Morgan M. Madden recently joined Babst Calland as an associate in the Energy and Natural Resources, Public Sector and Employment and Labor groups. Ms. Madden represents traditional and renewable energy industry clients in land use and other local regulatory matters. She also has served as a solicitor for several Pennsylvania municipalities and municipal authorities. Ms. Madden provides a wide range of services to clients in both the public and private sectors, with an emphasis on land use, zoning, planning, labor and employment advice, and litigation.
Prior to joining Babst Calland, Ms. Madden served as an associate with Eckert Seamans Cherin & Mellott, LLC. She is a 2017 graduate of Widener University Delaware Law School.
TEQ Hub
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
By now, you have likely heard about the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Beneficial Ownership Information Reporting Rule (the “Rule”) from your accountant, attorney, or business colleagues. Promulgated under the Corporate Transparency Act (CTA), the Rule requires most business entities to disclose information to FinCEN about their “beneficial owners”: individuals who directly or indirectly own or control such entities.
Enacted as part of the Anti-Money Laundering Act in 2021, the CTA is intended to “prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.” The Rule aims to enhance transparency and support the mission of the CTA by requiring domestic and U.S. registered foreign entities to report information about their beneficial owners to FinCEN. Most entities in the U.S. will likely be required to comply with the Rule, and FinCEN estimates approximately 32 million business will be required to make a filing. The Rule exempts 23 types of entities from reporting requirements, primarily large or regulated entities already subject to various reporting requirements, such as banks, SEC-reporting companies, insurance companies, and ‘large operating companies’, as well as wholly owned subsidiaries of the foregoing. Entities formed before January 1, 2024, have until 2025 to comply, while entities formed in 2024 have a 90-day compliance period.
Under the Rule, reporting companies must provide detailed personal identifying information for each individual beneficial owner, including name, date of birth, residential street address, and unique identifying number (such as a passport or driver’s license number). A ‘beneficial owner’ is a natural person who directly or indirectly owns or controls at least 25% of the ownership interests of a reporting company or who exercises ‘substantial control’ over the reporting company. Both ‘substantial control’ and ‘ownership interests’ are defined broadly to prevent loopholes allowing corporate structures to obscure owners or decision-makers. Companies formed after January 1, 2025, must also provide this information for ‘company applicants’, the individuals who make or direct the filing of a reporting company’s formation or foreign registration documents. The Rule also requires supplemental filings to be made within 30 days of any change to any of the reported information, for example, a change in residential address. Businesses will need to monitor changes in ownership and management throughout the year for compliance purposes.
FinCEN is authorized to disclose the reported information upon request under specific circumstances to federal agencies engaged in national security, intelligence or law enforcement activities and to state local and tribal law enforcement agencies, as well as certain other limited entities. Failure to comply with the requirements may result in potential civil and criminal consequences, including civil penalties of up to $500 per day a violation has not been remedied and criminal penalties of $10,000 and/or up to two years in prison for willful noncompliance.
The future of enforcement is uncertain as the Rule is currently being challenged in the courts on constitutional grounds. Reporting requirements have been paused for certain entities following an injunction issued by the Northern District of Alabama on March 1, 2024, which ruled the CTA unconstitutional because it exceeds Congress’s enumerated powers. With this and other cases challenging the validity of the Rule making their way through the courts, what should companies do in the meantime? Given the uncertainty about the constitutionality of the Rule and future enforcement, we recommend the following:
- New entities formed or registered on or after January 1, 2024, and before January 1, 2025, should comply with the applicable reporting requirements and make their filings within 90 calendar days after formation or registration.
- Existing entities formed or registered prior to January 1, 2024, should wait until the fall to begin their compliance efforts. This will allow time for further legal challenges or administrative guidance to develop without prematurely expending resources in the event the Rule is modified or suspended.
Every entity organized under U.S. law or registered to do business in the U.S. will need to determine (i) whether it is exempt from reporting requirements and (ii) if not, what information it must report. Companies with simple management and ownership structures may be able to navigate the filing on their own. However, where complex management or ownership structures or uncertainty about determinations of beneficial ownership or substantial control exist, an attorney can help you avoid missteps.
To read the full article, click here.
Law360
(by Joseph Schaeffer and Jessica Deyoe)
On June 28, 2024, the modern administrative state died with the United States Supreme Court’s overruling of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Born in obscurity as a six-justice plurality opinion on the meaning of “stationary source” under the Clean Air Act, its two-step framework for resolving ambiguities in agency-administered statutes soon catapulted Chevron into the most-cited opinion in the Supreme Court’s canon. That framework required courts reviewing agency’s statutory interpretations to ask, first, whether Congress had clearly spoken to the precise question at issue. If so, the Congressional intent controlled over any contrary agency interpretation. But, if not, the Court was to defer to the agency as long as it offered a permissible construction of the statute, even if that construction was not the one the Court would have reached on its own.
Chevron and its two-step framework enjoyed a charmed childhood as a perceived means to achieving uniformity in interpretation of agency-administered statutes. But as Chevron entered its teenage years, and particularly once it entered adulthood, its original luster began to tarnish. Members of the bench and bar began to question how the deference owed to agency interpretations under Chevron could be squared with Congress’s directive in the Administrative Procedure Act that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”[1] And some members of Congress and the broader public bemoaned Chevron as transferring power away from the legislative to the executive branch, enabling each new administration to offer a new gloss on statutory enactments that the prior administration had thought settled.
By the time the most recent question of Chevron’s continued vitality reached the Supreme Court in the consolidated cases of Loper Bright Enterprises and Relentless, Inc.,[2] the decision was a zombie. Not having been applied at the Supreme Court since 2016 and questioned by several of the justices in separate opinions, its death was virtually assured. But lower courts, bound by precedent, for the most part continued to apply it. Justice Roberts’ opinion formally overruling Chevron was thus a formality, but a necessary one nonetheless to inform and direct lower court review of federal administrative agency actions.
Writing for the majority, Justice Roberts adopted the central legal criticism of Chevron as the foundation of the Court’s holding: by requiring courts to defer agency interpretation of ambiguous statutory enactments, Chevron ran counter to the Congressional commandment in the Administrative Procedure Act for courts to “decide all relevant questions of law”[3] and to Constitutional separation-of-powers principles, as well. And because Chevron had started on a shaky legal footing, proved unworkable in practice, and experienced a lengthy period of desuetude at the Supreme Court, not even stare decisis could save it from death.
Chevron, however, did not “go gentle into that good night.” Its two-step framework continued to be applied by lower courts up to the moment of its death. And Justice Kagan, writing for the three Justices in dissent, denied any contradiction with the Administrative Procedure Act, arguing that that statute does not compel the de novo statutory review required by Justice Robert’s majority opinion, while bemoaning the Supreme Court’s lack of respect for stare decisis and the practical consequences of having judges interpret ambiguous provisions in complex technical statutes. Justice Kagan also expressed concern for the application of the many post-Chevron statutory enactments that assumed application of an interpretative framework that is no longer. She further predicted uncertainty as agency interpretations, once thought settled, will be subject to challenge. In that sense, Justice Kagan authored an obituary preceding ours.
