Articles, Alerts & Perspectives Archive

U.S. DOT Publishes Final Rule on Drug and Alcohol Testing Procedures

Firm Alert

On May 11, 2026, the U.S. Department of Transportation (DOT) published a final rule amending its drug and alcohol procedures under 49 CFR Part 40. DOT addresses implementation issues associated with oral fluid drug testing and updates terminology to align with Executive Order (E.O.) 14168, Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government. The rule becomes effective June 10, 2026.

Background:

On May 2, 2023, DOT amended Part 40 to add oral fluid testing as an additional drug testing method and, in certain situations, to require a directly observed collection to be an oral fluid test as opposed to a urine test. However, because there are currently no U.S. Department of Health and Human Services (HHS)-certified laboratories available to perform oral fluid testing, employers cannot yet utilize this testing method under Part 40.

To correct this practical impossibility, DOT published a notice of proposed rulemaking (NPRM) on December 9, 2024, proposing to amend Part 40 for an interim period to permit directly observed urine collections in certain situations where oral fluid collection is not yet available. Additionally, on October 1, 2025, DOT published a supplemental NPRM proposing to replace the word “gender” with “sex” in Part 40 to be consistent with E.O. 14168.

Key Highlights of the Final Rule:

Directly Observed Urine Collections: DOT amends Part 40 to allow employers to use directly observed urine collections in situations where oral fluid testing would otherwise be required, so long as oral fluid testing is not available. DOT characterizes this amendment as an interim measure intended to preserve existing testing and deter illicit drug use pending implementation of oral fluid testing.

Oral Fluid Testing Prerequisites and Requirements: The Final Rule clarifies that oral fluid testing will be considered “available” only if at least two HHS-certified oral fluid laboratories are available, a qualified oral fluid collector is available, and a conforming oral fluid collection device is available at the collection site. For FAA‑regulated employers subject to 14 CFR § 120.123(a), both certified laboratories must be located in the United States. Once oral fluid testing becomes available, employers will be required to use oral fluid collections in specified circumstances where a same-sex observer is unavailable for a directly observed urine collection.

18-Month Grace Period: DOT expands the proposed transition period and adopts an 18-month grace period following HHS’s announcement of a second certified oral fluid drug testing laboratory. During this period, employers may continue to conduct directly observed urine collections until they are set up to conduct oral fluid testing. However, if an employer becomes capable of conducting oral fluid testing during the grace period, the employer must use oral fluid testing. The Office of Drug and Alcohol Policy and Compliance (ODAPC) will publish a Federal Register notice stating when the 18‑month period begins and ends.

Terminology Changes: DOT replaces “gender” with “sex” in certain provisions of Part 40 to conform with E.O. 14168 and corrects a prior drafting error referencing “observer” versus “collector” in § 40.67(g). ODAPC will determine whether guidance to employers and service agents on how to identify an employee’s sex for directly observed urine collection is necessary.

Additional Collector Instructions: DOT adds language reminding collectors to consult the employer’s standing orders or contact the Designated Employer Representative for directions in specified collection scenarios under § 40.65.

Practical Implications and Takeaways:

For now, no immediate operational overhaul is required for most DOT-regulated employers because directly observed urine testing largely reflects the current status quo. DOT does not anticipate significant compliance costs resulting from the Final Rule.
Employers should nevertheless monitor developments related to HHS certification of oral fluid laboratories and begin preparing policies and assessing future operational needs.
The Final Rule signals DOT’s continued commitment to integrating oral fluid testing into DOT’s Part 40 procedures.

For a more detailed discussion, please contact Melanie Lampton at 202.853.3456 or mlampton@babstcalland.com.

Pennsylvania Department of Environmental Protection Issues New Civil Penalty SOPs for Oil and Gas Operations

PIOGA Press

(by Sean McGovern and Jordan Brown)

The Pennsylvania Department of Environmental Protection has issued two new Standard Operating Procedures (SOPs) for civil penalty assessments related to unconventional and conventional oil and gas wells and a new SOP for identifying, tracking, and resolving oil and gas violations:

These SOPs supersede the Civil Penalty Assessments in the Oil and Gas Management Program (Doc. ID No. 550-4180-001, issued January 12, 2002) and the Standards and Guidelines for Identifying, Tracking, and Resolving Oil and Gas Violations (Doc ID. No. 820-4000-001, issued January 17, 2015) Technical Guidance Documents (TGDs), respectively.

The Department’s transition from TGDs to SOPs represents a significant procedural shift. TGDs undergo public comment periods and structured review processes with opportunity for the regulated community to participate, whereas SOPs are internal agency documents that the Department can revise at its discretion without public input. This transition provides the Department with greater administrative flexibility but reduces opportunities for stakeholder engagement.

Conventional and Unconventional Civil Penalty SOPs

Changes common to both civil penalty SOPs (Conventional and Unconventional) include, but are not limited to the following:

1. Statutorily Based Penalty Ranges
  The SOPs now clarify the full civil penalty ranges authorized under the 2012 Oil and Gas Act. While these statutory maximums have existed since 2012, the new SOPs provide detailed guidance on how the Department will calculate penalties within these ranges.
2. Environmental Justice Areas
  Both SOPs now explicitly incorporate environmental justice (EJ) considerations into penalty assessments. Penalties may be increased where violations impact or have the potential to negatively impact residents in Environmental Justice Areas.
3. Stronger Unilateral Enforcement Posture
  While the 2002 TGD permitted the Department to deviate from guidelines in appropriate circumstances, the new SOPs contain more explicit and emphatic language stating that if an operator refuses to settle, the Department may impose a larger civil penalty in unilateral enforcement actions. This represents a more aggressive enforcement stance than previously articulated by the Department.
4. Expanded Water Supply Impact Categories
  The “Impact of Violations” section in both SOPs now includes:
  - - Both public and private water supplies (previously only public supplies were explicitly addressed in the prior technical guidance document);
    - Broader range of impacts beyond combustible gas migration, including impacts to both public and private water supplies, as well as other types of contamination and supply loss scenarios affecting any source of water used for human consumption, agriculture, or industrial purposes;
    - A Separate “Moderate” category with detailed criteria (previously combined “Moderate to Low”); and
    - Updated terminology from “explosive nature of gas contamination” to “migration of combustible gas”.

1. Escalating Penalties for Continuing and Uncorrected Violations
  The Department can elevate the willfulness category for violations that remain outstanding after receiving Notice(s) of Violation (uncorrected violations). Uncorrected violations are singular incidents that have not been remedied after the Department has issued notice to the operator, but do not involve ongoing discharges, damage, or conditions. In contrast, continuing violations involve ongoing discharges, damage, or conditions that persist over time and are observed continually, and such violations are subject to daily penalties for each day the violation continues. For example, a negligent violation may be reclassified as “reckless” after prior warning via NOV by the Department or “deliberate” when the operator has prior knowledge that the action or inaction constitutes a violation.
2. Enhanced Confidentiality Protections in Documentation
  The “Documentation” section of the SOPs now explicitly states that some records and evidence collected during penalty assessments will be treated as confidential information. SOP civil penalty worksheets completed by the Department to support proposed civil penalty offered to operators in the context of settlement discussions.
3. Changes to Penalty Amounts
4. Doubled Repeat Violator Enhancement for Unconventional Operators
  A key difference between the conventional and unconventional civil penalty SOPs is the violator’s history multiplier applied when operators have a record of recent similar violations. For conventional operations, the maximum penalty enhancement remains at 10% of the penalty subtotal (unchanged from the 2002 TGD), while for unconventional operations, the maximum enhancement has doubled from 10% to 20% of the penalty subtotal.

SOP for Identifying, Tracking, and Resolving Oil and Gas Violations

The SOP for Identifying, Tracking, and Resolving Oil and Gas Violations introduces several important procedural updates. Environmental justice considerations are now integrated into inspections, enforcement priorities, and penalty evaluations, with new enforcement priorities for violations impacting Environmental Justice Areas and the involvement of Regional EJ Coordinators. The Department’s inspection program has been updated to include a 15-year baseline inspection cycle for all operational wells, reduced inspection frequency for gas storage wells, enhanced plugging oversight, and new inspection types such as compliance schedule evaluations. Certain inspection types, such as road spreading inspections, have been eliminated. Permitting and reporting requirements have also changed, with the removal of some notification requirements and the addition of new ones, including notifications for horizontal directional drilling, modular storage structure installations, well communication incidents, and specific gas storage well activities. Water supply investigation procedures have been significantly updated, introducing new tracking and reporting systems, a streamlined notice process, and a two-tier notification approach based on the findings of the Water Quality Specialist.

These SOPs represent substantive changes from the prior TGDs and formalize the Department’s practices moving forward regarding oil and gas compliance and enforcement matters. All oil and gas operators should review their compliance programs in light of these enhanced penalty provisions and enforcement procedures, as these SOPs are immediately effective and are already being implemented by the Department.

If you have any questions about the applicability of the new civil penalty SOPs to your operations, please contact Sean M. McGovern at (412) 394-5439 or smcgovern@babstcalland.com or Jordan N. Brown at (202) 853-3459 or jbrown@babstcalland.com.

