Public Posting 2.0: High Court Creates Test for When Social Media Posts Are State Action

The Legal Intelligencer

(by Harley Stone, Anna Jewart and Alex Farone)

In August of 2023, we discussed the ongoing trend of recent cases to blur the line between public officials’ “public” and “private” digital communications and social media, focusing primarily on two 2023 Pennsylvania Commonwealth Court cases – Penncrest School District v. Cagle and Wyoming Borough v. Boyer.  In these cases the courts were called upon to decide when a public official’s own social media posts are “public” and therefore subject to disclosure under the Pennsylvania Right-to-Know Law (RTKL).  While release of messages or comments intended to be kept private can be embarrassing, on March 15, 2024, the U.S. Supreme Court weighed in on an issue that more directly impacts the legal interests of public officials: when does a public official’s social media activity on a personal account constitute state action under 42 U.S.C. §1983, subjecting the public official to liability?

Section 1983 provides a cause of action against “[e]very person who, under color of any statute, ordinance, regulation, custom, or usage of any State” deprives someone of a civil right granted under the U.S. constitutional or federal statute.  It protects against acts attributable to a State (interpreted to include local government agencies), not those of a private person.  When a person associated with a State or local government agency acts in a manner that allegedly deprives someone of a federal constitutional or statutory right, the question therefore arises as to whether that act rose to the level of “state action” that triggers potential §1983 liability or was merely the private conduct of that individual.  The line between private conduct and state action can be hard to draw, and the age of social media has only made such distinctions more difficult.  The U.S. Supreme Court recently weighed in on this specific, but prolific, issue in Lindke v. Freed, No. 22-611 (Mar. 15, 2024).

Lindke v. Freed involved a city manager who created a private, personal Facebook profile page in 2008.  He later changed the settings on his page so that it would be “public” – meaning anyone could see and comment on his posts.  In 2014 he updated his profile page to reflect that he had been appointed as city manager and thereafter continued to post on the profile page about his private life as well as information related to his job and issues of public concern.  During the COVID-19 Pandemic, a member of the public commented on some of the manager’s posts and expressed displeasure with the city’s approach to the pandemic.  The manager initially deleted these comments, then ultimately blocked the user.  The Facebook user sued the manager under §1983, arguing that the manager had violated the user’s right to free speech under the First Amendment because the manager’s Facebook profile page was a public forum.

The U.S. District Court for Eastern District of Michigan granted summary judgment to the manager, finding that the Facebook profile page was populated with predominantly personal posts and that there was an absence of “government involvement” in the posts. On appeal from the district court’s decision, the Sixth Circuit inquired into whether the manager ran his profile page as part of his actual or apparent duties, or whether the social media activity “couldn’t happen in the same way without the authority of the office.”  In addressing this issue, the Sixth Circuit considered the following nonexclusive factors: whether (1) state law requires the office holder to maintain a social media account; (2) state funds are used in running the account; (3) the account belongs to the state or office itself; and (4) operating the account requires the authority of the office, e.g. , the office holder instructs government staff to operate the account.  These same factors were considered by the Pennsylvania Commonwealth Court in Penncrest to aid in establishing the factors applicable the “public” nature of social media posts under the Pennsylvania RTKL.  The Sixth Circuit affirmed the District Court.

On appeal, the U.S. Supreme Court noted that the manager’s status as an employee of the State was not determinative, and the distinction between private conduct and state action turns on substance, not labels.  According to the Court, while public officials can act on behalf of the State, they are also private citizens with their own constitutional rights.  The “state action” requirement of §1983 excludes from liability the acts of officers in the ambit of their personal pursuits, and thereby protects a sphere of individual liberty for those who serve as public officials or employees.  This case, as the Court discussed, illustrates this dynamic.  The manager did not lose his own First Amendment rights when he became city manager, and he was permitted to speak as a private citizen even as to matters of public concern, or about information learned through his public employment.  The Court noted, as the Pennsylvania Commonwealth Court had in Penncrest, that there was no consensus amongst the federal circuits as to when a public official was acting in an official capacity when engaging in social media activity.  Therefore, the Supreme Court established a new two-part, fact-specific rule to analyze this issue: a public official’s social media activity constitutes state action under §1983 only if the official (1) possessed actual authority to speak on the State’s behalf, and (2) purported to exercise that authority when the official spoke on social media.  The appearance and function of the social media account are relative to the second step, but they cannot make up for lack of state authority in the first step.  Ultimately, the Court unanimously vacated and remanded for consideration of the Facebook user’s claim in light of its newly established test.

Lindke resolved the discrepancies between federal circuits regarding state action and social media under §1983.  It should therefore be closely reviewed and considered by any public employee or official who desires to engage in social media activity.  However, it also clouds the longevity of Pennsylvania cases, such as Penncrest and Boyer, which established factors for the related, but not identical, legal question of when private social media is a “public” record under the RTKL.

Additionally, municipalities should take this opportunity to revisit their internal policies concerning social media, using Lindke as a guidepost. Social media policies can be made applicable to both municipal employees and elected officials due to RTKL and §1983 concerns. These policies should caution against or prohibit the employees or elected officials from making public posts on social media concerning official matters unless the employee or elected official either (1) makes a disclaimer that they are speaking on their own personal behalf and not on behalf of the municipality or (2) specifically states that they are speaking with the authority of or on behalf of the municipality. These social media policies can also place limits on which municipal employees have the authority to speak on behalf of the municipality without prior approval of a supervisor or the elected officials, and the protocol for obtaining such approval.

Harlan S. Stone is a Shareholder in the Public Sector Services and Energy and Natural Resources groups of the Pittsburgh law firm of Babst, Calland, Clements & Zomnir, P.C.  Anna S. Jewart is an associate in Babst Calland’s Public Sector Services group and focuses her practice on zoning, subdivision, land development, and general municipal matters.  Alexandra G. Farone is an associate in Babst Calland’s Employment & Labor and Litigation groups, and her practice includes employment, labor, and human resources counseling to both public and private sector clients.

To view the full article, click here.

Reprinted with permission from the April 12, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.

Trends and Developments in New Transportation and Energy Technologies

Pittsburgh Business Times

(By James Chen)

The transportation industry is in “the midst of a revolution,” changing the paradigm of how we transport people and goods on the nation’s public roads, said James Chen. Chen, who heads the Transportation Technology and Energy practice at Babst Calland, speaks about trends and developments in new transportation and energy technologies.

“For the first time in 100 years, we’re shifting that technology completely to a whole new powertrain structure that uses stored energy in the form of electricity and motors to power vehicles,” Chen said.

Evolving from the dominant technology of internal combustion engines – gas and diesel-powered vehicles – the industry has seen incremental improvement, moving from leaded to unleaded gas, the use of catalytic converters and on-board diagnostic systems.

Now, the concept of a robust battery pack of stored energy that moves electric vehicles through harsh changes in weather, vibration and more is serving as a platform for new methods for stable, stationary environments outside the transportation realm, as in connectivity, data and data sharing.

The electric vehicle is also providing a platform in the area of autonomy – vehicles that almost drive themselves, recognizing lines on the road, pedestrians, other vehicles and roads signs.

“What you’re basically talking about is machine learning,” he said. “And machine learning, at the end of the day, is artificial intelligence.”

These new technologies are also relevant, Chen adds, because battery stored energy can help with demand across energy sectors as the focus moves from primarily fossil fuel burning to additional types of energy generation like wind, solar, hydro-power and nuclear. All are necessary to satisfy increasing demands for energy in the United States and abroad.

Established companies and start-ups alike in the transportation sector are investing in developing and advancing these new technologies, Chen said.

Market leader Tesla upended the electric vehicle concept in 2008 with its proof-of-concept Roadster that could be charged at home and have a 250-mile range.

“They also installed the supercharger network which allowed …. you to get about 80 percent charged in about 40 minutes,” Chen said.

And there are other companies, like:

  • Irvine, California-based Rivian, with its all-electric pickup trucks and sports utility vehicles.
  • Lucid Motors, out of Newark, California, with a “high-end sedan” that goes up to 500 miles in a single charge.
  • Lion Electric, from Canada, that is producing all-electric school buses.
  • Scout Motors, of Tysons, Virginia, which is backed by a several billion-dollar investment from Volkswagen.

Established transportation companies, including BMW, Volkswagen and Hyundai are also investing in new technologies. Hyundai is currently building a new electric vehicle plant in Georgia, Chen said.

Technology start-ups, including EVGo, ChargePoint and Electrify America, are also entering other transportation related realms, especially in the area of electric vehicle charging stations.

Additionally, in the area of autonomous driving, there is another group of start-ups that includes Aurora, Waymo – a division of Google – and Amazon acquired Zoox.

And energy companies – like ExxonMobil and British Petroleum – are also pursuing alternatives to petroleum-dependent energy systems.

Among the challenges that all of these companies face is working toward an infrastructure that supports and promotes their new technology platform. The starting point, Chen said, is through policy, “the precursor to laws and regulations.”

“The current laws and regulations were originally drafted with the incumbent technology in mind, with gasoline powered vehicles and gasoline powered technology in mind,” he said. “This is where the new players really have to start paying attention to what happens; how do we improve that?”

The answer is to inform policy makers of the current roadblocks companies face in terms of safety, emissions and efficiency improvements.

“For companies that are new in the space, it’s sometimes really easy to say, ‘We’ll worry about the policy later, we’ll worry about talking to policy makers and legislators and regulators later; let’s get the product out there,’” Chen said.

But, prior to approaching policy-makers, administrative officials and legislators, companies need to pitch their new products along the way by:

  • Keeping policy makers aware of their developments and why they are good.
  • Providing the reasons for efficiently improving energy.
  • Letting them know how improvements are creating a better and safer consumer experience.

The perfect example of how changes to policy, legislation and laws can directly affect the consumer is by incentivizing, from a policy perspective, new building codes to have electric vehicle charging access, Chen said. For many, the issue of local commutes is solved with an overnight 250- to 300-mile charge at home. For others, a convenient access to a power source can be geographically challenging — think homes with a plug that is from a parking spot or multi-dwelling condominium units.

“How do we find and build out that infrastructure so where electric vehicles seem to be most popular, urban and suburban areas, we’re providing that charging option,” he said. “That’s something companies need to play into.”

Business Insights is presented by Babst Calland and the Pittsburgh Business Times.

To view the PDF, click here.

To view the full article and video, click here.

 

Trends and Developments in New Transportation and Energy Technologies

Washington Business Journal

(By James Chen)

The transportation industry is in “the midst of a revolution,” changing the paradigm of how we transport people and goods on the nation’s public roads, said James Chen. Chen, who heads the Transportation Technology and Energy practice at Babst Calland, speaks about trends and developments in new transportation and energy technologies.

“For the first time in 100 years, we’re shifting that technology completely to a whole new powertrain structure that uses stored energy in the form of electricity and motors to power vehicles,” Chen said.

