can be very difficult, said Capito.
The PA Permit Fast Track Program, for example, has streamlined permitting for large economic development and infrastructure projects that require multiple permits from different agencies. And in March, Gov. Josh Shapiro proposed a state energy siting board to reduce red tape even further.
“One of the things that is of the utmost importance, if not the most important, for AI and data centers is speed,” Smith said. “Developers want to get the projects started quickly and want to get the projects done fast.”
Capito said he sees things speeding up at the federal level, too, thanks to President Donald Trump’s desire to invest heavily in AI.
“This is a critical industry,” Capito said. “It is a big national security component, managing the information flow of all of these systems that we have running that control essentially everything that you see and touch and feel every single day.”
Moore Capito is a shareholder at Babst Calland, where he represents clients in all phases of complex corporate, commercial and real estate transactions, and entity, joint venture, and partnership structuring and formation, and general business matters. His practice also focuses on counseling energy clients in various transactional matters of natural gas assets, joint developments, leasing, and operations. Moore also assists companies in navigating the complex legal landscape of emerging technologies, including data center development, ensuring projects are compliant with relevant laws and regulations.
Matt Smith serves as Chief Growth Officer of the Allegheny Conference on Community Development. In this role, Matt leads the Conference’s economic development efforts with a focus on growth of the regional economy through the attraction and retention of business investment and talent. He is also responsible for the organization’s local, state and federal policy and advocacy efforts, which are strategically oriented toward increasing economic competitiveness and accelerating growth opportunities regionwide.
Business Insights is presented by Babst Calland and the Pittsburgh Business Times.
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FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alex Graf)
On April 8, 2025, the Pennsylvania Environmental Quality Board (EQB) tabled consideration of the Clean Air Council (CAC) and Environmental Integrity Project’s (EIP) petition for a rulemaking seeking to amend 25 Pa. Code ch. 78a to increase required minimum setbacks from unconventional oil and gas wells from 500 feet to 3,281 feet. During the meeting, Public Utility Commission (PUC) Commissioner Kathryn Zerfuss moved to table the petition, stating that the members of the EQB need more time to consider materials submitted by industry members and others prior to the meeting, which the EQB approved. Tabling the petition followed a Pennsylvania Department of Environmental Protection (PADEP) presentation recommending that the EQB accept the petition for further study, with the caveat that the recommendation was not an indication of PADEP’s substantive position on the petition. See PowerPoint Presentation, PADEP, “Petition for Rulemaking: Unconventional Gas Well Setbacks” (Apr. 8, 2025). CAC and EIP also presented their argument for why the EQB should accept the petition for further study at the meeting, which largely focused on the positions taken in their petition regarding potential adverse health and environmental consequences to people and resources located near unconventional oil and gas wells.
Procedurally, an EQB member would have to motion to un-table the petition to advance the petition for consideration, which could occur at the earliest at EQB’s next regularly scheduled meeting, currently set for June 10, 2025. The April meeting featured much debate by the EQB as to the exact timeline of events if the petition is un-tabled and considered during the June meeting. Ultimately, if the petition is considered, the EQB will vote on whether the petition should be further studied by PADEP. The EQB may refuse to accept a petition for further study if it determines that the EQB has considered the issue in the past two years as part of a rulemaking, the requested action is currently in litigation or is not appropriate for rulemaking due to policy or regulatory considerations, or the petition involves an issue previously considered by the EQB and does not contain new or different information to warrant reconsideration. 25 Pa. Code § 23.5. If the EQB accepts the petition, notice of acceptance will be published in the Pennsylvania Bulletin within 30 days. Id. § 23.6.
Upon publication of the acceptance in the Pennsylvania Bulletin, PADEP has 60 days to prepare a report evaluating the petition, but may take additional time if necessary. Id. The report includes a recommendation on whether the EQB should approve the action requested in the petition. Id. This report must identify the anticipated date the EQB will consider a proposed rulemaking in the report if it contains any regulatory amendments. Id. CAC and EIP are entitled to receive the report and make comments that will inform PADEP’s ultimate recommendation. Id. §§ 23.7–.8. Following the report, if PADEP recommends regulatory amendments, it will prepare a proposed rulemaking within six months of sending the report to CAC and EIP. Id. § 23.8. If no regulatory amendments are recommended, PADEP will present at the EQB meeting at least 45 days after it mailed its report to CAC and EIP. Id.
