Articles, Alerts & Perspectives

Avoiding the Call –a Proactive Approach to Land Use and Zoning

Developing Pittsburgh

(By Michael Korns)

It is a tough market for developers, with both supply chain issues and inflation limiting your options. But luckily, you have found a great piece of property to develop. You have the perfect use in mind; you have your financing lined up; your engineers and architects have determined that you should have no issues with stormwater or permitting; utilities are available; and everything is good to go. You are deep into the due diligence period, perhaps even past it, when you get “the call” with news you never want to hear: “Just a heads up, there may be a problem with the zoning.”

Of course, you looked at the zoning already. You checked the Use Table for this zoning, and you saw your use was listed. Or at least, something close enough was listed. And sure, the definition in the ordinance is a bit strange, and there are some nonsensical technical requirements that are confusing, but there must be a solution? But now the municipality is telling you that you are looking at months of hearings and approvals, and you are stuck in limbo and bleeding money with no guarantee this project will ever get off the ground.

Does this sound realistic to you? Unfortunately, as a land use and zoning attorney, it is all too realistic to me. Many times, when a developer calls, they are facing a situation similar to the one described above. Unfortunately, at this stage, there may be no way to save the project. Even if the issue can be resolved, the project can be significantly delayed, and in a business where timing is everything, a “perfect project” can turn into a black hole waiting for the legal process to unfold.

To prevent this, developers need to rethink their approach to land use and zoning. Rather than thinking of zoning as a middle timeline issue, instead, zoning must be one of the very first questions to be considered on any project. After all, zoning can tell you not just what you cannot do with a property, but more importantly what you can do, and developers should be looking at an ordinance with an eye on all options.

Rule 1 – Know Your Use

Only the most inexperienced developer would fail to check the Use Table for the property they want to develop. But a zoning use definition must be parsed very carefully before a commitment of funds. Although there are some commonalities among zoning ordinances, and ordinances can borrow from one another, across Pennsylvania, there are hundreds of zoning ordinances, each with its own quirks, rules, and definitions. Moreover, when each ordinance was adopted, it reflected the priorities of the governing body at that time. In some cases, that can mean certain definitions will be painfully exacting and detailed, likely reflecting some controversy at the time of drafting, while on the other hand, large swaths of the ordinance may have been copied from another municipality with barely a glance.

This situation occurs frequently with new and novel forms of business or entertainment. A zoning ordinance may have a provision for a recreation facility, but does that include a high-end bowling alley? A concert venue? A sports training facility? Does a co-working facility fall under an office definition? What about residential short-term rentals? Is it defined at all? Does it fall under a hotel use? It is critically important that you do not attempt to simply assume what the drafters must have “meant” by the ordinance and focus on what the definition actually says.

As municipal solicitors, we have reviewed many plans and discovered that the applicant had only a vague sense of how the property would be used in practice. While they knew what they wanted to build, they didn’t know how it would be used, which is the critical question when seeking a zoning use approval. We have reviewed applications where the applicant had no answer to questions such as what types of activities would be on the property, whether there would be tournaments or spectators, whether there would be memberships or classes, the number of people to be on the site at any one time, hours of operations, types of equipment, whether food would be permitted, whether alcohol would be permitted, or whether indoor or outdoor activities would occur. Many of these applicants had spent significant funds on property acquisition and site design yet could not provide the municipality with the bare minimum of information necessary to determine whether zoning approval was even possible at this location.

To avoid this, it is usually best to do everything possible to make your project fit the ordinance, rather than the other way around. Look at how the ordinance defines your use, and follow that to the best of your ability, rather than stretch a definition. An early meeting with the municipality to see how they view the use is extremely valuable. If this is early enough in the project, it may be possible to change the project parameters to meet the municipality’s expectations, while later, you may have already applied for other permits or financing which limit your options. One extremely valuable thing to remember is that you can apply for and receive these approvals even before you own the property. So long as you have the permission of the current property owner or a valid sales agreement, you can go through the entire approval process before taking on ownership liability at all.

Rule 2 – Sweat the Small Stuff… Performance Standards Matter

It is very important to understand not just the definition of your use, but also the performance standards that apply. Just to take one very straightforward rule, consider all the issues that can come from a setback requirement. If there is a setback rule that applies to structures, how is a structure defined? Is there a specific definition of “side yard”? If a setback from a road is required, does that apply to an unopened street or abandoned alley? What about easements? What is permitted in the setbacks? Do things like air conditioning units count for setback purposes? None of those are hypothetical questions, and each reflects a question we have been asked to examine on a specific property. There are countless other questions that can be asked for this issue alone, and each performance requirement, whether for landscaping, parking, or stormwater, brings its own set of questions and issues.

Regardless of what is in the zoning ordinance, there is at least one form of relief that is always available: a variance. However, as a variance is a request for relief from a zoning ordinance, the burden for the applicant is very high. We once handled a matter for a developer who had already applied for seven different variances for a single project in the City of Pittsburgh. Besides needing to meet the legal standard for each one, this total list of requested variances gives ammunition to NIMBY (“Not In My Back Yard”) groups eager to argue that the needed variances were entirely out of character for the ordinances. This matter was appealed by a NIMBY property owner.

Rather than continuing the appeal, we did a new review of the project, this time with zoning as a key criterion for how the entire project would be designed. After a full review and analysis of the ordinance and the project, we were able to eliminate six of the seven variances to meet the ordinances’ performance standards and make minor tweaks to the design that did not impact the core project. This allowed us to clearly articulate that we worked within the ordinance and had designed a project that worked with, rather than fought against, the ordinance. When this new design was appealed, we prevailed in the Commonwealth Court. During oral argument, one judge stopped my argument simply to declare, “My gosh, you’ve done everything they asked for. What more can you do?” It was no surprise that we won the case and were approved for a large new commercial project in one of the hardest-to-build neighborhoods in the City of Pittsburgh.

Rule 3 – The Sunk Cost Fallacy

Sometimes, no matter how carefully and creatively you review the ordinance, the truth is, your project is just not going to fit with the ordinance as drafted. In this case, the variance option should be considered. If you are going with this option, it is critical that you have sought the minimum variance possible. If you cannot comply with the ordinance entirely, at least showing that you came as close as possible is still extremely valuable.

But you may find that even seeking a variance is a Hail Mary play. You need to be prepared to walk away. If you do not own the property in question, that may be easier. If you do own the parcel, then you need to look back at the Use Table to see what can be done. Every property has some authorized uses, and if it did not, then you would have an argument that the property has been legally taken by the municipality. Having blocked one project, the municipality may be wary of blocking a second one, particularly if it’s well-tailored to the zoning ordinance. You might also consider a substantive validity challenge, a rezoning, or a curative amendment. Avoid tunnel vision and look to the best use that fits the ordinance, even if it is not what you originally planned.

Conclusion

Navigating the complexities of zoning and land use is an essential endeavor for developers seeking success in their projects. It is crucial for developers to adopt a proactive approach to zoning from the very beginning. By thoroughly understanding the specific rules, definitions, and performance standards within each municipality’s ordinance, developers can avoid potential pitfalls and align their projects with the local requirements. By working together with your land use attorney, you can avoid the nasty pitfalls of a zoning surprise and spare yourself from getting “the call.”

Michael Korns is senior counsel in the law firm Babst Calland.  For questions related to the topic addressed in this article, contact Michael Korns at mkorns@babstcalland.com or 412.394.6440.

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PHMSA Releases Proposed Rule Addressing 2020 PIPES Act Gas Distribution Mandates

Pipeline Safety Alert

(by Jim Curry, Varun Shekhar and Chris Kuhman)

On September 7, 2023, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published in the Federal Register a Notice of Proposed Rulemaking (NPRM) titled, “Pipeline Safety: Safety of Gas Distribution and Other Pipeline Safety Initiatives.”  The NPRM implements provisions from the Leonel Rondon Pipeline Safety Act – part of the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020 – as well as a National Transportation Safety Board (NTSB) recommendation issued in response to an incident that occurred on a gas distribution pipeline system in Massachusetts’ Merrimack Valley on September 13, 2018.

PHMSA proposes to revise certain pipeline safety regulations in 49 C.F.R. Parts 191, 192, and 198.  While the NPRM focuses largely on gas distribution pipelines, PHMSA also proposes changes that would apply to all Part 192 regulated pipelines, including gas transmission and gathering pipelines.  Finally, PHMSA proposes to apply annual reporting requirements to small liquified petroleum gas (LPG) operators.

Comments on the NPRM are due on November 6, 2023.  Key aspects of the NPRM include:

Proposed Amendments to Part 191 Reporting Requirements:

• PHMSA proposes to collect additional information from operators of distribution lines, such as the number of miles of low-pressure service lines, including their overpressure protection methods.  For small LPG operators, PHMSA also proposes to collect information on the number and miles of service lines, and the disposition of any leaks.  The reporting requirements for LPG operators are proposed in lieu of an integrity management program, as discussed below.

Proposed Amendments to Part 192 Safety Requirements:

General

• PHMSA proposes to eliminate certain amendments to Part 192 that the Agency adopted in response to the U.S. Court of Appeals for the D.C. Circuit’s (D.C. Circuit) decision in GPA Midstream v. DOT, 67 F.4th 1188 (D.C. Cir. 2023). In GPA Midstream, the D.C. Circuit vacated the requirements for gathering lines in an April 8, 2022 final rule, titled “Pipeline Safety: Requirement of Valve Installation and Minimum Rupture Detection Standards” (RMV Rule).  Shortly after the D.C. Circuit’s decision, the Agency issued another final rule amending various provisions in Part 192 to provide explicit exceptions for gathering lines from the requirements in the RMV Rule.  PHMSA proposes to reverse those amendments, in part, by removing the exception for gathering lines in the definitions of “Entirely replaced onshore transmission pipeline segments”, “Notification of potential rupture”, and “Rupture-mitigation valve” in Section 192.3.  PHMSA also proposes to adopt certain amendments to § 192.9 to require operators of regulated gathering lines to develop emergency response plans in accordance with the current version of § 192.615.  According to the NPRM, the Agency does not intend to extend the other requirements from the RMV Rule pertaining to rupture mitigation, valve installation, operation, and maintenance to gathering lines.

Design

• PHMSA proposes to amend § 192.195 requiring new, replaced, relocated, or otherwise changed district regulator stations that serve low-pressure gas distribution systems be equipped with at least two methods of overpressure protection. Operators would also be required to monitor the gas pressure at or near the location of overpressure protection devices with a system providing real-time notification capability in the event of an overpressurization event.