Evolving from the dominant technology of internal combustion engines – gas and diesel-powered vehicles – the industry has seen incremental improvement, moving from leaded to unleaded gas, the use of catalytic converters and on-board diagnostic systems.

Now, the concept of a robust battery pack of stored energy that moves electric vehicles through harsh changes in weather, vibration and more is serving as a platform for new methods for stable, stationary environments outside the transportation realm, as in connectivity, data and data sharing.

The electric vehicle is also providing a platform in the area of autonomy – vehicles that almost drive themselves, recognizing lines on the road, pedestrians, other vehicles and roads signs.

“What you’re basically talking about is machine learning,” he said. “And machine learning, at the end of the day, is artificial intelligence.”

These new technologies are also relevant, Chen adds, because battery stored energy can help with demand across energy sectors as the focus moves from primarily fossil fuel burning to additional types of energy generation like wind, solar, hydro-power and nuclear. All are necessary to satisfy increasing demands for energy in the United States and abroad.

Established companies and start-ups alike in the transportation sector are investing in developing and advancing these new technologies, Chen said.

Market leader Tesla upended the electric vehicle concept in 2008 with its proof-of-concept Roadster that could be charged at home and have a 250-mile range.

“They also installed the supercharger network which allowed …. you to get about 80 percent charged in about 40 minutes,” Chen said.

And there are other companies, like:

  • Irvine, California-based Rivian, with its all-electric pickup trucks and sports utility vehicles.
  • Lucid Motors, out of Newark, California, with a “high-end sedan” that goes up to 500 miles in a single charge.
  • Lion Electric, from Canada, that is producing all-electric school buses.
  • Scout Motors, of Tysons, Virginia, which is backed by a several billion-dollar investment from Volkswagen.

Established transportation companies, including BMW, Volkswagen and Hyundai are also investing in new technologies. Hyundai is currently building a new electric vehicle plant in Georgia, Chen said.

Technology start-ups, including EVGo, ChargePoint and Electrify America, are also entering other transportation related realms, especially in the area of electric vehicle charging stations.

Additionally, in the area of autonomous driving, there is another group of start-ups that includes Aurora, Waymo – a division of Google – and Amazon acquired Zoox.

And energy companies – like ExxonMobil and British Petroleum – are also pursuing alternatives to petroleum-dependent energy systems.

Among the challenges that all of these companies face is working toward an infrastructure that supports and promotes their new technology platform. The starting point, Chen said, is through policy, “the precursor to laws and regulations.”

“The current laws and regulations were originally drafted with the incumbent technology in mind, with gasoline powered vehicles and gasoline powered technology in mind,” he said. “This is where the new players really have to start paying attention to what happens; how do we improve that?”

The answer is to inform policy makers of the current roadblocks companies face in terms of safety, emissions and efficiency improvements.

“For companies that are new in the space, it’s sometimes really easy to say, ‘We’ll worry about the policy later, we’ll worry about talking to policy makers and legislators and regulators later; let’s get the product out there,’” Chen said.

But, prior to approaching policy-makers, administrative officials and legislators, companies need to pitch their new products along the way by:

  • Keeping policy makers aware of their developments and why they are good.
  • Providing the reasons for efficiently improving energy.
  • Letting them know how improvements are creating a better and safer consumer experience.

The perfect example of how changes to policy, legislation and laws can directly affect the consumer is by incentivizing, from a policy perspective, new building codes to have electric vehicle charging access, Chen said. For many, the issue of local commutes is solved with an overnight 250- to 300-mile charge at home. For others, a convenient access to a power source can be geographically challenging — think homes with a plug that is from a parking spot or multi-dwelling condominium units.

“How do we find and build out that infrastructure so where electric vehicles seem to be most popular, urban and suburban areas, we’re providing that charging option,” he said. “That’s something companies need to play into.”

To view the PDF, click here.

To view the full article and video, click here.

Appellate Lineup: Looking Back at Recent Pennsylvania Cases of Note and Forward to Those on Deck

Litigation Legal Perspective

(by Joseph Schaeffer and Michael Libuser)

Major League Baseball’s Opening Day is symbolic: for a short while, every one of the 30 teams has a chance at the World Series and every one of the 26 players on those teams’ active rosters has a chance at emerging as a superstar. Over 162 games and thousands of at-bats, however, the winning teams and superstars separate themselves from the rest of the pack. Most of those games and at-bats will be remembered only by the participants, but a special few will live on in memory.

Litigation is not much different. Of the thousands of decisions issued each year by Pennsylvania’s appellate courts, most are relevant only to the parties to the dispute. A handful, though, have far broader consequences—whether by announcing a new legal principle or applying an existing legal principle in a novel manner. In this Legal Perspective, we highlight several recent decisions and a few that appear on the horizon.

Balls or Strikes? Reviewing the Pennsylvania Appellate Courts’ Recent Decisions

Sullivan v. Werner Co., 306 A.3d 846 (Pa. 2023)

Sullivan left undisturbed the longstanding prohibition on the admission of industry or government standards evidence in strict products liability cases. The defendant, a scaffold manufacturer, attempted to avoid liability in a design defect claim, in part by showing its compliance with OSHA and other standards. In a split decision, three of the six Pennsylvania Supreme Court Justices who presided over the appeal rejected that defense. Sullivan was unexpected. The Court adopted the prohibition on compliance evidence in the 1980s, in Lewis v. Coffing Hoist, based on an even earlier decision, Azzarello v. Black Bros. Co., in which the Court barred consideration of negligence concepts in the strict liability context. But because the Court overruled Azzarello in 2014, in Tincher v. Omega Flex, Inc., courts and commentators expected the Court to overrule Lewis. The Court did the opposite but, given the lack of a majority opinion, could revisit the issue.

KEM Resources, LP v. Deer Park Lumber, Inc., No. 10 MAP 2023, — A.3d —- (Pa. 2024)

In February, the Pennsylvania Supreme Court held that accounting claims under 68 P.S. § 101, governing the rights of a co-tenant not in possession to its share of rents, are subject to a six-year statute of limitations. Deer Park’s predecessor-in-interest leased out thousands of acres of land for oil and gas development, receiving $12.6 million up front. After KEM’s own predecessors-in-interest established a 50 percent stake in the same oil and gas interests, KEM sought an accounting from Deer Park of its share of monies received under the lease. The appeal resulted in two important holdings. First, the Pennsylvania Supreme Court reaffirmed that a party need not plead a statute if the allegations bring the case within the statutory scope. Second, the Court held that, absent a specific statute of limitations for a statutory accounting claim, Pennsylvania’s catch-all, six-year statute of limitations applies. Though providing welcome certainty, this decision provides co-tenants additional time to seek an accounting while also expanding the potential scope of liability.

Batter Up! Cases of Note before the Pennsylvania Supreme Court

Santiago v. Philly Trampoline Park, LLC, 291 A.3d 1213 (Pa. Super. 2023), appeal granted, No. 29 EAL 2023, 2023 WL 5947576 (Pa. 2023) 

Parents routinely sign agreements waiving liability for injuries to their children. But those agreements may have limited force, it turns out. This case involved children injured at Sky Zone trampoline parks. Before entering the parks, one parent of each of the injured children waived the parks’ liability and agreed to arbitrate any disputes outside of court. Although the agreements stated they were binding on the parents’ spouses and children, the Pennsylvania Superior Court held that the parents who signed the agreements bound neither their spouses nor their children. An affirmance in this case would solidify a sea change for potential liability of companies that provide risk-inherent services, particularly in the digital age of waivers. If the spouses and children can sue for injuries in court, the waivers are arguably meaningless.

Halpern v. Ricoh U.S.A., Inc., 299 A.3d 1023 (Pa. Super. 2023), appeal granted, No. 263 EAL 2023, 2024 WL 804876 (Pa. Feb. 27, 2024) 

The Pennsylvania Supreme Court is poised to consider whether manufacturers who fail to disclose latent defects in their products violate the prohibition on “fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding” in the Unfair Trade Practices and Consumer Protection Law (UTPCPL). The Pennsylvania Superior Court has long held that the prohibition on “fraudulent or deceptive conduct” does not impose an affirmative obligation on manufacturers to disclose latent defects, going back to the 2001 decision in Romeo v. Pittsburgh Associates. The Superior Court reaffirmed Romeo in Halpern, concluding that there is no UTPCPL failure-to-disclose liability absent some underlying duty. If the Pennsylvania Supreme Court disagrees, manufacturers will face a much broader scope of liability. Caught up in this issue is whether public advisories of defects, such as recalls, would be enough, or if manufacturers will need to provide proof of actual notice to each consumer.

Ungarean v. CNA, 286 A.3d 353 (Pa. Super. 2022), appeal granted, 2023 WL 4530116 (Pa. 2023), and MacMiles, LLC v. Erie Ins. Exchange, 286 A.3d 331 (Pa. Super. 2022), appeal granted, 2023 WL 4528617 (Pa. 2023) 

 These related appeals ask the Pennsylvania Supreme Court to decide whether business interruption insurance policies extend to losses incurred due to governmental closure orders and limits on business activities during the COVID-19 pandemic. The policies covered “direct physical loss of or damage to property,” which the Pennsylvania Superior Court interpreted, somewhat inconsistently, to apply (1) only where there is tangible property damage or injury (MacMiles) and (2) even without any tangible property damage or injury (Ungarean). These cases are difficult to reconcile—particularly because they were decided by the same judges on the same day. How the Pennsylvania Supreme Court resolves this matter likely will determine whether the Commonwealth is an outlier jurisdiction recognizing coverage for COVID-19 business interruption claims or joins the majority in finding that such coverage is unavailable.

Freilich v. SEPTA, No. 327 CD 2022, 2023 WL 4370703, 302 A.3d 1261 (Table) (Pa. Commw. July 6, 2023), appeal granted, No. 245 EAL 2023, 2024 WL 1044586 (Pa. 2024) 

This appeal involves a challenge to the statutory cap on damages recoverable against the Commonwealth. Freilich was injured when a Southeastern Pennsylvania Transportation Authority (SEPTA) bus ran over her foot, and SEPTA conceded liability. But while the parties stipulated to a $7 million jury verdict, the cap reduced Freilich’s nominal recovery to $250,000. After deductions, including for attorneys’ fees, the net award fell to zero. Freilich argued the cap violated her state constitutional rights to a jury trial and a remedy. The Commonwealth Court disagreed, but one judge urged the Pennsylvania Supreme Court to revisit the issue and suspend the cap until the General Assembly increases it. Notably, the parties will address the issue whether, if the cap is unconstitutional, the entire statute under which the Commonwealth partially waived its sovereign immunity is also unconstitutional. This appeal could expand governmental liability and reflects the Pennsylvania Supreme Court’s trend of considering requests to overrule relatively recent precedents.

