Articles, Alerts & Perspectives

U.S. Environmental Protection Agency Finalizes National Primary Drinking Water Regulations for Certain PFAS Chemicals

Environmental Alert

(by Jean Mosites and Mackenzie Moyer)

On April 10, 2024, the U.S. Environmental Protection Agency (EPA) finalized the National Primary Drinking Water Regulation (NPDWR) Rule regulating six per- and polyfluoroalkyl substances (PFAS) under the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.  This final rule establishes the first-ever nationally enforceable drinking water standards for PFAS.  The final rule establishes Maximum Contaminant Level Goals (MCLGs) and Maximum Contaminant Levels (MCLs) for perfluorooctanoic acid (PFOA), perfluorooctane sulfonic acid (PFOS), perfluorononanoic acid (PFNA), hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA, commonly known as GenX chemicals), and perfluorohexane sulfonic acid (PFHxS).  The final rule also establishes a Hazard Index MCLG and MCL for mixtures containing two or more of PFNA, HFPO-DA, PFHxS, and perfluorobutane sulfonic acid (PFBS).

For PFOA and PFOS, the final rule sets MCLGs – non-enforceable health-based goals that represent the maximum concentration of a contaminant in drinking water at which there is no known or anticipated negative effect on a person’s health – at 0 parts per trillion (ppt).  The MCLs, which are legally enforceable, are set at 4.0 ppt for PFOA and PFOS.  The MCLs represent the maximum concentrations allowed in drinking water that can be delivered to users of a public water system and are informed by factors such as available treatment technologies and cost.  As a change from the proposed rule, the final rule sets MCLGs and MCLs for PFNA, PFHxS, and HFPO-DA at 10 ppt.

For mixtures of two or more of PFNA, PFHxS, HFPO-DA, and PFBS, the final rule establishes a Hazard Index due to the chemicals’ likely co-occurrence.  The Hazard Index is calculated by dividing the concentration of each of the four PFAS compounds by its Health-Based Water Concentration (HBWC; 10 ppt for PFNA, 10 ppt for HFPO-DA (GenX), 9 ppt for PFHxS, and 2000 ppt for PFBS) and then adding the results together.  A total value greater than 1.0 is an exceedance of the proposed Hazard Index MCL.  For a more detailed explanation of the Hazard Index calculation, see EPA’s Fact Sheet for Understanding the Hazard Index, available here.

The final rule regulates community water systems (CWSs) and non-transient non-community water systems (NTNCWSs), collectively public water systems.  A CWS is defined as “a public water system which serves at least fifteen service connections used by year-round residents or regularly serves at least twenty-five year-round residents” and a NTNCWS is “a public water system that is not a [CWS] and that regularly serves at least 25 of the same persons over 6 months per year.”  40 C.F.R. § 141.2.

Under the final rule, public water systems have three years (by 2027) to complete initial monitoring of each of the six PFAS, followed by ongoing compliance monitoring.  The public must be provided with information on the levels of these PFAS in their drinking water beginning in 2027.  Public water systems have five years (by 2029) to implement solutions to reduce PFAS if monitoring shows levels exceeding the MCLs.  After those five years, public water systems that have PFAS in drinking water violating one of the MCLs must take action to reduce PFAS levels and provide notice to the public of the violation.

In the final rule, EPA identifies granular activated carbon, anion exchange resins, reverse osmosis, and nanofiltration as the best available technologies for PFAS removal in drinking water.  According to EPA, PFAS tend to co-occur, and these four treatment technologies have been documented to co-remove other forms of PFAS, along with the six PFAS being regulated.  More information on the final rule can be found on EPA’s webpage, available here.

The final rule supersedes any state-specific MCLs, if those MCLs are less stringent than EPA’s.  For example, Pennsylvania adopted MCLs for PFOA (14 ppt) and PFOS (18 ppt) in January 2023.  To retain primacy over the drinking water program, states must regulate PFAS no less stringently than EPA.  Under the final rule, states with primacy will have up to two years after the date of rule promulgation to develop regulations that are at least as strict as the federal MCLs.  Pennsylvania’s regulations already incorporate the federal drinking water standards by reference but given Pennsylvania’s earlier action to regulate PFAS in drinking water, it is likely there will be a regulatory amendment to remove Pennsylvania’s earlier standards.  25 Pa. Code § 109.202.  The regulations incorporated by reference are effective on the date established by the federal regulations; therefore, regulated entities in Pennsylvania should assume that the federal standards are effective upon the dates listed in the final rule.