Construction

• PHMSA proposes to amend § 192.305 requiring operators to inspect new, replaced, relocated, or otherwise changed transmission lines and mains to ensure they are constructed in accordance with Subpart G. Operator personnel that perform the construction task would be prohibited from performing the required inspection.  There is, however, an exception for small operators in situations where the operator could only perform the inspection by using a third-party inspector.

Testing

• PHMSA proposes to amend § 192.517 requiring gas pipeline operators to maintain test records of pipelines operating below 100 psig, service lines, and plastic pipelines for the life of the pipeline – well beyond the current 5 year requirement. The records would also need to include certain information about the operator and pipeline that was tested, similar to what is currently required in § 192.517 for other pipelines.

Operations 

• PHMSA proposes to amend § 192.605 requiring operators of gas distribution pipelines to update their O&M procedures to account for the risk of an overpressurization event. This includes identifying and responding to overpressurization indications, as well as investigating, responding to, and correcting the cause of an overpressurization indication.  PHMSA also proposes to require that operators of gas distribution pipelines develop and follow a Management of Change (MOC) process when conducting certain activities. As part of the MOC process, operators would be required, among other things, to ensure that qualified personnel review and certify construction plans associated with installations, modifications, replacements, or upgrades for accuracy and completeness, before the work begins.

• For all gas pipeline operators, PHMSA proposes to expand the existing list of pipeline emergencies in § 192.615 for which operators must have an emergency response plan. Under the proposal, the list would include a notification of a potential rupture, a release of gas that results in one or more fatalities, and any incident deemed significant by the operator.  For gas distribution lines, the list would also include the unintentional release of gas and shutdown of gas service to 50 or more customers (or 50 percent of its customers if it has fewer than 100 total customers).  Operators would need to immediately notify the appropriate public safety answering point after receiving notice of any of the emergencies listed in § 192.615.  PHMSA also proposes certain regulatory amendments requiring gas distribution operators to update their emergency response plans to improve communications with the public during an emergency.

• PHMSA proposes to establish a new § 192.638 requiring operators of gas distribution pipelines to identify and maintain traceable, verifiable, and complete maps and records that document the characteristics of their pipeline systems that are critical to ensuring pressure control. If an operator does not have these records, it would be required to develop and implement procedures for generating or collecting them.

• PHMSA proposes to establish a new § 192.640 requiring operators of gas distribution pipelines to evaluate each construction project to identify potential activities during which an overpressurization event could occur at a regulator station. If the evaluation results in a determination that a potential for overpressurization exists, operators would be required to have qualified personnel at the regulator station to prevent or respond to an overpressurization event.  The NPRM provides an exception for systems with remote monitoring and automatic shutdown capabilities.

Maintenance

• PHMSA proposes to amend § 192.725 requiring operators to test in the same manner as a new service line each disconnected service line being returned to service. Records of these tests would need to be maintained for the life of the pipeline as proposed in § 192.517, discussed above.

• PHMSA proposes to amend § 192.741 requiring operators of gas distribution pipelines to monitor the outlet gas pressure at or near regulator stations in accordance with § 192.195, discussed above.

Distribution Integrity Management Program (DIMP)

• PHMSA proposes to exempt small LPG operators from the DIMP requirements in Subpart P but extend annual reporting requirements to those operators, as proposed under Part 191 discussed above.

• PHMSA proposes to amend § 192.1007 establishing additional criteria for operators of gas distribution pipelines to evaluate when identifying and implementing measures to address risks identified in DIMP plans. Specifically, operators would need to account for, among other things, risks associated with the age of the pipe and pipeline system, the presence of known issues, and the potential for overpressurizing the system.  Operators would also be required to implement measures to address those risks.  In addition, operators would be required to document that each regulator station meets the design standards in § 192.195, discussed above, or take certain actions to minimize the risk of an overpressurization event.

Proposed Amendments to Part 198 State Pipeline Safety Programs:

• PHMSA proposes to amend §§ 198.3 and 198.13 requiring states to use the State Inspection Calculation Tool to ensure an adequate number of safety inspectors are employed in their pipeline safety programs.

Babst Calland has prepared a redline of Part 192 to show how PHMSA’s proposed changes would affect existing regulations.  Please contact a member of our pipeline safety practice if you would like a copy of the redline.

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WVDEP Notifies Facilities of PFAS Reporting Requirements

Environmental Alert

(by Kip Power and Matt Wood)

At the end of August 2023, the West Virginia Department of Environmental Protection (WVDEP) began sending letters to facilities that the agency believes may be subject to new requirements to report production or use of specific per- and polyfluoroalkyl substances (PFAS).  The requirements are included in the recently passed House Bill 3189, also known as the PFAS Protection Act (“the Act”), which Governor Jim Justice signed into law on March 28, 2023.

PFAS have been linked to effects on the human immune system, cardiovascular problems, and cancer.  They are often referred to as “forever chemicals” because of their persistence in the environment and tendency to accumulate in people and animals over time. Broadly, the Act is intended to identify sources of PFAS that are impacting drinking water sources in West Virginia.

WVDEP’s recent form letter notifies recipients that under the Act, facilities that discharge to surface water under an applicable National Pollution Discharge Elimination System (NPDES) permit or to a Publicly Owned Treatment Works (POTW) under an industrial pretreatment program, “which manufacture or knowingly use or have used” certain PFAS in their production process since January 1, 2017, are required to report such use to WVDEP on or before December 31, 2023.  Specifically, the Act requires that these facilities report any PFAS that the United States Geological Service (USGS) found in its recent study of raw water from 279 West Virginia public water systems.  Under the Act, facilities are also required to report their use of other PFAS that WVDEP identifies as harmful to human health and potentially present in detectable levels in West Virginia waters.

The list of 12 PFAS identified in the USGS study is included in WVDEP’s June 2022 presentation to the Joint Legislative Oversight Commission on State Water Resources, available here.  USGS’s complete study is available here.  Note, however, that WVDEP’s letter includes a list of 15 PFAS that are subject to the reporting requirement, including three additional chemicals identified by WVDEP that were not on the USGS list.  Facility reports must include each chemical’s name, Chemical Abstracts Service number, and the amount used in each year from 2017 through 2022, as well as any other information requested by WVDEP to identify sources of PFAS.  If a facility discharges to a POTW, WVDEP will forward the facility’s report to the POTW within 30 days of receipt.

Any facility subject to the PFAS reporting requirement under the Act must also implement, at a minimum, quarterly monitoring for its self-reported PFAS within six months of submitting its report.  How the monitoring requirement is documented will be based on the facility’s applicable permit.  For those facilities with a NPDES permit, WVDEP will modify the permit to include a monitoring requirement.  If a facility discharges to a POTW, the entity with pretreatment authority (either the POTW or WVDEP) will modify the facility’s pretreatment permit.  In their monitoring, facilities are required to use sampling and analytical methods approved by the U.S. Environmental Protection Agency (USEPA) or USEPA-recommended methods (if approved methods are not available).

While West Virginia moves to regulate PFAS at the state level, the federal government continues to progress along similar lines.  USEPA has proposed rules to establish a National Primary Drinking Water Regulation setting maximum contaminant levels for six PFAS.  It has also proposed to designate PFOA and PFOS (the two most prevalent and widely studied PFAS) as hazardous substances under CERCLA and is considering the same action for six other PFAS. These federal developments are some of the actions cited in the “Legislative Background” portion of the Act as justification for its enactment.

On a different legal front, a large number of PFAS-based lawsuits are pending against PFAS manufacturers, distributors and users, in many cases focusing on the historical use of aqueous film-forming foams (AFFF) in fighting liquid fuel fires at airports, military bases, and other industrial sites.  At least two federal Multi-District Litigation matters are currently pending, in the U.S. District Court for the District of South Carolina (AFFF Products Liability Litigation, MDL No. 2873) and in the U.S. District Court for the Southern District of Ohio (MDL No. 2433, encompassing wrongful death and personal injury actions involving discharges from Dupont’s Washington Works facility located near Parkersburg, West Virginia).  In June 2023, DuPont, Chemours, and Corteva reached a $1.185 billion agreement, and 3M Company reached a $10.3 billion agreement, to settle drinking water contamination claims by public water suppliers in the AFFF litigation.

As West Virginia, other states, and the federal government continue to take action to address PFAS across many program areas, Babst Calland attorneys will track these developments and are available to assist you with PFAS-related matters.  For more information on this development or related matters, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, or any of our other environmental attorneys.

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Clean Energy Tax Credits Tied to Labor Law Compliance

Firm Alert

(by John McCreary and Jim Curry)

The Inflation Reduction Act of 2022 (IRA) created a number of tax incentives in the form of credits and deductions to encourage development of alternative clean energy generation capacity. On August 28, 2023, the U.S. Department of the Treasury published a Notice of Proposed Rulemaking (NPR) detailing the conditions for receipt of the tax incentives and the potential penalties for non-compliance with those conditions by “taxpayers” – the developers and operators of qualifying clean energy projects. Increased Credit or Deduction Amounts for Satisfying Certain Prevailing Wage and Registered Apprentice Requirements, 88 Fed.Reg. 60018 (August 28, 2023). Uniquely, many of these incentives and potential penalties are premised on apprenticeship and prevailing wage requirements imposed by the Federal Davis-Bacon Act, 40 U.S.C. §3141, et seq. and its Related Acts (DBA). Compliance with prevailing wage and registered apprenticeship standards is now required for projects seeking the full value of various clean energy tax credits. Failure to comply with the rules will result in developers missing out on the full value of the credit and potentially the imposition of $5,000 multiplied by the total number of laborers and mechanics who were paid below the prevailing wage rate.

Until now the Davis-Bacon and Related Acts (Prevailing Wage Acts or PWA) have been applicable only to contractors actually employing “mechanics or laborers” on federally-funded projects “for construction, alteration, or repair” of “public buildings and public works” 40 U.S.C. §3142(a). The NPR, however, pushes compliance upstream to developers and producers seeking the tax advantages created by the IRA, who in all likelihood do not employ anyone covered by the Prevailing Wage Acts. This Alert provides an overview of how the NPR incorporates these labor laws into the clean energy tax incentives. It also highlights some of the anticipated difficulties developers and producers may encounter when attempting to take advantage of the tax benefits.

Clean Energy Tax Incentives and Penalties

The general intent of the NPR is revealed in Section III of its Preamble: “Generally, if a taxpayer satisfies the PWA requirements … the amount of credit or deduction determined is equal to the otherwise determined amount of the underlying credit or deduction multiplied by five.” 88 Fed. Reg. at 60019. With the multiplier, projects that satisfy the labor requirements can get a bonus rate of 30% for the investment tax credit or 1.5 cents per kilowatt hour for the production tax credit.