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Babst Calland Among Top-Ranked Firms in Associate Satisfaction Survey

BTI Consulting Group’s BTI Associate Satisfaction A-Listers 2026: BTI Survey of Law Firms Where Associates are Happiest report recognizes law firms that outperform peers based on direct associate feedback across factors tied to retention, engagement and long‑term career satisfaction. This first and only report of its kind, Associate Satisfaction A‑Listers is based on a large-scale independent survey with more than 5,000 responses of associates at Am Law 200, global, mid-size, and smaller law firms. The report shows exactly what drives associate satisfaction – and which firms deliver on it best.

According to the report, the surveyed associates identified Babst Calland as an Associate Satisfaction Leader across the activities and factors that drive associate job satisfaction. Women associates ranked the Firm as Distinguished in those same areas, an important distinction, as BTI found that women associates report job satisfaction levels that are 17% lower than those of their male counterparts across the legal industry.

Recognized among only 189 law firms in the country, Babst Calland ranked in the two top levels, Associate Satisfaction Leader and Distinguished Law Firm, where associates reported the highest levels of career development support, mentoring, training, growth opportunities, and overall job satisfaction. Babst Calland also ranked among the top 138 firms with the most satisfaction among women associates.

Among the seven factors most valued by associates, these are the BTI Associate Satisfaction A-Listers 2026 survey categories in which Babst Calland was ranked:

Associate Satisfaction Leader

top 5% of firms Best at Helping Women Associates in Their Careers
top 6% of firms With Partners Invested in Individual Women Associates’ Success
top 10% of firms Best at Helping Associates in their Careers
top 12% of firms With Partners Invested in Individual Associates’ Success

Distinguished Law Firm

top 14% of firms With Highest Number of Extremely Satisfied Women Associates
top 15% of firms Best at Mentoring Women Associates
top 15% of firms Best Opportunity for Women Associates to Grow Within Their Firm
top 16% of firms Best at Access to Training for Women Associates
top 20% of firms With Highest Number of Extremely Satisfied Associates
top 22% of firms Best at Mentoring Associates
top 22% of firms Best Opportunity to Grow Within Their Firm
top 23% of firms Offering the Best Access to Training

“We’re extremely proud of our associates at Babst Calland and value their contributions,” said Managing Shareholder Donald C. Bluedorn II. “Ensuring a satisfying work environment is a priority for us, and our associates have been integral in achieving that. For example, through their involvement in our Associates Committee and our Women’s Initiative, our associates have provided invaluable insights in improving our ability to support them professionally and personally. I am so grateful for them and for our shareholders who make such an impact as mentors and are committed to ensuring our associates realize their full potential.”

For more information about the report, visit BTI Associate Satisfaction A-Listers 2026 – The BTI Consulting Group.

Coal Mine Federal Oversight Rules Challenged in Litigation (Again)

Environmental Alert

(Christopher (Kip) Power, Robert Stonestreet and Joseph (Jed) Meadows)

Several organizations have filed a lawsuit seeking to invalidate regulations intended to restore state agencies as the primary regulators of most coal mining operations. On April 20, 2026, Citizens Coal Council, Appalachian Voices, and the Sierra Club (Plaintiffs) filed a civil action against Interior Secretary Doug Burgum, challenging the Office of Surface Mining Reclamation and Enforcement (OSM)’s February 19, 2026, revisions to its regulations governing oversight of state mine regulatory programs under the federal Surface Mining Control and Reclamation Act of 1977 (SMCRA). Citizens Coal Council, et al. v. Burgum, 1:26-cv-01348-RBW (D.C. D. Ct.). Asserting that the changes made by the 2026 revisions to those regulations (the “SMCRA Oversight Rules”; generally, 30 C.F.R. Parts 730 – 746) are “arbitrary, capricious, and otherwise inconsistent with law,” the Complaint largely seeks a return to the 2024 version that was put into effect under the Biden administration.

In their Complaint, the Plaintiffs allege that the 2026 changes “unlawfully modified important provisions of the [prior SMRCA Oversight Rules].” Complaint, at ¶ 3. Notably, the Plaintiffs previously challenged the 2020 version of the Oversight Rules (promulgated during President Trump’s first term) for many of the same reasons, but ended that challenge when the Biden administration promulgated the 2024 version of the same rules.

OSM’s 2026 revisions to its SMCRA Oversight Rules were indeed intended to return them largely to their 2020 form (the “2020 Rule”), “maintain[ing] SMCRA’s deference to primary states and limiting the scope of [Ten Day Notice] issuance by OSM.” (See Environmental Alert: “OSM Finalizes Oversight Rules to Closely Resemble 2020 Version”). Under SMCRA, a “Ten Day Notice” is issued to a state agency that is primarily responsible for administering that law’s requirements (known as a “primacy state”) whenever OSM determines that there may be a violation of the approved program at a particular mining operation permitted by the state. Oftentimes, such TDNs are requested by environmental groups who are heavily involved in numerous actions challenging coal mining in primacy states. As described in our February 25, 2026 Environmental Alert, in 2024 the Biden administration revised the 2020 SMCRA Oversight Rules by (among other things): (1) allowing citizens to report alleged SMCRA violations directly to OSM, without providing notice to the relevant state regulatory authority; and (2) “authoriz[ing] OSM to issue [Ten Day Notices] based on programmatic (rather than site-specific) concerns[]” (the “2024 Rule”). The 2026 Rule reversed these changes, along with others, noting that the 2024 Rule contributed to increased administrative costs and decreased efficiency. These are just two of several changes that are subject to this new legal action challenging OSM’s 2026 regulations.

For questions about challenges to the revised SMCRA Oversight Rules or other issues arising under SMCRA and/or counterpart state programs, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com; Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com; Joseph (Jed) Meadows at (681) 265-2111 or jmeadows@babstcalland.com; or your Babst Calland relationship attorney.

Removing the Home Court Advantage: How the Supreme Court’s Decision in Chevron USA, Inc. v. Plaquemines Parish Expands the Scope of Federal Officer Removal

The Legal Intelligencer

(by Joseph Schaeffer)

Earlier this term, a unanimous Supreme Court held that Chevron could invoke federal officer removal under 28 U.S.C. § 1442(a)(1) to remove environmental litigation that certain Louisiana parishes had filed in Louisiana state court. Chevron USA Inc. v. Plaquemines Parish, No. 24-813, at 2 (U.S. Apr. 17, 2026). The decision is significant primarily because it expands the circumstances under which persons acting under federal officers can remove cases to federal court. But it is also notable for how it lays bare a clear distinction in how certain members of the Court approach the task of statutory interpretation.

Start with the merits. In 2013, Plaquemines Parish and other parishes filed 42 state-court suits against oil and gas companies for allegedly violating Louisiana’s State and Coastal Resources Management Act, La. Rev. Stat. Ann. § 49:214.21 et seq. Id. at 5. Enacted in 1978, the Act requires persons using Louisiana’s coastal zone to obtain a permit unless the use was lawfully commenced or established prior to the permitting program taking effect in 1980. Id. The parishes alleged that the oil and gas companies had failed to obtain required permits, including because certain pre-1980 uses had been illegally commenced and not eligible for the permitting exemption. Id. Among other things, the parishes argued that the oil and gas companies’ operations during the 1940s were conducted in “bad faith” and failed to protect the “marshland from contamination and excessive land losses” by using earthen pits instead of steel tanks; using vertical-drilling methods instead of allegedly less harmful alternatives; and primarily using canals instead of roads for transportation. Id.

Several defendants, including Chevron, invoked federal officer removal under 28 U.S.C. § 1442(a)(1) to remove cases against them to federal court. Id. at 5-6. They argued that their operations in Louisiana’s coastal zone during the 1940s supported the production of crude oil for refining into high-octane aviation gasoline under wartime contracts with the United States. Id. at 6. The Petroleum Administration for War (P.A.W.) oversaw the entire oil industry from 1941 to 1945 and, pursuant to a directive to increase avgas production, contracted with dozens of avgas refineries, including one of Chevron’s predecessors, to meet military requirements. Id. at 3-4. The P.A.W. knew that refineries needed crude oil to produce avgas and adjusted the price of avgas based on the cost of obtaining crude oil. Id. at 4. The P.A.W. also allocated crude oil to specific refineries to maximize output and required production methods, such as vertical drilling, that resulted in higher crude oil production. Id. at 4. Chevron accordingly contended that the parishes’ suits targeted acts related to its performance of federal duties.

Before 2011, the federal officer removal statute authorized removal of state-court suits against federal officers or their agents “for any act under color of such office.” 28 U.S.C. § 1442(a)(1) (2006 ed.). The Supreme Court had interpreted that language as requiring a causal nexus between the conduct at issue and the alleged federal authority. Id. at 8 n.3. In 2011, however, Congress amended the federal officer removal statute to allow removal of state-court suits against federal officers or their agents “for or relating to any act under color of such office.” 28 U.S.C. § 1442(a)(1) (emphasis added). The federal district court and Fifth Circuit nevertheless both rejected Chevron’s arguments for removal. The Fifth Circuit acknowledged that the parishes were targeting wartime crude oil production, but it held that the claims did not relate to the performance of the avgas refining contracts because those contracts did not specify how crude oil was to be acquired. Id. at 6.