Joseph Schaeffer is a Shareholder in the Litigation Group of Babst Calland, in Pittsburgh, Pennsylvania, and Co-Chair of the firm’s Appellate Group. He focuses his practice on commercial and environmental litigation and regularly advises clients in the energy, manufacturing, and related industries. Contact him at 412-394-5499 or jschaeffer@babstcalland.com.

Michael Libuser is an Associate in the Litigation Group of Babst Calland, in Harrisburg, Pennsylvania. He focuses his practice on commercial litigation and appeals. Michael is a former law clerk to U.S. District Judge Yvette Kane, U.S. District Judge Karoline Mehalchick, and New York State Acting Supreme Court Justice Jeanette Rodriguez-Morick. Contact him at 717-868-8379 or mlibuser@babstcalland.com

 

Legislative & Regulatory Update

The Wildcatter

(By Nikolas Tysiak)

A dose of new case law has arisen in Appalachia this winter. Enjoy!

West Virginia

For those paying attention, there has been some litigation regarding the West Virginia statutory pooling laws passed in 2022. In Sonda v. West Virginia Oil and Gas Conservation Commission, two landowners sued the West Virginia Conservation Commission, challenging the new pooling laws (W. Va. Code §22C-9-1, et seq.) in federal court, alleging an unlawful taking without due process of law under the U. S. Constitution. Instead of proceeding on the merits, the U.S. district court for the Northern District of West Virginia unilaterally decided to abstain from hearing the case, stating that the parties needed to litigate in West Virginia state court first, without identifying the issues that needed to be resolved in state court. The U.S. Fourth Circuit Court of Appeals found that the U.S. District Court had “abused its discretion” in abstaining from the action, as there were clear questions of federal law presented for adjudication and no clear statement of state law issues to be decided. In order to abstain as attempted by the District Court, there must be an unclear issue of state law which may render the need to go to federal court moot. The Court of Appeals therefore reversed the District Court Order of Abstention and remanded to that court for further proceedings.

Ohio

The U.S. District Court for the Southern District of Ohio, Eastern Division, confronted a question of whether the Point Pleasant formation constituted part of the Utica Shale, or a deeper formation. In Honey Crest Acres LLC v. Rice Drilling D LLC (2024 WL 1155970 (March 18, 2024 S. D. Ohio, ED)), the district court was asked to analyze the language of an oil and gas lease; while the language of the lease expressly limited the leasehold rights, retaining to the lessor “all formations below the base of the Utica Shale” it raised the question of whether development of the Point Pleasant formation violated the terms of the lease or not. Specifically, the question is whether the Utica Shale and Point Pleasant formations should be considered separate geological formations or not. However, the opinion is only addressing the parties’ motions for summary judgment. As such, the court is not necessarily deciding on the merits; instead, it is deciding if the pleadings support continuing. As to the issue of whether a trespass against the lands of Honey Crest Acres LLC and a conversion of its property occurred, the court found that there were sufficient pleadings to support a trial. This means that a trial can, and likely will, proceed on the merits of these claims, so it is a case to watch out for in the future.

In a case NOT dealing with the DMA or MTA coming out of Ohio (for once), the Seventh District Court of Appeals was tasked with adjudication a purportedly ambiguous “Term Royalty Assignment” in Bounty Minerals LLC v. LL&B Headwater II, LP, 2024-Ohio-944. In this case, landowners leased their oil and gas to Mason Dixon Energy Inc. in 2007, with a 5-year primary term, a 5-year extension term, and a standard secondary term. In 2011, the landowners executed a Term Royalty Conveyance to Principle Energy, LLC, granting all their 1/8 royalty interest for as long as the lease stayed in effect, but would also apply to new leases granted within three years if the existing lease were terminated, canceled, surrendered, etc. LL&B was one of several successors to Principle, and the lease became vested in Ascent Resources-Utica LLC. Through a series of conveyances, Bounty Minerals acquired a 35% interest in the oil and gas rights. The lease was never produced throughout the primary or extended terms, expiring on September 13, 2017. Instead, the landowners and the predecessors to Bounty signed a new lease about a week later. The Trial Court found that, despite claims by Principle, LL&B and others, the Term Royalty Conveyance expired following the expiration of the 2007 lease. On appeal, the Seventh District noted that the anti-washout term (that the Term Royalty Conveyance could apply to new leases) was only applicable if the termination, surrender, cancellation, etc. of the 2007 lease occurred before the expiration of the primary, extension, or secondary terms. In other words, the Conveyance only applied to new leases if the 2007 lease ended prematurely. The appellate court agreed with the trial court, finding that the Term Royalty Conveyance did, indeed, expire. The court further analyzed a series of related claims for appeal, but found them all to be without merit, finding in favor of Bounty and the landowners and affirmed the trial court’s final judgment.

Pennsylvania

In Plum Borough v. Zoning Hearn Board of Plum, —A.3d—, 2024 WL 314667 (Pa. Comm. Ct., January 29, 2024), the Pennsylvania Commonwealth Court was tasked with determining whether the Plum Zoning Hearing Board had properly adhered to its own ordinances regarding the expansion of a UIC brine disposal well located in Plum Township. After lengthy discussion, the Commonwealth Court determined that the ZHB failed to properly apply its ordinances in dealing with the proposed expansion of the well operator, noting in several places that the ZHB expressed the sentiment that it was powerless to stop the actions of the operator, regardless of their determinations. The court emphasized that the ZHB was not powerless and had several tools at its disposal to prevent expansion of the well’s operations. The court remanded to the ZHB, with instructions on how to conduct further hearings on the issue.

In the Pennsylvania Supreme Court, there was a decision involving a claim of accounting between two co-tenants to oil and gas rights in Wyoming County. In KEM Resources, LP v. Deer Park Lumber, Inc., —A.3d —, 2024 WL 696763 (Pa. Supreme Court, February 21, 2024) the predecessor to Deer Park executed a lease covering its own interest and purporting to cover all the interest of its co-tenant, the predecessor to KEM. The factual background of the case is very convoluted, with quiet title actions, striking down the judgments in those actions, and a lot of procedural and technical arguments regarding the nature of accounting claims, but there appears to be only one issue that was up for appeal to the Supreme Court – did the accounting claim filed by KEM occur within the applicable statute of limitations time period? KEM claimed a six-year limitations period, while Dee Park claimed the applicable statute of limitations was only four years. After lengthy discussion of the background to the case, the arguments of the parties, and the law regarding accounting between co-tenants, the Supreme Court concluded that the appropriate claim in this instance was, indeed, one for accounting between co-tenants. The court went on to state that there was no specific statute of limitations for such an accounting claim, so the general statute of limitations for six years applied, thereby affirming the prior decisions of the trial court and the Superior Court on the issue.

To view the full article, click here.

To view the PDF, click here.

Reprinted with permission from the MLBC April 2024 issue of The Wildcatter. All rights reserved.

Safe, Secure, and Trustworthy: White House Executive Order on Artificial Intelligence

Pennsylvania Business Central

(By Mary Binker and Susanna Bagdasarova)

On October 30, 2023, President Biden issued Executive Order 14110 on “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,”[1] taking a significant step toward shaping the future of AI[2] and its regulation. The Order, which reflects growing calls for federal guidance on AI from public and private stakeholders, focuses on establishing a framework for safe, secure, and trustworthy AI development, focusing on ethical innovation, national security, and global cooperation. The Order builds on the White House’s October 2022 “Blueprint for an AI Bill of Rights”[3] and the National Institute of Standards & Technology’s (NIST) January 2023 “Artificial Intelligence Risk Management Framework.”[4]

The Order is broad in scope, covering a spectrum of industries and issues, including the establishment of new standards for AI safety and security; protection of privacy; advancement of equity and civil rights; support of consumers, patients, and employees; and promotion of innovation and competition.

Although the Order is primarily applicable to federal agencies, it reflects a vision and roadmap for AI regulation intended to guide both industry standards and future federal legislation.

The Order sets out eight principles and priorities to guide policymaking on AI systems:

  • AI must be safe and secure, requiring robust, reliable, repeatable, and standardized evaluations of AI systems, as well as mechanisms to test, understand, and mitigate risks.
  • The U.S. should promote responsible innovation, competition, and collaboration through investments in AI-related education, training, development, research, and capacity as well as by opposing monopolies and unlawful collusion with respect to key assets.
  • The responsible development and use of AI require a commitment to supporting American workers through job training and education, both to prevent AI systems from being deployed in ways that negatively impact employee rights and to use AI in ways that increase human productivity.
  • AI policies must be consistent with the Biden administration’s policy of advancing equity and civil rights and be structured to prevent deepening inequities, new types of harmful discrimination, and online and physical harms.
  • The federal government must enforce existing consumer protection policies and enact appropriate safeguards against fraud, bias, discrimination, and privacy infringement to protect Americans who are increasingly using AI and AI-enabled products, particularly in critical fields such as healthcare, financial services, education, housing, law, and transportation.
  • Policies and tools must be developed to protect Americans’ privacy and civil liberties to ensure that personal data collection, use, and retention is done in a lawful and secure manner that mitigates privacy and confidentiality risks.
  • The risks arising from the federal government’s own use of AI must be mitigated, and it must increase its ability to internally regulate, govern, and support responsible use of AI including, but not limited to, the recruitment of AI professionals.
  • The U.S. should be a global leader for societal, economic, and technological progress, and responsibly deploy technology through engagement with its international allies and partners to develop an AI governance framework and ensure that AI benefits the world rather than increasing or exacerbating existing harms and inequities.

Building on this foundation, Sections 4 through 11 of the Order each correspond to one of the eight guiding principles, setting out a host of practical policy goals, tasks, and guidance for federal agencies to implement in the next year. The lengthy Order contains directives for nearly all 15 executive departments to use their regulatory powers to monitor and mitigate risks, develop uses for AI technology, and implement such technologies safely. Certain directives are highlighted below:

  • The Order tasks NIST with establishing a series of guidelines for AI use and development, including (i) best practices to promote industry standards for safe, secure and trustworthy AI systems, (ii) a companion to the AI Risk Management Framework for generative AI, (iii) a companion to the Secure Software Development Framework for generative AI and dual-use foundation models,[5] (iv) AI auditing and evaluation guidelines with a focus on cybersecurity and biosecurity, and (v) procedures and processes for AI developers to conduct red-team testing[6] of dual-use foundation models.
  • The Order imposes recordkeeping and reporting requirements on developers of dual-use foundation models, including reporting of red-team safety test results and other critical information on model training and physical and cybersecurity measures. Developers will also be required to report the acquisition, development, or possession of large-scale computing clusters, including their location and the total amount of computing power available in each. Infrastructure as a Service (IaaS) products tested or sold by foreign persons will also be subject to recordkeeping and reporting requirements.
  • Various agencies with regulatory authority over critical industries are directed to assess and develop mitigation strategies for AI-related critical infrastructure vulnerabilities, including critical failures, physical attacks and cyberattacks.
  • The Department of Commerce is tasked with creating guidance for content authentication and watermarking of AI-generated content in government communications, in order to increase transparency and public trust and encourage adoption of such standards by the private sector.
  • The Department of Labor is instructed to create best practices for employers to mitigate AI risks and maximize AI benefits in the workforce, paying careful attention to the intersection of AI and worker protections.
  • The State Department and Department of Commerce must establish international frameworks for AI regulation, and the White House plans to collaborate with international partners and organizations for global and consistent AI regulation. The initial results of such collaboration are evident in the international agreement recently entered into by the U.S., as discussed below.
  • In addition to providing AI policy priorities and principles to federal agencies and departments, the Order calls on Congress to enact federal data privacy legislation and establishes a White House Artificial Intelligence Council to coordinate the implementation of AI-related policies by executive agencies.