Developers and producers who intend to benefit from the incentives need to be cognizant of the penalties for non-compliance. Non-compliance can only be remedied if “the taxpayer makes a correction payment to the laborer or mechanic and pays a penalty to the Secretary of the Treasury ….” Id. The amount of the correction payment is the difference between wages paid and the prevailing wage, plus interest at 6% for the applicable period. Id.  The penalty amount payable to the Secretary is ‘‘$5,000 multiplied by the total number of laborers and mechanics who were paid wages at a rate below the [prevailing wage] rate … for any period’’ during the year.” Id. “Intentional disregard” of the PWA requirements subjects violators to correction payments of three times the difference in wages and a $10,000 penalty for each violation. Id. at 60020.

Apprenticeship Requirements

In addition to the PWA requirements the IRA imposes an apprentice labor hours requirement mandating that developers and producers use qualified apprentices on their projects. Id. at 60020. The NPR mandates employment of “one or more qualified apprentices” by “each taxpayer, contractor, or subcontractor who employs four or more individuals to perform construction, alteration or repair work with respect to the construction of a qualified facility ….” Id. The labor hours required to be worked by apprentices vary depending on when construction of the qualified facility commences: 10% for projects which began before 1/1/2023; 12.5% for projects begun after 12/31/22; and 15% for projects beginning after 12/31/23. Id. Exceptions to the Apprenticeship Requirements are available for demonstrated good faith effort that the taxpayer was unable to procure the necessary number of apprentices from a registered apprentice program, or if the taxpayer makes a penalty payment to the Secretary in the amount of $50 per laborer for each hour that should have been worked by apprentices. Id. A taxpayer determined to have intentionally disregarded the Apprenticeship Requirements faces a $500 per labor hour penalty.

Pre-Hire Project Labor Agreement (PLA) Provisions

Project Labor Agreements are authorized under Section 8(f) of the National Labor Relations Act, 29 U.S.C. §158(f). These are labor contracts applicable to a defined project. Although the IRA and NPR do not require the use of PLAs, as a policy matter they are encouraged on qualified projects: “Pre-hire project labor agreements may be used to incentivize stronger labor standards and worker protections in the types of construction projects for which taxpayers may seek increased credit, and having a project labor agreement in place may also help ensure compliance with PWA requirements. For these reasons, the proposed regulations would also provide that the penalty payment requirement would not apply with respect to a laborer or mechanic employed under a project labor agreement that meets certain requirements and any correction payment owed to the laborer or mechanic is paid on or before a return is filed claiming an increased credit amount.” Id. at 60029.

Anticipated Compliance Difficulties

Because the regulations proposed in the NPR are not yet final and will not become final until sometime next year there is no immediate need to comply. Nevertheless, it is also essential for developers and producers to anticipate the compliance issues that are evident from the NPR, and perhaps even to submit comments to the U.S. Department of the Treasury addressing those issues.

Most developers and producers do not employ “mechanics and laborers” and have no experience administering the Prevailing Wage and Apprenticeship Requirement – compliance with these requirements has heretofore always been the responsibility of the construction contractors. How will taxpayers demonstrate compliance with the PWA and Apprenticeship Requirements? The construction contracts between the taxpayer and its contractors at a minimum should require: (a) warranties that the contractor has complied with all PWA and Apprenticeship Requirements; (b) the contractor to provide to the taxpayer any documentation necessary to establish such compliance; and (c) should contain appropriate indemnification provisions if non-compliance by the contractor results in loss of deductions or credits and imposition of penalties on the taxpayer.

Taxpayers also need to consider the apparent advantages of adopting a Project Labor Agreement for qualified projects and weigh them against the often vehement opposition to such agreements by many competent merit shop contractors and their industry trade groups, such as the Associated Builders and Contractors. Although a developer or producer, as owner of the project, can require the use of a PLA such a requirement could limit the number of otherwise qualified contractors who will bid on a project.

Conclusion

This Alert only summarizes some of the more salient labor-related issues raised by the NPR. The final rule may restrict or expand upon these proposed requirements to take advantage of the tax incentives. Regardless, developers and producers intending to construct qualifying projects need to begin preparing for these compliance issues and others raised by the NPR.

If you have any questions about the Inflation Reduction Act and its implications on clean energy tax incentives, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com or Jim Curry at (202) 853-3461 or jcurry@babstcalland.com.

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EPA acts to usurp State’s standards for stream impairment classification

GO-WV

(By Kip Power and Robert Stonestreet)

The federal Environmental Protection Agency (EPA) has taken rare action in proposing to not only supersede the role of the West Virginia Department of Environmental Protection (WVDEP) in addressing water quality conditions in the state, but also seeking to impose a new standard for determining how to classify the biological health of West Virginia waters. Under Section 303(d) of the federal Clean Water Act, state governments are required to identify, every three years, waters within their borders that do not meet designated water quality standards. Such waters are deemed “impaired” for the water quality standards exceeded and are placed on what is known as a “303(d) List.” That list must include waters that fail to meet numeric water quality standards – i.e., specific concentrations of iron, aluminum, and other substances. Waters can also be “impaired” for failure to comply with “narrative” water quality standards – i.e., narrative descriptions of certain prohibited conditions, such as distinctly visible foam, sludge deposits, foul odors, or discoloration. West Virginia’s narrative standards also provide that waters can be considered “biologically impaired” if they contain “materials in concentrations which are harmful, hazardous, or toxic to man, animal or aquatic life.”

When a stream is placed on the 303(d) List, it is put in line for the development of a pollution reduction plan (known as a “total maximum daily load” or “TMDL”). Among other things, a TMDL results in more restrictive permit limits for discharges associated with the parameters deemed to be contributing to the impairment.

For more than 20 years, the WVDEP has used the West Virginia Stream Condition Index (WVS-CI) as the primary methodology for evaluating whether a stream is “biologically impaired.” Under WVSCI, a stream is considered impaired if it does not support a certain volume and diversity of insects and other aquatic life even if the stream meets all numeric water quality standards. In recent years, however, EPA has advocated for the use of a different methodology, known as the “Genus Level Index of Most Probable Stream Status” (GLIMPSS) to determine biological impairment for purposes of the 303(d) List. EPA has not, however, disapproved of the WVSCI methodology.

WVDEP submitted its most recent 303(d) List to EPA on May 5, 2023. Less than three months later, on July 19, 2023, EPA published a proposal to second-guess WVDEP’s judgment by adding 348 additional streams to WVDEP’s 303(d) List of “biologically impaired” waters. 88 Federal Register 46156. EPA determined these streams should be classified as impaired when evaluated using the GLIMPSS model, even though the WVDEP’s methodology (including consideration of a stream’s WVSCI score and other relevant factors) did not indicate biological impairment. EPA has never before used GLIMPSS to add a West Virginia stream to the 303(d) List.

EPA’s action is particularly noteworthy because the interpretation and enforcement of water quality standards is supposed to primarily fall to the states. In recent years, the West Virginia Legislature has even adopted legislation specifically addressing how the state’s narrative water quality standards should be interpreted, which does not include the use of EPA’s GLIMPSS methodology.

Assuming EPA follows through with its proposal, the result will be nearly 350 additional streams added to West Virginia’s 303(d) List even though WVDEP does not consider those streams impaired using the methodology previously approved by EPA. Consequently, WVDEP will have to expend resources to ascertain the reason for the “impairment” and develop TMDLs to improve the biological health of the stream to meet whatever criteria EPA may designate as a proxy for its GLIMPSS score. This also threatens to establish a precedent for EPA’s imposition of its view of other parts of the West Virginia narrative standards, all while bypassing the normal Legislative rulemaking process that applies to changes to water quality standards.

More information regarding EPA’s proposal may be found here: https://www.epa.gov/tmdl/wv-303d-list-public-notice. The public comment period ended on August 18, 2023.

For questions about this proposal, the federal Clean Water Act and its implementation in West Virginia, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, or Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com.

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

DEP Releases Interim Final Environmental Justice Policy

Environmental Alert

(by Sean McGovern and Amanda Brosy)

1. The Pennsylvania EJ Mapping and Screening Tool – PennEnviroScreen
   The Interim Final Policy requires use of the PennEnviroScreen tool, which will replace DEP’s current EJ Areas Viewer tool. PennEnviroScreen is already live, and DEP plans to begin using the tool on September 16, 2023 to determine whether facilities are located in EJ areas based on 32 environmental, health, socioeconomic, and demographic indicators. According to DEP’s Environmental Justice Policy Revision webpage, permit applicants planning to file a permit application on or after September 16, 2023 “must use the new PennEnviroScreen tool to determine if the permit’s facility is in an environmental justice area.” A 113-page “Methodology Document,” which is intended to explain the rationale behind the PennEnviroScreen tool, is also available.Industry should be aware that DEP plans to regularly update the criteria used to evaluate areas where the Interim Final Policy applies (EJ areas). To allow for a level of certainty, however, the Interim Final Policy states that “the EJ Areas in effect at the key decision point of the project will follow that project.”
2. Trigger Projects v. Opt-In Projects
   DEP regulated activities that are listed as “Trigger Projects” in Appendix C automatically require application of the Interim Final Policy’s provisions. Examples in the Interim Final Policy include various mining permits (bituminous and anthracite underground and surface mines), waste permits (landfills, transfer stations, commercial incinerators), and air permits (new major source of hazardous pollutants or criteria pollutants). While the 2022 Draft Policy had classified oil and gas unconventional well permits as Trigger Projects, the Interim Final Policy does not; however, various types of unconventional oil and gas projects are listed as “Opt-In Projects.” Other Opt-In Projects include resource recovery facilities, scrap metal facilities, and “other projects as identified by the community.” After receiving a request from the community or a DEP staff member to apply the Interim Final Policy to Opt-In Projects, DEP may decide to do so using its “discretion and expertise.”
3. Inspections, Compliance, and Enforcement
   In the event there are comparable inspection and enforcement scenarios, and DEP does not have the resources to take all the necessary actions at the same time, DEP may exercise its discretion and prioritize an EJ Area. Further, DEP plans to form an:

   Enforcement and Compliance Team to prioritize inspection and monitoring at sites which have multiple authorizations, multiple on record complaints, habitual violations, sites with high volume generation or unique permit conditions, EJ communities, and sites of significant geographic location and to ensure timely and appropriate responses to violations, implement an efficient criminal referral protocol, and ensure effective collaboration.

4. Civil Penalties
   The Interim Final Policy also indicates that DEP interprets impacts to the environment or the public health and safety at an EJ Area to be a relevant factor in the calculation of penalties for violations and may include a dollar figure in the penalty amount for such a violation “provided there is adequate evidence to support a factual finding that the violation caused harm and the penalty amount fits within the statutory limits.”