The Supreme Court unanimously reversed. Writing for the Court, Justice Clarence Thomas looked to the ordinary meaning of the phrase “relating to” as encompassing even an indirect connection, albeit one that is more than “tenuous, remote, or peripheral.” Id. at 7-8. Justice Thomas considered the crude oil production challenged by the parishes to fit comfortably within the concept of a suit “relating to” Chevron’s performance of federal contracts for avgas refining. Id. at 9. Crude oil was an essential feedstock for avgas, and much of the crude oil that Chevron produced in the Louisiana coastal zone was used for avgas refining. Id. Moreover, the actions that the parishes alleged gave rise to liability were in service of wartime directives. Vertical-drilling methods maximized production, transportation by canal saved the time, materials, and manpower that would have been needed to build roads, and earthen pits satisfied P.A.W.’s directive to preserve steel. Id. at 9-10. Justice Thomas, contra to the Fifth Circuit, found it of no moment that the wartime contracts did not specify how Chevron was to obtain crude oil. He wrote that conduct can relate to federal duties even without the federal duties “specifically invit[ing]” that conduct. Id. at 10-11. He likewise rejected the Fifth Circuit’s conclusion that P.A.W.’s allocation of crude oil severed any relationship between production and refining, holding that acts can relate to their consequences despite the involvement of an intermediary in the chain of causation. Id. at 11.

Now to the doctrinal distinction. Justice Thomas took a clear textualist approach. He referenced the Court’s prior interpretation of the federal officer removal statute only in a footnote, implying that Congress’s subsequent amendment to the statute had made that interpretation irrelevant. Id. at 8 n.3. His analysis omits any discussion of Congressional intent and focuses solely on the ordinary meaning of the phrase “relating to” that Congress added to the federal officer removal statute in 2011.

Justice Ketanji Brown Jackson, by contrast, took an unapologetically holistic approach in concurrence. Starting from the premise that the Court should determine Congressional intent, she concluded that Congress did not intend for its 2011 amendment to change the causal-nexus requirement for federal officer removal. Id. at 2 (Jackson, J., concurring). Looking at legislative history, she determined that Congress was concerned with circumstances where federal officers were subjected to pre-suit discovery proceedings under state law. Id. at 3 (Jackson, J., concurring). The then-operative statutory language did not clearly allow removal in those circumstances because the pre-suit discovery proceedings were not targeting the federal officer “for” any act under color of office. Congress addressed that ambiguity in its 2011 amendments by providing that federal officers could remove “any proceeding” in which “a judicial order, including a subpoena for testimony or documents, is sought or issued.” The addition of the phrase “relating to” was simply a conforming amendment to make the rest of the statute consistent with the substantive changes. Id. at 4-5 (Jackson, J., concurring). In Justice Jackson’s view, this legislative history answered the interpretative question: rather than effecting a substantive change in the law, as Justice Thomas impliedly found, it was a minor change that left the causal-nexus requirement unaltered. Id. at 5 (Jackson, J., concurring).

Justice Jackson, of course, reached the same result as her colleagues: Chevron can remove the litigation to federal court. But she did so by applying the causal-nexus requirement, holding that the United States’ wartime demand for avgas was a but-for cause of Chevron’s production of crude oil from the Louisiana coastal zone. Id. at 6-7 (Jackson, J., concurring). Her different analytical approach thus had a material interpretive effect.

Lastly consider the significance. The Court’s decision opens more cases to removal under the federal officer statute by relaxing the causation requirement. At the same time, however, Justice Thomas notably identified climate litigation proceeding on false-advertising theories as lacking even the indirect connection permitted under the Court’s new test. Id. at 9. The true consequences of the Court’s decision will be determined in future proceedings in the lower court.

Joseph Schaeffer is a shareholder in the Litigation Group and Co-Chair of the Appellate Practice Group at Babst, Calland, Clements and Zomnir, P.C. He focuses his practice on environmental, energy, and complex commercial litigation. Joseph has an active appellate practice and has served as co-counsel or lead counsel in appellate matters before Pennsylvania and West Virginia State Courts, the United States Courts of Appeals for the Third and Fourth Circuit, and the Supreme Court of the United States. Contact him at 412-394-5499 or jschaeffer@babstcalland.com.

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Pennsylvania Department of Environmental Protection Issues New Civil Penalty SOPs for Oil and Gas Operations

Energy and Natural Resources Alert

(by Sean McGovern and Jordan Brown)

Conventional and Unconventional Civil Penalty SOPs

Changes common to both civil penalty SOPs (Conventional and Unconventional) include, but are not limited to the following:

1. Statutorily Based Penalty Ranges
  The SOPs now clarify the full civil penalty ranges authorized under the 2012 Oil and Gas Act. While these statutory maximums have existed since 2012, the new SOPs provide detailed guidance on how the Department will calculate penalties within these ranges.
2. Environmental Justice Areas
  Both SOPs now explicitly incorporate environmental justice (EJ) considerations into penalty assessments. Penalties may be increased where violations impact or have the potential to negatively impact residents in Environmental Justice Areas.
3. Stronger Unilateral Enforcement Posture
  While the 2002 TGD permitted the Department to deviate from guidelines in appropriate circumstances, the new SOPs contain more explicit and emphatic language stating that if an operator refuses to settle, the Department may impose a larger civil penalty in unilateral enforcement actions. This represents a more aggressive enforcement stance than previously articulated by the Department.
4. Expanded Water Supply Impact Categories
  The “Impact of Violations” section in both SOPs now includes:
  - - Both public and private water supplies (previously only public supplies were explicitly addressed in the prior technical guidance document);
    - Broader range of impacts beyond combustible gas migration, including impacts to both public and private water supplies, as well as other types of contamination and supply loss scenarios affecting any source of water used for human consumption, agriculture, or industrial purposes;
    - A Separate “Moderate” category with detailed criteria (previously combined “Moderate to Low”); and
    - Updated terminology from “explosive nature of gas contamination” to “migration of combustible gas”.

1. Escalating Penalties for Continuing and Uncorrected Violations
  The Department can elevate the willfulness category for violations that remain outstanding after receiving Notice(s) of Violation (uncorrected violations). Uncorrected violations are singular incidents that have not been remedied after the Department has issued notice to the operator, but do not involve ongoing discharges, damage, or conditions. In contrast, continuing violations involve ongoing discharges, damage, or conditions that persist over time and are observed continually, and such violations are subject to daily penalties for each day the violation continues. For example, a negligent violation may be reclassified as “reckless” after prior warning via NOV by the Department or “deliberate” when the operator has prior knowledge that the action or inaction constitutes a violation.
2. Enhanced Confidentiality Protections in Documentation
  The “Documentation” section of the SOPs now explicitly states that some records and evidence collected during penalty assessments will be treated as confidential information. SOP civil penalty worksheets completed by the Department to support proposed civil penalty offered to operators in the context of settlement discussions.
3. Changes to Penalty Amounts
4. Doubled Repeat Violator Enhancement for Unconventional Operators
  A key difference between the conventional and unconventional civil penalty SOPs is the violator’s history multiplier applied when operators have a record of recent similar violations. For conventional operations, the maximum penalty enhancement remains at 10% of the penalty subtotal (unchanged from the 2002 TGD), while for unconventional operations, the maximum enhancement has doubled from 10% to 20% of the penalty subtotal.

SOP for Identifying, Tracking, and Resolving Oil and Gas Violations

Pa. Supreme Court Holds Stormwater Management Fees Are Taxes

Environmental Alert

(by Lisa Bruderly and Mackenzie Moyer)

On April 30, 2026, the Pennsylvania Supreme Court released a long-awaited opinion about the ability of a municipality to assess charges to manage stormwater runoff. Borough of West Chester v. Pennsylvania State System of Higher Education, No. 9 MAP 2023. In the opinion, the Pennsylvania Supreme Court affirmed the unanimous 2023 Commonwealth Court opinion holding that stormwater management charges are taxes, not fees, and, thus, tax-exempt entities are immune from paying such charges. The Commonwealth Court based its decision on findings that the Borough did not enter into a voluntary, contractual relationship with the University, and the University did not receive discrete benefits through payment of the stormwater charge.

As background, the Home Rule Municipality of the Borough of West Chester owns and operates a small municipal separate storm sewer system (MS4) as part of its stormwater management system. In 2016, the Borough adopted an ordinance imposing a “stream protection fee,” otherwise known as the stormwater charge, upon owners of developed property who the Borough claimed benefitted from the stormwater management system to manage and control their stormwater entering the system. The amount of the stormwater charge is calculated based on the amount of impervious surface on the property.

Accordingly, the Borough sent West Chester University invoices for payment of the charge, in the amount of approximately $132,000 per year. However, the University did not pay the invoices, arguing that the charge was a tax, and, thus, the University was exempt from payment as an entity of the Commonwealth.