The final rule is the latest action under President Biden’s plan to combat PFAS pollution and EPA’s 2021 PFAS Strategic Roadmap (available here), under which EPA is taking a “whole-of-agency approach” to address PFAS throughout its lifecycle.  The final rule is expected to be published in the Federal Register in the near future.  Additional rulemaking proposals include the designation of certain PFAS as hazardous and information gathering obligations to be imposed on certain wastewater systems.

EPA also announced nearly $1 billion in newly available funding through the Infrastructure and Investment Jobs Act (IIJA) to help states and territories implement PFAS testing and treatment at public water systems and to help owners of private wells to address PFAS contamination.  This funding is a part of the $9 billion included in the IIJA to invest in drinking water systems impacted by PFAS and other emerging contaminants.

Babst Calland’s PFAS Work Group, including environmental, public sector, and litigation attorneys, continue to track PFAS technical and legal developments and are available to assist you with PFAS-related matters.  For more information on this and other remediation matters, please contact Jean M. Mosites at (412) 394-6468 or jmosites@babstcalland.com, Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other attorneys in this practice.

To stay informed on timely legal and regulatory information on PFAS, view our PFAS Perspectives page, or subscribe to updates here.

Trends and Developments in New Transportation and Energy Technologies

Pittsburgh Business Times

(By James Chen)

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

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

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

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

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

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

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

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

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

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

And there are other companies, like:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To view the PDF, click here.

To view the full article and video, click here.

Trends and Developments in New Transportation and Energy Technologies

Washington Business Journal

(By James Chen)

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

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

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

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

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

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

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

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

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

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

And there are other companies, like:

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

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

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

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

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

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

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

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

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

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

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

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

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

To view the PDF, click here.

To view the full article and video, click here.

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

Litigation Legal Perspective

(by Joseph Schaeffer and Michael Libuser)

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

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

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

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

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

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

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

Batter Up! Cases of Note before the Pennsylvania Supreme Court

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

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

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

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

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

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

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

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

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

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

Legislative & Regulatory Update

The Wildcatter

(By Nikolas Tysiak)

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

West Virginia

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

Ohio

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

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

Pennsylvania

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

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

To view the full article, click here.

To view the PDF, click here.

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

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

Pennsylvania Business Central

(By Mary Binker and Susanna Bagdasarova)

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

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

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

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

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

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

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

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

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

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

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

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

To view the full article, click here.

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

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

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

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

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

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

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

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

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

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

[10] See Inventorship Guidance for AI-Assisted Inventions

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

New to Whom? The Fifth Circuit strikes down EPA’s attempt to regulate ongoing uses of PFAS under TSCA’s “significant new use” provision.

Environmental Alert

(By Joseph Schaeffer and Sloane Wildman)

On March 21, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an opinion in Inhance Technologies, L.L.C. v. U.S. Environmental Protection Agency, No. 23-60620 (5th Cir. Mar. 21, 2024) that confirmed the obvious: a company that has a 40-year history of using perfluoroalkyl substances (PFAS) in its fluorination manufacturing process is not engaged in a “significant new use” under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601-2697. While not preventing the U.S. Environmental Protection Agency (EPA) from regulating existing uses of PFAS under other TSCA provisions, this common-sense conclusion provides industry with much-needed clarity and predictability.