Sweeping in its scope, the Order seeks to be comprehensive and consistent in addressing topics and sectors most keenly affected by the development and use of AI systems. Such directives will inevitably impact federal procurement policy and requirements for government contractors, a historically powerful tool to develop industry standards, even without legislative action.

In the months since its issuance, the White House has announced that federal agencies have both met “all of the 90-day actions” set out in the Order and “advanced other vital directives that the Order tasked over a longer timeframe”.[7]  Notable actions include the following:

  • Invoking the Defense Production Act, the Department of Commerce is able to compel AI systems developers to report certain vital information, including training and safety testing results.
  • The Department of Commerce published a proposed rule[8] on January 29, 2024, requiring U.S.-based cloud service providers (commonly “Infrastructure as a Service”) providers and their foreign resellers to identify, assess, and track foreign customers of their products. Public comments on such proposed rule will remain open until April 29, 2024.
  • In early February, the Department of Commerce announced the creation of the Artificial Intelligence Safety Institute, established at NIST, to support federal efforts in developing the guidelines, rules, and regulations outlined in the Order. In further support of these efforts, NIST established the AI Safety Institute Consortium, comprised of more than 200 companies and organizations across private industry, academic institutions, unions, nonprofits, and other organizations to “develop science-based and empirically backed guidelines and standards for AI measurement and policy.”[9] Consortium members include Amazon, Apple, Google, OpenAI, Carnegie Mellon University, Massachusetts Institute of Technology, and AFL-CIO Technology Institute.
  • The U.S. Patent and Trademark Office (USPTO) published guidance[10] in the Federal Register on the patentability of AI-assisted inventions on February 13, 2024. Public comments are open until May 13, 2024.
  • On March 18, 2024, the Department of Homeland Security released an “Artificial Intelligence Roadmap”[11] detailing its AI strategy, including three AI-enabled pilot programs to be undertaken by U.S. Citizenship and Immigration Services, Homeland Security Investigations, and the Federal Emergency Management Agency.
  • The Departments of Defense, Transportation, and Treasury, as well as six other agencies with regulatory authority, submitted risk assessments on the use of AI in critical national infrastructure.
  • Through the AI and Tech Talent Task Force, the federal government launched “AI Talent Surge” to accelerate hiring AI professionals across the federal government.

The next significant deadline is set for April 27, 2024, with 30 actions across the federal government to be completed. The White House and federal agencies have shown significant commitment to implementing the directives under the Order, and a variety of guidance, initiatives, and recommendations are expected from government agencies in the coming months.

Attorneys Mary Binker and Susanna Bagdasarova practice in Babst Calland’s Corporate and Commercial and Emerging Technologies groups and focus primarily on corporate and commercial law, including addressing the complex legal and business issues surrounding the development, deployment, commercialization, and use of emerging technologies in a variety of industries.

To view the full article, click here.

Published in the Pennsylvania Business Central on March 29, 2024.

[1] Full text available at Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.

[2] The definition of “artificial intelligence,” or “AI,” is as set forth in 15 U.S.C. 9401(3): “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments.” The Order is therefore broad in scope, applying to any machine-based system that makes predictions, recommendations or decisions, not only generative AI.

[3] Full text available at Blueprint for an AI Bill of Rights.

[4] Full text available at Artificial Intelligence Risk Management Framework.

[5] Defined as “an AI model that is trained on broad data; generally uses self-supervision; contains at least tens of billions of parameters; is applicable across a wide range of contexts; and that exhibits, or could be easily modified to exhibit, high levels of performance at tasks that pose a serious risk to security, national economic security, national public health or safety, or any combination of those matters…”

[6] Defined as “a structured testing effort to find flaws and vulnerabilities in an AI system, often in a controlled environment and in collaboration with developers of AI…[it] is most often performed by dedicated “red teams” that adopt adversarial methods to identify flaws and vulnerabilities, such as harmful or discriminatory outputs from an AI system, unforeseen or undesirable system behaviors, limitations, or potential risks associated with the misuse of the system.”

[7] See Fact Sheet: Biden-⁠Harris Administration Announces Key AI Actions Following President Biden’s Landmark Executive Order

[8] See Taking Additional Steps To Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities

[9]See  U.S. Commerce Secretary Gina Raimondo Announces Key Executive Leadership at U.S. AI Safety Institute

[10] See Inventorship Guidance for AI-Assisted Inventions

[11]See  Department of Homeland Security, Artificial Intelligence Roadmap 2024

 

Discovery Disputes: Best Practices from the Bench

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Michael Libuser)

For judges and their law clerks, one of the most frustrating aspects of pretrial practice is managing discovery disputes. Some advocates view them as hiccups—trivial quarrels that demand little of the court’s time—but discovery disputes often present the first meaningful opportunity for parties to interface with the court. (Case-management conferences, brief as they are, and narrowly focused on scheduling and housekeeping matters, rarely present the same opportunity.) And discovery disputes can, in fact, win and lose cases, color pretrial proceedings by sowing antagonism between the parties, and bring a case to a halt. This article cobbles together the views of numerous federal and state judges, as well as former and current law clerks, regarding best practices for addressing discovery disputes to the court. Some of these best practices are obvious, but litigants routinely fail to heed the obvious, according to the judges and law clerks who generously shared their views on this topic.
Know the Rules

Judges are unanimous: Review local and judge-specific rules. Ignoring this obvious but often-neglected advice can chip away at a lawyer’s credibility, clutter the record, and create unnecessary work for all involved. Numerous judges, for example, require parties to informally notify chambers of discovery disputes before filing formal discovery motions. This requirement advances the goals of efficiency and helps keep costs down, and some judges will deny or strike a formal discovery motion filed in violation of it.

Vet Your Position

“My first piece of advice when a litigator arrives at an impasse with opposing counsel regarding a discovery issue is to carefully review the [procedural rules] on point and research caselaw to ensure that the position you are taking is sound.” One judge estimates that 70 percent of discovery disputes can be resolved under a straightforward application of black-letter rules and law. And it is “far better to back down from a position during negotiations if the law does not support your position than when you are before a judge.” Failure to back down can result in sanctions, one judge reminds.

Confer

“If you haven’t conferred before contacting the court, you are doing it wrong!” Confer and confer early, but also make it meaningful—don’t just go through the motions. Adequate conferral may resolve the dispute, removing the court from the equation altogether. Even if opposing counsel refuses to engage in good-faith conferral efforts, attorneys should create a record of their attempts to confer to present to the court if necessary.

Don’t Dawdle

“Don’t—do not—wait until the day before the close of discovery to present a discovery dispute to the court.” Inform the court of a discovery impasse at the soonest possible time and, if necessary, seek an extension of any relevant deadlines.

Be Clear and Know the Ask

When addressing a discovery dispute to the court, clearly articulate your arguments and know what relief you are seeking. “Describing the dispute in general terms and not specifying the precise relief you want is going to decrease your odds of success substantially.” Limit your arguments to the principles that support your position, e.g., relevance or privilege, says one clerk. Be specific about the relief you seek, says another, but also be prepared to offer alternative forms of relief.

Some Context Matters

“Contextualize the dispute by explaining where the parties are in discovery and why the requested information is important to moving discovery forward.” Your case may be but one of hundreds on a judge’s docket. Providing some context for a discovery dispute orients the court and can provide a helpful framework for wading into the key issues. But judges warn that too much context can be counterproductive. Rehashing every micro-dispute needlessly overcomplicates matters.

Less Is More

Don’t inundate the court with irrelevant materials. Attorneys often overlook this advice, and a great many present discovery disputes atop a mountain of attorney emails and correspondence that “usually just show personal hostility or bickering and are not helpful to the discovery dispute.” The better practice? “Any discovery materials provided to the court should be narrowly tailored to the dispute at hand and their importance should be clearly explained to the court.”

Civility

Finally, judges advise to handle discovery disputes with civility and in full compliance with rules of professional conduct. One judge recommends that counsel revisit those rules, citing the common practice of weaponizing discovery to gain a tactical advantage, rather than invoking the rules of discovery to advance a good-faith position.

To view the full article, click here.
© 2024. Discovery Disputes: Best Practices from the Bench, Pretrial Practice & Discovery, American Bar Association Litigation Section, March 27, 2024 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

You’re Going to Need a Bigger Boat: Intentional Interference Claims Now Hold Water in Context of At-Will Employment Relationships

The Legal Intelligencer

(by Steve Antonelli)

When talking about the practice of law with other lawyers—whether long time practitioners, first year associates, or any stage in between—I have been known to advocate for my chosen practice area by pointing out that employment lawyers never get bored with the fact patterns we encounter.  I am of course willing to acknowledge that other commercial litigators surely come across an exciting case occasionally, but employment lawyers routinely deal with allegations that at the very least are interesting and sometimes include personality conflicts that are akin to a soap opera.  In late February, the Pennsylvania Supreme Court issued a decision in Salsberg v. Mann, — A.3d —- (2024), that could help to ensure that employment litigation will continue to have the “best” fact patterns for years to come, when it ruled that plaintiffs can maintain a cause of action for intentional interference with an at-will employment relationship against third-parties, including coworkers who act outside the scope of their authority to the point they are rendered a “stranger” to the plaintiff’s at-will employment relationship with their employer.

Drexel University employed Cara Salsberg as its Tax Manager; an at-will position within the University’s Tax Department.  Salsberg reported to Donna Mann, whose supervisory responsibilities included determining Salsberg’s schedule and assignments, evaluating Salsberg’s performance, and making recommendations to the University related to Salsberg’s employment.  During a staff meeting in anticipation of the 2017 tax season, Mann told Salsberg and another Tax Department employee that they would soon need to work a yet-to-be-determined amount of overtime during the upcoming “busy season.”  Salsberg expressed her disagreement to Mann, who in turn blamed her own supervisor, David Rusenko, for the increased workload.  Salsberg then decided to meet with Rusenko directly.  During her meeting with Rusenko, Salsberg addressed the mandatory overtime issue but also raised additional alleged “concerning” behaviors about Mann.  She claimed that Mann “did nothing all day” and was “crazy.”  She also told Rusenko that Mann would regularly “pick her head until it bled,” and “run through the office,” bump into walls, and slam her office door.  Rusenko declined to intervene and instead recommended that Salsberg address these matters with Mann directly.  Shortly after Salsberg did so, Mann issued Salsberg a Performance Improvement Plan.  In early June 2017, Drexel terminated Salsberg’s employment for poor performance.

