TEQ Magazine
(By Dane Fennell)
Artificial Intelligence (AI) has made its way into the legal profession — though not in the way that some news headlines might suggest. Recently, a program called ChatGPT passed several law and business school exams. However, for anyone who has any thoughts that we are entering an age of AI legal representation, flesh and blood lawyers who engage in utilizing AI on a daily basis can confirm that those days are a long way off.
“While AI is being used as a tool in a number of different areas of the law, it’s not yet capable of taking over all human roles,” says Dane Fennell, Senior Counsel at Babst Calland. “It’s just an arrow in the quiver that professionals can use to help them be more efficient, saving them and their clients time and money.”
Fennell discusses the state of AI technology in the legal profession — how it’s being used, and what it can and can’t do.
How would you characterize AI’s place in the legal world?
There are a number of ways that AI has found its way into the legal profession. For example, in M&A due diligence, AI can be used to review large volumes of documents to assist the legal team to home in on the key aspects of a deal with much more speed and efficiency than a manual review. This saves clients time and money, and actually enables the review team to expand the scope of a review to find the “needle in the haystack” issues.
Consumer-based programs are helping those who find themselves with relatively minor legal issues, such as parking tickets and credit card fees. Rather than pay a lawyer, some people are plugging their information into apps such as DoNotPay (which is the company that created ChatGPT) and allowing technology to fight to get those fees back or beat a ticket.
The problem is that modern AI technology typically doesn’t work well with respect to issue-spotting or finding a resolution to open-ended problems. They still require significant human oversight to be effective.
Lawyers need to have a basic understanding of AI, know what tools their firm is using and what those tools can and can’t do, in order to provide the best services to clients.
What should business leaders know about AI’s use in legal work?
Some business leaders believe that they can just buy an AI program and use it themselves to sort out whatever legal issue they encounter. Unfortunately, AI isn’t something that can be bought off the shelf, unboxed and used in a meaningful way. These technologies are supported by dedicated companies that work with law firms to tailor the AI to simultaneously improve it in an organic way, while also allowing the firm to utilize the AI as best fits the firm’s needs. Based on the current technology available on the market, there are no programs or technologies that can handle all aspects of a legal issue without human oversight.
Before a firm even considers implementing some form of AI, the client needs to have the final right to approve its use, particularly when any of the client’s data is sent to third-party companies or if saved on a non-firm server. It is a lawyer’s duty to explain exactly what the programs do — such as organizing, categorizing and inventorying documents and information — and what they don’t do — such as making decisions without human interaction or oversight. AI amplifies a firm’s capabilities, and if used correctly, AI can be an invaluable resource that saves clients time and money.
For the foreseeable future, the human component within the legal profession is not going anywhere. AI technology has made leaps in the last decade, but at the end of the day it is a tool alone. It’s a powerful, though oftentimes expensive, tool that can make a good business or firm great if it’s correctly applied.
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PIOGA Press
(By Jean Mosites and Kevin Garber)
The Marcellus Shale Coalition v. Department of Environmental Protection and Environmental Quality Board, 573 M.D. 2016.
In April 2023, the Pennsylvania Supreme Court vacated the Commonwealth Court’s decision that had invalidated several “public resource” provisions in 25 Pa. Code Chapter 78a. The Supreme Court’s decision is an abrupt departure from its 2018 decision affirming the preliminary injunction on Count I that had been imposed by the Commonwealth Court in 2016. The Supreme Court’s latest ruling puts these regulations into effect in the well permit process for the first time.
There is no statutory right to judicial review of new regulations in Pennsylvania. Such challenges must proceed in the form of declaratory judgment action in the Commonwealth Court or “as applied” in an appeal before the Environmental Hearing Board on a case-by-case basis. The latter course is duplicative, lengthy and costly, offering only piecemeal relief. MSC challenged portions of the new Chapter 78a regulatory package through a declaratory judgment action in October 2016, seeking relief for its members from regulations beyond the scope of Environmental Quality Board’s (EQB) authority, regulations with high cost and little discernible benefit.
Count I of MSC’s Petition for Review challenged Sections 78a.15(f) and (g), and the related definitions contained in Section 78a.1 of the Chapter 78a regulations. The provisions created a new pre-permitting process for well permit applicants, requiring new notice and comment opportunities in addition to those expressly authorized by Act 13, as adopted in 2012. The relevant defined terms include:
Common areas of a school’s property—An area on a school’s property accessible to the general public for recreational purposes. For the purposes of this definition, a school is a facility providing elementary, secondary or post-secondary educational services.
Other critical communities—
(i) Species of special concern identified on a PNDI receipt, including plant or animal species:
(A) In a proposed status categorized as proposed endangered, proposed threatened, proposed rare or candidate.
