Articles, Alerts & Perspectives

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

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

FNREL Water Law Newsletter

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

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

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

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

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

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

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

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

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

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

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

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

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

PADEP Issues Draft 2024 Pennsylvania Integrated Water Quality Report

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

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

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

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

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

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

City & State Pennsylvania Magazine

(by Jim Chen)

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

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

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

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

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

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

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

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

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

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

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

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

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

PIOGA Press

(By Gary Steinbauer and Christina Puhnaty)

On December 2, 2023, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its final Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (Final Rule). The Final Rule comes more than two years after EPA published its initial proposal on November 15, 2021 (Initial Proposal) and a supplemental proposal on December 6, 2022 (Supplemental Proposal) (collectively, the “Proposals”). According to EPA, the agency received over one million comments on the Proposals. (For information on the Proposals, please see our November 11, 2021 and December 12, 2022 articles.) This Alert focuses on critical aspects of the Final Rule, including key changes that EPA made since issuing the Proposals.¹ 

Brief Overview of Methane Rule

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

Key Requirements of Methane Rule

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

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

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

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

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

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

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

³ Specified affected facilities constructed, reconstructed, or modified after September 18, 2015 and on or before November 15, 2021 are regulated under Subpart OOOOa.

PFAS and RCRA: EPA’s Latest Proposed Rules Significantly Expand Corrective Action Authority

Environmental Alert

(by Sloane Anders Wildman and Jessica Deyoe)

On February 8, 2024, the U.S. Environmental Protection Agency (EPA) published two proposed rules to address per- and polyfluoroalkyl substances (PFAS) and other emerging contaminants under the authority of the Resource Conservation and Recovery Act (RCRA). Specifically, EPA is proposing to add nine PFAS (including their salts and structural isomers) to the list of “hazardous constituents” in Appendix VIII of 40 C.F.R. Part 261. EPA is also proposing to clarify, by regulation, that emerging contaminants – including PFAS – can be addressed under RCRA’s Corrective Action Program. Comments on the first proposed rule, Listing of Specific PFAS as Hazardous Constituents, are due April 8, 2024, and comments on the second proposed rule, Definition of Hazardous Waste Applicable to Corrective Action for Releases from Solid Waste Management Units, are due March 11, 2024.

EPA first announced its intent to regulate PFAS under RCRA in its 2021 PFAS Strategic Roadmap. This came as a direct response to a petition by New Mexico’s Governor Michelle Lujan Grisham requesting the EPA list PFAS as RCRA Subtitle C hazardous waste, either as a class of chemicals or as individual chemicals. Then, in November 2021, the EPA announced it would initiate rulemaking for two RCRA actions, which have now been published in the Federal Register as proposed rules more than two years later.

RCRA and the Regulation and Cleanup of Hazardous Waste

RCRA gives EPA the authority to control and regulate hazardous waste from “cradle-to-grave” under its Subtitle C regulatory framework. 42 U.S.C. §§ 6921-6934; 40 C.F.R. Parts 260 – 273. RCRA also gives EPA the authority to require cleanup of hazardous waste under its Corrective Action Program. 42 U.S.C. § 6924(u). While both Subtitle C and the Corrective Action Program apply to “hazardous wastes,” the two programs differ in scope because each relies on a different definition of “hazardous waste.”

Scope of RCRA Corrective Action Program

RCRA’s Corrective Action Program applies to a broader category of substances than RCRA’s Subtitle C program because it is not tied to Subtitle C’s regulatory definition of hazardous waste. Specifically, RCRA section 3004(u) provides that any permit issued to a treatment, storage or disposal (TSD) facility under Subtitle C after November 8, 1984 must require corrective action for all releases of hazardous waste or hazardous constituents from solid waste management units at the facility. See 42 U.S.C. § 6924(u). EPA also can require corrective action through the issuance of RCRA administrative orders. The list of hazardous constituents for which EPA requires evaluation and cleanup under the Corrective Action Program is found in 40 C.F.R. Part 261 Appendix VIII. RCRA’s Corrective Action Program is implemented through EPA guidance and policy documents to assist entities conducting cleanups.