Following her discharge, Salsberg commenced litigation against both Drexel and Mann, alleging, among other claims, that Mann interfered with Salsberg’s contractual relationship with Drexel.  The Court of Common Pleas of Philadelphia County granted summary judgment in favor of the defendants, and Salsberg appealed.  The Superior Court issued a divided, en banc opinion in favor of Mann, in which the majority relied upon Hennessy v. Santiago, 708 A.2d 1269 (Pa. Super. 1998), a twenty-five-year-old case which held that claims for intentional interference with contractual relationships are only cognizable in Pennsylvania in the employment context relative to prospective at-will employment relationships but not to current at-will employment relationships.  The Superior Court held that, like the plaintiff in Hennessy, a current at-will employee, Salsberg did not have any reasonable expectation of continued employment guaranteed by a contract, and therefore any such expectation is nothing more than a “mere hope.”  In its opinion, the Superior Court noted that Hennessy made this “critical” distinction between prospective and current at-will employment relationships “without much explanation.”

The Pennsylvania Supreme Court disagreed with the distinction drawn by the Superior Court in Hennessy because it “ignores the expectation interest that a party to the at-will employment relationship has in continued employment absent unlawful interference by a third party….”  The Court therefore overruled Hennessy and its progeny and held that “Pennsylvania does not categorically bar claims for intentional interference with an at-will employment contract or relationship by a third-party.”  In doing so, the Court acknowledged that even though at-will employment “does not confer a contractual ‘right’ to continued employment as between the parties to the employment relationship, it does not follow that an employee has no protectable interest whatsoever in the continuance of that employment relationship vis-à-vis third parties:

The fact that the employment is at the will of the parties … does not make it one at the will of others. The employee has manifest interest in the freedom of the employer to exercise his judgment without illegal interference or compulsion and, by the weight of authority, the unjustified interference of third persons is actionable although the employment is at will.”

Stated differently, at-will employees in Pennsylvania should be free from third-party interference with their employment.

To assert a claim for intentional interference against a coworker, “at a minimum” the coworker must have been “acting outside the scope of her employment pursuant to Section 228 of the Restatement (Second) of Agency such that she qualifies as a true third party, or stranger, to the contractual relationship.”  Such conduct is within the scope of employment if it: (a) is the kind she is employed to perform; (b) occurs substantially within the authorized time and space limits; (c) is actuated, at least in part, by a purpose to serve the employer; and (d) if force is intentionally used, it is not unexpectable force.

Salsberg claimed that Mann’s conduct interfered with the at-will relationship between Salsberg and Drexel.  She argued that Mann’s conduct was intentional, improper, without privilege, and outside the scope of her authority to the point she was rendered a third-party, or “true stranger” to the at-will relationship between Salsberg and Drexel.  Mann argued, among other things, that she always acted within the scope of her authority and that, as Salsberg’s supervisor, she had the privilege to cause Drexel to terminate Salsberg’s employment.  Mann also argued that there was no record evidence that she acted solely with actual malice or against Drexel’s interests when evaluating Salsberg’s performance.

On this matter, the Court agreed with Mann because it found that there was no genuine issue of material fact as to whether Mann actually acted outside the scope of her authority to the extent that she should be considered a third party that could intentionally interfere with the employment at-will relationship between Salsberg and Drexel.  In other words, Mann’s conduct fell within authorized time and space limits, did not involve the use of force, and was clearly the kind of conduct that she was employed to perform as Salsberg’s supervisor.  Moreover, the Court determined that Mann’s actions were taken, “at least in part,” with the purpose to serve Drexel.  Salsberg admitted that she disagreed with Mann on the workload issue, circumvented Mann by raising the issue with Rusenko even though she knew this would anger Mann, and then told Rusenko that she believed Mann to have mental health issues.  Salsberg also did not dispute the fact that Mann was not pleased with the number of hours Salsberg had been working, her attitude at work, and her substantive work performance (which included admitted errors).  Relying upon its well-settled precedent in Geary v. U.S. Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974), a wrongful termination case with “similar circumstances,” the Court reinforced the notion that employers have a legitimate interest in “preserving administrative order” in their own houses.  In short, the Court deemed Salsberg’s case to be an attempt to circumvent the employment at-will doctrine and therefore rejected it.

Although the Court recognized the potential for parties to use the Salsberg opinion as a means to attempt to “maneuver around” the employment at-will doctrine, the fact remains that the door has been opened for cognizable suits by an employee against a coworker for intentional interference in at-will employment relationships if the coworker had a hand or influence in the employee’s termination.  Employers should be cautioned, as an uptick in these types of claims may encourage employers to take up the coworker’s defense.  In many instances, it would benefit the employer to argue that the coworker acted in the employer’s interest and within their scope of authority when influencing the employee’s termination.  In these instances, drafting an air-tight joint defense agreement with the defendant coworker will be imperative.  The agreement should include a caveat that representation can and will be withdrawn if the employer determines a conflict or adverse interest between the employer and the defendant coworker.  For example, if discovery reveals that the coworker acted with discriminatory animus in their influencing of the employee’s termination, the employer could be at risk of a later finding of vicarious liability for discrimination.  Therefore, it is critical for employers to fully investigate allegations of intentional interference between an employee and a coworker prior to agreeing to defend the coworker, and to draft joint defense agreements in a manner that provides an escape route should the facts pan out in a manner that supports an intentional interference claim on the basis of discriminatory animus, as discriminatory acts do not fall within an employee’s scope of duties or authority.

Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers in all phases of labor and employment 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 412-394-5668 or santonelli@babstcalland.com.

To view the full article, click here.

Reprinted with permission from the March 25, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.

What’s in a Name? Key Disclosure Considerations for Pseudonymous Plaintiffs

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Joseph Schaeffer)

Cases with anonymous plaintiffs are rare but not unheard of when disclosure of the plaintiff’s real identity might lead to reprisal. Indeed, one of the most famous cases in American history—Roe v. Wade—was prosecuted on behalf of the pseudonymous Jane Roe all the way to the U.S. Supreme Court. A recent decision from the U.S. Court of Appeals for the Second Circuit, however, sounds a cautionary note for plaintiffs attempting to litigate their claims anonymously.
In Do No Harm v. Pfizer Inc., No. 23-15, 2024 WL 949506, — F.4th — (2d Cir. Mar. 6, 2024), Do No Harm, an advocacy group opposing racial discrimination in healthcare, appealed the dismissal without prejudice of its challenge to a Pfizer fellowship program for persons of African American/Black, Latino/Hispanic, and Native American descent. The trial court had considered Do No Harm’s standing in connection with a motion for preliminary injunctive relief filed concurrently with the complaint, and it found wanting the affidavits of anonymous members that Do No Harm had submitted to support. At issue on appeal was whether the trial court applied the correct legal standard to its standing inquiry—particularly with respect to its conclusion that Do No Harm needed to identify the members supporting its associational standing by name.The Second Circuit affirmed the trial court on appeal. First, the court held that the trial court properly required Do No Harm to meet the same burden of proof on standing at the preliminary-injunction stage that is required at the summary-judgment stage. And second, a majority of the court held that Supreme Court precedent requires a plaintiff (or a member supporting associational standing) to be identified at least to the court to support standing at the preliminary-injunction or summary-judgment stage. The majority reasoned that a name is relevant to showing a concrete and particularized injury, especially because Do No Harm’s members would have been required to identify their name to Pfizer in connection with any application. A partial dissent, however, argued that the majority had elevated procedural rules governing anonymity to constitutional requirements.

What does this ruling mean for practitioners and their clients? To start, it does not affect the practice of employing pseudonyms at the pleadings stage. It also does not address cases where evidence necessary to support standing is uniquely in the defendant’s possession. And it does not require plaintiffs to disclose their identities or their members to the public. At bottom, what this ruling does is require plaintiffs to disclose their identities or their members to the court by no later than the preliminary-injunction or summary-judgment stage to support standing. This narrow requirement should be easily surmounted—but only if counsel is aware of its existence.

To view the full article, click here.

© 2024. Diversity Jurisdiction and the Unintended Consequences of Remote Employees, Pretrial Practice & Discovery, American Bar Association Litigation Section, March 18, 2024 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Developments in Data Privacy

PIOGA Press

(by Ember Holmes and Justine Kasznica)

In 2023, Pennsylvania’s Breach of Personal Information Notification Act (BPINA), underwent its first major update since it was signed into law in June 2006. The Amended BPINA¹ went into effect on May 2, 2023. The Amended BPINA affects all Pennsylvania entities that store information belonging to Pennsylvania residents, including energy companies, but has the most significant impact on state agencies and entities that contract with state agencies.

BPINA was designed to set security parameters and standards for entities that maintain, store, or manage computerized data containing the Personal Information (as defined below) of Pennsylvania residents. BPINA sets forth specific requirements for notifying residents of security system breaches. The Amended BPINA creates new definitions for previously undefined terms in BPINA, amends existing term definitions, and bolsters notification and security requirements for state agencies, state agency contractors, counties, public schools, and municipalities.

As a state agency, the Pennsylvania Department of Environmental Protection (PADEP) will be subject to this higher level of scrutiny with regard to its handling of personal information. In addition, any entity that contracts with the PADEP or maintains data on behalf of the PADEP or any other state agency is also subject to these more stringent requirements and should be familiar with the updates as applicable to their notification, reporting, and encryption practices.

Expanded Definition of “Personal Information” and Related Notification Requirements

  • The original BPINA definition of “Personal Information” included: (i) social security numbers; (ii) driver’s license numbers or state identification card numbers issued in lieu of driver’s licenses; and (iii) financial account numbers and credit or debit card numbers, in combination with any required access codes or passwords that would permit access to an individual’s account.
  • The Amended BPINA expands “Personal Information” to include medical information, health insurance information, and username or email address information in combination with a password or security question. This change applies to all entities that collect and store information of Pennsylvania residents and will most significantly impact companies that contract with third-party vendors to provide services such as online payments, health portals, and banking. These services almost always involve use of a username and password, and exposure of this information will now trigger response and notification protocols.
  • The Amended BPINA also added “electronic notice” as a valid means of notifying individuals that their information may have been materially compromised. This can be accomplished by directing the individual to promptly change their password and security question or take any other steps that may be appropriate to protect their information.