Babst Calland’s energy and environmental attorneys will be tracking the EJ Policy as DEP responds to comments and moves to finalize the policy next year. If you have any questions about the environmental justice developments described in this Alert, please contact Sean McGovern at 412-394-5439 or smgovern@babstcalland.com or Amanda Brosy at 202-853-3465 or abrosy@babstcalland.com.

Department of Labor Proposes Rule Change Permitting Unions to Participate in OSHA Workplace Walk-Throughs

Employment Alert

(by John McCreary and Janet Meub)

On August 29, 2023, the United States Department of Labor (DOL) published a Notice of Proposed Rulemaking that would permit union representatives and other nonemployees to participate in workplace inspections conducted by Occupational Safety and Health Act Compliance and Safety Officers (CSHOs).

Pursuant to the current law, Section 8(e) of the Occupational Safety and Health Act (OSHA) provides “a representative of the employer and a representative authorized by employees the opportunity to accompany CHSOs during the physical inspection of the workplace for the purpose of aiding the inspection.” The OSHA and 29 CFR part 1903 endow the CSHO with the authority to resolve any disputes about who the employer and employee representatives are and to deny any person from participating in the inspection whose conduct interferes with a fair and orderly investigation. The CSHO also has the authority to permit additional employer representatives and representative authorized by employees to participate in the workplace walk-throughs. See 29 CFR 1903.8(a).

Historically, OSHA mandated that the representative authorized by employees for worksite inspections be an actual employee. Over the years, OSHA has offered guidance on its interpretation of section 1903.8(c) and the definition of “representative authorized by employees” for OSHA walk-through inspections. In 2003, OSHA issued a letter of interpretation (Racic Letter) in response to the question of whether a union representative who files a complaint on behalf of a single worker could then act as a walk-through inspection representative in a workplace that had no labor agreement. OSHA determined that there was “no provision for a walkaround representative who has filed a complaint on behalf of an employee of the workplace.” See, ID OSHA – 2023-0008-0002. In 2013, OSHA issued a second letter of interpretation (Sallman Letter) stating that workers at a worksite without a collective bargaining agreement could designate a union or community organization for purposes of an OHSA walk-through inspection “as long as they had been authorized by employees to serve as their representative. OSHA then withdrew the Racic Letter as confusing.

OSHA updated its Field Operations Manual (FOM) in October 2015, incorporating its interpretation of 29 CFR 1903.8(c), stating that there may be instances where workers without a certified or recognized bargaining agent would benefit from a third party representing them at an OSHA inspection. However, in 2016, The National Federation of Independent Business (NFIB), filed suit in the Northern District of Texas, arguing that OSHA’s Sallman Letter interpretation was at odds with its regulations, should have been subject to notice and comment rulemaking, and that the Sallman Letter exceeded OSHA’s statutory authority. The district court concluded 1) that the Sallman Letter contradicted §1903.8(c) which clearly required that the employee representative be an employee himself, and 2) that a change to a regulation must be subject to notice and comment rulemaking. The court did reject the NFIB’s argument that the Sallman Letter conflicted with OSHA itself, concluding that OSHA requires the employee’s representative to be authorized by the employees, not necessarily that the representative be an employee himself. See, Nat’l Fed’n of Indep. Bus. v. Dougherty, 2017 WL 1194666 (N.D. Tex. Feb. 3, 2017). In the wake of that decision, OSHA rescinded the Sallman Letter and removed the language referencing it in the FOM.

And now, engaged in the proper notice and comment rulemaking process, OSHA’s proposed rule change seeks to broaden the types of individuals who may serve as a representative of the employees during OSHA’s physical inspections of the workplace:

• The representative authorized by the employees may be an employee OR a third party (i.e., a union representative, a bilingual interpreter, an expert on a particular piece of equipment, occupational hygienist, etc.).
• A third-party representative authorized by employees may be reasonably necessary to conduct an effective and thorough physical workplace inspection by virtue of her knowledge, skills, or experience.

The proposed change would permit a union representative, even where employees are not represented by a union or in the absence of a collective bargaining agreement, to participate in an OSHA workplace inspection. The DOL and OSHA believe that the rule change strengthens OSHA’s ability to obtain critical information regarding worksite conditions and hazards to ensure safer workplaces everywhere – not just in facilities where the employees are represented by unions. Critics of the proposed rule change argue that OSHA is promoting infiltration of private employer property for unionization efforts.

The DOL seeks written comments on the proposed rule change by all stakeholders by October 30, 2023. If you have any questions about the DOL’s proposed rule change or OSHA workplace inspections, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com or Janet K. Meub at (412) 394-6506 or jmeub@babstcalland.com.

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I-9 procedures are changing and non-compete agreements could be next

Smart Business

(By Adam Burroughs featuring Alex Farone)

Many employers have questions about changes, both made and proposed, to certain onboarding issues — an update to the I-9 verification process as well as proposed federal changes to non-competition agreements.

Smart Business spoke with Alexandra G. Farone, Attorney at Law at Babst Calland, about what employers need to know about the I-9 changes and what’s happening with non-compete agreements.

What’s happening with the I-9 verification process?

The I-9 employment eligibility verification process involves looking at documents to confirm the employee is who they say they are and that they are authorized to work in the U.S. The longstanding requirement that employers review those documents in person was relaxed during the COVID-19 pandemic, allowing it to be done remotely. As of August 1, 2023, the categorical relaxation of the in-person verification requirement ended. Employers now are required to resume in-person I-9 verification for all new employees, whether themselves or via an authorized agent, unless they are a registered user of the web-based platform E-Verify in good standing.

In addition, employers are also now required to re-verify in person anyone who had been verified remotely during the COVID-19 pandemic, and to do so by the end of August.

To address the challenge of re-verifying remote employees, employers who are not registered E-Verify users can designate an ‘authorized agent’ — who can be anyone, regardless of qualification — to act on behalf of the company to verify in person the employee’s identification and work authorization documents. But no matter who acts as the agent, the liability for inaccurate verification remains solely with the employer. So, if an agent verified someone who is not actually authorized to work in the U.S., the employer is going to be penalized.

Additionally, a new I-9 form just went live on August 1. There are several changes to the form, but most relevant is the ability for E-Verify employers to indicate remote examination of I-9 documents. The previous form can be used through October 31, 2023.

What’s happening with non-compete agreements?

Earlier this year, the Federal Trade Commission issued a notice of proposed rulemaking on a potential national ban on non-competes, making the assertion that preliminary findings indicate that non-competes constitute an unfair method of competition, in violation of Section 5 of the Federal Trade Commission Act. Also, the General Counsel for the National Labor Relations Board issued guidance this year that indicates some existing non-compete provisions might violate the National Labor Relations Act. These announcements, along with emerging or imminent bans on non-competes in other jurisdictions have fueled rumors and misunderstandings among employers and employees alike that non-competes are already outlawed nationally.

This is not the case. No changes have been made nationally as to the legality of non-competes. Right now, if an employer’s city or state has not banned non-competes, the status quo is still in place, which is the case for Pennsylvania.

The ban that the FTC is contemplating is very broad. It would apply not only to employees, but also to independent contractors and unpaid volunteers. Existing non-competes would need to be rescinded, as they could legally no longer be in effect.

It looks as if the FTC is going to delay a vote on a final rule until next year. In the meantime, employers that use non-competes should begin thinking strategically about implementing non-disclosure agreements and similar protective measures in case the proposed ban does become law.

Who should employers talk with if they have questions?

Employers that are unsure about what’s happening with these onboarding issues should call their employment attorney because the answers can be nuanced depending on factors such as the type of employer or whether a collective bargaining agreement is in place. It’s best that employers talk with a legal expert to make sure that they’re doing everything correctly at the outset of any onboarding issues, so that they can give the most accurate answers back to their employees and begin to plan for the future.

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Where Can a Corporation Be Sued for, Well, Anything? (An Evolving Test)

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Christina Manfredi McKinley and Joseph Schaeffer)

Mallory is undoubtedly a significant development in the Supreme Court’s personal jurisdiction jurisprudence, but its practical impact remains to be seen.

The Fourteenth Amendment to the U.S. Constitution provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” U.S. Const. art. XIV, § 1. For corporations, the question of what constitutes due process—and, specifically, where the corporation can be sued for conduct unrelated to the corporation’s conduct in the forum (i.e., “general personal jurisdiction”)—has continued to evolve.

Indeed, over the last century, the Supreme Court’s jurisprudence has contracted the available forums in which a corporation can be subjected to general personal jurisdiction, culminating in 2014 with the concept that there are only two locations in which a corporation is “at home” for general jurisdiction purposes: where it is incorporated and where it maintains its principal place of business. This test has been a practical one and has provided (some degree of) both certainty to corporate defendants and a disincentive to otherwise-inclined forum shoppers.

At the close of this past term, however, the Supreme Court in Mallory v. Norfolk Southern Railway Co. rejected a due process challenge to a Pennsylvania law that requires out-of-state corporations to submit to general jurisdiction in the Commonwealth as a condition of registering to do business within Pennsylvania. Mallory, 600 U.S. ____, slip op. (2023).

Personal and General Jurisdiction

The concept of “personal jurisdiction” is an important one in the law. It refers to the ability of a court to take an action that is binding on the parties in front of it. See id. slip op. at 2 (Barret, J., dissenting). A court that has “general jurisdiction” over a defendant can entertain any cause of action against that defendant, irrespective of whether the defendant’s complained-of conduct has a nexus to the forum. Id. at 13. A court that only has “specific jurisdiction” over a defendant, by contrast, can entertain only those causes of action that arise out of or relate to that defendant’s complained-of conduct in the forum state. Id. This distinction has been part of the legal canon since the Supreme Court’s landmark 1945 decision in International Shoe Co. v. State of Washington, 326 U.S. 310 (1945).

Overview of Mallory

When Robert Mallory sued Norfolk Southern in Philadelphia County, Pennsylvania, for alleged workplace injuries, he did not allege either general or specific jurisdiction. Norfolk Southern was not incorporated in Pennsylvania, nor did it maintain its principal place of business there. And Mallory, a Virginia resident, alleged workplace exposures as having occurred only in Ohio and Virginia.

But Mallory alleged that Philadelphia County, known for its large jury verdicts, was proper for a separate reason. Mallory asserted that Philadelphia County had personal jurisdiction over Norfolk Southern because the company had registered to do business in Pennsylvania. Under Pennsylvania law, a corporation doing business in Pennsylvania must register to do business in the state. 15 Pa. Cons. Stat. § 411(a). But Pennsylvania’s unique corporate registration scheme then takes it one step further: under 42 Pa. Cons. Stat. § 5301(b), any corporation that registers to do business in Pennsylvania necessarily consents that “any cause of action may be asserted against him” in the Commonwealth’s courts, irrespective of whether the complained-of conduct has any nexus to the forum. In essence, Mallory argued that section 5301(b) provided an additional ground for exercising personal jurisdiction beyond those identified in International Shoe—that is, jurisdiction by consent.