Scope of RCRA Subtitle C

In contrast to the Corrective Action Program, Subtitle C governs “hazardous wastes,” as defined under EPA regulations, which is a narrower definition than under the RCRA statute. Under Subtitle C regulations, a material must be classified as a “solid waste” before it can be classified a hazardous waste. Generally, a solid waste is a hazardous waste if it is listed in EPA regulations as such, if it exhibits one of four hazardous characteristics, if it is a mixture of hazardous and non-hazardous waste, or if it is derived from a hazardous waste. See 42 U.S.C. § 6903(5); 40 C.F.R. §§ 261.21–.24 & 261.31–261.33. Subtitle C provides a rigid regulatory framework governing the generation, transportation, treatment, storage and disposal of hazardous wastes, including the permitting of TSD facilities. As noted above, TSD permits are required to include corrective action to address releases of hazardous waste, and those corrective action obligations apply to both hazardous waste and hazardous constituents.

EPA’s Proposed Rules

1. Listing of Specific PFAS as Hazardous Constituents

EPA is proposing to add nine PFAS (including their salts and structural isomers) to the list of “hazardous constituents” in Appendix VIII of 40 C.F.R. Part 261. If finalized, this rule will expressly identify nine PFAS for consideration in RCRA facility assessments and, where necessary, further investigation and cleanup through the RCRA corrective action process at RCRA TSD facilities. The nine PFAS are: PFOA, PFOS, PFBS, PFNA, PFHxS, PFDA, PFHxA, PFBA, and GenX. EPA estimates that there are 1,740 TSD facilities with solid waste management units that have released or could release any of the nine PFAS proposed to be listed and, as such, could be subject to additional corrective action requirements under this proposed rule. 89 Fed. Reg. at 8607. Notably, EPA is not currently proposing to list any PFAS as “hazardous wastes” subject to RCRA Subtitle C’s full “cradle to grave” regulatory requirements. However, EPA has stated that “[a] hazardous constituent listing is a step toward a potential hazardous waste listing” and that “[i]f finalized, this hazardous constituent listing would form part of the basis for any future action the Agency may take to list these substances as a hazardous waste.” Id. at 8609.

2. Definition of Hazardous Waste Applicable to Corrective Action for Releases from Solid Waste Management Units

EPA’s second proposed rule would clarify that emerging contaminants can be cleaned up through the RCRA corrective action process and therefore that EPA’s authority to address emerging contaminants is not limited by the narrower regulatory definition of hazardous waste in RCRA Subtitle C. While this proposed rule does not directly address PFAS, it facilitates the use of RCRA corrective action authority to address emerging contaminants, such as PFAS, at RCRA permitted TSD facilities. EPA intends that this revision codify the Agency’s existing interpretation of RCRA, which allows it to address releases from solid waste management units of all substances that meet the broader statutory definition of hazardous waste. Therefore, EPA is proposing to modify 40 C.F.R. § 260.10 to make clear that the statutory definition of hazardous waste applies to corrective action for release of hazardous waste from solid waste management units.

Impact of Proposed Rules

Both rulemakings would vastly expand the universe of sites subject to RCRA corrective action and the universe of substances that would need to be assessed and addressed under RCRA. They also lay the groundwork to regulate PFAS as a hazardous waste, subject to the full suite of RCRA’s Subtitle C hazardous waste management regulations. In addition, if PFAS are designated as hazardous wastes, they would automatically be considered “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund). This, in turn, would result in an even greater expansion of EPA’s authority to require cleanup of PFAS contaminated facilities and potentially result in the re-opening of sites that have already been closed under Superfund.

As the federal and state governments take multiple actions across many programs to address PFAS, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. Visit the PFAS Perspectives webpage for timely legal and regulatory information affecting businesses and industries.

For further information, please contact Sloane Wildman at 202-853-3457 or swildman@babstcalland.com, Jessica Deyoe at 202-853-3489 or jdeyoe@babstcalland.com, or your client service attorney at Babst Calland.

Pennsylvania Senator Yaw Introduces Bill to Repeal RGGI

Environmental Alert

(By Kevin Garber and Jessica Deyoe)

On February 2, 2024, Pennsylvania Senator Gene Yaw introduced SB 1058 to repeal the Regional Greenhouse Gas Initiative CO₂ Budget Trading Program regulation that the Environmental Quality Board promulgated in 2022. Senator Yaw stated that “RGGI is wrong for Pennsylvania” and believes that Pennsylvania would be better suited by an “environmentally responsible energy policy that recognizes and champions Pennsylvania as an energy producer.” He further stated that RGGI would leave thousands of Pennsylvanians struggling to pay their utility bills and would have a detrimental impact on the reliability of the region’s electric grid.