In affirming the Commonwealth Court, the Court identified a two-step test for distinguishing a fee for a service from a local tax, in which the Court first examined whether the municipality is performing the service in a “quasiprivate or public capacity.” If acting in a quasiprivate capacity, the Court would then determine whether “the associated charge is measured by the service rendered.” Looking at documents, including the relevant ordinance, the Court concluded that the Borough provides stormwater management in the Borough’s public capacity. As such, analysis of the second step of the test was not necessary. The Court held that, “Where a municipality is duty bound to provide a service for the public benefit and in the absence of a voluntary, contractual relationship between itself and those receiving the service, the associated charge is a tax.”

This holding will certainly impact municipalities’ abilities to raise funds to implement stormwater management and pollution control. An amendment to the Municipality Authorities Act signed by Governor Corbett in 2013, allowed certain local governments to create stormwater authorities. Such stormwater authorities are authorized to impose fees, but not taxes. The Court’s opinion raises questions about the continued ability of stormwater authorities to assess stormwater management charges to implement, manage, and update stormwater management controls. It also raises broader questions about a municipal authority’s ability to assess other fees against tax exempt entities. In its opinion, the Supreme Court acknowledged that there will be difficulties “in navigating the regulatory landscape and the environment problems posed by unmitigated stormwater,” but that the Court must adhere to the “basic principles that define taxation.”

Babst Calland attorneys continue to track these developments and are available to assist with stormwater-related matters. For more information on this development and other water matters, please contact Lisa Bruderly at (412) 394-6495 or lbruderly@babstcalland.com, Mackenzie Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.

Local Street Opening Fees Preempted by the Public Utility Code

The Legal Intelligencer

(by Steve Korbel, Anna Hosack and Alex Giorgetti)

The use of street opening ordinances to regulate and maintain public rights-of-way has increased in popularity over the past few years, with many of the local municipalities having adopted some form of a model ordinance. These ordinances commonly include references to fees for permitting and inspection, and in many cases provide for the use of a variable fee based on the linear footage of the proposed opening into the public right-of-way. The goal of this variable fee is to provide for flexibility, as a street opening can be minor, requiring very little review, or involve significant linear footage, requiring longer inspections and/or additional engineer review. The Commonwealth Court’s recent decision in Columbia Gas of Pennsylvania, Inc. v. Menallen Township, 351 A.3d 326 (Pa. Cmwlth. 2026), impacts the interpretation of those street opening ordinances and their variable fees when applied to public utilities, such as water, gas, and electric companies.

From 2016 to 2022, Columbia Gas of Pennsylvania, Inc. (“Columbia Gas”), a public utility regulated by the Pennsylvania Public Utility Code, 66 Pa.C.S. § 101 et seq., (“PUC”), performed three infrastructure expansion projects in Menallen Township (“Township”), including the installation of approximately 1,700 linear feet of pipe in public rights-of-way. Columbia Gas paid $14,259 in fees to the Township for that infrastructure work, and in order to begin construction on a new project within the Township in 2023, requiring the addition/replacement of approximately 7,000 linear feet of pipe, Columbia Gas paid, under protest, $42,542.08 in fees to the Township. The Township charged these fees via its street opening ordinance (“Ordinance”), which imposes fees on anyone seeking to excavate or open a public roadway. The ordinance included a flat application fee of $150 for all applications. It also imposed variable inspection fees calculated on a per hour and per square foot basis, intended to fund the Township’s inspection of the utility’s pipe installation work and its monitoring of road conditions following the restoration.

Columbia Gas filed a petition for review in the Commonwealth Court’s original jurisdiction challenging the Township’s Ordinance Sections 13-16 which limit the locations where excavation can occur, such as by limiting removal of trees or shrubs, prohibiting excavation of recent paving, and regulating the depth of facilities (“Location Provisions”), Section 20 which set the following fees: a permit fee of $150 (“Application Fee”); inspection and supervision fees of $18-25 per hour for the Township’s engineer to supervise the work, plus $3.67 per square foot of opening/excavation (“Inspection Fees”) and a bond amount of $25 per linear foot, and Section 21 which imposes a civil penalty of $600 per day on any entity that violates the provisions of the Township’s street opening ordinance (“Violation Provision”). Columbia Gas also challenged the Township’s fee resolution, which raised the per-hour Inspection Fee to a minimum of $75 per hour, arguing that the Inspection Fee is preempted under the field preemption doctrine established by the Pennsylvania Supreme Court in PPL Electric Utilities Corp. v. City of Lancaster, 214 A.3d 639 (Pa. 2019).

Before further analysis, the Commonwealth Court dismissed Columbia Gas’s challenges to the Location Provisions and the Violation Provisions as unripe for review since the Township had not enforced those provisions of the Ordinance against Columbia Gas.

Upon further analysis, the Commonwealth Court upheld the $150 flat Application Fee but found that the variable Inspection Fees crossed the line from permissible management of rights-of-way into impermissible regulation of utility facilities and operations. The court’s reasoning followed the analytical framework set out in Waterford Township v. PUC, 276 A.3d 301 (Pa. Cmwlth. 2022), which distinguished between two categories of municipal fees. On one side of the line are fees that regulate access to the right-of-way — permit fees, application fees, and similar charges that control when and how an applicant may open a street. Those remain permissible, even as applied to public utilities. The $150 flat Application Fee in this instance regulated access to public rights-of-way rather than regulating utility operations and did not infringe on preempted utility regulation.

However, fees that regulate the quality of the utility’s work — charges tied to the scope of inspection, the duration of monitoring, or the method of installation — fall within the PUC’s exclusive regulatory field and are preempted. The Commonwealth Court found that the Township’s per hour and per square foot Inspection Fees were designed to fund the Township’s own heightened inspection of the utility’s construction methods and to monitor the utility’s restoration work over time. That purpose, the Court concluded, placed the fees squarely within the preempted field. The Court noted that the dollar amount of the fees alone was not dispositive. The regulatory purpose the fees were designed to serve was the critical determination.

The key takeaways from the Commonwealth Court’s holding in Columbia Gas for municipalities are as follows:

1. Flat permit or application fees remain on solid ground.

Municipalities own their roads and retain authority over their streets and rights-of-way. A municipality may charge a reasonable flat fee to process an application, issue a permit, and manage access to the right-of-way. The fee must relate to the administrative cost of regulating right-of-way access, not to the scope or duration of the utility’s construction activity. This distinction is necessary to avoid allegations of preempted regulations.

1. Variable fees related to the size of the excavation, the number of inspection hours, or the length of a monitoring period are vulnerable to preemption challenge when applied to PUC regulated utilities.

A municipality that calculates its fee based on the square footage of the cut or the hours its inspector spends watching and monitoring the utility’s crew is, in the Commonwealth Court’s view, regulating the utility’s work — not managing access to the roadway. Such regulation impermissibly treads on the PUC’s preemptive regulation of public utilities.Despite this decision, municipalities still retain their authority as road owners. The right to define the condition in which a road must be returned after an opening — through restoration standards set as conditions of right-of-way access — is grounded in the municipality’s property interest in its own infrastructure, not in the regulation of utility operations. Assessing street opening fees in the wake of Columbia Gas requires careful structuring, but a municipality that works with its solicitor to think creatively about its ordinance and fee structure is not without recourse.

1. Municipalities may still impose the full range of their existing fee structures on non-utility applicants — private contractors, developers, cable providers that are not certificated public utilities, and others.

The preemption doctrine applies only where the fee functions as a regulation of a PUC jurisdictional utility. The Commonwealth Court’s decision does not apply to non-utility applicants, as the Code and its preemption do not apply to them. A two-tiered fee structure that distinguishes between utility and non-utility applicants is one way to preserve existing revenue from non-utility work while complying with the court’s holding.

Municipalities that currently impose variable inspection or restoration monitoring fees on public utilities should review their street opening ordinances and fee resolutions promptly. In particular, a governing body should work with its solicitor to determine whether its fee structure, as applied to utilities, can withstand scrutiny under the Columbia Gas framework. Where variable fees are assessed against utilities, the municipality should consider whether an amendment to its fee resolution, its street opening ordinance, or both would better align with current law while still protecting the municipality’s infrastructure investment. A municipality that has already reviewed its ordinance and, if necessary, adopted a compliant approach, will be better positioned to respond to inquiries and challenges from a position of strength.

Stephen L. Korbel is a shareholder at the firm, focusing his practice primarily on municipal and employment and labor law. Contact him at 412-394-5627 skorbel@babstcalland.com.

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

Alexander O. Giorgetti is an associate at the firm, focusing his practice primarily on municipal and land use law. Contact him at 412-773-8718 or agiorgetti@babstcalland.com.

To view the full article, click here.