Chevron was preceded in death by Securities and Exchange Commission v. Jarkesy.[4] Another Justice Roberts opinion from just a day earlier, Jarkesy applied the Seventh Amendment to invalidate the SEC’s use of in-house administrative law judges to seek civil penalties under antifraud provisions in agency-administered statutes. Those claims must henceforth be prosecuted in federal court where defendants may be tried by a jury of their peers. Similar provisions in approximately 200 other federal statutes are likely to soon face similar challenges, if not to fall soon. Chevron and Jarkesy thus mark the end of the modern administrative state, where agencies could offer their own interpretations of ambiguous statutory provisions and then enforce their interpretations in in-house administrative forums with less formal procedural rules.
Though its modern iteration died with Loper Bright and Jarkesy, the administrative state lives on. Chevron is survived by the cases decided under its two-part framework, with the majority noting that “mere reliance” on Chevron is not enough by itself to qualify as a “special justification” for overruling a decision. Chevron also is survived by Skidmore,[5] under which agency interpretations and opinions, even on legal questions, are entitled to respect consistent with “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” And Chevron further is survived by Auer,[6] under which judicial deference is required of agencies’ interpretations of their own regulations. Neither decision, however, is a substitute for the scope and significance of deference that agencies were previously afforded under Chevron.
Though much about the post-Chevron landscape remains to be determined, the courts now have a much larger role in saying what the law is—not only at the interpretative stage under Loper Bright but also at the enforcement stage under Jarkesy.
Joseph V. Schaeffer is a shareholder and co-chair of the appellate practice group at Babst Calland Clements and Zomnir PC.
Jessica L. Deyoe is an associate at the firm.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
For the full article, click here.
Reproduced with permission. The article was first published on Law360, July 8, 2024.
[1] 5 U.S.C. § 706.
[2] Loper Bright Enterprises Inc. v. Raimondo, No. 22-451, 603 U.S. — (2024).
[3] 5 U.S.C. § 706.
[4] U.S. Securities and Exchange Commission v. Jarkesy, No. 22-859, 603 U.S. — (2024).
[5] Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
[6] Auer v. Robbins, 519 U.S. 452 (1997).
Firm Alert
Chevron is overruled; right to jury trial in many agency enforcement actions is guaranteed; and claim accrual date for Administrative Procedure Act claims are fixed.
(by Gary Steinbauer, Jess Deyoe and Joseph Schaeffer)
In the span of five days, the U.S. Supreme Court issued three decisions with the potential to significantly alter the future of federal administrative law. These decisions, Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. — (2024) (Loper Bright) and Securities and Exchange Commission v. Jarkesy, No. 22-859, 603 U.S. — (2024) (Jarkesy), and Corner Post, Inc. v. Board of Governors of the Federal Reserve System, No. 22-1008, 603 U.S. — (2024) (Corner Post) are explained in more detail below. They are poised to have profound implications for federal agency regulatory and enforcement actions, particularly those involving federal agency actions under the major environmental and energy statutes.
In Loper Bright, the Supreme Court has overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), a four-decades-old and oft-cited Supreme Court decision that granted federal administrative agencies deference when interpreting ambiguous statutory provisions. More recently, Chevron deference and the familiar two-step test it established has come under increasing scrutiny, with the Supreme Court itself not invoking the test since 2016. The Court’s decision in Loper Bright Enterprises v. Raimondo is Chevron’s formal death knell.
Chevron, decided in 1984, evolved into a pillar of federal administrative law. Its two-step framework for resolving ambiguities in agency-administered statutes is familiar to many regulatory attorneys and judges. It required courts reviewing an agency’s statutory interpretations to ask, first, whether Congress had clearly spoken to the precise question at issue. If so, the Congressional intent controlled over any contrary agency interpretation. If not, Chevron’s second step required the court to defer to the agency so long as it offered a “permissible construction” of the statute, even if that construction was not the one the court would have reached on its own.
The petitioners in Loper Bright challenged an agency rule mandating that certain commercial fishing vessels pay for onboard observers. Prior to 2020, the federal government fully funded observer coverage, but federal funding later ceased, leading the petitioners to challenge the rule as unlawful. Both District Courts and Circuit Courts of Appeals ruled in favor of the federal agency, relying on Chevron deference after finding some ambiguity as to Congress’s intent and deferring to the agency’s “reasonable” interpretation of the underlying statute. The Supreme Court’s acceptance of the challenges addressed in Loper Bright all but confirmed Chevron’s demise. The sole question before the Supreme Court in Loper Bright was whether Chevron should be overruled or clarified.
Writing for the 6-3 majority, Chief Justice John G. Roberts Jr. issued a sharp rebuke of Chevron, laden with historical references and analysis. By requiring courts to defer to agency interpretation of ambiguous statutory enactments, the Court held that Chevron ran counter to the Congressional commandment in the Administrative Procedure Act (APA) for courts to “decide all relevant questions of law” and to Constitutional separation-of-powers principles. The Court held that it is a judge’s obligation to determine what the law is, including determining statutory meaning in the face of ambiguity. Chevron, according to the majority, “fosters unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.”
In overturning Chevron deference, the Court clarified that its decision in Loper Bright does not “call into question prior cases that relied on the Chevron framework.” According to the Court, a prior decision’s “mere reliance” on Chevron doctrine is not enough for a court to overrule in the future, without an additional “special justification.” The majority opinion also made clear that Chevron is survived by Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), under which agency interpretations and opinions are entitled to respect consistent with “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”
Justice Elana Kagan, writing for the three Justices in dissent, denied any contradiction of the Chevron doctrine with the APA, arguing that the statute does not compel the de novo statutory review required by the majority opinion. The dissent also cautioned that statutes passed during the four-decades of Chevron doctrine were done under the expectation that Chevron would guide interpretative authority between agencies and courts and, similarly, that rules issued during this timeframe would presume statutory ambiguities were the agencies’ to reasonably resolve. Justice Kagan justified Chevron and emphasized the practical consequences (and in her opinion, significant problems) with having judges interpret ambiguous provisions in complex “scientific and technical” statutes, using several examples to support this view.
The Loper Bright decision represents a fundamental change in federal administrative law, particularly for stakeholders involved in federal environmental regulatory matters. This is particularly true when considered in conjunction with the Supreme Court’s decision the day before in Jarkesy, where Justice Roberts, again writing for the majority, held that the Seventh Amendment requires agencies to prosecute common-law forms of action in federal courts, where juries are available, instead of in administrative tribunals, where they are not. These twin decisions reset (some may argue upset) the balance of power between courts and federal agencies implementing regulatory statutes, like the major federal environmental laws. And given the Supreme Court’s decision in Corner Post, which held that an Administrative Procedure Act claim accrues when the injury occurs, many regulations once thought beyond challenge may become susceptible to attack.
The impact of the Loper Bright, Jarkesy, and Corner Post decisions on federal environmental and energy regulatory efforts will unfold in the coming months and years. But it seems assured that federal courts now are the sole arbiter of whether a federal agency’s action aligns with the underlying statute, without regard or deference to the federal agency’s interpretation of Congressional intent and while according “due” respect to the agency based on Skidmore.
If you have questions about the Loper Bright, Jarkesy, and Corner Post decisions or their implications for your business, please contact Gary E. Steinbauer 412-394-6590 or gsteinbauer@babstcalland.com, or Jessica Lynn Deyoe at 202-853-3489 or jdeyoe@babstcalland.com, at Joseph V. Schaeffer at 412-394-5499 or jschaeffer@babstcalland.com.