In part, this bill comes as a response to Governor Shapiro’s appeal of a November 2023 ruling by the Pennsylvania Commonwealth Court, which held that the RGGI regulation was an unconstitutional tax and declared the rule to be void. See Bowfin KeyCon Holdings, LLC et al v. Pennsylvania Department of Environmental Protection and Pennsylvania Environmental Quality Board (No. 247 M.D. 2022). It also comes not long after members of the Pennsylvania General Assembly met with members of the Ohio General Assembly to discuss the reliability of the mid-Atlantic power grid PJM manages. PJM is the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. PJM projects 20 percent of its existing capacity will retire before 2030.

Earlier, on December 12, 2023, Senator Yaw introduced SB 832 to create an Independent Energy Office in Pennsylvania.  The Office would be a nonpartisan independent agency committed to providing at least one statewide energy report to each legislative session that reviews the use of fossil fuels, renewable energy, and nuclear power to meet the Commonwealth’s energy needs and working with the General Assembly to establish a statewide energy plan.

For more information on RGGI or other related matters, please contact Kevin Garber at (412) 394-5404 or kgarber@babstcalland.com, Jessica Deyoe at (202) 853-3489 or jdeyoe@babstcalland.com, or any of our other environmental attorneys.

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

The Legal Intelligencer

(by Michael Korns and Anna Hosack)

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

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

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

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

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

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

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

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

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

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

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

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

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

Legislative & Regulatory Update

The Wildcatter

(By Nikolas Tysiak)

Happy New Year! After a hiatus, we are back with new laws and cases for your information.

In Nicholson v. Severin POA Group, LLC, 895 S.E.2d 927 (W. Va. I.C.A. 2023), the West Virginia intermediate court of appeals was asked to interpret the meaning of an oil and gas reservation in a Doddridge County deed. The original deed involved a conveyance from F. W. Severin to L. D. Nicholson for 117.55 acres, excepting and reserving “one-sixteenth of all the oil and gas in and under said land.” In 2022, this language gave rise to a dispute as to whether Severin retained a 1/16 interest in oil and gas, or a ½ interest in oil and gas. After reviewing several older cases involving different iterations of oil and gas reservations, most of which involved either fractional splits between oil and gas rights (i.e., 1/16 oil and ½ gas) or referenced royalty as to the oil, gas, or both, the intermediate court determined the language of Severin’s reservation did not include the same factors creating ambiguity, that the Severin reservation was therefore not ambiguous, and concluded that Severin, and his successors in title, only retained an undivided 1/16 interest in oil and gas, based on the unambiguous language of the original deed.

In DD Oil Company v. State ex rel Ward, — S.E.2d —, 2023 WL 8588491 (W. Va. I.C.A.), DD Oil Company had permits to drill several wells in Ritchie County. The West Virginia Department of Environmental Protection (WVDEP) issued violations against DD Oil, which required DD Oil to cease all drilling operations and caused a protracted administrative and judicial review process. More than a year after the initial notice of violation, and after expiration of all the permits issued to DD Oil, WVDEP withdrew its notice of violation. The net effect of these actions was that DD Oil was never able to fulfill the requirements of its permits but was also banned from further action due to the expiration of those same permits. An administrative review of WVDEP’s notices of violation was pending before the West Virginia Environmental Quality Board (“EQB”) which hears administrative appeals on permitting matters, at the time when the notices were withdrawn. The EQB reported being troubled by the actions of WVDEP requested to DD Oil, but ultimately the EQB felt it could not offer relief as the source of the dispute technically no longer existed, and also felt that they could not provide the type of relief request by DD Oil – an extension of the relevant permits to make up for lost time caused by WVDEP’s actions. The West Virginia Intermediate Court disagreed, finding that the EQB was perfectly qualified to offer relief under the circumstances, that the relief requested by DD Oil was reasonable and within EQB’s power to give, and that the withdrawal of the violation notices did not negate the EQB’s authority to give the relief requested. The Court referred the case back to the EQB for further adjudication in accordance with its holdings.