CAC and EIP filed their petition on October 22, 2024. See Clean Air Council and Environmental Integrity Project Petition (Oct. 22, 2024) (Petition). To support their arguments, they cite to the 2020 43rd Statewide Investigating Grand Jury Report (43rd Grand Jury Report) published under then-Attorney General Josh Shapiro, now Governor, which concluded in part that the commonwealth “take action to expand the no-drill zone between fracking and homes from 500 to 2,500 feet and to adopt a more protective no-drill zone of 5,000 feet for schools and hospitals.” Petition at 2 (citing the 43rd Grand Jury Report at 93–94). The petition also alleges that people residing near unconventional oil and gas wells experience negative health consequences, that the wells release dangerous pollution, and that the wells contaminate surface and groundwater, and for these reasons, the EQB should increase minimum setbacks to protect public health and public resources. See generally id. On November 21, 2024, the Pennsylvania Department of Environmental Protection (PADEP) informed CAC and EIP that the petition complied with the EQB petition policy. Letter from PADEP (Nov. 21, 2024). Information and materials for the EQB’s June meeting will be posted to PADEP’s website.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Christina Puhnaty and Ethan Johnson)
On February 15, 2025, the Pennsylvania Department of Environmental Protection (PADEP) announced that the inflation rate for calculating anthracite and bituminous coal and industrial mineral mining water supply operation and maintenance bond amounts for replacement water supplies will be 3.80% and the interest rate for the 20-year Treasury bill will be 3.08%. 55 Pa. Bull. 1603 (Feb. 15, 2025). The rates became effective on April 1, 2025, and will be in effect until the new rates are published in February 2026.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Christina Puhnaty and Ethan Johnson)
In a February 25, 2025, Mining and Reclamation Advisory Board and Aggregate Advisory Board Joint Regulation, Legislation, and Technical Committee Meeting, the Pennsylvania Department of Environmental Protection (PADEP) presented its plans to rescind two technical guidance documents (TGDs) and revise two others due to the TGDs being inaccurate and out of date after changes to Pennsylvania’s coal regulations and noncoal regulations. See PowerPoint Presentation, PADEP, “Water Supply Replacement TGDs” (Feb. 25, 2025).
PADEP plans to rescind its Water Supply Replacement and Permitting TGD (TGD 562-4000-101) but to convert some of its sections into standard operating procedures. PADEP also plans to rescind the Insurance Requirements and Water Supply Replacement Assurance TGD (TGD 562-2500-702) due to its inaccuracy following PADEP’s 2023 revisions to 25 Pa. Code ch. 77 regarding liability insurance rates. Any information still needed from the WSR and Permitting TGD and the Insurance Requirements and Water Supply Replacement Assurance TGD will be incorporated into a revised Water Supply Replacement and Compliance TGD (TGD 563-2112-605).
PADEP plans to make minor revisions to its Increased Operation and Maintenance Costs of Replacement Water Supplies (on All Coal and Surface Noncoal Sites) TGD (TGD 562-4000-102). PADEP will also revise its Water Supply Replacement and Compliance TGD (TGD 563-2112-605), which PADEP will rename as Water Supply Replacement, Permitting, and Compliance. In the revised TGD, PADEP will incorporate background information from the rescinded Water Supply Replacement and Permitting TGD (TGD 562-4000-101), remove requirements that are now in regulations, remove attached forms, and include relevant information from the rescinded Insurance Requirements and Water Supply Replacement Assurance TGD (TGD 562-2500-702). PADEP also announced its intention to remove statements regarding de minimis maintenance or treatment costs, which are no longer addressed in 25 Pa. Code chs. 87 and 88.
PADEP expects the revised TGDs to be published for public comment in fall 2025. PADEP’s mining TGDs are available here.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Christina Puhnaty and Ethan Johnson)
The Pennsylvania Department of Environmental Protection (PADEP), on March 22, 2025, announced the 2025 land reclamation bond rate guidelines for coal mining operations, and on March 29, 2025, announced the land reclamation bond schedule for noncoal mining operations. The coal mining operations bond rate guidelines became effective on April 1, 2025, and are available at 55 Pa. Bull. 2392 (Mar. 22, 2025). The noncoal mining operations bond schedule became effective March 29, 2025, and is available at 55 Pa. Bull. 2576 (Mar. 29, 2025).