Norfolk Southern disputed the enforceability of section 5301(b). It argued that International Shoe established the only two circumstances under which general jurisdiction can be imposed on a corporation within the limits of constitutional due process. When the issue reached the Pennsylvania Supreme Court, that court agreed and limited the application of section 5301(b) to be consistent with International Shoe. The Pennsylvania Supreme Court then affirmed the dismissal of Mallory’s suit for lack of personal jurisdiction.

Supreme Court Decision in Mallory

After granting certiorari, the U.S. Supreme Court reversed. Writing for a four-justice plurality, Justice Neil Gorsuch concluded that the case was controlled by Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co. Pennsylvania Fire, 243 U.S. 93 (1917). In Pennsylvania Fire, decided nearly 30 years before International Shoe, the Supreme Court unanimously rejected a due process challenge to a Missouri law that, similar to section 5301(b), required an out-of-state corporation desiring to transact business in Missouri to consent to personal jurisdiction over any suit. See generally id.

Justice Gorsuch’s opinion saw no distinction between the Pennsylvania and Missouri statutes and no conflict with International Shoe. In Justice Gorsuch’s interpretation, International Shoe only established the due process limits of personal jurisdiction when an out-of-state corporation had not registered to do business in the forum state. Nothing in International Shoe or the Supreme Court’s subsequent cases, according to Justice Gorsuch, precluded an out-of-state corporation from consenting to general personal jurisdiction—as Norfolk Southern did when it registered to do business in Pennsylvania.

Justice Amy Coney Barrett, joined by Chief Justice John Roberts and Justices Elena Kagan and Brett Kavanaugh, dissented. In the dissenters’ view, International Shoe had overruled Pennsylvania Fire and established the outer due process limits of general jurisdiction over out-of-state corporations. Mallory, slip op. at 15 (Barrett, J., dissenting). And because Norfolk Southern was neither incorporated in Pennsylvania nor maintaining its principal place of business there, the dissent would have ruled that Pennsylvania lacked general jurisdiction to hear Mallory’s case.

Limited Impact of Mallory?

Mallory is undoubtedly a significant development in the Supreme Court’s personal jurisdiction jurisprudence (and a significant shift, depending on perspective). But its practical impact remains to be seen. First, only Pennsylvania has enacted a statute requiring out-of-state corporations to consent to general jurisdiction as a condition for registering to do business in its state, and it is far from assured that the other states will follow suit. Second, the Supreme Court entered judgment solely on Norfolk Southern’s due process challenge to section 5301(b). Norfolk Southern also had brought a dormant Commerce Clause challenge, which the Supreme Court emphasized had not been addressed below and should be considered on remand. Id. at 4 n.2. And third, Justice Samuel Alito, though concurring in judgment, wrote separately to express his view that section 5301(b) would be struck down under that as-yet-undecided dormant Commerce Clause challenge. In short, there is a fair possibility that section 5301(b) will survive one constitutional challenge only to fall later under another.

Nevertheless, there remains a significant risk that other states will enact similar corporate registration schemes, thereby presenting a corporate defendant with an impossible choice: either decline to do business in a foreign (and sometimes faraway) state, or register at the risk of being haled into that state’s courts for conduct wholly unrelated to any activity the corporation might conduct there.

Conclusion

It is too soon to tell the ramifications of Mallory, so, for now, the measured approach is best. Corporations doing business outside their states of incorporation and principal places of business should not panic but continue to monitor Mallory’s progress on remand and the evolution of such corporate registrations in other jurisdictions.

Christina Manfredi McKinley and Joseph Schaeffer are shareholders at Babst Calland in Pittsburgh, Pennsylvania.

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© 2023. Where Can a Corporation Be Sued for, Well, Anything? (An Evolving Test), Pretrial Practice & Discovery, American Bar Association Litigation Section, August 24, 2023 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

EPA Deletes Emergency Affirmative Defense Provisions from its Clean Air Act Title V Permitting Program Rules

Legal Intelligencer

(by Varun Shekhar)

The U.S. Environmental Protection Agency (EPA) has finalized rulemaking originally proposed in 2016 to remove “emergency” affirmative defense provisions from its Clean Air Act (CAA) permitting regulations for “major sources”.  On July 21, 2023, EPA published a Final Rule amending 40 C.F.R. §§ 70.6 and 71.6 to delete the emergency affirmative defense provisions in light of decisions from the U.S. Court of Appeals for the DC Circuit.

The emergency affirmative defense provision under 40 C.F.R. Parts 70 and 71 originated from rulemaking promulgated by EPA in 1992.  This rulemaking was intended to implement the 1990 amendments to the CAA which established Title V, including requirements for operating permitting programs as applicable to among other things, “major sources”.  The CAA defines a major source as “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant…”.  In addition, the CAA also includes as major sources those “that emit[] or ha[ve] the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants.”

As part of the 1992 rulemaking, EPA included at 40 C.F.R. §§ 70.6(g) (for state operating permitting programs) and 71.6(g) (for federal operating permitting programs) provisions allowing for an operator to assert an affirmative defense for any unavoidable noncompliance with technology-based emission limits in the event of “any situation arising from sudden and reasonably unforeseeable events beyond the control of the source, including acts of God, which situation requires immediate corrective action to restore normal operation…”.  These provisions also required the operator to keep contemporaneous operating logs or other evidence documenting the occurrence of the emergency event, that the facility was at the time of the event being properly operating, that it took all reasonable steps to minimize emissions, and that notice of the emergency was submitted to the applicable permitting authority within two business days of the exceedance of the emission limit.  The operator bore the burden of proving the occurrence of an emergency event.

The emergency affirmative defense provisions themselves, as well as similar provisions elsewhere that provided liability relief during periods of startup, shutdown, or malfunction (SSM) have been somewhat controversial.  In 2008, the D.C. Circuit in Sierra Club v. EPA, 551 F.3d 1019 (D.C. Cir. 2008) determined that an EPA rule that exempted sources from CAA Section 112 (hazardous air pollutant) emissions standards during SSM periods violated the CAA’s requirement that such standards apply continuously.

However, the key case underpinning EPA’s current rulemaking to delete §§ 70.6 and 71.6 is Natural Resources Defense Council (NRDC) v. EPA, 749 F.3d 1055 (D.C. Cir. 2014).  In that case, a number of groups challenged, among other things, EPA’s rulemaking to create an affirmative defense against citizen suits for violations of CAA Section 112 emissions standards in cases where “unavoidable” malfunctions caused the violation.  EPA explained the basis of this provision was to resolve “tension” between the CAA’s requirement that emission standards apply at all times (as noted in Sierra Club) and the fact that operators may exceed emission limits for reasons beyond their control.  The rule also restricted federal district courts hearing the citizen suit from assessing penalties unless the operator failed to meet their burden of proving all requirements in the affirmative defense.  The court struck down the unavoidable malfunction affirmative defense provision, finding that the rule served to usurp the courts’ role in determining appropriate remedies in a case, and that CAA Sections 113 and 304 did not otherwise support the EPA’s rule.

The D.C. Circuit reaffirmed its decision in NRDC two years later in the case U.S. Sugar Corp. v. EPA, 830 F.3d 579 (D.C. Cir. 2016).  There, industry groups challenged CAA Section 112 emission standards on the basis that the standards were too onerous because they were developed by EPA without taking malfunction events into account.  The court sided with EPA, reiterating its holding in NRDC that had EPA established an affirmative defense provision against citizen suits for violations of the emission standard during malfunctions, it would constitute an “impermissible intrusion on the judiciary’s role.”  Instead, the court found EPA’s approach to developing the standard and reserving the right to exercise enforcement discretion during malfunction events as a reasonable interpretation of the CAA.

The EPA’s current rulemaking to remove the emergency affirmative defense provisions from 40 C.F.R. §§ 70.6 and 71.6 was initially proposed by EPA on the heels of these cases.  During the 2016 proposed rule’s comment period, several commenters argued that EPA was reading the NRDC and other cases too broadly, since none of them involved consideration of the Title V program or its implementing regulations.  Moreover, some expressed the position that there was a distinction between the affirmative defense provision under consideration in NRDC, which affected citizen suits under CAA Section 304, and the emergency affirmative defense provision, which made no reference to Section 304.  Others contended that there was a fundamental difference between emergencies, which often occur through forces outside the boundaries of a facility, and malfunctions which were at issue in NRDC.

The EPA disagreed with these comments, stating that NRDC was fundamentally based on CAA Sections 113 and 304, which pertain to enforcement generally, and are not specific to hazardous air pollutant standards.  In addition, EPA reiterated its position in Sugar Corp. that an affirmative defense provision is unnecessary because it will use its case-by-case enforcement discretion to determine whether to initiate enforcement, as appropriate.  And, according to EPA, removal of the emergency affirmative defense “would harmonize the EPA’s treatment of affirmative defenses across different” regulatory programs under the CAA.

Although this rulemaking does not directly apply to regulated sources, it will have an indirect effect on them.  Specifically, state permitting programs under Title V will have to delete such affirmative defenses from its regulations by August 2024. Moreover, any Title V permits issued by states will eventually need to have removed from them any emergency affirmative defense provisions, although these will most likely occur during subsequent renewals or reissuances of the permit.

Although EPA suggests that the impact of the deletion of the emergency affirmative defense provisions on the regulated community may not be significant, it is important to note that operators will no longer be able to rely upon explicit provisions in their Title V permits to shield them from liability for emissions violations in cases of events like natural disasters or power outages.  Case-by-case enforcement discretion is a matter of agency policy but is not binding upon agencies themselves, which in some cases can lead to disparate penalties or other enforcement results among facilities.  Nonetheless, operators still may find it useful to continue to implement the recordkeeping provisions of the emergency affirmative defense provisions to assist in developing its case for an agency to exercise enforcement discretion in its favor during an emergency event.

Varun Shekhar is a shareholder in Babst, Calland, Clements and Zomnir’s Environmental Group. His environmental practice emphasizes federal, state and local regulatory matters arising under the Clean Air Act (CAA). He counsels facilities across the country regarding permitting, compliance determination and assurance, CAA Section 114 information requests, environmental audits, and emerging air quality issues including climate change and regulation of greenhouse gas emissions. Contact him at vshekhar@babstcalland.com.

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Reprinted with permission from the August 24, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.