TSCA Background

TSCA was enacted in 1976 to regulate chemicals that “present an unreasonable risk of injury to health or the environment.” 15 U.S.C. § 2601. EPA may do so in one of two ways. Under TSCA § 5, EPA may regulate the use of “new chemical substance[s]” and any “significant new use” of chemical substances. 15 U.S.C. § 2604. To determine whether use of a chemical substance is a significant new use, EPA considers four factors:

(1) the projected volume of manufacturing and processing of a chemical substance; (2) the extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance; (3) the extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance; and (4) the reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

15 U.S.C. § 2604(a)(2). If the use is a significant new use, EPA issues a Significant New Use Rule (SNUR) for public notice and comment. Id. Industry wishing to engage in the significant new use then must submit a Significant New Use Notice (SNUN) at least 90 days in advance of manufacture or processing. Id. at § 2604(a)(1)(B)(i). EPA must review that SNUN and make one of three findings: “[1] the relevant chemical substance or significant new use presents an unreasonable risk of injury to health or the environment … [2] the information available …is insufficient to permit a reasoned evaluation of the health and environmental effects of the relevant chemical substance or significant new use … or [3] the relevant chemical substance or significant new use is not likely to present an unreasonable risk of injury to health or the environment.” Id. at § 2604(a)(3). If EPA finds that there is an unreasonable risk or insufficient information to evaluate the risk, then it must issue an order prohibiting or limiting the chemical substance’s manufacture. Id. at § 2604(e), (f).

Alternatively, under TSCA § 6, EPA may regulate any chemical substance—not just new chemical substances or significant new uses. Id. at  § 2605. The broader authority conferred under TSCA § 6, however, is balanced by a more rigorous rulemaking process that requires EPA to perform, among other things, a cost-benefit analysis supporting the new regulation. Id. at § 2605(c)(2)(A)-(C).

In 2020, EPA invoked its authority under TSCA § 5 to finalize a SNUR designating as a significant new use any manufacture or processing of certain PFAS that would not be ongoing after December 31, 2015 or for which there currently was no ongoing use (the “PFAS SNUR”). Inhance Tech., No. 23-60620, at *5-6. EPA stated in the proposed PFAS SNUR that it would not designate ongoing uses as significant new uses, but it required companies seeking protection under this safe harbor to submit their prior manufacture and use of PFAS for approval. Id. at *11. EPA then excluded only the submitted ongoing uses from coverage under the final SNUR. Id. Notably, in the proposed PFAS SNUR, EPA included a non-exhaustive list of industries as potentially affected by the proposed rule, but did not include the fluorination industry on this list.

EPA orders Inhance to cease manufacturing or process PFAS

Inhance fluorinates plastic containers to create a barrier that prevents the containers’ contents from leaching out and outside substances from permeating in. Id. at *2. Neither Inhance nor EPA was aware during the rulemaking process for the PFAS SNUR that fluorination involved the manufacture or processing of PFAS. Id. at *11. Because EPA had not identified the fluorination industry as one of the industries potentially subject to the PFAS SNUR Inhance did not submit a SNUN during the rulemaking process to invoke the safe harbor for ongoing uses. Id.

Two years after finalizing the PFAS SNUR, EPA learned that Inhance’s fluorination process resulted in the creation of PFAS. Id. at *2. Relying on the PFAS SNUR, EPA issued Inhance a notice of violation ordering Inhance to either change its fluorination process to stop creating PFAS or temporarily cease fluorination resulting in the creation of PFAS. Id. Rather than complying with the notice of violation, however, Inhance submitted SNUNs for its fluorination process to EPA for review. Id.at *2-3. EPA completed its review by issuing orders prohibiting Inhance from manufacturing or processing PFAS through its fluorination process, and Inhance petitioned the Fifth Circuit for review. Id. at *3.

The Fifth Circuit considers what qualifies as a significant new use

At the heart of Inhance’s petition for review was whether the creation of PFAS through its fluorination process was an ongoing use, which EPA could regulate only under TSCA § 6, or a significant new use, which EPA could regulate under TSCA § 5. TSCA does not define “significant new use” or “new,” and the parties proposed very different definitions. EPA argued that a significant new use is any use “not previously known to EPA,” id. at *9, whereas Inhance argued that a significant new use is a use “having recently come into existence” or “not previously existing,” id. at *8. Inhance’s fluorination process would qualify as a significant new use under EPA’s definition, since its creation of PFAS was not known to EPA until 2022, but would not so qualify under Inhance’s definition, since the process had been in place for decades.

The Fifth Circuit found Inhance’s definition to be more persuasive for two reasons.