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alex Graf)
On February 26, 2025, the Pennsylvania Department of Environmental Protection (PADEP) announced it had begun accepting grant applications for the Reducing Industrial Sector Emissions in Pennsylvania (RISE PA) Program. See Press Release, PADEP, “Shapiro Administration Launches RISE PA Initiative to Create Energy Jobs, Cut Costs, Grow Pennsylvania’s Energy & Manufacturing Industries, and Lower Toxic Air Pollution” (Feb. 26, 2025). The RISE PA Program is funded by a $396-million award under the 2022 Inflation Reduction Act for projects that will reduce carbon emissions from the industrial sector, including from fuel combustion, industrial process emissions, natural gas and oil systems, coal mining, and other electricity usage.
As previously reported in Vol. 42, No. 1 (2025) of this Newsletter, President Trump’s Executive Order No. 14,154, “Unleashing American Energy,” created uncertainty around RISE PA’s future by pausing clean energy and climate-related funding under the Inflation Reduction Act. Exec. Order No. 14,154, § 7, 90 Fed. Reg. 8353 (Jan. 20, 2025). The Shapiro administration, however, sued the federal government and the funds were unfrozen on February 24, 2025.
The RISE PA Program awards are tiered based on project size: up to $40 million for small-scale projects; up to $100 million for medium-size projects; and up to $220 million for large-scale projects. Small-scale awards are administered by the Pennsylvania Technical Assistance Program (PennTAP), while medium- and large-scale awards are administered by PADEP.
The Shapiro administration offered examples of eligible projects, including, “installing energy-efficient heat recovery systems to reduce the energy required to heat or cool an industrial facility, electrifying an industrial plant by swapping out diesel-powered generators with equipment that runs on electricity, and capturing coal mine methane from mining operations.” Press Release, supra. The program also includes bonus award opportunities based on taking one or more additional actions and depending on the size of the project. These include a Community Benefits Bonus (for projects in low-income and disadvantaged communities that include a Community Benefits Plan; up to 10% of total project cost), a Fair Labor Bonus (committing to one or more labor-related requirements, based on project size; up to 10% of total project cost), and a GHG Emissions Reduction Bonus (available to medium- and large-scale projects based on the percentage reduction of GHG emissions; up to 10% of total project cost).
The RISE PA website includes step-by-step instructions for applying online, mock project application answers and budgets, and other guidance to assist applicants, as well as a form to submit public feedback about the program. PADEP is currently accepting applications for medium- and large-scale projects, with an application deadline of August 29, 2025, and first award announcements in fall 2025. All projects must be completed by April 1, 2029.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alex Graf)
On March 31, 2025, the Pennsylvania Department of Environmental Protection (PADEP) entered a settlement agreement with the Pennsylvania Independent Oil & Gas Association (PIOGA), PA Independent Petroleum Producers (PIPP), and PA Grade Crude Oil Coalition (PGCC) (collectively, Petitioners) pertaining to the Control of VOC Emissions from Conventional Oil and Natural Gas Sources pursuant to 25 Pa. Code ch. 129.
The settlement arises out of a December 5, 2022, petition for review of the emergency-certified final-omitted Control of VOC Emissions from Conventional Oil and Natural Gas Sources by the Petitioners in the Commonwealth Court of Pennsylvania. PIOGA, PIPP and PGCC Petition (Dec. 5, 2022) (Petition). Petitioners challenged the rule on the grounds that (1) the regulation did not meet the requirements to be issued as a final omitted rulemaking; and (2) PADEP did not develop the regulation for conventional oil and gas wells separately and independently from those regulations developed for unconventional oil and gas wells, as required by Act 52 of 2016. The rule was adopted by the Environmental Quality Board (EQB) through an emergency certified final-omitted rulemaking approved by the Governor, without notice and comment, which adopted reasonable available control technology standards (RACT) to control volatile organic compound (VOC) and methane emissions from existing and future conventional oil and gas operations and unconventional oil and gas operations, respectively. PADEP contended that the emergency certified final-omitted rulemaking process was appropriate pursuant to the PA Commonwealth Documents Law because notice and comment from the public was unnecessary, impractical, and contrary to the public interest.