Pretrial Practice & Discovery
American Bar Association Litigation Section
(by Lucy Wiesner)
Under the Federal Rules of Civil Procedure, parties may obtain discovery regarding any nonprivileged matter that is relevant to either party’s claim or defense and proportionate to the needs of the case. While irrelevant information falls outside the scope of the express language of the rule, courts are generally reluctant to allow parties to redact irrelevant information contained within an otherwise responsive document.
A recent decision from the Southern District of New York provides helpful guidance on when relevancy redactions may be appropriate and how parties can avoid motions practice to resolve disputes over their scope.
The case Kaiser Aluminum Warrick, LLC v. U.S. Magnesium, LLC, No. 22-cv-3105 (JGK) (KHP) (S.D.N.Y. Feb. 27, 2023) concerned the defendant’s failure to fulfill its contract to supply magnesium to the plaintiff. The defendant relied on a force majeure defense, citing unexpected equipment failures. During discovery, the defendant produced several otherwise responsive documents with relevance redactions, to which the plaintiff objected. The plaintiff moved the court to require the defendant to produce the challenged documents in full “arguing that redactions for relevance are disfavored when there is a protective order in place, as one is here.” Id. at *1. The defendant responded that the redacted information was “irrelevant and competitively sensitive, and therefore, it should not be required to be produced in unredacted form.” Id.
The court held that where relevancy redactions “are consistent with Rule 1 and Rule 26 and do not deprive the other party of context, they may be appropriate” but advised that “a party should request permission to make such redactions in advance of production.” Id. at *2. Even where there is a stipulated protective order in place, “a party should not necessarily be denied the opportunity to redact if redacting would not otherwise prejudice the other side or delay the case.” Id. The court acknowledged that a particular concern with relevancy redactions “is that they can lead to motion practice . . . which often creates additional expense and delay” and suggested that such a risk could be minimized “if a producing party discusses its desire to make such redactions with its adversary in advance of its production and seeks advance permission from the Court to make them.” Id.
Following in camera review, the court found that the challenged documents “consist[ed] of monthly reports containing detailed financial information, results of research on competitors in the market, and reports on segments of the business unrelated to magnesium operations (such as information about its lithium plant and production). They also contain[ed] information about magnesium production.” Id. at *1. While the defendant had not sought permission to make relevancy redactions, the court had “already resolved discovery disputes in [defendant’s] favor concerning production of information about its Lithium plant and finances, holding this information to be irrelevant to the force majeure defense and not proportional to the needs of the case.” Id. at *2. Therefore, preventing the defendant from redacting such information would “run[] contrary to” the court’s prior discovery rulings. Id.
However, the court challenged the extent of defendant’s redactions, advising that “[h]ad [the defendant] sought permission before redacting, the court would have advised it to redact in a different manner than it did.” Id. While the court upheld the majority of the relevancy redactions, it ordered the defendant to unredact certain relevant information regarding the company’s magnesium operations and all column/row descriptors and graph titles contained within the reports so that the plaintiff would have the context necessary to determine the type of information that was redacted.
Overall, there are two main lessons to take away from this opinion. First, relevancy redactions should be applied conservatively in a way that preserves necessary context for the opposing party. Second, while some discovery disputes are inevitable, the need for motions practice can be significantly minimized if the parties discuss how they are going to handle relevancy redactions with each other and with the court in advance of production.
To view the full article, click here.
© 2024. Discovery Disputes: Best Practices from the Bench, Pretrial Practice & Discovery, American Bar Association Litigation Section, June 28, 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.
PIOGA Press
(by Jean Mosites and Gina Buchman)
On May 30, 2024, Vermont Governor Philip Scott allowed S.259, An act relating to climate change cost recovery, to become law without his signature. S. 259, entitled the Climate Superfund Act, will require the development of claims to shift the cost of alleged climate-related impacts in Vermont onto the companies that produced fossil fuels responsible for greenhouse gas (GHG) emissions.
This bill is the first of its kind to become law in the United States, and similar legislation is pending in Massachusetts, New York, and Maryland. Borrowing some concepts from the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), or Superfund, which imposes strict liability for cleanup of contaminated sites on potentially responsible parties, this Act seeks to assign financial liability for climate-related impacts on the companies that extracted and refined petroleum products and other fossil fuels. Like CERCLA, the Act imposes retroactive liability on entities having conducted lawful business activities in the past.
Vermont’s Act establishes a Climate Superfund Cost Recovery Program to be administered by the Climate Action Office of the Agency of Natural Resources. The Vermont Treasurer will be required to assess the cost of GHG emissions to the state and its residents during the period January 1, 1995 through December 31, 2024. The Agency of Natural Resources will apportion liability and make cost recovery demands to “Responsible Parties,” those entities engaged in the trade or business of extracting fossil fuel or refining crude oil responsible for more than one billion metric tons of covered greenhouse gas emissions during the covered period.
Funds received from these companies will be deposited in the Climate Superfund Cost Recovery Program Fund and used for climate change adaptation projects. A Responsible Party’s first payment would be due six months after the cost recovery demand is made and should be at least 20% of the total demand. Subsequent payments of not less than 10% of the total demand would be due annually thereafter until the entire demand is received.
The Act also requires the Agency of Natural Resources to submit a report to the General Assembly on or before January 15, 2025 regarding the feasibility of and progress towards implementing the requirements of the Act. The Agency will also be required to adopt rules implementing the Act. Rules regarding methodologies to identify Responsible Parties and determine their share of covered GHG emissions and requirements for registering entities that are responsible parties must be finalized by January 1, 2027. A rule for the adoption of a Resilience Implementation Strategy to identify and prioritize climate change adaptation projects and disperse funds must be finalized by January 1, 2026.
Instead of signing or vetoing the bill, the Governor allowed the bill to become law after five days and sent a letter to the Vermont General Assembly. This letter expressed his concerns that the $600,000 appropriated by the legislature to cover implementation of the Act would be inadequate to complete the required cost analysis, which he expects to meet significant scrutiny and legal challenges.
Legal challenges to both the law and any regulations promulgated pursuant to it are certainly expected. Challengers are likely to target the methodologies used to determine Responsible Parties, the limited scope of definition of Responsible Parties and the decision to hold what may be just a few companies liable for the entire impact of GHG emissions, and the lack of connection between the adaptation projects and the actions of the Responsible Parties.
It is also worth noting that the Climate Superfund Act is not the state’s only active initiative to hold energy companies liable for their activities within the state. The state also filed a consumer protection lawsuit in Vermont state court in 2021 against a dozen oil companies, alleging deception and unfair business practices related to the sale of their products. Vermont v. Exxon Mobil Corp. (Vt. Super. Ct.). The defendant oil companies removed the case to federal district court in Vermont, but, like other similar lawsuits, it was ultimately remanded back to state court in February 2024. Vermont v. Exxon Mobil Corp., 2:21-cv-00260 (D. Vt.). In this litigation, Vermont seeks the defendants to “disgorge all funds acquired and/or retained as a result of any acts or practices found to be unlawful,” among other relief sought.
Babst Calland continues to track climate change legislation and litigation, as well as federal and state regulatory developments. For more information on this and other climate change-related matters, please contact Jean M. Mosites at (412) 394-6468 or jmosites@babstcalland.com, Gina F. Buchman at (202) 853-3483 or gbuchman@babstcalland.com.
To read the full article, click here.