First, Inhance’s definition better aligned with the TSCA’s text, structure, and purpose. TSCA § 5 creates forward-looking requirements—requiring notice before manufacture and processing and requiring EPA to consider projected volumes and reasonably anticipated manners and methods of manufacturing. Id. at *9. The cost-benefit analysis required under TSCA § 6 also indicates that Congress intended a more careful balancing for processes that had previously existed. Id. at *10. And, at bottom, the idea that an existing use becomes “new” when discovered by EPA runs counter to common sense. Id.

Second, Inhance’s definition avoids constitutional issues that would arise under EPA’s definition. Because Inhance did not know that its fluorination process created PFAS during the PFAS SNUR rulemaking, it had no reason to know that it would be subject to the regulation or that it would need to submit a SNUN to take advantage of the regulation’s safe harbor. EPA’s definition thus would require Inhance—and companies in a similar position—to be clairvoyant in identifying their regulatory obligations. Id. at *11-12.

What it all means

The Fifth Circuit was careful to note in conclusion that its decision only prohibits EPA from invoking its TSCA § 5 authority to regulate ongoing uses of PFAS. EPA may continue to invoke its TSCA § 6 authority. As the Fifth Circuit acknowledged, though, the regulatory process under TSCA § 6 is more rigorous and requires a cost-benefit analysis that is absent from the TSCA § 5 process. Given the difficulties some industries have faced in finding effective PFAS replacements, it is thus possible that ongoing uses that would have been prohibited or limited under TSCA § 5 will survive due to the cost-benefit analysis required under TSCA § 6. Though time will tell, this might prove to be the most significant consequence of the Fifth Circuit’s decision.

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 this development and other remediation matters, please contact Joseph V. Schaeffer at (412) 394-5499 or jschaeffer@babstcalland.com, Sloane Anders Wildman at (202) 853-3457 or swildman@babstcalland.com, or any of our other environmental attorneys.

Federal Court Dismisses Challenge to WV Pooling Statute

Energy Alert

(by Robert Stonestreet and Austin Rogers)

A federal court has dismissed a challenge to the validity of a West Virginia law authorizing pooling and unitization of oil and gas formations associated with Marcellus and Utica shale wells.  The court concluded that the mineral owners who filed the suit lacked standing to bring their claims because they failed to allege an actual injury from the challenged law.

As reported in an Alert published on February 1, 2024, the Fourth Circuit Court of Appeals directed the lower court, Judge John Preston Bailey of the District Court for the Northern District of West Virginia, to resolve a pending lawsuit challenging the law, known as Senate Bill 694, enacted by the West Virginia Legislature in 2022.  This includes a determination of whether the mineral owners established legal standing to challenge the law.  The District Court had previously abstained from addressing the merits of the claims or the legal standing of the mineral owners.

Judge Bailey ruled that the mineral owners lacked legal standing for at least two reasons. First, the Court observed that the mineral owners did not allege that their mineral interests had been adversely affected by the challenged law, that they were subject to unitization under the law, or that their royalties were diminished in any way by the law. Second, the Court found no causal connection between the mineral owners’ alleged injury and the enactment of the law.  The Court noted that the mineral owners did not explain how the agency they sued, the West Virginia Oil and Gas Conservation Commission, was affecting their mineral interest “in any way” or that future enforcement of the law against them was “imminent.”

If you have questions about this lawsuit or West Virginia law governing pooling and unitization, please contact either of the following attorneys to learn more: Robert Stonestreet at rstonestreet@babstcalland.com or 681.265.1364 or Austin Rogers at arogers@babstcalland.com or 681.265.1368.

Discovery Disputes: Best Practices from the Bench

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Michael Libuser)

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

The Legal Intelligencer

(by Steve Antonelli)

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

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

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

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

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

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

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

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

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

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

Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers in all phases of labor and employment law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling. Contact him at 412-394-5668 or santonelli@babstcalland.com.

To view the full article, click here.