Notification and Security Requirements for State Agencies, State Agency Contractors, Counties, Public Schools, and Municipalities

  • With regard to state-related entities, the Amended BPINA redefines the scope of notification requirements and imposes a variety of heightened, new notification requirements on these entities. The term “State Agency Contractor” is defined for the first time as “a person, business, subcontractor, or third-party subcontractor that has a contract with a state agency for goods or services that require access to personal information for the fulfillment of a contract.”
  • Under the Amended BPINA, entities that maintain, store, or manage computerized data containing Personal Information on behalf of the Commonwealth are required to utilize encryption or other adequate security measures to protect Personal Information from view or access by an unauthorized party. These entities must also maintain a policy governing encryption or other security measures, and a policy relating to data storage and retention.

Federal Regulation Compliance

  • The Amended BPINA provides a “safe harbor” for entities, state agencies, and state agency contractors that comply with federal notification requirements imposed by a functional federal regulator – such entities are deemed to be compliant with BPINA. For example, any entity that is subject to and in compliance with the privacy and security standards under the Health Insurance Portability and Accountability Act of 1996² (HIPAA) or the Health Information Technology for Economic and Clinical Health Act³ (HITECH) are deemed to be compliant with the Amended BPINA.
  • The Amended BPINA also provides that any entity that complies with the notification requirements or procedures pursuant to the rules, regulations, procedures, or guidelines established by the entity’s primary state or functional federal regulator is deemed to be compliant with the Amended BPINA. Entities that are not currently in compliance with any such federal requirement must actively ensure compliance with the BPINA.

Next Steps

  • All entities that do business in Pennsylvania, maintain data belonging to Pennsylvania residents, or do business with the Commonwealth or its agencies, should familiarize themselves with the new requirements, and should review their security-related policies, practices, and incident response plans to ensure compliance with the Amended BPINA.
  • Violations of the Amended BPINA are considered unfair or deceptive acts under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and the penalties for violations may be injunction, restitution, or other civil penalties.

To view the full article, click here.

Reprinted with permission from the March 2024 issue of The PIOGA Press. All rights reserved.

1 Breach of Personal Information Notification Act-Omnibus Amendments, Act of Nov. 3, 2022, P.L. 2139, No. 151.

2 Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191 (Aug. 21, 1996).

3 Health Information Technology for Economic and Clinical Health Act, Pub. L. 111-5, Title XIII (Feb. 17, 2009).

PADEP Releases Final Guidance Regarding Trenchless Technology

The Foundation Water Law Newsletter

(Lisa M. BruderlyMackenzie M. Moyer and Jessica Deyoe)

On January 18, 2024, the Pennsylvania Department of Environmental Protection (PADEP) presented the final version of the technical guidance document on using trenchless technology to construct natural gas pipelines, other pipelines, and underground utilities to the PADEP Water Resources Advisory Committee. See PowerPoint Presentation, PADEP, “Trenchless Technology Guidance: Environmental Considerations for the Construction and Operation of Trenchless Technology” (Jan. 18, 2024). The final guidance was published in the Pennsylvania Bulletin in late February. See 54 Pa. Bull. 1017 (Feb. 24, 2024). Development on the guidance began in 2018 due to a stakeholder workgroup required as part of a PADEP settlement with the Clean Air Council, the Delaware Riverkeeper Network, and the Mountain Watershed Association regarding PADEP-issued permits for the Mariner East II Pipeline Project.

The final guidance, entitled “Trenchless Technology Guidance,” PADEP Doc. No. 310-2100-003, outlines the steps that proponents of projects using trenchless technology should consider. Trenchless technology is defined as “[a] type of subsurface construction work that requires few trenches or no trenches which includes any trenchless construction methodology, including, but not limited to: horizontal directional drilling, guided auger bore, cradle bore, conventional auger bore, jack bore, hammer bore, guided bores, and proprietary trenchless technology.” Id. at 6. Trenchless technology is often considered a less environmentally impactful alternative to other types of construction. Id.

Under the Guidance, each project should evaluate the “suitability, feasibility, and environmental considerations” of using trenchless technology methods, depending on the level of environmental risk. Id. at 2. The Guidance provides consistency for the regulated community and review staff on the appropriate level of due diligence recommended for trenchless technology. The Guidance is broken into three major sections: (1) Suitability, Feasibility, and Environmental Considerations; (2) Design and Permitting; and (3) Construction and Compliance.

In response to the 143 comments PADEP received on the draft guidance, PADEP changed the Guidance by, among other things: (1) clarifying when it is appropriate to use a Pennsylvania-licensed Professional Engineer or Professional Geologist; (2) adding to the recommended analyte list; (3) removing the HDD flow chart; (4) adding new risk factors to more accurately assess risk; and (5) updating the definitions.

Proposed Changes to Pennsylvania’s General Stormwater Permit for Construction Activity

Pennsylvania’s National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges of Stormwater Associated with Construction Activities (PAG-02) is up for reissuance in 2024. The current permit is set to expire on December 7, 2024. At the Pennsylvania Department of Environmental Protection’s (PADEP) Water Resources Advisory Committee meeting on November 16, 2023, Krystal Bloom from PADEP’s Bureau of Clean Water presented on the proposed changes to the PAG-02. See PowerPoint Presentation, PADEP, “PAG-02: NPDES General Permit Reissuance” (Nov. 16, 2023).

The PAG-02 applies to earth disturbance activities that disturb areas greater than or equal to one acre. It does not apply to earth disturbance activities involving agricultural plowing and tilling, animal heavy use areas, timber harvesting activities, or road maintenance activities. Earth disturbance activities associated with oil and gas exploration, production, processing or treatment operations, or transmission facilities may be required to obtain coverage, instead, under an Erosion and Sediment Control General Permit (ESCGP).

The proposed PAG-02 includes changes in anticipation of the final Post-Construction Stormwater Management (PCSM) Manual. Under the current PAG-02, permittees are responsible for long-term PCSM best management practices (BMPs); under the new permit, permittees would be responsible, more broadly, for PCSM stormwater control measures (SCMs), which are defined as “any natural feature or manmade structure designed or utilized to reduce or manage the volume, pollutant load, or peak rate of stormwater runoff.” The Permit also proposes to modify the deadline to submit a notice of intent (NOI) for coverage from 60 days prior to planned construction commencement to 90 days. If the PAG-02 is finalized as proposed, all permittees with coverage under the current PAG-02 looking to renew coverage would need to submit a renewal NOI by December 7, 2024. Existing projects may continue coverage under the existing PAG-02 if the projects are under the proposed applicability thresholds of 100 acres of earth disturbance and 25 acres of new impervious surfaces. If the PAG-02 is finalized as proposed, annual reports would need to be submitted by December 7 each year, and permittees would be required to repair or replace any erosion and sedimentation control BMPs or PCSM SCMs within 24 hours of discovery of a failure in the BMP or SCM.

Draft Assessment Book and Integrated Water Quality Report

On October 28, 2023, the Pennsylvania Department of Environmental Protection (PADEP) published a notice in the Pennsylvania Bulletin announcing the Draft 2024 Integrated Water Quality Monitoring and Assessment Report (Integrated Report). See 53 Pa. Bull. 6782 (Oct. 28, 2023). The public comment period was open from October 28, 2023, through December 11, 2023. PADEP sought comments on the general nature of the Integrated Report, as well as on the waters listed as high priorities for total maximum daily load development and the waters selected to be restored through advance restoration plans. A comment-response document will be made available to the public once the Integrated Report is finalized.

The Integrated Report is Pennsylvania’s biennial update on the health of streams and lakes throughout the commonwealth, as required by sections 303(d) and 305(b) of the federal Clean Water Act (CWA). In the proposed Integrated Report, PADEP expanded the assessment of waterways with 7,566 stream miles and 103,777 public lake acres newly assessed or reassessed for a use—drinking water, fish consumption, aquatic life, and recreational use. The Report also shows water quality restoration, noting that since 2004 approximately 967 miles of streams and 28,727 acres of public lakes have been restored. The Report reflects the cumulative assessment of 99% of stream miles and 99% of lake acres statewide since Pennsylvania began reporting for the CWA.

PADEP is also in the process of updating their Water Quality Assessment Methodology for Surface Waters (Assessment Book), the current version of which was published in 2021. See PADEP, “Assessment Methodology for Streams and Rivers” (2021). The Assessment Book describes current methods used by PADEP to assess the surface waters of Pennsylvania as required by sections 303(d) and 305(b) of the CWA. Notable updates include new assessment methods (Wadeable Freestone Acidification Assessment Method, Physicochemical Potable Water Supply Assessment Method, and Bacteriological Source Method), updated assessment methods (General Source and Cause Method, Eutrophication Cause Method), and the inclusion of Lake Assessment Methods.

 As of the time of this report, public comment has not yet opened on the 2024 Draft Assessment Book.

Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

Governor Shapiro Awards $101.1 Million in Grants for Abandoned Mine Land Reclamation Projects

The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. ReinhartSean M. McGovern, Gina F. Buchman, Christina M. Puhnaty)

The Pennsylvania Department of Environmental Protection (PADEP) recently announced the availability of over $101.1 million in funding for 16 environmental restoration projects across 12 Pennsylvania counties as part of PADEP’s AML/AMD Grant Program. See Press Release, PADEP, “The Shapiro Administration Awards $101.1 Million in Grants for Environmental Restoration Projects” (Jan. 17, 2024). This funding comes from the Biden administration’s Bipartisan Infrastructure Law, through which Pennsylvania expects to receive $244.9 million annually until 2036. These projects focus on reclaiming abandoned mine lands and decreasing or treating abandoned mine drainage.

Pennsylvania’s AML/AMD Grant Program will have three application rounds in 2024 for new projects:

  • 2024 Application Round 1—February 19, 2024, through 11:59 p.m. April 5, 2024
  • 2024 Application Round 2—June 3, 2024, through 11:59 p.m. July 19, 2024
  • 2024 Application Round 3—September 23, 2024, through 11:59 p.m. November 8, 2024

Program guidance and application instructions are available on PADEP’s website, as well as annual summaries of the accomplishments of abandoned mine reclamation projects in Pennsylvania. See PADEP, “AML/AMD Grant Program,” here.

PADEP Issues Draft 2024 Pennsylvania Integrated Water Quality Report
In November 2023, the Pennsylvania Department of Environmental Protection (PADEP) issued its draft interactive 2024 Pennsylvania Integrated Water Quality Report and the public comment on the draft report has now closed. The report identifies Pennsylvania’s federal Clean Water Act (CWA) § 303(d) listing of impaired waters requiring total maximum daily loads (TMDLs), and section 305(b) reporting of the overall condition of Pennsylvania’s aquatic resources. PADEP compiles and submits this report to the U.S. Environmental Protection Agency once every two years. PADEP received 18 comments on the draft report, the majority of which were submitted by Pennsylvania-based environmental nonprofit organizations.

Section 303(d) of the CWA requires states to list impaired waters that require TMDLs and describe the data used to make those decisions. States are also required to set prioritization ranking for restoring impaired waters, and PADEP meets this requirement by creating a list of watersheds that are identified as restoration priorities. Section 305(b) of the CWA requires states to report the status of waters and describe the programs in place to control pollution and restore water quality. The draft integrated water report assesses the sources and causes of stream and lake impairment, and also describes PADEP’s groundwater monitoring and characterization efforts. The report also describes restoration programs in place in Pennsylvania to restore water quality. PADEP’s integrated water quality reports dating back to 2016 are available on PADEP’s website here.

Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

The New Energy & Transportation Technology Revolution: Can Pennsylvania Adapt?

City & State Pennsylvania Magazine

(by Jim Chen)

Published in January of this year, the U.S. Energy Information Administration (“EIA”) Short-Term Energy Outlook (‘STEO’) forecast shows a rising trend in energy production across all sectors.  These trends include not only an increase in oil and gas production, but also a rise in alternative energy generation such as wind and solar, supported by battery storage technology that increases by 14 gigawatts this year and 9 gigawatts next year for a total installed capacity of 40 gigawatts by 2025.  Overall, these trends are a net positive for the United States as the country diversifies energy sources in the United States and the means by which electricity is generated.  Diversification of our energy supply matters – not simply from a supply side calculus, but for reasons of national security, technology leadership, economic prosperity and growth, and the environment.  An “all-of-the-above” strategy is simply smart policy for the United States.

From an economic perspective, reliance on a single source of energy leaves the country vulnerable to price shocks and shortages when inevitable issues arise.  Petroleum should be a particular focus as the United States is the largest consumer of oil in the world at over 20 million barrels per day.  Of that amount, 66.6% is consumed in the transportation sector, 43% for motor gasoline alone.  As a result, diversification can be beneficial and reduce risk in the transportation sector as part of the overall energy mix.

The national security and economic implications of an overreliance on a single source of energy are significant, regardless of the U.S. rate of domestic production.  For example, oil is a global commodity subject to volatile price fluctuations based on world events.  When Russia invaded Ukraine in February 2022, oil prices surged significantly with prices for West Texas Intermediate crude increasing by over 50% and Brent crude by over 55%.  As a result of objections over the Russia invasion, U.S. allies in Europe faced significant challenges in weaning themselves off of Russian oil and gas – which amounted to 45% of all natural gas imports into Europe.  Even today, Europe continues to face challenges in sourcing reliable supplies of gas, petroleum and coal that are not reliant on Russia.  Domestic liquefied natural gas (LNG) production from the U.S. has helped our European allies make up some of the shortfall.

Price shocks and supply threats from global events continue as some of the largest oil reserves remain in the most volatile areas of the world.  The Israel-Palestine war, along with agreed upon cuts by OPEC nations, threatens to upend world oil prices.  The World Bank warned in October of last year that “the outlook for commodity prices would darken quickly if the [Israel-Palestine] conflict were to escalate.”  Energy price increases would not only impact commodity prices, but food supplies as well.  Fortunately, the United States and other countries have more diversity in their energy supply.

Introducing renewable energy into the mix of energy sources simply makes sense.  Diversification of the energy in the United States can reduce dependence on imported energy and promote economic development through creation of jobs in manufacturing, installation and maintenance. The International Energy Agency predicts that renewables will make up more than one-third of the world’s total electricity generation by early 2025.  This higher trend is a net positive given that global electricity demand is expected to grow at an ever-increasing rate, due in part to the rise in use of electrification in technologies such as heat pumps and battery electric vehicles.  Pennsylvania has very much been a part of the growth in renewables with nearly 4% of the Commonwealth’s in-state electricity generated by such technologies in 2022.  Governor Josh Shapiro has stated his support for the goal of 30% of all energy sold in Pennsylvania to come from renewable sources by 2030.

While the Governor’s campaign position is a good start, Pennsylvania now has an opportunity to continue its legacy of leadership in energy innovation by diversifying energy generation in the Commonwealth.  This leadership can also include support for the new technologies using that energy, like electric vehicles.  Last year, electric vehicles made up 7.6% of all new vehicles sales in the United States; up from 5.9% in 2022.  That figure equated to 1.2 million electric vehicles sold in 2023.  With ever increasing improvements in range, performance, reliability and choice, electric vehicles are proving to be competitive with the incumbent technology of internal combustion engine equipped vehicles.  Add in the lower maintenance costs and favorable total cost of ownership and electric vehicles make a compelling cost and performance case.  Electric vehicles also provide the platform for the next generation of technology with connectivity and autonomy as gateways to break throughs in human/machine interface and artificial intelligence.

Transportation electrification and its accompanying technological improvements have broad benefits beyond the products themselves.  Economically, the surge in electric vehicles and attendant demand has encouraged manufacturers to invest back into the United States.  Traditional manufacturers like Hyundai and BMW have begun building new plants or expand existing plants in the United States to build new electric vehicle line ups.  New technology companies like Tesla, Lucid, Rivian, Scout, and Lion Electric have built or are building new or refurbished plants, also in the United States, to produce the next generation of electric vehicles.  Today, there are about 30 battery factories either planned, under construction or already operating in the United States with more on the way.  All of these investments have led to job growth and increased economic activity here at home.  In a review of the automotive industry and electric vehicles under the past two administrations, the Washington Post reported that automotive jobs have increased substantially with auto manufacturing jobs at their highest point since 2006.

With all the positives coming from the diversification of the United States’ energy mix and the growth of the electric vehicle industry, careful consideration must be made regarding policies and legislation that impact these promising new technologies.  For several sessions, the Pennsylvania legislature has debated the imposition of an electric vehicle “fee” in addition to traditional registration of vehicles in the Commonwealth.  Currently working through the legislature, Senate Bill 656 (SB 656) would impose an annual fee of $290 on top of the standard registration for every electric vehicle registered in Pennsylvania.  Proponents argue that this fee is fair because electric vehicle owners do not pay gas taxes, which support road infrastructure fees.  The $290 figure represents the average cost of what a Pennsylvania driver pays in gas taxes.  Opponents would note, however, that this proposal does not consider the fact that electric vehicle owners already do pay taxes – on the electricity they use to recharge their vehicles. In addition, opponents note that the share of electric vehicles on the road is miniscule compared to the number of combustion engine equipped vehicles.  As a result, careful review of all the impacts of proposed legislation like SB 656 needs to be conducted.

To be sure, the issue of funding public infrastructure is a very real issue.  Supported by federal and state levied gas taxes, the funding of road maintenance and care for the United States’ aging infrastructure is vital.  But shortfalls in funding for infrastructure have a number of complex root causes, including improvements in vehicle efficiency that have resulted in a decrease in the amount of taxes collected.  In 1984 (the earliest year EPA figures were available), a gas-powered Ford F-150 4WD vehicle with a 5.8L, 8-cylinder engine and automatic transmission achieved a combined EPA fuel economy rating of 10 miles per gallon.  Today, a comparable model year 2023 Ford F150 with a 5.0L, 8-cylinder engine and automatic transmission achieves a combined EPA fuel economy rating of 19 miles per gallon – nearly double its 1984 predecessor.  Accordingly, the issue of supporting infrastructure through a single source of revenue – gas taxes – may be difficult to sustain in the long term.  Other states have considered a range of solutions to the infrastructure funding issue.  For example, states such as Oregon and Virginia are experimenting with a vehicle-miles-traveled (“VMT”) approach that levies fees on drivers based on the actual mileage put on vehicles – agnostic of the type of power train involved.  These other options that directly address the root cause of the issue should be taken into consideration.

Policy and legislation are powerful tools that when used appropriately, can help promote new technologies and achieve laudable societal goals.  Pennsylvania has long been a leader in energy and transportation technology.  Careful consideration of all aspects of new legislation in support of desirable policy goals is paramount.  Anything less would not be in keeping with the Commonwealth’s long-standing position as a leader in energy generation, innovation and technology.

Jim Chen is a shareholder in the Transportation Technology and Energy, Emerging Technologies, and Environmental groups at law firm Babst Calland. Mr. Chen joined Babst Calland in its Washington, D.C. office after more than a decade as an executive at several successful start-up electric vehicle manufacturers, notably as Vice President of Regulatory Affairs at Tesla, Inc. and as Vice President of Public Policy and Chief Regulatory Counsel at Rivian Automotive, LLC. During that time period, he also served as General Counsel and Corporate Secretary at two other start-up manufacturers. Prior to his in-house experience, Mr. Chen was a partner at two other AMLAW 100 law firms where his practice focused on product-related issues in the areas of automobile emissions and safety regulation, chemical and pesticide regulation, and general environmental and safety law.

To view full article online at City & State Pennsylvania Magazine, click here.

 

 

A Methane Mixed Bag: EPA Finalizes Methane Rule for New and Existing Oil and Gas Facilities

PIOGA Press

(By Gary Steinbauer and Christina Puhnaty)

On December 2, 2023, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its final Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (Final Rule). The Final Rule comes more than two years after EPA published its initial proposal on November 15, 2021 (Initial Proposal) and a supplemental proposal on December 6, 2022 (Supplemental Proposal) (collectively, the “Proposals”). According to EPA, the agency received over one million comments on the Proposals. (For information on the Proposals, please see our November 11, 2021 and December 12, 2022 articles.) This Alert focuses on critical aspects of the Final Rule, including key changes that EPA made since issuing the Proposals.

Brief Overview of Methane Rule

The Methane Rule is comprised of four separate actions proposed under sections 111(b) and 111(d) of the Clean Air Act. EPA currently regulates emissions of volatile organic compounds (VOCs) and methane from oil and natural gas facilities under 40 C.F.R Part 60 Subparts OOOO2 and OOOOa3. First, through this Final Rule, EPA will regulate oil and natural gas facilities constructed, modified, or reconstructed after December 6, 2022, under a new Subpart OOOOb. The requirements in OOOOb will apply to affected facilities 60 days after the rule is published in the federal register. Second, under a new Subpart OOOOc, EPA finalized emissions guidelines that are intended to inform states in the development, submittal, and implementation of state plans to establish standards of performance for greenhouse gases (in the form of limitations on methane) from sources existing on or before December 6, 2022. Under the Final Rule, states and tribes are required to submit plans to EPA for review within 24 months of the publication of the Final Rule in the Federal Register, with a compliance deadline for existing sources that is no later than 36 months after the deadline to submit the plan to EPA. Third, the Final Rule amends OOOOa in response to Congress’ June 2021 revocation of regulatory amendments made by EPA under the Trump administration. Fourth, the Final Rule also includes “Appendix K,” a protocol for determining leaks using Optical Gas Imaging (OGI) that EPA now requires at natural gas processing plants regulated by OOOOb or OOOOc.