In Lodge v. Hoyt, 2023 WL 8234312 (Pa. Super. 2023), surface owners of a 111-acre tract brough a quiet title action against various parties (the “Hoyt Appellants”). While acknowledging that their interests in the 111-acre tract were subject to a reservation of oil and gas from 1893 benefitting the predecessors to the Hoyt Appellants, Lodge claimed the reservation was void as to their 111 acres. In addition, another party (the “Solomons”) claimed title to the oil and gas under the 111 acres through a Tax Claim Deed from 1981. Lodge further claims that the tax claim deed was void as to the oil and gas under the 111 acres because the tax claim deed reference to effected acreage contained a substantive, typographical error. The Trial Court found that the statute of limitations regarding challenging tax claim deeds had expired, and so the 1981 tax claim deed was beyond challenge, essentially vesting the oil and gas rights with the Solomons. The Superior Court determined that there was a material issue of fact that needed resolution to determine whether the Tax Claim deed to the Solomons mistakenly included mineral rights that had not been assessed and remanded to the trial court for additional findings.

The West Virginia Legislative session started in January and several bills of note have been introduced, but not yet passed. A few critical ones, which do not appear to be favorable to the oil and gas industry, are listed below:

Senate Bill 235 and House Bill 4292 – proposed to introduce a new section to the West Virginia code, providing for a monetary penalty assessable against an operator who fails to pay royalties for mineral production for six months, equal to three times the market of the extracted minerals for which payment was due, plus reasonable fees and costs incurred to enforce the landowners’ rights as W. Va. Code §36-4-9c.

Senate Bill 270 and House Bill 4722 – proposed to create a tax credit against the severance tax relating to mineral production for private taxpayers that make infrastructure investments in roads and bridges. As written, the bills currently do not apply to oil and gas producers.

Several Dormant Mineral Act and/or Marketable Title Act cases arose from Ohio 7th District Court of Appeals as well:

Jeffco Resources, Inc. v. Abrecht, 2023-Ohio-4712 (7th Dist. December 22, 2023) – Surface owners in Harrison County did not exercise reasonable due diligence in determining owners of severed oil and gas interest, as there was sufficient information in probate and other records to extend the search beyond the “record title baseline” search.

Kemp v. Rice Drilling D, LLC, 2023-Ohio-4732 (7th Dist. December 20, 2023) – Surface owners in Belmont County made a claim to a severed ½ oil and gas interest from 1917 under their land via the Marketable Title Act. The root of title deed included language stating, “ALSO RESERVING one-half of the oil and gas royalty as heretofore reserved.” The Court of Appeals decided this reference was not a sufficiently specific identification of a recorded title transaction for the purposes of the Marketable Title Act because it contains an error as to the interest previously reserved. We note that this decision appears to go against the spirit of Erickson v. Morrison, 2021 Ohio-746 (2021), an Ohio Supreme Court case. Consequently, there remains a question as to whether the above case is good law in Ohio.

Crum v. Mooney, 2023-Ohio-4451 (7th Dist. December 6, 2023) – Surface owners in Monroe County made a claim to a severed oil and gas royalty interest from 1898 under their land under the Marketable Title Act. The court found that the Marketable Title Act did not extinguish the severed royalty interest. The court further found that the 1898 severance created a fixed fractional 1/16 royalty interest.

White Revocable Trust v. Kemp, 2023-Ohio-4513 (7th Dist. December 5, 2023) – Surface owners in Belmont Conty made a claim to severed oil and gas interest from a 1930 severance deed reservation. The surface owners’ 1970 root of title deed contained the following language “Said premises also subject to oil and gas lease previously given and also subject to easements for rights of way as previously given and conveyed.” The court found that there was no reference to a specific record title transaction containing an oil and gas severance, and that the reference to the prior lease was not sufficient to give the surface owners notice that there was a severed mineral interest affecting the land. Factually, the parties that granted the lease at issue did not own oil and gas rights, resulting in the lease effectively being unenforceable, and therefore inapplicable as a title transaction for Marketable Title Act purposes.

Crozier v. Pipe Creek Conservancy, LLC, 2023-Ohio-4297 (7th Dist. November 28, 2023) – Surface owners in Belmont County make a Marketable Title Act claim against severed oil and gas mineral rights from 1930 underlying their property. The root of title deed contained a word-for-word repetition of the language used in the original 1930 reservation (excepting and reserving all the oil and gas). Nevertheless, the court found the reference to be a general reference without specific reference to a record title transaction and stated that the Marketable Title Act may serve to divest the severed mineral owners. We note that this decision appears to go against the spirit of Erickson v. Morrison, 2021 Ohio-746 (2021), an Ohio Supreme Court case. Consequently, there remains a question as to whether the above case is good law in Ohio.