In resolution of the petition for review of the rule, the parties agreed to a settlement that stipulates that for the leak detection and repair (LDAR) monitoring threshold, a separate tank battery surface site is not aggregated with the well or wells that supply the tank battery. See PIOGA v. DEP Settlement Agreement FAQ (Mar. 31, 2025). Further, if the well that supplies the separate tank battery surface site is subject to LDAR on its own due to the barrel of oil equivalent produced per day, the separate tank battery surface site is not automatically also subject to LDAR. PADEP did not conduct a separate RACT analysis for a conventional oil and gas separate tank battery surface site. LDAR will be required at a separate tank battery site if: (1) the separate tank battery surface site receives more than 15 barrels of oil or the equivalent amount of natural gas per day, and (2) one or more of the wells supplying the separate tank battery surface site produced five or more barrels of oil or the equivalent amount of natural gas per day.
Additionally, the settlement explains how PADEP calculated the 2.7 tons per year trigger for controlling VOC emissions from a storage vessel and states that VOC recovery and control requirements are not impacted by the number of wells connected to a particular tank. The recovery requirement is not impacted by how much methane is emitted from a tank, it instead relates to the collection of VOC emissions. VOC recovery and control requirements are also not impacted by the number of wells connected to a particular tank. The settlement also requires that for 10 years, rulemakings under the Air Pollution Control Act, 35 Pa. Stat. §§ 4001–4106, concerning conventional oil and gas well operations shall be undertaken separately and independently from unconventional wells.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alex Graf)
On January 14, 2025, the Pennsylvania Department of Environmental Protection (PADEP) launched a new webpage to track the progress of permit applications. See Commw. of Pa., “Track Your Permit Application” here (Permit Tracker). The Permit Tracker allows interested parties to search permits by program area (e.g., oil and gas, by county, permit type, and other details). Applicants can also check the status of a permit application, including which step of the review process the permit is in, the target date for completing that step, and contact information for the permit reviewer.
According to an accompanying press release, PADEP co-developed the Permit Tracker with the Commonwealth Office of Digital Experience (CODE PA) to modernize the permitting process, and in response to requests from the business community. Press Release, PADEP, “Shapiro Administration Launches New Permit Tracker; Businesses Applying for DEP Permits Can Now See Progress in Real-Time” (Jan. 16, 2025). PADEP said that it continues the agency’s “commitment to transparency and improving the user experience for applicants working with us to build a better Pennsylvania.” Id. In addition to PADEP’s efforts to reduce its permit application backlogs, the agency said the Shapiro administration has been hiring staff to improve operational efficiency. Id.
Implementation of the Permit Tracker follows CODE PA’s October 2024 launch of another website to educate stakeholders about state grant opportunities and assist applicants through the application process. That tool, available here, covers multiple grant categories, including energy and oil and gas. More information about CODE PA’s other efforts can be found on its website here.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alex Graf)
On April 5, 2025, the Pennsylvania Department of Environmental Protection (PADEP) issued the General Plan Approval and/or General Operating Permit for Gaseous Fuel-Fired Spark Ignition Internal Combustion Engines (BAQ-GPA/GP-16). 55 Pa. Bull. 2680 (Apr. 5, 2025).
A General Permit is a plan approval and operating permit for a specific category of sources that PADEP has determined can be adequately regulated under standardized conditions. Section 6.1(f) of the Air Pollution Control Act (35 Pa. Stat § 4006.1(f)) and 25 Pa. Code ch. 127, subch. H (relating to general plan approvals and operating permits) authorize PADEP to develop General Permits.
PADEP is also authorized to require new sources to control air pollution through the use of best available technology (BAT) under section 6.6 of the Air Pollution Control Act. In developing General Permits, PADEP establishes BAT for new sources, which can include equipment, devices, methods, or techniques to control air emissions to the maximum degree possible utilizing technologies that are available or may be made available. 25 Pa. Code § 121.1.
GP-16 sets BAT emission limits for certain new gaseous fuel-fired spark ignition internal combustion engines that are more stringent than the applicable New Source Performance Standards for these engines in 40 C.F.R. pt. 60, subpt. JJJJ, and 40 C.F.R. pt. 63, subpt. ZZZZ. GP-16 includes standardized requirements related to BAT and additional terms including recordkeeping and reporting requirements, a compliance certification, source testing requirements, and compliance with applicable New Source Performance Standards. The use of the GP-16 is restricted to facilities that are minor sources.
Prior to the issuance of this General Permit, sources seeking to install and operate spark ignition engines were either required to meet certain exemption criteria or go through the full plan approval process to permit these sources. GP-16 will streamline the permitting process for owners and operators who wish to install spark ignition engines at their facilities in Pennsylvania.