Federal CCR Regulatory Update: EPA Adds CCR To National Enforcement and Compliance Initiatives and Proposes to Deny Alabama’s CCR Permit Program

Environmental Alert

(by Don Bluedorn, Gary Steinbauer and Mackenzie Moyer)

In the past week, the U.S. Environmental Protection (EPA) has made two major announcements related to the regulation of Coal Combustion Residuals (CCR). On August 17, 2023, EPA announced its National Enforcement and Compliance Initiatives for fiscal years 2024 through 2027, adding “protecting communities from coal ash contamination” to a list of six priority areas for enforcement. Three days earlier, EPA published notice in the Federal Register of its proposal to deny Alabama’s application to administer its own CCR permitting program in lieu of EPA’s federal CCR program. These developments are among other CCR-related regulatory proposals from EPA earlier this year and a sign that EPA’s focus on CCR regulatory and enforcement will continue.

EPA Adds Coal Ash Contamination as an Enforcement Initiative

Every four years, EPA publishes a list of national initiatives to focus its enforcement efforts. On January 12, 2023, EPA published notice in the Federal Register, seeking comment on the NECIs for fiscal years 2023 to 2027. 88 Fed. Reg. 2093. In this notice, EPA listed “Addressing CCR” as one area “for further consideration of possible development” as an NECI. EPA has now formally adopted CCR issues as an enforcement priority for the next four years, all but guaranteeing that EPA will prioritize CCR enforcement and compliance over the next several years.

EPA Proposes to Deny Alabama’s CCR Permit Program

On August 14, 2023, the U.S. Environmental Protection Agency (EPA) published notice of its proposed denial of Alabama’s application to operate its own Coal Combustion Residuals (CCR) permit program in the Federal Register. Alabama; Denial of State Coal Combustion Residuals Permit Program, 88 Fed. Reg. 55,220.

Section 4005(d) of the Resource Conservation and Recovery Act (RCRA) allows states to seek approval from EPA to administer a state CCR permit program in lieu of the federal CCR Rule. EPA will approve a state’s CCR permit program if the state program requires each CCR unit in the state to achieve compliance with either the federal requirements or state requirements that are as protective of the federal requirements. EPA has already approved CCR permit programs in Oklahoma, Georgia, and Texas, and did so without imposing conditions. EPA’s proposed denial of Alabama’s program is the first time EPA is proposing to deny an application.

The Alabama Department of Environmental Management (ADEM) submitted permit program applications to EPA Region 4 on July 12, 2018, February 26, 2021, and December 29, 2021. While its application before EPA was pending, ADEM began issuing CCR permits and has been doing so since it promulgated its first set of CCR regulations in 2018. ADEM has identified 16 CCR units (three landfills and 13 surface impoundments) that currently, or have been, used for CCR disposal in Alabama. Since 2018, ADEM had issued permits to eight CCR facilities. Thus, EPA’s proposed denial comes after ADEM has issued permits for half of the CCR-regulated units in the state.

In its proposal, EPA stated that although Alabama’s regulations “largely mirror” the federal CCR regulations, it believes ADEM has been issuing permits for CCR units containing permit terms that are neither the same nor as protective as the federal CCR regulations. EPA’s proposal states that it is particularly concerned with deficiencies in ADEM’s permits related to closure requirements for unlined surface impoundments, associated groundwater monitoring networks, and corrective action requirements. According to EPA, ADEM’s permits allow CCR in closed units to remain saturated by groundwater, without requiring any engineering measures to control groundwater flowing into and out of the closed unit. Additionally, ADEM has approved groundwater monitoring systems with an inadequate number of wells in incorrect locations and ADEM’s permits effectively allow the permittee to delay implementation of effective measures to remediate groundwater contamination. For these reasons, EPA proposed to deny Alabama’s CCR permit program.

EPA compared Alabama’s permit conditions with EPA’s CCR Rule and found that Alabama’s permits were “not as protective as the Federal CCR requirements.” However, EPA’s regulations are ambiguous; for example, 40 CFR § 257.91 only requires the owner or operator of a CCR unit to “install a groundwater monitoring system that consists of a sufficient number of wells, installed at appropriate locations and depths.” In short, EPA’s proposing to deny Alabama’s CCR permit program because it views ADEM’s interpretations of what are effectively EPA’s CCR regulations as inconsistent with EPA’s more recently announced interpretations. EPA’s stated issues with ADEM’s implementation of Alabama’s CCR permit program are consistent with those relied on by EPA when it proposed to deny all of the CCR Part A and Part B demonstrations. Notably, EPA’s interpretations in the Part A demonstrations are the subject of ongoing litigation by Utility Solid Waste Activities Group (USWAG) accusing EPA of engaging in illegal rulemaking.

Written comments on EPA’s proposed denial are due on October 13, 2023. EPA also plans on holding an in-person public hearing on September 20, 2023, and a virtual public hearing on September 27, 2023.

EPA’s Other Recent CCR-Related Regulatory Actions

EPA’s proposed denial of Alabama’s permit program is one of many steps EPA has taken recently to regulate CCR units throughout the nation. On March 29, 2023, EPA published a proposed rule to revise the technology-based effluent limitations guidelines and standards for the steam electric power generating point source category applicable to combustion residual leachate. And on May 18, 2023, EPA proposed to establish regulatory requirements for inactive surface impoundments at inactive CCR facilities. Additionally, EPA plans to issue a final rule in October of 2023, outlining a federal permit program for CCR facilities in states that do not have their own approved programs.

EPA has taken several recent actions to solidify its focus on CCR regulatory and enforcement matters and operators of CCR Rule-regulated units should be prepared for continued oversight by EPA. Babst Calland attorneys continue to track these developments and are available to assist you with CCR-related matters. For more information on this development and other waste matters, please contact Donald C. Bluedorn II at (412) 394-5450 or dbluedorn@babstcalland.com, Gary E. Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com, Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.

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Public-Posting: Penncrest, Boyer, and the Release of Social-Media Under the RTKL

Legal Intelligencer

(by Harley Stone and Anna Jewart)

Have Facebook and TikTok become the new forum for conducting  political debates by public officials? That’s at least one of the questions faced by the Commonwealth Court in two recent decisions, Penncrest School District v. Cagle, 293 A.3d 783 (Pa. Cmwlth. 2023), and Wyoming Borough v. Boyer, No. 715 C.D. 2021 (Pa. Cmwlth. July 27, 2023).  As public engagement continues to move “online” the topic of how to treat public officials’ emails, text messages and social media pages has become a hot button topic.  Earlier this year, in Penncrest, the Court considered  what to do about these developing issues.  In a June 2021 RTKL request, the requester in Penncrest sought Facebook posts and comments “related to homosexuality and Penncrest School District, its officials, employees, or students or its curriculum, physical [resources], or electronic resources… including posts or comments removed” or deleted by two specific members of the school board for a specific time period.  The respondent district denied the request on the basis that no such posts or comments existed for any Penncrest-owned Facebook accounts.  On appeal, the OOR determined it was immaterial as to whether the agency controlled the Facebook page, but that it would review the contents of the page to determine whether it was used as a significant platform by an elected official or employee to conduct or discuss official business.  The lower court affirmed and reasoned it did not matter if the posts were made on the district’s Facebook account or a member’s private account. The court reasoned that the posts became a “record” if created by persons acting as school board members and if they contained information related to school business.

Penncrest appealed to Commonwealth Court raising three issues: (1) that social media posts and comments from board members’ personal social media accounts are not related to the business of the board or the district; (2) that board members acting in their private capacity as private citizens are able to express their personal opinions by posting or commenting on matters of personal interest via personal social media without creating a record subject to disclosure; and (3) that public attendees of a board meeting who opined about the members’ social media posts and comments do not create a record.

As discussed by the Court in Penncrest, the RTKL defines a “record” as “[i]nformation, regardless of physical form or characteristics, that documents a transaction or activity of an agency and that is created, received or retained pursuant to law or in connection with a transaction, business or activity of the agency.” 65 P.S. §67.102.  The Court looked back at its prior consideration of the phrases “documents a transaction or activity of an agency”, “in connection with a transaction, business or activity”, and “of the agency”.  It reviewed its prior treatment of emails of public employees and officials, offering an  interpretation of several  prior holdings related to the same, noting  the  tension between its  decisions in Easton Area School District v. Baxter, 35 A.3d 1259, (Pa. Cmwlth. 2012) and Barkleyville Borough v. Stearns, 35 A.3d 91 (Pa. Cmwlth. 2012) and those in Mollick v. Township of Worcester, 32 A.3d 859 (Pa. Cmwlth. 2011) and In re Silberstein, 11 A.3d 629 (Pa. Cmwlth. 2011).  Ultimately, the Court  concluded that strict application of principles extracted from its email cases to social media activity may be unwise and instead opted to examine the disclosure of social media postings  under the RTKL with a fresh lens.

Prior to Penncrest, no Pennsylvania court had addressed a RTKL request for social media postings, so the Court went on to review  the Office of Open Record’s determinations in Purdy v. Borough of Chambersburg, OOR Dkt. No. AP 2017-1229 (Aug 16, 2017) and Boyer v. Wyoming Borough, OOR Dkt. No. AP 2018-1110 (Sept. 5, 2018).  Boyer was on appeal before the Court at the time of its decision in Penncrest and the Court issued a decision on the same, discussed further below, on July 27, 2023.  In both cases, the OOR granted a request for access to social media posts.  In Penncrest the Court attempted to reconcile its own prior decisions related to emails, the OOR’s determinations in Boyer and Purdy, and certain federal case law regarding treatment of social media outside the open records context.

Returning to the definition of “record” the Court in Penncrest determined that to constitute a record the social media postings in question need to meet  three criteria: “(1) it must prove, support, or evidence an agency’s transaction or activity; (2) it must have been created, received, or retained in connection with an agency’s transaction, business, or activity; and (3) must have been  created by, originated with, or possessed by the agency.” The Court grappled with how to apply these criteria, noting that official posts on the agency’s official, authorized social media account are presumptively public; however, if a public official posts about a private matter on the public agency account, those posts likely would not be “records” of the agency.  In Penncrest the issue was a request for a public official’s public post on his personal social media account.  Therefore, the inquiry focused on whether the posts documented a transaction or activity of the school board.

The Court in Penncrest developed a set of nonexclusive factors to determine whether an agency member’s social media post was a post “of the agency” under the RTKL.  First, the court must examine the social media account itself, including the private or public status of the account, as well as whether the account has the “trappings” of an official agency account, and whether the official has an actual or apparent duty to operate the account, or whether the authority of the public office itself is required to run the account.  Second, it examines the social media posts themselves and then consider whether the posts prove, support, or evidence a transaction or activity of an agency, taking into consideration whether they were merely informational in nature, or were created, received, or retained by law in connection with a transaction, business or activity of the agency. Finally, it must consider “official capacity” with regard to the account and posts, noting that the information must have been created, received, or retained by the public official in their official capacity or scope of employment as public officials, which may be evidenced by whether the agency required the posts, directed the posts, or whether they further the agency’s interest.  The Court in Penncrest remanded to the trial court to expand the record to address whether the social media activity at issue constituted a record under the framework established.