Reprinted with permission from the June 2024 issue of The PIOGA Press. All rights reserved.
The Legal Intelligencer
(by Max Junker and Anna Jewart)
Noted wordsmith Justice Michael Musmanno articulated the rationale for the “deemed approval” concept in Pennsylvania land use law noting: “Without this kind of coercive determination, a Board could effectively prevent the erection of needed structures through the simple process of luxurious lolling while spiders of inattention spin webs of indifference over pending public problems.” To avoid luxurious lolling by local governments, the Legislature included mandatory deadlines in the Pennsylvania Municipalities Planning Code, 53 P.S. § 10101 et seq. (“MPC”), which governs municipal regulation of zoning, subdivision and land development within the Commonwealth. The MPC sets forth strict requirements for when and how municipalities make decisions on land use applications, in addition to how they communicate those decisions to the applicant. A failure to comply with these requirements may result in a deemed approval of the underlying application.
Within days of each other, the Commonwealth Court issued two reported opinions which affirmed the deemed approvals of land use applications. CRG Services Management, LLC v. Lowhill Township, No. 1091 C.D. 2023 (Pa. Cmwlth. June 3, 2024) (deemed approval of a land development plan for a warehouse because the township’s denial letter was inadequate) and Folk v. Mifflin Township Zoning Hearing Board, 969 C.D. 2023 (Pa. Cmwlth. June 5, 2024) (deemed approval for a variance to operate a wedding venue on a farm because the zoning hearing board did not commence the public hearing within 60 days of application’s submission). In light of these cases, this article provides a brief overview of key MPC provisions which could result in a deemed approval of a land use application.
Timing Requirements: One way an application can be deemed approved is by a failure to meet the statutory deadlines to consider and render a decision on an application. Most deadlines contained in the MPC are mandatory unless waived or extended by the applicant in writing or on the record.
- Zoning: the deadline for a decision on a zoning application depends on what type of application it is, and requires a review of both the MPC and local ordinances.
- Zoning Permit Applications/ Uses Allowed by Right: The MPC provides no statutory timeline in which a zoning officer must render a decision on a zoning permit application. Instead, §909.1, allows an applicant to appeal to the zoning hearing board (ZHB) on the “failure to act on the application.” However, the local zoning ordinance may establish a timeline for review. A deemed approval of the application may occur if the zoning officer fails to act within the deadline set by the ordinance. If no such deadline is set, the only remedy available to the applicant is to appeal to the ZHB.
- Variances and Special Exception Applications: Variances and Special Exception applications are handled through a quasi-judicial public hearing process before the ZHB. Section 908 of the MPC governs how public hearings are conducted before the ZHB. Section 908(1.2) in relevant part requires that the first hearing before the board be commenced within 60 days from the date of receipt of the applicant’s application, unless an extension of time has been granted. Each subsequent hearing must be held within 45 days of the prior hearing, absent agreement otherwise. Under §908(9) the ZHB must render a written decision on the application within 45 days after the last hearing. A failure to commence, conduct, or complete the hearing as required by §908(1.2) or a failure to render a timely decision under §908(9) can result in a deemed approval of the application. The Court in Folk found the applicant’s variance application was deemed approved by the ZHB’s failure to commence a hearing on the application within 60 days of receipt of the application as required by §908(1.2).In addition, under §908(10) a copy of the final decision, or as discussed further below, the findings, must be delivered to the applicant personally or mailed to him or her not later than the day following its date. However, the courts have determined that, where appropriate findings of fact and conclusions of law are ultimately provided, a failure to provide notice of the decision as set forth in §908(10) alone does not result in a deemed approval.
- Conditional Use Applications: Conditional use applications are also handled through a quasi-judicial public hearing process, this time before the governing body of the municipality. Section 913.2 of the MPC regulates how governing bodies handle conditional use hearings. Although §913.2 does not establish a timeline to hold a first hearing on the application, it states that where the governing body fails to commence, conduct, or complete the required hearing as provided in §908(1.2) of the MPC, the decision shall be deemed to have been rendered in favor of the applicant. Consequently, the timing requirements in §908(1.2) are applicable to adjudication of a conditional use application (60 days to hold a first hearing). The governing body must make a written decision on the application within 45 days after the last hearing per §913.2(b)(1).
- Subdivision and Land Development: the MPC also governs how municipalities handle applications for subdivisions and land developments. These applications take many forms (lot consolidation, minor and major subdivision, , land development, etc.) and often involve a two-part approval process (preliminary and final). They may be handled either by the governing body of the municipality, or the planning agency / commission. However, in each case the applicant is required to submit a “Plat,” defined as a map or plan of a subdivision or land development. Section 508 of the MPC, governs a municipality’s process for rendering a decision on any Plat. The local subdivision and land development ordinance can establish shorter time limits for the review of Plats, but §508 requires that a decision must be made and communicated to the applicant no later than 90 days following the date of the regular meeting of the governing body or the planning agency (whichever first reviews the application) next following the date the application was filed. If the next regular meeting is more than 30 days following the date of the application, the 90-day period is measured from the 30ᵗʰ day following the date the application is filed. The decision needs to be communicated, in writing, to the applicant personally or mailed to the applicant’s last known address no later than 15 days following the date of the decision. A failure to render a decision and communicate it within the time allowed may result in a deemed approval of the application.
Form and Content Requirements: The second most common way that a deemed approval can occur is where a decision on the application is timely made, but not communicated to the applicant in the form or manner required by the MPC. Therefore, it is important to closely review how a decision needs to be communicated, and what it must contain.
- Zoning: Regardless of the type of zoning application, a decision on the application needs to be communicated to the applicant in writing. For conditional uses (§913.2(b)(1)), variances, or special exceptions, (§908(9)) where the application was contested or denied, the written decision is to be accompanied by findings of fact and conclusions of law together with the reasons for the decision. Any conclusions based on the MPC or any other rule or regulation needs to contain a reference to that provision and the reasons why the conclusion was deemed appropriate in light of the facts found. The purpose of these findings and conclusions is to aid appellate review if an appeal is filed.
- Subdivision and Land Development: Any decision on a “Plat” must be in writing. If the application is not approved as filed, the decision must specify the defects found in the application, and describe and cite to the specific provisions of the statute or ordinance which have not been met. In CRG Services, the municipality voted to deny a revised application for land development due to “[r]ecommendations from [the township] Planning Commission and Engineer.” However, it failed to specify the defects found in the application or describe the requirements which had not been met as required by §508 of the MPC by either specifying them in the denial letter or making an express incorporation of the Engineer’s letter. As a result, the Commonwealth Court determined that the application was deemed approved.
The Commonwealth Court’s affirmation of two deemed approvals in one week is a healthy reminder that although in general the law disfavors deemed approvals, where there is statutory authority for the same, municipalities must proceed with caution in how they handle applications. The provisions cited above are not exhaustive and municipalities are urged to contact their solicitor to discuss the relevant requirements for any application. There is an entire process for perfecting a deemed approval through a mandamus action or public notice, but that is an article for another day because our deadline has expired.
Robert Max Junker is a shareholder in the public sector, energy and natural resources, and employment and labor groups of Babst Calland. 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,
To view the full article, click here.
Reprinted with permission from the June 20, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.