A copy of the General Permit, application instructions, the comment and response document, and technical support document can be found on PADEP’s website here.
Copyright © 2025, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
West Virginia Executive
(by Moore Capito)
As the “backbone” of digital infrastructure, data centers are becoming more and more critical in meeting the demands of the modern digital world. With advances in artificial intelligence (AI) and the increased reliance on computing by people all over the world, demand for data centers is outpacing supply.
We are in a global modern-day gold rush to build data centers. And just as the 49ers faced infrastructure challenges of the day, data center developers are facing a critical infrastructure obstacle: energy.
A data center is a physical facility that houses servers that manage, store, and process data. There are several types of data centers, and while all do not require the same prerequisites to develop, they all require vast amounts of electricity. According to the United States Department of Energy, data centers account for two percent of the electricity usage in the country consuming 10 to 50 times more electricity per floor space than a typical commercial structure.
The electricity required to power data centers is adding stress on grids that are already pushing the limits. Utilities are having difficulty guaranteeing the level of power required to sustain current demand and meet projected future demand. As a result, developers are evaluating alternative ways to power their projects.
Recently, Amazon Web Services (AWS) purchased Talen Energy’s 1,200 acre data center campus which provides direct power from the Susquehanna Steam Electric Station. Tech companies and developers are no longer waiting on the utilities and are trending toward establishing dedicated power sources. This trend provides energy rich states an incredible opportunity.
Energy companies are actively exploring how to provide direct power ranging from laying additional pipelines to evaluating construction of new power plants dedicated to powering data centers. As evidenced by the recent energy deals, states like West Virginia offer an attractive proposition to data center developers – access to vast amounts of energy sources. Additionally, West Virginia boasts incredible research and development institutions, including West Virginia University and Marshall University. As a result, this region is well positioned to be the next hub for data center development.
Of course, there are challenges. Navigating the regulatory environment, finding suitable property, and identifying partners with available energy supply are just a few. Our firm, Babst Calland, specializes in environmental, energy, and emerging technologies law. As such, we are perfectly situated to connect those pieces because we understand each geographic footprint and tailor legal strategies accordingly, with a deep knowledge of state regulation and local jurisdictions. We provide the cross-disciplinary legal team to address these challenges and support regional and national data center projects.
The demand for data centers is growing and projected to grow even faster. We know the greatest challenge is meeting the electricity requirements. West Virginia has an abundant supply of natural resources, affordable land, artificial intelligence research and development, and proximity to densely populated areas. Now is the time to leverage those strengths. If we do so, our region is poised to benefit greatly from this rush for data centers.
With increased demand for complex data center development, whether navigating potential legal challenges related to financing, project siting, land acquisition, zoning, or regulatory compliance, Babst Calland is prepared to address the region’s most pressing concerns.
Moore Capito is a shareholder in the Corporate and Commercial, Emerging Technologies, and Energy and Natural Resources groups of Babst Calland. He has substantial experience in all phases of complex corporate, commercial and real estate transactions. He routinely counsels clients in entity, joint venture and partnership structuring and formation, and general business matters. For more information, please contact Moore Capito at (681) 205-8953 or mcapito@babstcalland.com or visit babstcalland.com.
Reprinted with permission from the Spring 2025 edition of WV Executive.
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TEQ Hub
(by Kristen Petrina)
On May 19, 2025, President Trump signed into the law the “TAKE IT DOWN Act (the “Act”). The Act includes data privacy, digital protections, and AI governance requirements of companies to remove deepfakes from “covered platforms”, particularly with a focus on nonconsensual intimate imagery (“NCII”).
The Act, whose acronym stands for “Tools to Address Known Exploitation by Immobilizing Technological Deepfakes on Websites and Networks Act” includes both criminal and civil elements; however, it does not create a new private right of action, rather provides the Federal Trade Commission with the enforcement authority over failures to comply with the notice and removal obligations, which would constitute an unfair or deceptive act or practice under the Federal Trade Commission Act.