Having utilized the OOR’s determination in Boyer to develop the applicable factors in Penncrest, the Cour then turned around and used the Penncrest factors to decide the requester’s appeal in Boyer.  In Boyer the requester sought records related to a Facebook page named “Joseph Dominick Mayor of Wyoming” including removed or blocked comments; messages sent and received, and posts made to the page or “liked” by the administrator of the page.  The request was deemed denied by the Borough which later clarified that the page was private and the items requested did not exist.  The OOR concluded the page was a “record” of the Borough.  The Court of Common Pleas reversed on the basis that the items requested were not “public records.”  On appeal by the requester, the Commonwealth Court revisited its recent decision in Penncrest.  It determined that Penncrest’s discussion of “official capacity” was particularly instructive in Boyer and found that there were strong implications that Mr. Dominick used the page in an “official capacity” in his role as mayor of the Borough.  However, it concluded that given its reasoning in Penncrest, the cases cited by the lower court did not control its disposition of the appeal in Boyer, and it was required to remand to the Court of Common Pleas for application of Penncrest’s analytical framework.

Penncrest attempted to develop an analysis for agencies and the OOR to utilize to determine when records related to social media pages are or are not “public records” under the RTKL.  Boyer shows that these factors are mandatory and apparently here to stay.  Both Penncrest and Boyer are pending on appeal before their respective courts of common pleas.  How the lower courts apply the Penncrest factors in these cases will hopefully shed some light on how these factors work in a practical sense and whether or not they in fact provide clarity, or further confusion, in the developing area of public figure social media posts under the RTKL.

Harlan S. Stone is a Shareholder in the Public Sector Services and Energy and Natural Resources groups of the Pittsburgh law firm of Babst, Calland, Clements & Zomnir.  Anna S. Jewart is an associate in Babst Calland’s Public Sector Services group and focuses her practice on zoning, subdivision, land development, and general municipal matters. Contact them at hstone@babstcalland.com and ajewart@babstcalland.com.

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Reprinted with permission from the August 17, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.

Five Babst Calland Attorneys Named as 2024 Best Lawyers in America® “Lawyer of the Year”, 37 Selected for Inclusion in The Best Lawyers in America®, and 18 Named to Best Lawyers: Ones to Watch® in America

Babst Calland is pleased to announce that five lawyers were selected as 2024 Best Lawyers in America® “Lawyer of the Year” in Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2024 Best Lawyers in America^® “Lawyer of the Year” include:

James V. Corbelli – Litigation – Environmental in Pittsburgh, Pa.

Blaine A. Lucas, Municipal Law “Lawyer of the Year” in Pittsburgh, Pa.

Kevin J. Garber – Natural Resources Law in Pittsburgh, Pa.

Steven B. Silverman – Information Technology Law in Pittsburgh, Pa.

Christopher “Kip” Power – Mining Law in Charleston, W.Va.

View the award recipients here.

In addition, 37 Babst Calland lawyers were selected for inclusion in the 2024 edition of The Best Lawyers in America® (by BL Rankings), the most respected peer-reviewed publications in the legal profession:

• Chester R. Babst III – Environmental Law, Litigation – Environmental
• Donald C. Bluedorn II – Environmental Law, Litigation – Environmental, Water Law
• Joseph G. Bunn – Commercial Transactions / UCC Law, Mining Law, Banking and Finance Law, Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law, Business Organizations (including LLCs and Partnerships), Corporate Law, Mergers and Acquisitions Law
• Dean A. Calland – Environmental Law
• Matthew S. Casto – Commercial Litigation, Litigation – Environmental
• Frank J. Clements – Corporate Law
• Kathy K. Condo – Commercial Litigation
• James V. Corbelli – Commercial Litigation, Litigation – Environmental
• James Curry – Energy Law, Oil and Gas Law
• Julie R. Domike – Environmental Law, Litigation – Environmental
• Kevin K. Douglass – Natural Resources Law
• Christian A. Farmakis – Corporate Law, Real Estate Law
• Leonard Fornella – Admiralty and Maritime Law, Mass Tort Litigation / Class Actions – Defendants, Personal Injury Litigation – Defendants
• Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental, Water Law
• Steven M. Green – Energy Law
• Jennifer Hicks – Energy Law
• Lindsay P. Howard – Environmental Law, Litigation – Environmental
• Robert Max Junker – Land Use and Zoning Law
• Stephen I. Korbel – Litigation – Labor and Employment
• Blaine A. Lucas – Energy Law, Land Use and Zoning Law, Municipal Law, Litigation – Land Use and Zoning
• Christina Manfredi McKinley – Commercial Litigation
• John A. McCreary – Labor Law – Management
• Janet L. McQuaid – Environmental Law
• Timothy M. Miller – Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental
• Jean M. Mosites – Environmental Law
• Christopher B. “Kip” Power – Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal, Arbitration
• Joseph K. Reinhart – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental
• Bruce F. Rudoy – Corporate Law
• Charles F.W. Saffer – Real Estate Law
• Peter H. Schnore – Real Estate Law
• Mychal Sommer Schulz – Litigation – ERISA
• Mark D. Shepard – Commercial Litigation, Bet-the-Company Litigation, Litigation – Environmental
• Steven B. Silverman – Information Technology Law, Commercial Litigation
• Laura Stone – Corporate Law
• Robert M. Stonestreet – Environmental Law, Energy Law, Commercial Litigation
• David E. White – Construction Law, Litigation – Construction
• Michael H. Winek – Environmental Law

View the award recipients here.

18 Babst Calland lawyers were also named to the 2024 Best Lawyers: Ones to Watch® in America which recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States:

• Susanna Badgasarova – Corporate Law
• Mary H. Binker – Corporate Law, Real Estate Law, Energy Law
• Katrina N. Bowers – Energy Law, Environmental Law
• Carla M. Castello – Commercial Litigation, Litigation – Labor and Employment, Mass Tort Litigation / Class Actions – Defendants
• Andrew C. DeGory – Commercial Litigation
• Nicholas M. Faas – Administrative / Regulatory Law, Government Relations Practice
• Alexandra G. Farone – Commercial Litigation, Litigation – Labor and Employment
• Marc J. Felezzola – Commercial Litigation, Litigation – Construction
• Michael E. Fink – Corporate Governance and Compliance Law, Corporate Law, Mergers and Acquisitions Law
• Alyssa Golfieri – Land Use and Zoning Law, Municipal Law
• Chelsea R. Heinz – Energy Law
• Sean R. Keegan – Commercial Litigation, Litigation – Labor and Employment
• Benjamin A. Kift – Commercial Litigation
• Jennifer L. Malik – Land Use and Zoning Law, Municipal Law
• James D. Mazzocco – Litigation – Environmental, Transportation Law, Construction Law
• Joseph V. Schaeffer – Commercial Litigation
• Joshua S. Snyder – Commercial Litigation, Energy Law
• Eric Spada – Commercial Litigation

View the award recipients here.

Best Lawyers undergoes an authentication process, and inclusion in The Best Lawyers in America® is based solely on peer review and is divided by geographic region and practice areas. The list has published for more than three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 65 countries.

The Form I-9: Refresher and Reminder of Recent Changes

PIOGA Press

(By Alex Farone)

Recent changes to the Form I-9 and its completion procedures have brought employee onboarding to the forefront for many employers. This article provides a primer on the Form I-9 generally, recent changes to the process, and tips to address instances of non-compliance.

What is the Form I-9?

On November 6, 1986, the Immigration Reform and Control Act was enacted to require employers to verify the identity and employment eligibility of their employees to work in the United States and created criminal and civil penalties for employer violations. The Form I-9 is a required form issued by U.S. Citizenship and Immigration Services of the Department of Homeland Security (DHS) used to document this verification. A new model Form I-9 was released on August 1, 2023, though the previous Form I-9 may still be utilized through the end of October. The new Form I-9 has two sections (Section 1 for employee information and attestation, and Section 2 for employer review and verification) and two supplements (Supplement A for preparer/translator certification for Section 1, and Supplement B—formerly Section 3 on the previous Form I-9—for reverification and rehire).

The employee must complete Section 1 no later than the employee’s first day of employment, which involves providing their name, address, date of birth, social security number, contact information, citizenship/immigration status, and signature. The employer must complete Section 2 within three business days after the employee’s first day of employment. Section 2 requires the employee to provide the employer with unexpired, original documentation specified on the List of Acceptable Documents such as a passport, driver’s license, or social security card, to establish their identity and authorization to legally work in the United States. The employer must review these documents, identify them in Section 2, and certify under penalty of perjury that they have accurately verified these documents. The document verification process required for Section 2 is the subject of the recent I-9 procedural changes discussed below.

What are the New Document Verification Requirements for Form I-9 Completion?

The U.S. Immigration Customs Enforcement (ICE) had temporarily allowed remote I-9 verification after March 20, 2020, during the COVID-19 pandemic for employees working remotely. Many employers accomplished remote verification via a video conference with the employee where the employee held up their documentation on camera for virtual inspection. After several extensions, these permitted flexibilities ended on July 31, 2023. As of August 1, 2023, employers must now resume physically inspecting the Form I-9 and employment eligibility documentation for new employees. ICE announced that employers will have a 30-day grace period until August 30, 2023, to reverify in person all employment eligibility documents for employees who were hired after March 20, 2020 with virtual or remote examination. For all new hires moving forward, the in-person verification requirements resumed on August 1, 2023.  The DHS recently approved alternative procedures to allow remote verification to continue only for employers who are registered users in good standing of the government-run, web-based platform E-Verify.

Employers now have three options to accomplish the document verification required by Section 2 of the Form I-9.

1. Employers may perform the inspections in-person themselves by requesting that these employees visit the office or by sending another employee to perform the inspection in person.
2. Employers are permitted to designate an authorized representative, including non-employees such as third-party notaries, to conduct the in-person inspection on behalf of the employer. In fact, DHS permits any person other than the employee in question to act as an employer’s authorized representative. Some employers utilize third-party services for this function, and others request contact information for a friend or family member of the employee to have them perform this role. Using the employee’s friend or family member in this capacity is certainly the most cost effective and the least administratively burdensome option, but employers should be cautious of potential pitfalls as ICE requires strict compliance and employers will be held liable for any violations, whether intentional or unintentional.
3. Employers can become registered users on E-Verify and utilize this online process for new remote verifications moving forward. Note, however, that for the required re-verifications by August 31 of employees hired during the pandemic via remote verification, employers can only utilize E-Verify to become compliant if they were enrolled in E-Verify at the time they originally completed the Form I-9 for that employee and remain currently enrolled. Otherwise, reverification must be done in person by one of the two options listed above.