Litigation Alert
(by Joseph Schaeffer and Mychal Schulz)
Last week, the Supreme Court of Appeals of West Virginia addressed two long-standing issues under West Virginia products liability law: (1) must a plaintiff asserting a strict liability design-defect claim prove the existence of an alternative, feasible design, and, (2) if so, must the alternative, feasible design eliminate the risk of the specific injury suffered by the plaintiff?
The questions arose in Shears v. Ethicon, Inc. et al., No. 23-192 (W. Va. June 11, 2024), one of numerous cases involving allegedly defective transvaginal mesh consolidated in multi-district litigation pending in the United States District Court for the Southern District of West Virginia (the “MDL Court”). In rejecting the manufacturer’s objection to consolidation, the MDL Court commented in a 2015 ruling that “there is no West Virginia authority requiring plaintiffs to prove, as part of their prima facie case, that the proposed safer alternative design would have reduced an individual plaintiff’s specific injuries.” Id. at *3 (citation omitted).
In 2016, however, the Supreme Court of Appeals published West Virginia Pattern Jury Instructions for Civil Cases under the leadership of then-Justice Menis E. Ketchum. Pattern Jury Instruction (PJI) § 411 stated: “There are many designs which, although they may eliminate a particular risk, are not practicable to produce. To prove that a design is defective, [name of plaintiff] must prove that there was an alternative, feasible design that eliminated the risk that injured [him/her].” Id. at *4 (citation omitted; brackets and italics in original). Citing PJI § 411, the MDL Court reconsidered its 2015 ruling and held in a 2016 ruling that West Virginia law requires a plaintiff in a strict liability design-defect case to “prove that there was an alternative, feasible design—existing at the time of the product’s manufacture—that would have eliminated the risk that injured the plaintiff.” Id. (citation omitted; emphasis in original).
In 2020, the MDL Court transferred the Shears case for trial to the United States District Court for the Northern District of West Virginia (the “Trial Court”). Then, in a 2022 ruling, the Trial Court relied on the MDL Court’s 2016 ruling and PJI § 411 to exclude the plaintiffs’ design and materials expert because he opined only that there were “safer alternative” materials with which a mesh could have been manufactured, not materials that would “eliminate” the risk of the specific injuries at issue. The Shears case then went to trial with the plaintiffs relying on malfunction and negligence theories of liability, which were resolved by judgment as a matter of law in favor of the defendant for the malfunction claim, and a jury verdict for the defendant on the negligence claim.
The plaintiffs appealed to the Fourth Circuit and, among other things, challenged the MDL Court’s 2016 ruling and the Trial Court’s 2022 exclusion ruling. Following oral argument, the Fourth Circuit sua sponte certified three questions to the Supreme Court of Appeals: (1) is PJI § 411 an accurate statement of West Virginia law?; (2) must a design-defect plaintiff prove the existence of an alternative, feasible product design existing at the time of the subject product’s manufacture; and (3) if the answer to the second question was in the affirmative, must the alternative, reasonable product design eliminate the risk of the harm suffered by the plaintiff?
In an opinion authored by Justice Haley Bunn, the Supreme Court of Appeals reviewed West Virginia design-defect jurisprudence and determined that PJI § 411 is not an accurate statement of West Virginia law. While the Court affirmed that, under West Virginia law, a plaintiff in a strict liability design defect case must prove the existence of an alternative, feasible product design existing at the time of the subject product’s manufacture, it rejected the requirement in PJI § 411 that the alternative design must “eliminate” the specific risk of harm suffered by the plaintiff. Rather, after reviewing its prior cases, the Court held that a plaintiff must instead meet an intermediate standard under which they show that “an alternative, feasible design existing at the time the subject product was made would have substantially reduced the risk of the specific injury suffered by the plaintiff.” Syl. Pt. 5, in part, id. (emphasis added).
The Supreme Court of Appeals’ decision in Shears expressly rejected the definition of a design defect contained in the Restatement (Third) of Torts: Prod. Liab. § 2 (Am. L. Inst. 1998), which had been recently adopted by the Intermediate Court of Appeals of West Virginia in Ford Motor Co. v. Tyler, 249 W. Va. 471, 896 S.E.2d 444 (W. Va. Ct. App. 2023). Note only does this decision represent a resounding win for manufacturers, suppliers, and retailers of products, but product liability defendants in West Virginia cases should take careful note of this decision going forward in developing a record at the trial court level to better position strict liability design defect claims for summary judgment.
If you have questions about the Shears decision or products liability litigation, or its implications for your business, please contact Joseph V. Schaeffer at 412-394-5499 or jschaeffer@babstcalland.com or Mychal S. Schulz at 681-265-1363 or mschulz@babstcalland.com.
Pittsburgh Business Times
(by Jenn Malik featuring Joel Bibby)
There’s no magic pill for weight loss – but many think we’re getting closer to having one with the widespread use of diabetes medications, also known as GLP-1s (glucagon-like peptide analogs). And employers with sponsored health plans are seeing a significant impact on their plan budgets from the increased use of these drugs.
“It used to be that the majority of (a company’s) prescription spend on their health benefits was really in specialty drugs,” said Jenn Malik, an attorney in the employment and labor and public sector groups at the law firm Babst Calland. “But now you’re seeing a shift to these GLP-1s that are really topping the charts.”
Primarily injected, the drug compounds, better known as Ozempic and Mounjaro approved for treating type 2 diabetes, and their approved-for-weight-loss lifestyle counterparts, such as brands commonly known as Wegovy and Zepbound, are made of the same active ingredient as the diabetes version, explained Joel Bibby, a licensed pharmacist and managing director of clinical services for Integrity Pharmaceutical Advisors. They work by affecting an enzyme in your gut that can help you feel full and help your body process blood sugars. In addition to treating diabetes, they can help with issues associated with diabetes, like being overweight, which affect many different body systems.
“Indications for use of these drugs are expanding. In March, they were approved to reduce the risk of certain cardiovascular events, like heart attack and stroke. There are also rumors of Wegovy’s pending approval for help with other conditions,” Malik said.
“The broadening use of GLP-1 medications is also driving employers to rethink their plan designs.
Consider these statistics: one in eight adults say they’ve taken a GLP-1 at some point in their lives and about six percent of adults say they’re currently taking the drug.* Applying these statistics to an employer plan with 1,500 covered lives that has six percent of its members using one of these medications, they could pay anywhere from about$900 to $1,500 per month for each member with a prescription. At $12,000 a year per utilizer – using six percent of a population of 1,500 – that can be more than $1.5 million per year that an employer spends for one drug,” Malik said.
To cover or not to cover
One consideration for employers when deciding to cover GLP-1s – along with the high cost and expanding indications – is determining eligibility for the medications. Some practical and legal ways for managing this while keeping an eye on spending and ensuring the members who need these drugs are getting them include:
- Requiring a diabetes diagnosis before someone is prescribed one of the medications.
- Instituting another type of intervention, like prohibiting a 90-day fill on the initial prescription. “The drugs have a lot of side effects; many people discontinue them,” Bibby said. “If you fill a 90-day prescription for $3,000, someone might go two weeks into taking the medication and have to stop and throw it away.”
- Including prior authorization criteria, like a certain body mass index (BMI), participation in exercise and diet programs or permitting only certain providers to prescribe these medications.