As always, if you come across any interesting or applicable laws, court cases or regulations, please forward them on to us friendly folks of the Legislative and Regulatory Committee.

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

Court to rule on WV pooling statute challenge

GO-WV

(by Robert Stonestreet and Austin Rogers)

A federal appeals court has instructed a lower court to resolve a pending suit challenging the constitutionality of West Virginia’s oil and gas pooling and unitization law.  The federal district court previously declined to resolve certain constitutional issues presented in the suit on the grounds that those issues should be decided by a state court instead of a federal court.

In 2022, the West Virginia Legislature enacted Senate Bill 694 to revise West Virginia law governing the pooling and unitization of oil and gas formations associated with horizontal well development.  Pooling and unitization essentially involves combining separately owned properties into a single “unit” through which one or more horizontal wells are drilled.  The oil and gas produced from the horizontal well is then allocated among all the properties in the unit for purposes of calculating production royalties payable to the mineral owners.

Prior to Senate Bill 694 becoming effective on June 7, 2022, formation of a pooled unit for a horizontal well drilled through “shallow” oil and gas formations, which includes the Marcellus Shale, required consent of 100% of the mineral owners for all the properties to be included in the unit.  This 100% consent requirement did not apply to horizontal wells drilled through “deep formations” such as the Utica Shale.  One of the more significant changes made by SB 694 was to allow the West Virginia Oil and Gas Conservation Commission to approve units for shallow formations where at least 75% of the mineral owners consent, provided other requirements are also satisfied.  This means that up to 25% of a unit could potentially include properties for which the mineral owner did not consent to being part of a unit.

Before Senate Bill 694 became effective, a pair of mineral owners (Scott Sonda and Brian Corwin) filed a lawsuit in the federal District Court for the Northern District of West Virginia seeking to preclude the law from taking effect.  Governor Jim Justice was the only defendant named in the case.  In their suit, Sonda and Corwin alleged that the law was illegal for several reasons, including the claim that the law authorizes the unconstitutional taking of private property without just compensation and deprives landowners of due process of law.

Federal Judge John Preston Bailey initially dismissed all of their claims for two reasons.  First, Judge Bailey concluded that Sonda and Corwin lacked standing to bring the challenge because (a) their property had not been pooled into a unit without their consent and no operator had sought approval of a unit to include their property without their consent; and (b) the Commission, not the Governor, has the power to directly enforce Senate Bill 694.

Second, Judge Bailey ruled that, even if Sonda and Corwin established standing, Governor Justice had constitutional immunity from the suit because he had no direct authority to implement Senate Bill 694.  Rather, the Commission has the authority to implement the law.

Instead of dismissing their suit entirely, Judge Bailey granted leave for Sonda and Corwin to amend their complaint to name the Commission as a defendant instead.  Sonda and Corwin did so, and also named as defendants each person who serves on the Commission.  The amended complaint still does not allege that mineral properties owned by Sonda or Corwin were pooled into a unit without their consent.  Instead, the amended complaint attempts to address the standing issue by alleging that Senate Bill 694 effectively eliminates their ability to challenge whether they are being fairly compensated for oil and gas produced from their property that was pooled into a unit with their consent.

The Commission moved to dismiss the amended complaint for various reasons, including Sonda’s and Corwin’s lack of standing to bring the case.  Judge Bailey did not address the standing issue, but agreed with the Commission with respect to three of the five claims asserted by Sonda and Corwin.  Judge Bailey then abstained from addressing the Commission’s arguments for dismissal of the other two claims, which asserted constitutional violations, because he believed that those issues were more appropriate for resolution by a state court instead of a federal court.

The Commission appealed Judge Bailey’s decision to abstain from addressing the arguments for dismissal of the constitutional claims.  By opinion issued on January 31, 2024, the Fourth Circuit Court of Appeals ruled that Judge Bailey should not have abstained.  The appellate court also directed Judge Bailey to first address the standing issue before addressing any other pending issue.  The opinion does not specify a deadline for Judge Bailey to rule on those issues.  If Judge Bailey finds that Sonda and Corwin continue to lack standing to assert their claims, the case will presumably be dismissed on that ground alone.  If Judge Bailey concludes that Sonda and Corwin have established standing, Judge Bailey will likely address the merits of the Commission’s other arguments for dismissal.

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.

Click here, to view the article online in the February issue of Go-WV News.