Life After CERCLA

Environmental Legal Perspective

(by Tim Bytner)

The phrase “Comprehensive Environmental Response, Compensation and Liability Act,” or “CERCLA” for short, is something that pricks the ears of environmental managers and counsel, but usually not in a good way. Certainly, the mere mention of an EPA104(e) information request is something that can cause the hands to get clammy even for the most seasoned environmental managers and in-house counsel. The concerns are not unfounded. Being named as a potentially responsible party (“PRP”) for a contaminated site, whether it be as an owner, operator or an arranger, usually is the start of a process that can take a few years to decades to complete.

I consider myself very fortunate that my career in the environmental industry has touched on just about every stage of a contaminated site. Having been an environmental consultant prior to (and during) law school, there was a time when I was the person collecting samples and preparing various plans and technical reports. Now having practiced environmental law for more than 18 years, I’m the person directing responses to information requests and negotiating with agency counsel and other PRPs on remedial investigations, cost sharing, feasibility studies, etc. Over the years, I’ve had multiple conversations with clients that began with “I just received this letter…” or “…have you seen the news today?”

It can be quite difficult to see an end to the CERCLA process, but endings can and do happen. To date, 460 sites have been removed from the National Priority List (“NPL”).[1] Some of these sites were removed from the NPL because of what I would generally term as “administrative” reasons, meaning that the site is still undergoing some form of remediation, it’s just no longer appropriate to maintain on the NPL. But there are sites that were removed from the NPL because the remedial work had been completed to an extent which rendered the site suitable for some form of future use.

For example, the Pioneer Sand Company Superfund Site, located near Pensacola Florida was added to the NPL in 1983 due to suspected contamination from the disposal of various phenols, resin compounds, plating sludges, etc. After cleanup, the site was removed from the NPL in 1993. Groundwater monitoring and operation/maintenance activities continue, but the site now presents a great opportunity for reuse, so long as the reuse is consistent with the implemented remedy. [2]

Compatibility with the remedy is the key for reuse of any contaminated site, and it is important to keep potential reuse in mind throughout the process such that the remedy can be tailored to the extent practicable to maximize reuse.

In cases that I have been involved with, the remedy often involved the construction of some form of cap to act as a barrier between the aboveground environment and any contaminated materials that remain in place below. Reuses of sites with a cap typically involve activities and/or construction that do not compromise the cap.

Another form of remedy, and one which often accompanies the implementation of a cap, is the use of institutional controls such as a restriction on the use of groundwater and/or a restriction on the use of the site for residential purposes. Although these types of restrictions prohibit the site from certain forms of redevelopment, plenty of possibilities remain.

I’ve seen many uses of sites that formerly were, and even currently are, on the NPL including warehousing, parking lots, self-storage units, nature preserves, manufacturing, etc. More recently, AI has fueled a significant demand for data centers. To that end, the EPA has developed a guidance document, which provides useful information on the criteria needed for the redevelopment of a site for use as a data center.[3] Data centers represent a prime opportunity for reuse of a contaminated site with the possibility of significant benefits, not only to the landowner but to the surrounding community as well.

The important aspect to keep in mind for any contaminated site, whether it is regulated through CERCLA or through state means, is that the space will still exist after the remediation is complete. The options for using that space are limited only by the entrepreneur’s imagination.

Tim Bytner focuses his practice primarily on federal and state environmental regulation and litigation. He advises clients on matters involving the remediation and reuse of contaminated properties under both state and federal jurisdiction and counsels clients in environmental compliance issues involving the Clean Air Act, Clean Water Act, RCRA, EPCRA, CERCLA, and a wide variety of state regulatory issues. He also has experience in environmental emergency response and the Spill Prevention, Control, and Countermeasure Rule, the Facility Response Rule, and various state planning requirements.

____________________________

[1] Environmental Protection Agency, Deleted National Priorities List (NPL) Sites – by State (April 8, 2026), https://www.epa.gov/superfund/deleted-national-priorities-list-npl-sites-state.

[2] Environmental Protection Agency, Site Redevelopment Profile: Pioneer Sand Company Superfund Site (March 31, 2026), https://semspub.epa.gov/work/HQ/403575.pdf.

[3] Environmental Protection Agency, Guidance on the Redevelopment of Superfund and Brownfield Sites as AI Data Centers, EPA-540-S-26-001 (January 2026), https://www.epa.gov/system/files/documents/2026-01/guidance-on-the-redevelopment-of-superfund-and-brownfield-sites-as-ai-data-centers.pdf.

EPA Proposes Revisions to Coal Combustion Residuals Regulations

Environmental Alert

(by Ben Clapp, Gary Steinbauer and Mackenzie Moyer)

On April 13, 2026, the U.S. Environmental Protection Agency (EPA) published a Proposed Rule in the Federal Register that would amend federal regulations related to the disposal and beneficial use of coal combustion residuals (CCR). If finalized as proposed, the amendments would provide increased regulatory flexibility, expand pathways for owners and operators of CCR disposal units to achieve compliance with federal CCR regulations, rescind or reduce the scope of regulations governing certain CCR disposal and storage areas, and reduce restrictions on the beneficial use of CCR. In addition, EPA announced that it is planning to reopen the public comment period for the proposed Federal CCR Permit Program rule, which was originally published on February 20, 2020.

Background

The federal regulation of CCR dates back to 2015, when EPA finalized the first national minimum criteria for the beneficial use and disposal of CCR as a solid waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA). As reported in detail in an earlier Babst Calland Environmental Alert, in 2024, EPA supplemented the 2015 regulations by finalizing what is known as the “Legacy CCR Rule,” which expanded the scope of the federal CCR rules to regulate inactive CCR surface impoundments at inactive electric utilities, otherwise known as legacy CCR surface impoundments and CCR management units (CCRMUs). CCRMUs represent a broad general category of CCR disposal units, including inactive CCR landfills and other land-based disposal areas that had previously not been regulated under EPA’s CCR rules.

Proposed Amendments

The more notable and potentially impactful elements of the Proposed Rule are described below:

Expansion of Option to Certify Closure by Removal for Legacy CCR Surface Impoundments: The Proposed Rule would create another option to certify closure of legacy CCR surface impoundments by removal if the removal was completed prior to November 8, 2024, under the oversight of a regulatory authority. At present, the closure by removal option for legacy CCR surface impoundments is only available to owners and operators able to certify that a legacy CCR surface impoundment has been closed by removal in accordance with the current rule’s specific performance standards. The proposal would modify this compliance pathway by allowing the owner or operator to certify closure by removal when (i) a regulatory authority played an active role in overseeing and approving the closure by removal and any necessary corrective action pursuant to an enforceable requirement issued on or after October 19, 2015, and (ii) impacts to groundwater were considered by the regulator. Enforceable requirements may include a state or federal permit, an administrative order, or consent order issued under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or by an EPA-approved state RCRA program. In addition, EPA is soliciting comments on whether this compliance option should be expanded further to include removal-based closures of legacy CCR surface impoundments concluded prior to October 19, 2015, and/or such closures there were not performed pursuant to an enforceable requirement.
Reduced Limitations on Owner/Operators’ Ability to Defer Certain Legacy CCR Surface Impoundment Closures to Permitting: The proposal would streamline an owner/operator’s ability to defer compliance with federal closure requirements for legacy CCR surface impoundments that (i) completed closure under state law prior to November 8, 2024; (ii) under the oversight of a regulatory authority; (iii) pursuant to an enforceable requirement issued after October 19, 2015; and (iv) have had groundwater monitoring performed, until the facility becomes subject to a EPA-approved state permitting program or the federal permitting program, at which point the permitting authority would make a final determination of whether the facility achieved the performance standards set for the in the federal CCR rules.
Site-Specific Considerations during Permitting: The Proposed Rule would also create a new compliance pathway allowing for site-specific considerations during permitting for CCR units complying with groundwater monitoring, corrective action, and closure requirements under a federal or state CCR permit. If finalized, the permitting authority could make site-specific determinations regarding the appropriate point of compliance for the groundwater monitoring system, site-specific cleanup levels during corrective action for constituents without federal maximum contaminant levels, and other closure requirements. Owners or operators would still be required to ensure that the unit poses no reasonable probability of adverse effects on human health and the environment. Of particular note, EPA is also soliciting comment on an alternative closure performance standard that would allow owner/operators to close a CCR disposal unit with waste in place that is in contact with liquids, provided that (i) standing liquid and sufficient subsurface liquid is eliminated; (ii) the hydraulic condition within the CCR unit will not adversely impact the stability of the cover system; (iii) the hydraulic condition of the CCR unit will not adversely impact any required corrective actions; and (iv) the hydraulic condition will not result in a reasonable probability of adverse effects on human health and ecological factors as determined through a site-specific assessment. If finalized, this revision to the standards for closing CCR units with waste in place would represent a significant departure from EPA’s recent interpretations of CCR rule requirements to allow for such closure only when “free liquids” have been removed from the unit.
Rescission or Limiting the Scope of CCRMU Requirements: EPA is proposing to rescind all CCRMU requirements, which would represent a significant reduction in the number of CCR units regulated under the federal rules. In the alternative, EPA is soliciting comments on several potential revisions that may be implemented alone or in combination with one another, including: (i) deferring all CCRMU requirements to permitting; (ii) allowing owner/operators to defer compliance with federal closure requirements for CCRMUs that completed closure under state law prior to November 8, 2024; (iii) exempting past onsite CCR uses that meet the definition of beneficial use; (iv) expanding the roadbed exemption to include railbeds and all roadbed and railbed embankments; and (v) increasing the threshold CCR amounts to be employed in determining whether a land-based accumulation of CCR constitutes a CCRMU. EPA is also soliciting comments on the appropriate scope of the Facility Evaluation Reports (FER) required under the current CCRMU regulations. In the preamble to the Proposed Rule, EPA states that it understands that the FER requirements may need to be modified as well, depending on what is modified for CCRMUs.
Removal of CCR Dewatering Structures from Regulation: EPA proposes to define “CCR dewatering structures” as “a stationary device, designed to temporarily contain an accumulation of CCR which is constructed of non-earthen materials (e.g., concrete, steel, plastic). The device must be used primarily for dewatering CCR waste to facilitate disposal of CCR solids elsewhere.” As proposed, dewatering structures would not be classified as a CCR surface impoundment or a CCRMU and thus would not be subject to federal CCR regulation. Common dewatering structures may include holding basins, scrubber drying basins, fly ash washdown basins, tanks, or settling ponds.
Expansion of the Beneficial Use of CCR: EPA is also proposing revisions to the definition of beneficial use by removing the criterion that requires environmental demonstrations for non-roadway uses of more than 12,400 tons of unencapsulated CCR on land. EPA also proposes to exclude the following beneficial uses from federal regulation: (i) CCR used in cement manufacturing at cement kilns, (ii) flue gas desulfurization (FGD) gypsum used in agriculture, and (iii) FGD gypsum used in wallboard.