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

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

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Joseph Schaeffer)

D.C. Circuit Delivers EPA a Loss on Startup, Shutdown, and Malfunction Waivers under the Clean Air Act

Environmental Alert

(by Joseph Schaeffer and Gina Buchman)

On March 1, 2024, the D.C. Circuit issued its long-awaited decision in Environmental Committee of the Florida Electric Power Coordinating Group, Inc. v. EPA, No. 15-1239 (D.C. Cir. Mar. 1, 2024), in which it vacated the majority of an Environmental Protection Agency (EPA) final agency action commonly referred to as the 2015 SSM SIP Call.  The agency action required states to remove provisions in their state implementation plans (SIPs) that insulate sources from liability for excess emissions occurring during periods associated with startups, shutdowns, and malfunctions (SSM). To understand the impact of this decision, it is necessary to understand both what was at issue and what the Court did (and did not) decide.

Environmental Committee is the product of a long-simmering dispute over SSM provisions.

Under the Clean Air Act, 42 U.S.C. § 7401 et seq., states are required to adopt and submit for EPA’s approval SIPs that provide for the implementation, maintenance, and enforcement of national ambient air quality standards within their jurisdictions. 42 U.S.C. § 7410(a)(1). From the time that SIPs were first required as part of the 1970 amendments to the Clean Air Act, many states have included special provisions governing SSM events. These SSM provisions generally fall into one of four categories:

1. Automatic exemption provisions excluding SSM periods from otherwise applicable emissions rules;
2. Director’s discretion provisions allowing state officials to independently and conclusively determine that excess emissions during SSM periods are not violations of applicable emissions rules;
3. Enforcement discretion provisions allowing state officials to bar enforcement action for excess emissions during SSM periods; and
4. Affirmative defense provisions allowing sources to defend against all or some liability for excess emissions during SSM periods.

After years of sustained criticism of these provisions from environmental organizations, Sierra Club filed a rulemaking petition in 2011 that asked EPA to require states to remove SSM provisions from their SIPs. And in 2015 EPA responded by issuing a SIP call requiring 35 states and the District of Columbia to do just that. 80 Fed. Reg. 33840 (June 12, 2015).  Industry and many states then filed a petition for review with the D.C. Circuit raising two primary sets of issues: first, whether EPA properly exercised its authority to issue a SIP call and, second, whether EPA correctly determined that SSM provisions are prohibited under the Clean Air Act.

Environmental Committee imposes limits on EPA’s authority to reject SSM provisions while rejecting limits on EPA’s authority to issue SIP calls.

The Court’s decision first addressed whether EPA had properly exercised its authority to issue a “SIP call.” Under the Clean Air Act, EPA must issue a SIP call when it finds that a SIP is “substantially inadequate” to (1) attain or maintain the National Ambient Air Quality Standard, inadequate, (2) mitigate interstate pollutant transport, or (3) comply with any requirement of the Clean Air Act.  42 U.S.C. § 7410(k)(5). The petitioners argued that EPA issued the SIP call here without such finding and thus meeting the required preconditions for issuing a SIP call.  The Court, however, rejected petitioner’s argument and, in doing so, the Court reached four significant conclusions:

1. EPA is not required to make factual findings that a SIP provision prevents (or will prevent) compliance with national ambient air quality standards where, as in this case, EPA has found that a SIP provision has substantial legal deficiencies.  It need only identify the deficiency and explain why it is substantial;
2. EPA may invoke the need for a SIP “to otherwise comply with any requirement of [the Clean Air Act],” 42 U.S.C. § 7410(k)(5), to issue a SIP call requiring correction of individual provisions even where the SIP as a whole is adequate to meet national ambient air quality standards;^[1]
3. EPA may issue SIP calls to clarify ambiguous provisions, even where states have issued post hoc interpretative letters, because clarity benefits all stakeholders’ ability to police compliance with the Clean Air Act; and
4. EPA may, but is not obligated to, consider costs and benefits before issuing a SIP call.

Having decided that EPA properly issued a SIP call, the Court next addressed whether EPA could lawfully require states to remove SSM provisions from their SIPs. Under the Clean Air Act, SIPs must “include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of [the Clean Air Act].” 42 U.S.C. § 7410(a)(2)(A). Because SSM provisions represent a temporary departure from ordinarily applicable emissions rules, EPA argued in its SIP call that they violate the statutory requirement that an “emission limitation” “limit[] the quantity, rate, or concentration of emissions of air pollutants on a continuous basis.” 42 U.S.C. § 7602(k) (emphasis added). The Court found that it did not need to decide that issue, however, because EPA had predicated the SIP call on the mistaken conclusion that SIPs must include emission limitations.