Employers with self-funded plans will likely have more options available to them to help control GLP-1 spend as opposed to fully-insured plans in terms of both controlling costs and determining the impact of GLP-1s on costs. “Prescription drug claims will come through pretty quickly,” Malik said. “So you can see spikes in utilization as they’re starting on almost a monthly basis for self-funded plans and the impact to your budget versus your fully-insured plans where utilization data is reviewed less frequently and health care renewals occur on a yearly basis,” Malik said.
Employers should also track their data – examining their current members’ use of these diabetes medications and the type of population requiring them, especially when it comes to achieving the long-term benefits of covering drugs that may result in reduced weight, less musculoskeletal injuries and improved cardiovascular conditions.
“But if your population is really transient, or you have a lot of turnover, it may not make sense for an employer – at least the weight loss drug component of it –because employers won’t really get the benefit of the cost savings in the form of reduced medical claims down the line,” Malik said.
Also, employers should keep in mind that currently, data doesn’t fully support temporary use of GLP-1 medications. In most cases, use must be continual to achieve ongoing benefits.
“The widespread utilization of GLP-1s cannot be understated,” said Malik.
To help navigate the increased use of GLP-1s, Malik and Bibby encourage employers to review the current utilization in their health care plan and use the resources available to help find the right solutions for their employees.
*According to the Keiser Family Foundation Health Tracking Poll
Business Insights is presented by Babst Calland and the Pittsburgh Business Times.
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The Authority
(by Michael Korns and Amanda Brosy)
Municipal authorities and other public entities in Pennsylvania have long been familiar with the weight and burden of DEP and EPA mandates and regulations. Whether it involves issues with stormwater infiltration, erosion and sediment control, or any number of issues related to water treatment, all too often authorities must correct issues that they did not cause. Given that history, authorities should brace themselves, because new regulations will put them in the crosshairs again.
PFAS – A pollutant that means forever.
The new issue facing authorities relates to a large group of man-made chemicals known as per- and polyfluoroalkyl substances, or “PFAS” for short. PFAS are resistant to heat, oils, stains, and water, and for that reason, PFAS have been incorporated into a wide variety of consumer products and industrial processes since the 1940s. They are ubiquitous in the environment and are known as “forever chemicals” because they do not readily break down in nature. Ongoing research shows a variety of potential health risks related to PFAS exposures.
Pennsylvania has adopted PFAS standards related to drinking water and environmental cleanup, and EPA, which is working to address PFAS pollution on multiple regulatory fronts, recently finalized the first-ever national drinking water standard related to PFAS. In December 2023, DEP also updated its NPDES Individual Industrial Wastewater permit application to include PFAS sampling. Applications going forward are required to include sampling for four PFAS: PFOA, PFOS, PFBS, and HFPO-DA (commonly referred to as GenX) as part of Pollutant Group 1 sampling. Because sampling is required under Pollutant Group 1, all industrial categories are subject to the sampling requirements.
The heart of the issue for authorities is this: the elimination of PFAS in drinking water is a regulatory priority for both EPA and DEP. This is an important goal, and with appropriate grant funding, authorities could be an important partner in removing these chemicals from both the natural environment and our own drinking water, as they have done with the elimination of lead water lines. Unfortunately, many of the existing and proposed regulations tend to take a less cooperative approach, requiring regulated entities to ensure that PFAS are eliminated from the material in their possession, regardless of whether that entity created or used the PFAS at issue.
As is immediately obvious to anyone reading this, PFAS regulation presents a massive challenge to municipal water and wastewater authorities. Because PFAS have been used in so many different products and industries, it is very likely that wastewater treatment plants are receiving water that already contains levels of PFAS that would be in violation of the upcoming DEP and EPA standards. Water treatment facilities may also find PFAS in water sources, whether surface or groundwater. Given the ubiquity of PFAS, even water treatment plants fed entirely from natural sources may find PFAS present at unacceptable levels.
Potential Impacts
The list of potential ways in which new PFAS regulations are likely to impact authorities is numerous, but a non-exclusive list includes the following.[1]
National Primary Drinking Water Regulation (NPDWR)
On April 10, 2024, EPA released a final NPDWR that sets legally enforceable limits (maximum contaminant levels, or MCLs) in drinking water for six different PFAS. The federal standard becomes immediately effective in Pennsylvania, replacing the prior Pennsylvania standards. Notably, the rule sets an MCL of 4 parts per trillion (PPT) for PFOA and PFOS. The NPDWR requires public water systems to complete their initial monitoring for the chemicals within three years and notify the public what levels are detected. Where PFAS are found at levels that exceed the new standards, systems must take steps to reduce those levels within five years. To help states implement testing and treatment at public water systems, $1 billion has been made available through the Infrastructure Investment and Jobs Act. With this new rule in place, water utilities and municipalities should begin evaluating the technical and cost implications of conducting testing and installing treatment systems to meet the NPDWR standards.
Pretreatment
The EPA is developing, or plans to develop, effluent limitation guidelines that address PFAS for multiple industries, including landfills and metal finishers. Many authorities accept wastewater from some of these industries. These guidelines are expected to include pretreatment standards that will need to be incorporated into pretreatment programs and reflected in the local limits with which all industrial users must comply.
Biosolids
Some authorities dispose of biosolids at landfills. As part of its PFAS Strategic Roadmap, EPA is currently conducting a biosolids risks assessment for PFOA and PFOS, two of the most studied PFAS. Risk assessments are used to characterize the nature and magnitude of potential harm to human health and the environment as a result of exposure to a chemical. EPA intends to finalize the risk assessment by December 2024. These risk assessments may result in additional testing requirements and/or restrictions for disposal or land application of biosolids.
Superfund Hazardous Substances Designation
On September 6, 2022, EPA published a Proposed Rule to designate PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, aka Superfund). In the Proposed Rule, EPA identifies waste management and wastewater treatment facilities as potentially affected entities. However, EPA has said it will focus its enforcement efforts on manufacturers and other entities that have released PFOA and PFOS into the environment. To that end, EPA is also working on an enforcement discretion and settlement policy that will outline its priorities. The final rule and accompanying policy are expected to be issued sometime this spring. Meanwhile, EPA has also requested public input on whether to designate other types of PFAS, besides PFOA and PFOS, as CERCLA hazardous substances. In light of the Biden administration’s commitment to addressing PFAS issues on multiple fronts, we expect EPA to finalize the Proposed Rule and take steps to develop other rules to address PFAS releases to the environment under CERCLA and other federal environmental statutes.
EPA Information Collection Request
The EPA is working to develop a study of influent to publicly owned treatment works across the nation. The goals of the study are to identify categories of industrial users discharging PFAS; collect data on PFAS in domestic wastewater influent to treatment works; characterize PFAS from industrial users and domestic sources; collect data on adsorbable organic fluorine concentrations in wastewater; and better understand PFAS pass through in treatment works to biosolids and effluent.
What Now?
It is clear that authorities will be impacted by the evolving PFAS regulatory environment in a variety of ways. If finalized, the proposed regulations could require authorities to develop and implement pretreatment protocols for industrial waste and then hold authorities responsible for the PFAS that happen to enter their systems. While the EPA claims that it does not intend to make utilities a target of initial CERCLA enforcement, its proposed “hazardous substances” rule does not absolve utilities from responsibility for the PFAS in their systems that they did not create or use. This is particularly concerning because it may not be possible in all cases to identify the origin of PFAS in the system.