As noted above, along with the Proposed Rule, EPA announced that in a separate action, it would reopen the public comment period for the Federal CCR Permit Program proposed rule originally published on February 20, 2020. Given the Proposed Rule’s increased deferral of CCR rule compliance determinations to either EPA-approved state permitting programs (at present only four states have such programs) or a federal permitting program, and its contemplated reliance on the permitting authorities to make site-specific, risk-based determinations regarding CCR rule compliance requirements, the finalization of the federal permit program is an integral component of EPA’s efforts to amend the CCR rules.

The public comment period on the Proposed Rule closes on June 12, 2026. EPA plans to hold a virtual public hearing on the proposal on May 28, 2026. Babst Calland attorneys continue to track these developments and are available to assist with CCR Rule-related matters. For more information on this development and other waste matters, please contact Ben Clapp at (202) 853-3488 or bclapp@babstcalland.com, Gary Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com, Mackenzie Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.

Commonwealth Court Limits Municipal Authority to Impose Inspection Fees on Public Utilities for Street Opening Work

Public Sector Alert

(by Steve Korbel, Anna Hosack and Alex Giorgetti)

In Columbia Gas of Pennsylvania, Inc. v. Menallen Township, 351 A.3d 326 (Pa. Cmwlth. 2026), the Commonwealth Court struck down a township’s variable street opening inspection fees as applied to a public utility. The Court held that the fees constituted impermissible utility regulation preempted by the Pennsylvania Public Utility Code, 66 Pa.C.S. § 101 et seq. (the “Code”). This decision has immediate practical consequences for every Pennsylvania municipality that charges public utilities permit or inspection fees for work in the public right-of-way.

The Dispute and the Decision

Like most municipalities, Menallen Township (Township) maintained a street opening ordinance that imposed fees on anyone seeking to excavate or open a public roadway. The ordinance included a flat application fee of $150. It also imposed variable inspection fees calculated on a per hour and per square foot basis, intended to fund the Township’s inspection of the utility’s pipe installation work and its monitoring of road conditions following the restoration. Columbia Gas of Pennsylvania, Inc. (Columbia Gas), a public utility regulated by the Public Utility Commission (PUC), challenged the variable fees after the Township assessed inspection charges that far exceeded the flat application amount. Columbia Gas filed a petition for review in the Commonwealth Court’s original jurisdiction, arguing that the inspection fees were preempted under the field preemption doctrine established by the Pennsylvania Supreme Court in PPL Electric Utilities Corp. v. City of Lancaster, 654 Pa. 203, 214 A.3d 639 (Pa. 2019).

The Commonwealth Court left the $150 flat application fee undisturbed, but notably held that the variable inspection fees crossed the line from permissible right-of-way management into impermissible regulation of utility facilities and operations. The Court’s reasoning followed the analytical framework set out in Waterford Township v. PUC, 276 A.3d 301 (Pa. Cmwlth. 2022), which distinguished between two categories of municipal fees. On one side of the line are fees that regulate access to the right of way — permit fees, application fees, and similar charges that control when and how an applicant may open a street. Those remain permissible, even as applied to public utilities. On the other side are fees that regulate the quality of the utility’s work — charges tied to the scope of inspection, the duration of monitoring, or the method of installation. Those fall within the PUC’s exclusive regulatory field and are preempted.

The Court found that the Township’s per hour and per square foot inspection fees were designed to fund the Township’s own heightened inspection of the utility’s construction methods and to monitor the utility’s restoration work over time. That purpose, the Court concluded, placed the fees squarely within the preempted field. The Court noted that the dollar amount alone was not the dispositive factor. What mattered was the regulatory purpose the fees were designed to serve.

What This Means for Municipalities

The Columbia Gas decision does not eliminate a municipality’s authority to charge utilities for street opening permits. It does, however, constrain how those fees may be structured. Municipalities should keep three principles in mind:

Flat permit or application fees remain on solid ground.Municipalities own their roads and retain authority over their streets and rights-of-way. A municipality may charge a reasonable flat fee to process an application, issue a permit, and manage access to the right-of-way. The fee must relate to the administrative cost of regulating right-of-way access, not to the scope or duration of the utility’s construction activity. This distinction is necessary to avoid allegations of preempted regulations.
Variable fees related to the size of the excavation, the number of inspection hours, or the length of a monitoring period are vulnerable to preemption challenge when applied to PUC regulated utilities.A municipality that calculates its fee based on the square footage of the cut or the hours its inspector spends watching and monitoring the utility’s crew is, in the Commonwealth Court’s view, regulating the utility’s work — not managing access to the roadway. Such regulation impermissibly treads on the PUC’s preemptive regulation of public utilities.Despite this decision, municipalities still retain their authority as road owners. The right to define the condition in which a road must be returned after an opening — through restoration standards set as conditions of right-of-way access — is grounded in the municipality’s property interest in its own infrastructure, not in the regulation of utility operations. Assessing street opening fees in the wake of Columbia Gas requires careful structuring, but a municipality that works with its solicitor to think creatively about its ordinance and fee structure is not without recourse.
Municipalities may still impose the full range of their existing fee structures on non-utility applicants — private contractors, developers, cable providers that are not certificated public utilities, and others.The preemption doctrine applies only where the fee functions as a regulation of a PUC jurisdictional utility. The Commonwealth Court’s decision does not apply to non-utility applicants, as the Code and its preemption do not apply to them. A two-tiered fee structure that distinguishes between utility and non-utility applicants is one way to preserve existing revenue from non-utility work while complying with the Court’s holding.

Recommended Steps

Municipalities should also be prepared for utilities to cite Columbia Gas in correspondence challenging existing fee practices. Several utilities have already begun sending letters to municipalities across the Commonwealth requesting fee adjustments. A municipality that has already reviewed its ordinance and, if necessary, adopted a compliant approach will be able to respond to those inquiries from a position of strength.

If you have questions about the Columbia Gas decision and its implications for Pennsylvania municipalities, please contact Stephen L. Korbel (412) 394-5627 or skorbel@babstcalland.com, Anna R. Hosack at (412) 394-5406 or ahosack@babstcalland.com, or Alexander O. Giorgetti at (412) 773-8718 or agiorgetti@babstcalland.com.

Justine M. Kasznica: Pittsburgh Can Be the Center of a New Industrial Revolution — For Space

Pittsburgh Post-Gazette

(by Justine Kasznica)

For more than half a century, space exploration has been defined by brief human visits to space and to the moon. The NASA Apollo missions proved humanity could reach the Moon, while the International Space Station demonstrated that humans could live in space for extended periods. But these efforts, remarkable as they were, remained temporary by design.

A week before the launch of NASA’s Artemis II crewed lunar orbit mission, NASA unveiled plans to establish a permanent lunar base near the Moon’s south pole. The effort includes at least two crewed missions per year, a 30-lander robotic campaign, and major investments in habitats, mobility systems, and — most notably — an interoperable lunar power grid and communications network. NASA will invest $30 billion over the next decade.

NASA also announced Space Reactor-1 Freedom, a nuclear-powered interplanetary spacecraft targeting a Mars launch by 2028 and a new plan for the International Space Station that expands the current platform with government and commercial modules rather than retiring it. Funding will come from repurposed programs and more efficient use of existing resources.