The Court held that the Clean Air Act requires a SIP to contain an “emission limitation” only as “necessary or appropriate” to meet applicable requirements under the act. 42 U.S.C. § 7410(a)(2)(A). Provisions that are not “necessary or appropriate” to meet applicable requirements under the Clean Air Act thus can be included in a SIP without needing to meet the definition of an “emission limitation.” Those provisions instead can be considered to be “other control measures, means, or techniques.” Id. The Court accordingly held that EPA cannot call a SIP “solely on the ground that [a measure] fails to meet the statutory definition of an ‘emission limitation’—a definition it did not need to satisfy.” Environmental Committee, at *36. Rather, EPA must determine first that it is “necessary or appropriate” for the emissions rules subject to SSM provisions to operate on a continuous basis. Because EPA did not do so, it failed to establish that SIPs were subject to call for including SSM provisions authorizing automatic exemptions, director’s discretion, or complete affirmative defenses to noncompliance.

Though siding with the petitioners’ position on SSM provisions in most respects, the Court notably upheld the SIP call in two cases. First, the Court determined that EPA could call a SIP to clarify an ambiguous provision that would be unlawful under certain interpretations. In this case, the Court denied the petitions for review as to Tennessee’s overbroad enforcement discretion provision that could be read to allow the state to foreclose EPA enforcement actions and citizens suits. And second, the Court held that states cannot include affirmative defense provisions in their SIPs that limit the available relief for violations of emissions rules, such as provisions that block EPA and citizens from seeking monetary penalties. Doing so would unlawfully remove the authority to determine remedies that Congress vested exclusively in the judiciary.

Environmental Committee’s long-term impact is uncertain.

The Court’s decision preserves SSM provisions for the foreseeable future, and also supports the Clean Air Act’s core principle of cooperative federalism.  The Court reminds the litigants that EPA is obligated to set permissible concentrations of air pollutants and it is the states that determine how they will meet those air quality standards consistent with their particular circumstances and priorities.  Environmental Committee, at *22. The petitioner’s victory here is a reminder to EPA of its constitutional mandate.

But the petitioners’ victory might be short-lived. As Judge Nina Pillard noted in partial dissent, the Court’s partial vacatur of the SIP calls rests on EPA’s failure to establish that operation of emissions rules on a continuous basis (i.e., free from SSM provisions) is “necessary or appropriate” to meet applicable requirements under the Clean Air Act. Environmental Committee, at *27 (Pillard, J., dissenting). Calling this a “low bar,” she speculated that EPA might not even be required to make a factual showing and offered several arguments that EPA might make to support its rejection of SSM provisions. Id. The Court’s rejection of proposed limits on EPA’s authority to issue SIP calls will also help clear the path if EPA were to accept Judge Pillard’s invitation. Whether EPA does so, however, is another matter—particularly with a looming presidential election. And, of course, there is no guarantee that any reissuance of the SIP call would not be met with another legal challenge.

For more information on this decision in the D.C. Circuit or other related Clean Air Act matters, please contact Joseph V. Schaeffer at (412) 394-5499 or jschaeffer@babstcalland.com or Gina Falaschi Buchman at (202) 853-3483 or gbuchman@babstcalland.com.

^[1] This conclusion is arguably dicta as the Court determined that EPA met its factual burden even if it were to apply an “as-a-whole” standard.

Developments in Data Privacy

PIOGA Press

(by Ember Holmes and Justine Kasznica)

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

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

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

Expanded Definition of “Personal Information” and Related Notification Requirements

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

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

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

Federal Regulation Compliance

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

Next Steps

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

To view the full article, click here.

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

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

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

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

PADEP Releases Final Guidance Regarding Trenchless Technology

FNREL Water Law Newsletter

(Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

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

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

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

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

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

Draft Assessment Book and Integrated Water Quality Report

FNREL Water Law Newsletter

(Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

Draft Assessment Book and Integrated Water Quality Report

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

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

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

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

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