Key Requirements of Methane Rule

Significant changes from the existing OOOO and OOOOa regulatory frameworks include:

  • Super Emitter Program: The Final Rule will allow certified third parties to monitor well sites, centralized production facilities, and compressor stations regulated by OOOO, OOOOa, OOOOb, or OOOOc using specific remote detection technologies for “super-emitter emission events,” which are defined as emission events resulting in 100 kilograms (220.5 pounds) per hour or more of methane. These third parties are required to submit notifications of super emitter events to EPA’s Super Emitter Program Portal within 15 calendar days of the observation. Upon receipt of a notification by a third party, owners and operators of these facilities would be required to initiate an investigation within five days and report the results of that investigation to EPA within 15 days. EPA plans to publish online the information that EPA receives through the Super Emitter Response Program, which will include an identification of the operator responsible for the super emitter event after giving the operator the opportunity to respond to EPA regarding the event.
  • Storage Vessel Applicability Threshold Now Applies to Tank Batteries: EPA has finalized its proposed expansion of its regulation of oil and gas-related storage vessels under both Subparts OOOOb and OOOOc. Currently, Subpart OOOOa storage vessel regulations are limited to VOC emissions and based on a VOC potential to emit (PTE) of 6 tons per year (tpy) for a single storage vessel. Under Subpart OOOOb, EPA includes the same 6 tpy VOC PTE applicability threshold, adds a methane applicability threshold of 20 tpy, and applies these thresholds to a single storage vessel or the aggregate potential emissions from a “tank battery,” i.e., a group of storage vessels that are adjacent and receive fluids from the same operation or are manifolded together. As for storage vessels at existing facilities, EPA will regulate existing tank batteries meeting the 20 tpy methane threshold. For storage vessels meeting these threshold requirements, EPA requires a 95% reduction of VOC and methane by routing emissions through a closed vent system to a control device.
  • Fugitive Emissions Monitoring Required at All Well Sites: At 40 CFR § 60.5397a(1), OOOOa currently excludes low-production well sites from fugitive emissions monitoring requirements. The Final Rule, however, requires fugitive emissions monitoring at all well sites, though the frequency and level of monitoring varies by site based on its configuration and the presence, if any, of production equipment. For example, single wellhead-only and small well sites must conduct quarterly audio, visual and olfactory (AVO) inspections, while multi-well-head only well sites must do semiannual OGI inspections in addition to quarterly AVO inspections. Well sites with major production and processing equipment must conduct AVO inspections every other month and quarterly OGI inspections. Compressor stations are required to conduct monthly AVO inspections and quarterly OGI inspections.
  • First-time Requirements for Oil Wells with Associated Gas: For the first time, EPA will require that associated gas from new, reconstructed, or modified oil wells be routed directly to a sales line. In situations where gas-producing oil wells do not have access to a sales line, associated gas would need to be used on-site as a fuel source, used for another purpose that a purchased fuel or raw material would service, or be routed to a flare or other control device achieving 95 percent reduction of methane and VOC emissions. The Final Rule separates new associated gas wells into multiple groups based on when construction is commenced to establish a two-year “phase-in” period for the application of the final standards. EPA requires that these same standards apply to existing oil wells with associated gas.
  • Well Closure Plans: The Final Rule includes a new suite of well closure requirements. Under these requirements, owners and operators of well sites are required to submit a closure plan to EPA within 30 days of the cessation of production and a notification to EPA 60 days before well closure activities begin. The contents of the well closure plan would need to include the steps necessary to permanently plug all wells, a description of financial requirements and assurance to complete closure, and the schedule for completing closure. Well surveys using OGI are required at the well site following well closure activities.

Additional notable requirements include the use of zero-emission pneumatic controllers and pneumatic pumps, a “no identifiable emissions” standard for closed vent systems, and the use of best management practices aimed to minimize or eliminate VOC or methane emissions during well liquids unloading.

If you have any questions about the applicability of the Final Rule to your operations, please contact Gary E. Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com or Christina Puhnaty at (412) 394-6514 or cpuhnaty@babstcalland.com.

To view the PDF, click here.

To view the full article, click here.

Reprinted with permission from the February 2024 issue of The PIOGA Press. All rights reserved.

1 The Final Rule is 1690 pages, which does not include the Regulatory Impact Analysis and other documents in the rulemaking record. A detailed evaluation of each potentially applicable requirement is warranted, and this Alert provides only a high-level summary of certain provisions

2 Specified affected facilities constructed, reconstructed, or modified after August 23, 2011 and on or before September 18, 2015 are regulated under Subpart OOOO.

Specified affected facilities constructed, reconstructed, or modified after September 18, 2015 and on or before November 15, 2021 are regulated under Subpart OOOOa.

When Standing Won’t Stand – Pennsylvania Supreme Court Rules that a Grant of Party Status by a Zoning Hearing Board Does Not Automatically Convey Appellate Rights

The Legal Intelligencer

(by Michael Korns and Anna Hosack)

Last spring, the Pennsylvania Supreme Court addressed the question of who is entitled to standing in matters before a municipal zoning hearing board, and more importantly, who has standing to file an appeal from a board decision.  In South Bethlehem Assocs., LP v. Zoning Hearing Bd. of Bethlehem Twp., 294 A.3d 441 (Pa. 2023), the Pennsylvania Supreme Court held in a three-two decision that while the Municipalities Planning Code, 53 P.S. § 10101 et seq., (the “MPC”), allows the Board wide latitude to grant party status, a grant of standing by the Board does not automatically convey appellate rights absent a finding that the party is entitled to judicial review under the Local Agency Law, 2 Pa.C.S. § 105 et seq., only if they qualify under the “aggrieved party” standard, which requires that they had suffered a harm to an interest that the law is intended to protect.  However, this was a narrow decision, and the dissenters would allow any grant of party status by the Board to also grant appellate standing.  The result would be a dramatic relaxation of appellate standing requirements in zoning hearing board cases.

In South Bethlehem Assocs., the Applicant, a hotel owner, applied to the Zoning Hearing Board of Bethlehem Township (“ZHB”) and requested a dimensional variance.  At the public hearing before the ZHB, counsel for a business competitor of the Applicant appeared and claimed party status by signing in on the provided form as an objector.  The Applicant objected to the Objector’s participation because the Objector’s hotel was outside of the four-hundred-foot radius required for formal notice of the hearing.  The Applicant argued that the Objector was only appearing as a business competitor to oppose the construction of a nearby hotel and therefore the Objector lacked standing to oppose the requested variance.

In ruling on the objection, the ZHB relied upon an opinion of its Solicitor claiming that the Objector became a party of record when its counsel entered his appearance on the objector sheet.  Notably, the Solicitor stated that per the MPC, even if the objector’s property was on the other side of the Township, he could still be a party of record if so designated by the Board.  The Objector did not call any witnesses but did cross-examine the Applicant’s witnesses and provide oral argument in opposition to the variance at the close of the hearing.  The ZHB ultimately issued a unanimous written decision granting the requested variance.

Following the grant of the variance, the Objector appealed the decision to the Court of Common Pleas.  The Applicant intervened in the matter and argued that the Objector lacked standing.  The trial court concluded that the Objector had standing to appeal, as it had timely appeared before the ZHB as an objector and opposed the decision of the ZHB.  However, the trial court also affirmed the Board’s decision on the merits.  The Objector appealed to the Commonwealth Court, which affirmed the trial court’s order on the grounds Objector lacked standing, as the only “aggrievement” it could show was that it would suffer business competition.  The Commonwealth Court reasoned that zoning appeals may not be utilized solely as a method to deter free competition.

The Pennsylvania Supreme Court granted allocator and limited its review to whether the Commonwealth Court erred in holding that the Objector lacked standing to seek judicial review.  At the local zoning hearing board level, the MPC grants the board significantly wider latitude for standing than in most legal proceedings.  Section 908(3) of the MPC states: “The parties to the [zoning board] hearing shall be the municipality, any person affected by the application who has made timely appearance of record before the board, and any other person including civic or community organizations permitted to appear by the board.  The board shall have power to require that all persons who wish to be considered parties enter appearances in writing on forms provided by the board for that purpose.” 53 P.S. § 10908(3) (emphasis added).  The majority noted that this “any other person” language is quite broad.  What, if any limitations on the Board’s discretion should be under this standard were not before the Court.  The Court would only decide if the ZHB could grant standing for appellate review.

In finding that the local standard and the appellate standard could differ, the Court reasoned that a policy goal of the broader MPC standard is to allow for a range of views for and against the relief sought without regard to aggrievement, so as to fully inform the board on the merits of the proposed variance.  Alternatively, a policy goal could have been to avoid the need for mini hearings on aggrievement causing delays before local zoning hearing boards.  Either way, the Majority found that there are legitimate rationales for having a local standard that is more lenient than the appellate standard.

However, the Court reasoned that the legislature’s intent could not be to do away with the need for aggrievement as a predicate to an appeal to a court of law, whose jurisprudential interest and procedures are not identical to those of a local administrative body.  The Court noted that standing exists as a jurisprudential doctrine to protect the courts and the public from the burden of plaintiffs who have no legally enforceable interest affected by the matter.  The Court acknowledged that the Objector’s interest in preventing the Applicant’s hotel two blocks away is not an interest the law recognizes as enforceable in court.  Public policy protects market competition, not competitors from said competition.  The Court held that it remains a valid policy objective to prevent the zoning appeals process from being misused for the sole purpose of hindering market competition.

It was undisputed that the Objector’s sole source of impact, and entire motive for its participation in the case, was to oppose a variance that would have allowed a competitor to operate.  Therefore, the majority found that the Objector did not have standing to appeal the ZHB’s decision.

Given that this was a three-two decision, it is notable that the dissent advocates for a radical change in Pennsylvania appellate standing in cases of this type.  Notably, the Dissent authored by Justin Donahue and joined by Justice Wecht asserted that a party sufficiently establishes that they have party standing automatically by grant of party status before a ZHB where the party is aggrieved by an unfavorable ruling by the board.  The dissent argues that the question of standing for judicial review requires only two conditions be met (1) that the Board properly allowed Appellant to appear and participate at the hearing; and (2) Appellant did not prevail before the Board.

Should this position become the majority position, the standard to establish standing for appellate review of zoning hearing board matters will be dramatically decreased.  Not only could this significantly increase costs for municipalities, but it would also frustrate local zoning goals, policies, and initiatives.  Furthermore, a technical reading of the MPC shows that Section 908(3) of the MPC only applies to zoning hearing boards, not Municipal governing bodies, and therefore municipal conditional use hearings, which otherwise apply very similar standards and procedures as ZHB special exception hearings, would provide radically different appellate rights, further adding complexity to local land use policies and incentivizing municipalities to minimize use of their zoning hearing board.

Michael T. Korns is senior counsel at Babst Calland Clements and Zomnir, P.C. and focuses his practice primarily on municipal permitting, planning, subdivision and land use, and zoning issues.  He is also a member of the firm’s Energy and Natural Resources group.  Contact him at 412-394-6440 or mkorns@babstcalland.com.

Anna R. Hosack is an associate at the firm and focuses her practice primarily on municipal and land use law.  Contact her at 412-394-5406 or ahosack@babstcalland.com.

To view the full article, click here.

Reprinted with permission from the February 12, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.