While public attention for this new effort will naturally gravitate toward launch sites in places like Florida and mission control centers in Texas, the deeper economic opportunity lies in the industrial backbone needed to sustain this vision. In particular, Pittsburgh and the broader Keystone Region including Ohio and West Virginia.

Building in space

NASA is signaling something far more ambitious than exploration. It is laying the groundwork for permanence, building in space with commercial industry at the helm.

The agency is moving away from symbolic milestones toward sustained infrastructure, assembling the foundation for a permanent human presence beyond Earth. It is creating a space-based industrial economy, one that will depend on supply chains spanning manufacturing, energy, robotics, materials science, and logistics. NASA is becoming an anchor customer catalyzing entire industries.

This region brings a unique combination of strengths aligned with a lunar economy. Its legacy in energy, robotics, and advanced manufacturing positions it to produce critical components for space infrastructure. The same expertise that once powered America’s industrial rise can now be redirected toward building systems for the lunar surface.

Importantly, the region is not starting from scratch. Companies like Astrobotic Technology in Pittsburgh are already contributing to NASA’s lunar ambitions through landers, delivery systems, and lunar power technologies. Other Pennsylvania-based firms, including Westinghouse, Ansys, and Advanced Cooling Technologies, are leaders in space nuclear technologies, computing and simulation, and thermal technologies respectively.

Building here for space

This growing base of activity provides a nucleus for a broader network of manufacturers, robotics firms, materials companies across Pennsylvania, Ohio, and West Virginia.

The region is further strengthened by research institutions, space-oriented institutes and centers, and strong community colleges and technical schools. southwestern Pennsylvania’s leadership in robotics and AI — particularly in the Pittsburgh area — positions it to develop technologies for autonomous construction, maintenance, and operations on the Moon.

NASA assets such as the Glenn Research Center in Ohio and the Independent Verification and Validation Facility in West Virginia offer critical capabilities directly tied to propulsion, power, communications, materials development and mission assurance.

Energy is another of the region’s advantages. Decades of expertise in reactor and grid technologies translate directly to the challenge of powering off-world systems.

Finally, the region can play a catalytic role in NASA’s Ignition plans and implementation, by developing the innovations needed to sustain human health, enable closed-loop life support, and support long-duration survival in extreme extraterrestrial environments.

As NASA deepens its reliance on commercial partnerships, a wide network of companies will be needed to deliver the systems required for sustained lunar operations. The Keystone Region is well positioned to compete in the specialized manufacturing and engineering layers of this supply chain.

Building the 21^st century

What is unfolding is not just another phase of space exploration. It is the early stage of a new industrial revolution.

The Keystone Region helped build the infrastructure that powered the 20th century. It will help build the infrastructure that could define the 21st and beyond.

But this opportunity will not materialize on its own. Capturing it will require state-level action and investment as well as coordinated action across states and sectors. Pennsylvania, Ohio, and West Virginia must position themselves as a unified industrial space corridor, aligning workforce development, strengthening university-industry partnerships, and engaging proactively with federal agencies.

The question is no longer whether humanity will establish a lasting presence in space. NASA’s plans make clear that it will. The question is which regions on Earth will help make it possible and who will benefit when they do.

Justine Kasznica is a shareholder and chair of the Emerging Technologies Group at the Pittsburgh law firm Babst Calland and is a co-founder and board chair of the Keystone Space Collaborative, a nonprofit organization supporting the Tri-State Region’s space industry.

To view the article, click here.

Legislative & Regulatory Update

April 1, 2026

The Wildcatter

(by Nik Tysiak)

There have been interesting developments surrounding Renewable Energy Zoning, Estate Administration, Real Estate Tax Sales, and all also regarding the West Virginia Unknown Heirs Act.

Renewable Energy Development and Zoning
Renewable energy development faced significant zoning challenges during this period. The Pennsylvania Commonwealth Court’s decision in West Lampeter Solar 1, LLC v. West Lampeter Township Zoning Hearing Board, 2026 WL 110932, — A.3d —-(2026) established important precedent for solar development, holding that a proposed 25-acre agrivoltaics project combining solar energy production with sheep grazing was not agricultural use under zoning ordinances. The court determined that agriculture, as an undefined term given its plain and ordinary meaning, does not include solar energy production, even when combined with traditional agricultural activities like sheep grazing. This ruling significantly impacts solar developers seeking to utilize agricultural zoning classifications for renewable energy projects.

Ohio courts addressed wind energy development in One Energy Enterprises Inc. Board of Allen Township Trustees of Hancock County One Energy Enterprises Inc v. Board of Allen Township Trustees of Hancock County, 2026 WL 357969 (2026), involving disputes over wind turbine expansion and local zoning authority. The case arose when Allen Township, historically without zoning laws, began considering zoning regulations in response to proposed wind turbine expansion, demonstrating ongoing tension between renewable energy development and local control over land use.

Estate Administration and Real Property Transfers
Estate-related property disputes also appeared across multiple jurisdictions. Pennsylvania’s Superior Court in Imbrenda v. Imbrenda, 2026 WL 81887, — A.3d —- (2026) addressed a quiet title action involving allegations of forged deeds transferring property from family members to a deceased father. The case largely involved the acceptability of evidence from interested parties regarding the allegedly forged deed. The court examined the application of Pennsylvania’s Dead Man’s Act, a statute designed to facilitate testimony about pre-death transactions, pursuant to an allegedly forged 1978 deed. The Court ultimately held that a statutory exception to the Dead Man’s Act, for parties claiming property interests under the deceased, applied because the controversy involved ownership interests following the father’s death rather than estate claims, and found the testimony of such interested parties appropriate.

Ohio courts addressed estate administration complexities in Estate of Guito Alibrando v. Minor, 2026-Ohio-133, (5th Cir. 2026), involving disputes over real property sales by a holder of power of attorney and the distinction between probate and non-probate assets in joint survivorship accounts. The court clarified that funds in joint and survivorship accounts are non-probate assets that pass to the surviving joint owner outside of estate administration procedures.

In re Estate of Forte, 2026 WL 249802, — A.3d —- (2026), a case where Pennsylvania’s Superior Court addressed spousal election rights and property settlement agreements in contested estate proceedings. The Superior Court examined the Orphans’ Court’s mandatory jurisdiction over estate administration and distribution, noting the court’s authority over both decedent estates and testamentary trusts.

Tax Title and Property Redemption Issues
Tax title procedures generated significant litigation during this period. Pennsylvania’s Supreme Court in In re Upset Sale, Tax Claim Bureau of Tioga County, Control No. 012488, 349 A.3d 933 (2026) established that, absent irregularity or illegality in upset tax sale proceedings tied to allegedly inadequate sale prices, the Real Estate Tax Sale Law does not permit landowners to seek equitable relief based solely on sale price, regardless of the ratio between sale price and fair market value.

West Virginia’s Intermediate Court of Appeals addressed tax redemption rights in Roper v. Mattera, 2026 WL 290363, Not Reported in S.E. Rptr. (February 3, 2026), holding that property owners retain redemption rights until a tax deed is actually issued. The court emphasized that under W.Va. Code § 11A-3-56, “the owner of a tax delinquent property may redeem that property at any time before a tax deed is issued,” protecting property owners’ rights even when purchasers at tax sales have pending requests for deed issuance.

Winged Foot Minerals, LLC v. SWN Production Company, 2026 WL 685161 (not reported in S.E. Rptr.) (March 3, 2026) was a West Virginia Intermediate Court of Appeals decision addressing the validity of a 1993 tax deed purporting to convey a three-fourths interest in oil and gas rights underlying approximately 227 acres in Marshall County, West Virginia. The case centers on whether severed mineral interests can be properly conveyed through tax deed procedures when the severed minerals may not have been correctly assessed for taxation, and when the severed minerals also appear to have remained assessed with the surface.

The dispute involves a three-fourths oil and gas interest that was originally devised to James Prendergast’s predecessors. Petitioners, led by Winged Foot Minerals, LLC and various members of the Prendergast family, claimed ownership of this 75% mineral interest based on James Prendergast’s purchase at a 1991 tax sale and the resulting 1993 tax deed. The remaining one-fourth interest in the oil and gas was initially devised to Joseph Nolte, Jr., and remained unsevered from the surface estate. The case reveals a complex title history where the one-fourth interest owned by Joseph Nolte, Jr. was never separately severed from the surface and continued to be taxed as part of the overall surface tract assessment. The remaining ¾ interest, while severed in title, appears to have remain assessed with the surface following such severance, and also subject to a later, separate assessment that may have been created improperly. The separate assessment apparently covered interests in “royalty” only and were entered in the name of parties with no interest in such ¾ minerals. The central legal issue involves the validity of a tax deed for the severed 3/4 mineral interest and the requirements for proper tax assessment of such interests. The court focused on the fact that the “royalty” assessment was not proper for various reasons, and also that the ¾ oil and gas rights remained assessed with the surface, ultimately finding that the tax deed for the “royalty” rights was void.