Authorities in Pennsylvania should not wait for potential enforcement to assess threats to their systems. If you are able to identify sources of PFAS, consider review of applicable pretreatment requirements on industrial customers. If there are PFAS in your system that you cannot identify the source for, then your Solicitor should be closely monitoring final approvals of the upcoming regulations to best understand what will be required of your authority in the months and years to come.
As the federal and state governments continue to take action to address PFAS across many program areas, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. For more information on how municipal authorities and other public entities can navigate the uncertainties and better understand the new rules and regulations, please contact Michael Korns at (412) 394-6440 or mkorns@babstcalland.com or Amanda Brosy at (202) 853-3465 or abrosy@babstcalland.com.
[1] This article was submitted for publication on April 12, 2024 and thus does not include any developments after that date.
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The Wildcatter
(by Nikolas Tysiak)
A few cases to report on this month.
Griffin v. Toland, 2024 WL 2269941 (W. Va. S. Ct. May 20, 2024). In a memorandum decision (i.e. – without oral arguments), the West Virginia Supreme Court sought to interpret intentions of the parties to a 1976 deed containing oil and gas reservation language. Hazel L. White acquired all the surface and ½ the oil and gas under a tract of 82 acres during her lifetime, one-half the oil and gas having been properly and effectively reserved by a predecessor in title pursuant to a 1943 deed. By deed dated June 29, 1976, Hazel White conveyed the 82 acres to Timmie and Vickie McMillan, with an exception of ½ the oil and gas. The exception language in the June 29, 1976 was reportedly identical to the reservation language used by Hazel White’s predecessor in title to retain the “other” ½ of the oil and gas via the 1943 deed. The 82 acres was purportedly conveyed multiple times following the June 29, 1976 deed, all containing language nearly identical to both the 1943 deed and the June 29, 1976 deed. Griffin, as successor to Hazel White, filed a declaratory judgment action claiming rightful ownership of the ½ oil and gas interest purportedly reserved under the June 29, 1976 deed, as against the current surface owners (Toland). The trial court found in favor of Toland, stating that the June 29, 1976 deed was ambiguous as to Hazel White’s intent – the language does not indicate whether Hazel indicated to retain the “remaining” one half of the oil and gas associated with the 82 acres, ½ of the ½ interest, or none of the oil and gas. After allowing parol evidence, the trial court found that none of the parol evidence regarding Hazel White’s intent at the time of the June 29, 1976 deed was enough to overcome the legal holding that ambiguity in a deed must be construed most strongly against the grantor. The Supreme Court agreed that the June 29, 1976 was ambiguous but further held that the ambiguity presented a material issue of fact, so sustaining a motion for summary judgment regarding the situation was inappropriate. The case was remanded to the trial court for further proceedings.
Callen v. Foertsch, 2024 WL 2176673 (Pa. Super. Ct. May 15, 2024). Also in a memorandum decision (non-precedential), the court was confronted with a question of whether a joint tenant with right of survivorship effectively broke the joint tenancy and created a tenancy in common before her death. Dan Callen and Elaine Callen-Foertsch inherited a tract of land as joint tenants with the right of survivorship in 1990. They jointly leased the land in 2009, each receiving ½ the royalties. After Elaine’s death in November 2021, her daughter, Mae Foertsch, recorded a “Pennsylvania Gift Deed” whereby Elaine purports to convey all her interest in land in Butler County (including the land at issue) to Mae. Dan maintained that, as the surviving joint tenant, all title to the land, and therefore the oil and gas royalties, passed to him by operation of law. Rather than deciding on the facts, the Superior Court issued an order based on the most technical of technicalities, holding that the appeal from the trial court was not appropriate because the appeal occurred before the trial court issued a true final order. The trial court had only quieted title in favor of Dan Callen, but failed to dispose of a counter claim for monetary damages by Mae Foertsch. Consequently, the case was remanded back to the trial court for further proceedings.
In Tera, L.L.C. v. Rice Drilling D, L.L.C. (2024-Ohio-1945), the Ohio Supreme Court faced a “bad-faith” trespass claim by the landowners (Tera) against Rice, claiming that operations in the Point Pleasant formation was a violation of the terms of the executed leases, which only specified the Utica and Marcellus formations as being affected. Both the trial court and intermediate appeals court (Ohio 7th district) agreed with this reasoning, granting and affirming a motion for summary judgment on the issue of trespass, respectively – stating that there was no triable issue of fact based on the language of the leases. The Supreme Court of Ohio disagreed on procedural grounds, finding that a triable issue of fact did exist, as the meaning of the phrase “the formation commonly known as the Utica Shale” could be, and clearly has been, construed to include more than the literal Utica Shale formations. In a great win for the oil and gas industry in Ohio, the motions for summary judgment arising from the bad faith trespass claims were reversed and remanded back to trial to determine what that phrase actually means in Ohio.
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Reprinted with permission from the MLBC June 2024 issue of The Wildcatter. All rights reserved.
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
On March 9, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced the availability of its draft National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges of Stormwater Associated with Construction Activities (draft 2024 General Permit), which would apply to eligible projects proposing earth disturbance greater than or equal to one acre. See 54 Pa. Bull. 1263 (Mar. 9, 2024). PADEP accepted comments on the draft through April 8, 2024. PADEP’s draft 2024 General Permit includes significant changes compared to the PAG-02 General Permit currently in effect, set to expire on December 7, 2024 (2019 General Permit). To supplement these changes, PADEP is expected to update the Erosion and Sediment Module 1 and Post-Construction Stormwater Management (PCSM) Module 2 to be consistent with the draft 2024 General Permit upon reissuance.
The 2019 General Permit requires that proof of the recording of an instrument for post-construction stormwater management (PCSM) best management practices (BMPs), now referred to as stormwater control measures (SCMs), be submitted to PADEP or the County Conservation District (CCD) with the Notice of Termination (NOT) or a Transfer Application. The draft 2024 General Permit would require submission of the full recording and proof of the recording to PADEP before a pre-construction meeting is scheduled, as well as upon the submission of the NOT to ensure compliance. The draft 2024 General Permit would also require the use of a standard form to document the completion of each structural PCSM SCM, which must be signed by a licensed professional and submitted to PADEP or CCD within 30 days of completion of each SCM.
The draft 2024 General Permit would require site inspections to be conducted by qualified personnel only, with PADEP providing three options to demonstrate that a person is qualified. Existing permittees would have one year from the effective date of the 2024 General Permit, December 8, 2024, to implement this provision. PADEP’s draft 2024 General Permit would also require the submission of an annual report by December 7 of each year. This report would require information on the status of the project. For existing permittees, the draft 2024 General Permit would require a renewed NOI to be submitted by December 7, 2024, to remain covered under the reissued PAG-02 General Permit.
Additionally, the draft 2024 General Permit identified specific types of non-stormwater discharges that would be authorized during earth disturbance activities to be consistent with other PADEP General Permits for stormwater discharges. The U.S. Environmental Protection Agency’s (EPA) technology-based standards at 40 C.F.R. pt. 450 are incorporated into the effluent limitation requirements, in addition to two new requirements for construction dewatering water. Discharges would be required to be treated by an approved series of at least two BMPs.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
In February 2024, the Pennsylvania Department of Environmental Protection (PADEP) updated its National Pollutant Discharge Elimination System (NPDES) permit application process for Major Sewage Facilities and Individual Industrial Wastewater permits to include per- and polyfluoroalkyl substances (PFAS) sampling. PFAS have historically been used to make products water, stain, and heat resistant and have been a key ingredient in some aqueous film forming foams (AFFF) used to extinguish flammable liquid fires, most commonly found at airports or on military bases. PFAS are known as “forever chemicals” because they do not break down naturally in the environment. Due to these properties and their ubiquitous nature, PFAS have been found in various environmental media, such as groundwater (including drinking water), plants, animals, and humans.