To ensure reverification compliance by August 30, 2023, employers should (1) make a list of all employees hired after March 20, 2020 who only received a remote inspection of their employment eligibility documents, (2) determine if it can use E-Verify to accomplish reverification and if not, decide whether and how it will use authorized agents to do so, (3) notify the affected employees of what will now be required, and (4) create a plan for dealing with employees who do not make themselves or their documentation available by the deadline. Due to the risk of monetary fines discussed below, if an employer wishes to use an authorized representative to conduct in-person verification on the employer’s behalf, they should consult an attorney to ensure they set up appropriate procedure and instructions. Employers should also note that some state laws have additional requirements concerning authorized representatives—for example, remote employees located in California generally cannot have a notary act as the authorized agent, as notaries in California are prohibited by the California Secretary of State from completing or certifying I-9 forms unless they are bonded immigration consultants.

For unionized workforces, employers should notify the union’s representatives about the approaching deadline and the steps the employer plans to take to address reverification for those employees whose papers were verified remotely since March 2020. Detailed instructions should be given to any authorized representatives, and as a best practice the employer should retain a copy of the email or other communication by which the employer assigned someone to act as the authorized representative.

Penalties and Ongoing Compliance

ICE utilizes an administrative inspection process to compel production of Form I-9s within three business days. ICE issues thousands of Notices of Inspection to employers every year, and any employer can be subject to inspection. During such an inspection, ICE will review the employer’s Form I-9s and supporting documentation for compliance. While employers are given at least 10 business days to make corrections to any technical violations found on the forms, they are subject to monetary fines for all substantive violations, and uncorrected technical violations. Furthermore, employers that are found to have knowingly hired or continued to employ unauthorized workers will be required to cease the activity and may be civilly fined and/or criminally prosecuted. In 2015, an event planning company in California was fined over $600,000 for technical violations on I-9 forms, with the majority of the violations stemming from the employer’s consistent failure to sign Section 2 of the Form I-9.

If an employer has not performed a Form I-9 self-audit in the recent past, this would be an ideal time to do so. A self-audit should determine if the employer possesses accurate and complete Form I-9s for every current employee and former employee within the required retention period hired after November 6, 1986. Employers must retain the Form I-9 (and any supplement pages and photocopies made of documentation provided) for each employee for one year from the last date of employment or three years after the first date of employment, whichever is later. The employer should take the following steps based on the audit results:

• For current employees with no Form I-9 on file whatsoever:
  • Immediately have the employee complete Section 1 of the current Form I-9.
  • Inspect the employee’s employment eligibility documents and complete Section 2.
  • Do not backdate anything on the form, but be sure to specify the employee’s original hire date where requested in Section 2.
• For former employees with no Form I-9 on file whatsoever:
  • Do not recreate the form.
  • Complete a memo to file with an explanation as to why there is no Form I-9 and when/how you realized the error.
• For current employees with inaccurate or incomplete Form I-9s on file, two options can be used:
  • Draw a single line through the incorrect information, enter the correct information, and put your initials and date next to the correction.
  • If Section 2 is not filled out, this would be considered a major error for which a completely new Form I-9 can be filled out. Attach this to the original Form I-9, with an explanation describing why the change was made via a short memo.
• For former employees with inaccurate or incomplete Form I-9s on file, two options can be used:
  • Draw a single line through the incorrect information, enter the correct information, and put your initials and date next to the correction
  • You can fill out previously incomplete sections, also putting your initials and date, but you cannot add any information that requires the former employee (such as documentation verification or their signature). Note instances where you were unable to make corrections on a memo and attach it to the Form I-9.

This is an ideal time for employers to review their compliance with the Form I-9 requirements, both generally and in light of the new verification rules.

To view the full article, click here.

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Reprinted with permission from the August 2023 issue of The PIOGA Press. All rights reserved.

Legislative & Regulatory Update

The Wildcatter

(By Nikolas Tysiak)

In Collingwood Appalachian Minerals III, LLC v. Erlewine, — S.E.2d —, 2023 WL 4013373 (June 15, 2023), the West Virginia Supreme Court heard another case that contributes to the ongoing saga surrounding oil and gas rights being sold at tax sale. This case is a bit unique, in that there is both a language interpretation issue and a tax sale issue presented. The tract at issue contains 135 acres. In 1909, J. E. Huff conveyed the land to James Sivert, reserving ½ the oil and gas. James Sivert conveyed the land to Joseph and Myrtle Rogers in 1944, reserving ¼ the oil and gas. The Rogerses conveyed the land to Osborn Dunham in 1945, reserving from the conveyance “all exceptions and reservations contained in all prior deeds”. Meanwhile, James Sivert conveyed his ¼ oil and gas interest to Joseph Palmer also in 1945, who then conveyed such ¼ oil and gas interest to Osborn Dunham in November of 1945. As of 1945, Osborn Dunham held ½ the oil and gas and all of the surface as to the 135 acres. Critically, beginning in 1930, James Sivert was assessed for the surface and ½ the oil and gas separately. Upon his reservation of ¼ oil and gas in 1944, the Rogerses and Sivert were each assessed for ¼ oil and gas under the land.

In 1968, Dunham conveyed to Russell F. Stiles “the same land” as received by him in 1945. Following this deed, Stiles became assessed for the surface and ¼ oil and gas, while Stiles became assessed for another ¼ oil and gas. Royalties were also paid in accordance with this division of oil and gas rights. In 1988, Stiles failed to pay either his surface assessment or the separate oil and gas assessment associated with the 135 acres. Erlewine purchased the surface assessment at tax sale in 1991, while Waco Oil & Gas Company and Trio Petroleum Corp. purchased Stiles’ the ¼ oil and gas assessment in the same year. In 1995, Trio and Waco purchased the ¼ oil and gas assessment entered in the name of Dunham at a separate tax sale. This raises three questions that the court had to address – (1) what effect did the 1968 deed have on ownership of the oil and gas estate; (2) what did the 1991 tax deed convey; and (3) what did the 1995 tax deed convey?

The Court addressed these questions in the reverse order indicated above. First, it found that the 1991 tax deed to Trio and Waco had to be valid, as there was no other paid assessment that would have saved the oil and gas assessment covering unsevered oil and gas rights entered in the name of Stiles. Erlewine tried to rely on Orville Young LLC v. Bonacci, 246 W. Va. 26 (2021), and the Court agreed that case was critically important to the analysis. However, the Court found that the Orville Young case was clearly distinguished from the situation surrounding the 135 acres, as Orville Young involved a situation where oil and gas was unsevered in title but severed for taxation and the surface estate assessment had been properly paid. Under recent case law, the Court has emphasized that any payment that covers a separate interest in oil and gas will be deemed to cover such interest. However, the only other assessment that could cover the unsevered oil and gas in this instance was the surface assessment, which was also delinquent at the same time. Additionally, West Virginia code indicates that an error in tax sale procedures will not invalidate the sale UNLESS a cause of action is expressly created in the code. The Court determined that the code does not include a separate cause of action that covers the circumstances created by the circumstances surrounding the 135 acres, resulting in there being no relief available to Erlewine, and found the 1991 tax deed covering the oil and gas rights of Stiles to be valid.

The Court addressed the questions regarding the language of the 1968 deed and the 1995 tax deed simultaneously. Erlewine argued that the 1968 deed conveyed all interests of Dunham to Stiles, and that Dunham should not have retained any oil and gas rights under that deed and all his oil and gas rights became vested in Stiles; by extension, the 1995 tax deed could convey no interest because the oil and gas rights previously held by Dunham were covered by the Stiles surface assessment. The Court disagreed, effectively finding that the reference in the 1968 deed to “the same land” as conveyed in the 1945 deed acted as a limitation on the conveyance, thereby upholding the tax deed. Despite this conclusion, no points of law are cited by the Supreme Court, except to say that an unambiguous deed requires no interpretation, and finding the language unambiguous. Arguably, the reference to “the same land” could be construed as a further description of the land conveyed, and not intended as a limitation, so one could argue that the language of the 1968 deed is, in fact, ambiguous. As such, further analysis of the intent of the parties may have been warranted in these circumstances, and it may be wise to exercise caution and discretion in relying on the conclusions of the Erlewine case insofar as deed interpretation is concerned.

As a footnote to everyone’s favorite West Virginia tax sale case from recent years (L&D Investments Inc. v. Mike Ross Inc.), the West Virginia Supreme Court was recently presented with questions surrounding who should contribute to the attorneys’ fees in the broader litigation arising between L&D Investments, Antero, and Mike Ross. Finding that the counsel for L&D Investments had benefited various other oil and gas owners through his efforts, the Supreme Court held that such counsel should have the opportunity to have the other oil and gas owners, known and unknown, who benefitted from his efforts, contribute to his fees in L&D Investments, Inc. v. Antero Resources, 887 S.E.2d 208 (W. Va. 2023).

Warrior Oil and Gas, LLC v. Blue Land Services, LLC, 248 W. Va. 1 (2023), involved a land abstracting company (Blue) bringing action against Warrior Oil and Gas and WOG Minerals for failure to pay invoices for title services rendered. After a lengthy pre-trial and discovery process during COVID, Blue was eventually awarded a default judgment against Warrior and WOG, with accompanying damages. On appeal, the Supreme Court found various administrative deficiencies in the lower court’s order and award, including the following: (1) failure to list findings of fact and conclusions of law with the trial court’s order; (2) failure to properly apply law regarding the measure of appropriate damages; (3) failure to provide a reason to support its award of damages; and (4) improper award of pre-judgement interest. The Supreme Court reversed the default judgment award and remanded to the circuit court for further proceedings consistent with its findings.

In Pennsylvania, a case on permitting called Marcellus Shale Coalition v. Department of Environmental Protection, 292 A.3d 921 (Pa. S.Ct. 2023), the Pennsylvania Supreme Court was confronted with the question of the scope and breadth of the rulemaking authority afforded to the DEP under Act 13 of 2012, amending the Pennsylvania Oil and Gas Act of 1984. The Marcellus Shale Coalition challenged various definitions and conclusions reached by DEP in its rulemaking capacity under Act 13 as overly broad and unenforceable. The Supreme Court undertook a lengthy analysis of the background of administrative law in Pennsylvania, the rules specifically challenged by the MSC, the arguments set forth by both sides, the holdings below in the Commonwealth Court, and the impact those rules were likely to have on the permitting process, and found that the DEP unequivocally held the power to make the rules it made and enlisted appropriate community partners in establish those rules.

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Reprinted with permission from the MLBC August 2023 issue of The Wildcatter. All rights reserved.