WEST VIRGINIA UNKNOWN HEIRS PROCEEDING
Heritage Resources -Marcellus Minerals, LLC v. JB Exploration I, LLC, 2026 WL 688270 (not reported in S.E. Rptr.) (February 18, 2026) was a West Virginia Intermediate Court of Appeals decision addressing the seven-year statute of limitations for reopening unknown heir proceedings under West Virginia’s Unknown Heir Statute. The case demonstrates the strict temporal limitations that apply to parties seeking to establish their identity and claim mineral interests after unknown heir proceedings have concluded.

JB Exploration I, LLC had apparently initiated unknown heir proceedings as to a tract of 28.25 acres in McElroy District, Tyler County, to obtain leasing authority over mineral interests owned by unknown or missing owners. Heritage Resources-Marcellus Minerals, LLC subsequently sought to intervene and establish its claim to these mineral interests but filed its motion to reopen after the statutory deadline had expired. The Appeals Court agreed but also stated that the trial court likely erred regarding its declaration that Heritage was, in fact, an unknown owner without appropriate factual findings or development of Heritage’s claims. The decision was partially reversed and sent back to the trial court for further development on the factual issues.

To view the full article, click here.

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McNees Attorney Joins Babst Calland In Harrisburg

Law360 Pulse

(by James Boyle)

An attorney with nearly 10 years of experience representing clients in commercial real estate development and transactions has moved her practice to Babst Calland Clements and Zomnir PC’s Harrisburg, Pennsylvania, office after more than four years with McNees Wallace & Nurick LLC.

Kate W. Millikan has been welcomed to Babst Calland as senior counsel in the corporate and commercial practice group in the Harrisburg office, the firm announced Thursday. Millikan told Law360 Pulse she has been with the firm for about a month and is “happy and pleased” about her addition to the firm.

Millikan said her decision to move to Babst Calland sprouted from a business trip to Pittsburgh. She was in town closing a transaction for a client and stayed with a friend from law school who practices at Babst Calland. They talked about the firm, and those conversations turned into an opportunity for Millikan to join a team of attorneys she held in high regard.

“There are a lot of attorneys at Babst Calland I know personally and professionally, through our overlapping years of practice,” Millikan said. “The quality of their personalities as individuals and as legal practitioners played a huge part in my decision to move. It is hard to find people to work with whom you like and are good at their jobs.”

Babst Calland’s strong reputation for its commercial real estate practice also played a key role in Millikan’s decision to join the firm, she said. Her work largely focuses on managing the legal requirements for the development of condominiums and mixed-use communities, and Babst Calland has the resources she needs to expand her practice, Millikan said. “Babst Calland’s clientele are front-runners in commercial development, including data center projects,” Millikan said. “This is a win-win situation for both of us, where I can help their clients and they can help my practice.”

Millikan’s practice represents clients from all sides of commercial real estate transactions and development, including builders, investors, and lenders and guides projects through financing, land use and zoning permits and regulatory approvals. She has been involved in development projects throughout Pennsylvania and in New Jersey and North and South Carolina, Millikan said.

“I am heavily focused on commercial real estate, with a special emphasis in commercial condominiums and mixed-use planned community development,” Millikan said. “I draft the declarations forming and the ancillary documents governing commercial condominiums and large-scale planned communities, such as shopping centers, 55 and older communities, developments featuring retail and residential uses, office complexes, and industrial sites.”

Millikan said she enjoys the tangible aspects of her practice, where she can get involved with a development project on the ground floor and see her efforts result in physical buildings and neighborhoods in a matter of years.

“I get to see concept plans and help build the strategy to make them happen,” Millikan said. “In three to four years, I can see what I pictured come to life. I also enjoy the challenge of helping the project adapt to changes as they evolve.”

Donald C. Bluedorn II, managing shareholder of Babst Calland, said in a statement to Law360 Pulse on Friday that the firm is “very pleased” to add Millikan to the Harrisburg office.

“Kate is a well-respected real estate lawyer with experience in managing complex commercial transactions and property development matters,” Bluedorn said. “She will be a tremendous asset to our firm and clientele, especially in serving the needs in the development or redevelopment of multi-unit residential, commercial, industrial, and mixed-use projects.”

Millikan earned her law degree from Penn State Dickinson Law in 2015 and started her legal career as an associate with Martson Law Offices. She moved to McNees Wallace & Nurick in February 2018, then left the firm to practice at Troutman Pepper Locke in December 2019. In April 2022, Millikan returned to McNees Wallace’s Harrisburg office.

–Editing by Linda Voorhis.

For the full article, click here.

Powering the Region’s Data Center Growth

TEQ Magazine

(featuring Justine Kasznica)

Guiding hyperscale and modular projects across Pennsylvania and West Virginia, Babst Calland is helping shape the power-secure future of this mission-critical infrastructure.

The rapid growth of data centers – driven by cloud computing, artificial intelligence, and the need for low-latency digital infrastructure – has transformed what were once primarily real estate projects into some of the most complex developments in the energy and infrastructure sectors in our region.

At the core of modern data center development is power. Securing sufficient, reliable, and resilient electricity has become one of the defining challenges for developers, particularly as grid congestion, interconnection delays, and regulatory scrutiny increase. Many projects now require sophisticated power purchase agreements (PPAs), power generation agreements (PGAs), and on-site or co-located generation solutions to meet capacity and uptime requirements.

Today’s data center projects sit at the intersection of power generation, environmental regulation, land use, construction, and technology governance, requiring coordinated legal strategies across multiple disciplines. Babst Calland’s legal team has become increasingly involved from the earliest stages of development on projects – advising on site acquisition and control, evaluating water and energy access, and assessing regulatory and permitting risks across state and federal jurisdictions, and land use and zoning approvals, including variances and conditional use permits, often require public hearings and coordination with local governments, which often add another layer of complexity and potential delay.

Behind-the-Meter Power and Islanded Systems Gain Momentum

Grounded in active, large-scale work, Babst Calland is currently guiding the development of well over 3,000 megawatts of new power generation capacity tied to data center projects across Pennsylvania and West Virginia. These projects range from hyperscale campuses to smaller modular facilities encompassing the design, permitting, interconnection, and financing of both behind-the-meter generation assets, such as natural gas turbines and solar paired with battery storage, as well as fully islanded power systems.

These islanded systems are designed to provide baseload power, redundancy, and resiliency, supporting mission-critical workloads that cannot tolerate downtime. By considering both conventional and emerging energy solutions, companies are now navigating the technical and legal complexities of meeting power demand while maintaining operational flexibility.

Attorney Justine Kasznica, team leader of Babst Calland’s data center development practice, outlined the various near-term challenges and opportunities facing the industry.

Site Selection & Development

Data Center companies look for large-scale sites with an emphasis on water and energy access, infrastructure alignment, regulatory compliance, and risk analysis on co-located energy infrastructure, including gas pipelines, electric transmission, solar generation, and battery energy storage systems (BESS). Companies also need to be concerned about land use and zoning matters, variances, conditional use approvals, and public hearings when developing new or expanded facilities.

Contracts Drive Risk Allocation and Performance

Contracting has become a central risk-management tool in data center development. Engineering, Procurement and Construction (EPC), design-build, and modular construction contracts must address accelerated schedules, supply-chain constraints, and performance guarantees tied to uptime and efficiency. On the operational side, agreements governing power supply, cooling systems, and maintenance increasingly focus on redundancy, preventative maintenance, and vendor accountability.

Leasing and colocation agreements must also address power allocation, connectivity, shared infrastructure, and scalability. For operators and tenants alike, service-level agreements (SLAs) and enterprise technology contracts—covering SaaS, IaaS, and software licensing—are critical to ensuring performance standards are met as infrastructure becomes more virtualized and cloud-based.

Energy-related contracting continues to evolve as well. Solar PPAs, BESS service agreements, and SREC contracts now routinely include detailed provisions governing pricing mechanisms, dispatch rights, performance guarantees, and risk allocation among developers, operators, utilities, and investors.

Permitting, Regulatory Compliance, and Workforce Considerations

Beyond construction and power, data center development raises broader compliance issues. Environmental permitting at the federal, state, and local levels remains a key consideration, particularly for projects involving on-site generation or significant land disturbance. At the same time, operators must navigate data privacy, cybersecurity, and cross-border compliance requirements – especially when structuring public, private, or hybrid cloud environments.

Workforce issues are also gaining attention. Skilled labor shortages, safety compliance, and employment regulations affect both construction and long-term operations, making workforce planning an increasingly important component of development strategy.

When disputes arise, they often span multiple areas of law, including commercial contracts, zoning and environmental compliance, and cybersecurity or data-privacy incidents – underscoring the interconnected nature of today’s data center projects.

A Rapidly Evolving Sector

As data centers grow in scale and strategic importance, development has become less about standalone facilities and more about integrated infrastructure ecosystems. Power generation, land use, technology, and regulatory compliance are no longer parallel tracks – they are deeply interdependent.

The result is a shift toward multidisciplinary legal and advisory models that mirror the complexity of the projects themselves. For developers, investors, and operators, success increasingly depends on addressing these issues holistically, from site selection and power strategy through long-term operation and eventual decommissioning.

To view the article, click here.

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