Major Sewage Facilities and Individual Wastewater permit applicants will now need to sample for four PFAS compounds as part of Pollutant Group 1 testing. The compounds required to be tested include perfluorooctanoic acid (PFOA), perfluorooctanesulfonic acid (PFOS), perfluorobutanesulfonic acid (PFBS), and hexafluoropropylene oxide dimer acid (HFPO-DA, commonly known as GenX).
Because PFAS has been added to Pollutant Group 1, all industrial categories are subject to the sampling requirements. Ongoing monitoring may also be required. Applicants with non-detect results or results at or below the Target Quantification Limits (QLs) will be required to monitor annually. Applicants with detections or non-detects above the QL will be required to sample quarterly. The QLs are 4.0 parts per trillion (ppt) for PFOA, 3.7 ppt for PFOS, 3.5 ppt for PFBS, and 6.4 ppt for HFPO-DA.
Ongoing monitoring may be discontinued if there are four consecutive monitoring periods with non-detect results at or below the QLs. Additionally, Module 1 of the Individual Wastewater Permit application, which is required for Industrial Stormwater discharges, has been updated to ask whether AFFF containing PFAS have been used at the facility.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)
The Pennsylvania Department of Environment Protection’s (PADEP) Water Resources Advisory Committee (WRAC) met on May 16, 2024, to discuss PADEP’s proposed rulemaking regarding notification requirements for unauthorized discharges to waters of the commonwealth and the draft final Triennial Review of Water Quality Standards (WQSs). Section 91.33 of Title 25 of the Pennsylvania Code requires immediate notification to PADEP if, because of an accident or other activity or incident, a toxic substance or other substance which would endanger downstream users or otherwise result in pollution reaching the waters of the commonwealth, is discharged into waters of the state. The characteristics of unauthorized discharges, such as spills and leaks, are not known prior to the discharge, and there are many site-specific factors affecting the risk of unauthorized discharge. According to PADEP, the purpose of the proposed regulation is to make the notification requirements for unauthorized discharges as straightforward as possible. The requirements do not expand notification obligations but attempt to clarify which unauthorized discharges need to be reported. In PADEP’s presentation to the WRAC, PADEP provided examples of unauthorized discharges that do not need to be reported, discharges that may need to be reported, and discharges that must be reported. For example, releases of materials within secondary containment when there is no possibility of the substance reaching waters of the commonwealth do not need to be reported, spills of non-liquid materials into waters of the commonwealth may not need to be reported, depending on the material, and sanitary sewer overflows that reach waters of the commonwealth must be reported.
WRAC also reviewed the draft final version of the Triennial Review of WQSs regulation. In the regulation, PADEP proposed new or updated WQSs for 17 toxic substances including: acetone, barium, boron, cadmium, carbayl, chloroform, chorophenoxy herbicide, 1,4 dioxane, formaldehyde, methyl isobutyl ketone, metolachlor, resorcinol, 1,2,3 trichloropropae, 1,2,4 trimethylbenzene, 1,3,5 trimethylbenzene, and xylene, among others. According to PADEP, there were no changes between the proposed regulation and the final regulation.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
Environmental Alert
(by Jean Mosites and Gina Buchman)
On May 30, 2024, Vermont Governor Philip Scott allowed S.259, An act relating to climate change cost recovery, to become law without his signature. S. 259, entitled the Climate Superfund Act, will require the development of claims to shift the cost of alleged climate-related impacts in Vermont onto the companies that produced fossil fuels responsible for greenhouse gas (GHG) emissions.
This bill is the first of its kind to become law in the United States, and similar legislation is pending in Massachusetts, New York, and Maryland. Borrowing some concepts from the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), or Superfund, which imposes strict liability for cleanup of contaminated sites on potentially responsible parties, this Act seeks to assign financial liability for climate-related impacts on the companies that extracted and refined petroleum products and other fossil fuels. Like CERCLA, the Act imposes retroactive liability on entities having conducted lawful business activities in the past.
Vermont’s Act establishes a Climate Superfund Cost Recovery Program to be administered by the Climate Action Office of the Agency of Natural Resources. The Vermont Treasurer will be required to assess the cost of GHG emissions to the state and its residents during the period January 1, 1995 through December 31, 2024. The Agency of Natural Resources will apportion liability and make cost recovery demands to “Responsible Parties,” those entities engaged in the trade or business of extracting fossil fuel or refining crude oil responsible for more than one billion metric tons of covered greenhouse gas emissions during the covered period.
Funds received from these companies will be deposited in the Climate Superfund Cost Recovery Program Fund and used for climate change adaptation projects. A Responsible Party’s first payment would be due six months after the cost recovery demand is made and should be at least 20% of the total demand. Subsequent payments of not less than 10% of the total demand would be due annually thereafter until the entire demand is received.
The Act also requires the Agency of Natural Resources to submit a report to the General Assembly on or before January 15, 2025 regarding the feasibility of and progress towards implementing the requirements of the Act. The Agency will also be required to adopt rules implementing the Act. Rules regarding methodologies to identify Responsible Parties and determine their share of covered GHG emissions and requirements for registering entities that are responsible parties must be finalized by January 1, 2027. A rule for the adoption of a Resilience Implementation Strategy to identify and prioritize climate change adaptation projects and disperse funds must be finalized by January 1, 2026.
Instead of signing or vetoing the bill, the Governor allowed the bill to become law after five days and sent a letter to the Vermont General Assembly. This letter expressed his concerns that the $600,000 appropriated by the legislature to cover implementation of the Act would be inadequate to complete the required cost analysis, which he expects to meet significant scrutiny and legal challenges.
Legal challenges to both the law and any regulations promulgated pursuant to it are certainly expected. Challengers are likely to target the methodologies used to determine Responsible Parties, the limited scope of definition of Responsible Parties and the decision to hold what may be just a few companies liable for the entire impact of GHG emissions, and the lack of connection between the adaptation projects and the actions of the Responsible Parties.
It is also worth noting that the Climate Superfund Act is not the state’s only active initiative to hold energy companies liable for their activities within the state. The state also filed a consumer protection lawsuit in Vermont state court in 2021 against a dozen oil companies, alleging deception and unfair business practices related to the sale of their products. Vermont v. Exxon Mobil Corp. (Vt. Super. Ct.). The defendant oil companies removed the case to federal district court in Vermont, but, like other similar lawsuits, it was ultimately remanded back to state court in February 2024. Vermont v. Exxon Mobil Corp., 2:21-cv-00260 (D. Vt.). In this litigation, Vermont seeks the defendants to “disgorge all funds acquired and/or retained as a result of any acts or practices found to be unlawful,” among other relief sought.
Babst Calland continues to track climate change legislation and litigation, as well as federal and state regulatory developments. For more information on this and other climate change-related matters, please contact Jean M. Mosites at (412) 394-6468 or jmosites@babstcalland.com, Gina F. Buchman at (202) 853-3483 or gbuchman@babstcalland.com, or any of our other environmental attorneys.