Criminal and Civil Liability
The Act criminalizes the publication of an authentic or computer-generated NCII and outlines penalties for when the images of “intimate visual depiction” as defined in 15 USC 6851(5)(A), of an adult or minor and imposes new obligations on social media and online platforms to respond to requests to promptly remove unlawful NCII. Synthetic or computer-generated NCII, includes the term “digital forgery” meaning “any intimate visual depictions of an identifiable individual created through the use of software, machine learning, artificial intelligence, or any other computer generated or technological means, including by adapting, modifying, manipulating, or altering an authentic visual depiction, that, when viewed as a whole by a reasonable person, is indistinguishable from an authentic visual depiction of the individual.” An identifiable individual includes someone “(i) who appears in whole or in part in an intimate visual depiction; and (ii) whose face, likeness, or other distinguishing characteristic (including a unique birthmark or other recognizable feature) is displayed in connection with such intimate visual depiction.”
Criminal Liability for “Knowingly” Publishing NCII
- Involving Adults. The Act prohibits the use of an interactive computer service to knowingly publish an intimate visual depiction of an adult identifiable individual, who is not a minor, if (i) the intimate visual depiction was obtained or created under circumstances in which the person knew or reasonably should have known the identifiable individual had a reasonably expectation of privacy; (ii) what is depicted was not voluntarily exposed by the identifiable individual in a public or commercial setting; (iii) what is depicted is not a matter of public concern; and (iv) publication of the intimate visual depiction is intended to cause harm or causes harm, including psychological, financial or reputational harm, to the identifiable individual. For synthetic or computer-generated digital forgeries, the test is similar, except to establish criminal liability, the depiction would have to be published without consent of the identified individual.
- Involving Minors. Under the Act, NCII involving minors, defined as anyone under the age of 18 years, sets forth stricter prohibitions making it unlawful to publish NCII of an identifiable individual who is a minor with the intent to (i) abuse, humiliate, harass, or degrade the minor; or (ii) arouse or gratify the sexual desire of any person.
- Consent, Disclosure and Disclosure Exceptions. The Act recognizes that the consent to create an image is not the same as consent to publication, stating that the fact that (i) an identifiable individual providing consent for the creation of an image; or (ii) the identifiable individual disclosure of the intimate visual depiction to another individual does not establish or constitute consent to publication. However, certain exceptions apply to allow for disclosure to law enforcement, professional obligation reporting requirements, or publication of an individual’s own images.
Civil Liability for Failure to Comply with Notice and Removal Requirements
The criminal provisions of the law went into effect immediately, the Act provides, “covered platforms” a year after the date the law went into effect, to develop a process for notice and removal of NCII identified from their platforms within 48 hours of receiving a valid request from an identifiable individual or someone authorized to act on the individual’s behalf. A covered platform means “a website, online service, online application, or mobile application that (i) serves the public or (ii) for which it is the regular course of business of trade or business of the website, online service, online application, or mobile application to publish, curate, host or make available content of nonconsensual intimate visual depictions.” Covered platforms do not include ISPs, email providers, online services that consist primarily of not user generated content, or services for which chat, comment or interactive functionality is directly related to the provision of not user generated content.
A covered platform must provide a clear, easy to understand and conspicuous policy which shall include valid removal request requirements, how to submit a removal request and the removal responsibilities of the platform. A valid removal request must be in writing, with a physical or electronic signature, and include (i) enough information to locate the depiction; (ii) a statement of the individuals’ good faith belief that the depiction was not consensual; and (iii) the requester’s contact information.
Within 48 hours of a valid removal request, the covered platform must remove the intimate visual depiction and make reasonable efforts to identify and remove any known identical copies of such depiction.
The Act gives covered platforms liability protections from claims from content posters based on the covered platforms good faith removal, disabling access to, or removal of, material claimed to be NCII, regardless of whether the intimate visual depiction is ultimately determined to be unlawful or not.
Covered Platform Next Steps
While the removal obligations will not take effect until May of 2026, covered platforms face significant obligations to confirm compliance. Knowledge of the Act allows companies to develop a business model to aid in immediate removal of NCIIs as it must occur with 48 hours. Therefore, companies that host user generated content, should prepare to take the following steps to determine if and how they would need to comply:
- Determine if you or your company would be a covered platform.
- Determine whether your company has enough resources, proper operating and escalation procedures, and training to implement the Act’s requirements.
- Establish a notice process and policy.
- Review your data privacy, AI, cybersecurity, document retention and digital governance policies.
- Consider engaging professional support to confirm that your company is prepared to comply with the Act’s requirements.
Kristen Petrina is an associate in the Corporate and Commercial and Emerging Technologies groups of Babst Calland. She represents domestic and international clients on a broad range of general corporate and commercial law matters and advises businesses on data privacy and protection and security compliance.
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