(B) That are classified as rare or tentatively undetermined.(ii) The term does not include threatened and endangered species.
Playground—
(i) An outdoor area provided to the general public for recreational purposes.
(ii) The term includes community-operated recreational facilities.
Public resource agency—An entity responsible for managing a public resource identified in § 78a.15(d) or (f)(1) (relating to application requirements) including the Department of Conservation and Natural Resources, the Fish and Boat Commission, the Game Commission, the United States Fish and Wildlife Service, the United States National Park Service, the United States Army Corps of Engineers, the United States Forest Service, counties, municipalities and playground owners.
Following MSC’s Petition for Relief, the Commonwealth Court preliminarily enjoined application of portions of the regulations on November 8, 2016. 1 MSC filed an application for partial summary relief on Count I on August 31, 2017. Pending review of that application, the Pennsylvania Supreme Court affirmed the preliminary injunction as to Count I on June 1, 2018. 185 A.3d 985 (Pa. 2018).2
On August 23, 2018, the Commonwealth Court issued a unanimous opinion invalidating portions of the new pre-permit process created in 25 Pa. Code §§ 78a.1 and 78a.15(f), and (g), pertaining to new “public resources.” In its decision on the merits, the Commonwealth Court concluded that the new public resources and new public resource agencies that had been created by the EQB were beyond its legal authority.3
In the April 2023 decision, however, Justice Donohue writing for the Supreme Court concluded that the General Assembly intended to give the agencies “leeway to promulgate the challenged regulations and that those regulations are reasonable.” The analysis provided in Section VI of the Court’s opinion, which is 37 pages long addressing issues from statutory construction to the Environmental Rights Amendment to agency deference, is joined only by Chief Justice Todd.
Justice Wecht joined the opinion but would have affirmed the Commonwealth Court’s invalidation of the definition of “other critical communities.” Justice Dougherty joined the opinion regarding other critical communities but would have affirmed the Commonwealth Court opinion invalidating the definitions of common areas of schools’ property, playgrounds, and including private entities as public resource agencies. Justice Mundy dissented, finding that the Commonwealth Court correctly determined that the agencies exceeded their statutory authority in promulgating each the challenged regulations.4
Despite the narrow outcome of a 3 to 2 Supreme Court decision, under Section 78a.15(f), well permit applicants must now notify the “public resource agency” for resources: 1) in a location that could impact other critical communities and 2) within 200 feet of common areas on a school’s property or a playground. The public resource agencies for the non-listed special concern species are the jurisdictional agencies – PA Fish and Boat Commission, PA Game Commission, Department of Conservation and Natural Resources, and the US Fish and Wildlife Service. The “public resource agencies” for the schools and playgrounds are yet to be identified on a case by case basis.
Notice is to include a plat provided at least 30 days prior to submission of a well permit application. The public resource agency then has 30 days to provide written comments to the Department regarding measures, if any, the public resource agency recommends the Department consider as a condition on the well permit. The applicant may provide a response to the public resource agency comments.
Going forward, well permit applications are to include the identification of public resources, descriptions of functions and uses of the public resource, and measures proposed to avoid, minimize or otherwise mitigate impacts, if any. Under section 78a.15(g), the Department is to consider the proposed measures, other measures necessary to protect against probable harmful impacts, comments by public resource agencies, and the optimal development of the gas resources and the property rights of the gas owners.
The Department’s denial of a well permit application or its imposition of conditions in a permit based on these newly applicable provisions is likely an appealable final action. In any such well permit appeal before the Pennsylvania Environmental Hearing Board, the Department has the burden of proving the well conditions imposed to protect any public resources listed in Section 3215(c) of Act 13 are necessary.5
1 The Court partially enjoined regulations challenged in Counts I (public resources), II (area of review), IV (impoundments) and V (site restoration). MSC v. DEP, Memorandum Opinion and Order, Nov. 8, 2016, as amended Feb. 14, 2017, J. Brobson. Counts for which injunctive relief was not granted include challenges to: Count III, 25 Pa. Code §§ 78a.58(f) (onsite processing), Count VI, 78a.66 (remediation of spills), and Count VII, 78a.121(b) (waste reporting).
2 The Supreme Court also affirmed the preliminary injunctions related to Counts II and IV as it applied to centralized impoundments, but vacated the injunction related to freshwater impoundments and Count V.
3 The Order issued on August 23, 2018 stated: 1. The definitions of “other critical communities,” “common areas of a school’s property,” and “playground” contained in Section 78a.1 of Title 25, Chapter 78a of the Pennsylvania Administrative Code (Chapter 78a Regulations), 25 Pa. Code §78a.1, are hereby declared void and unenforceable; 2. The definition of “public resource agency” in Section 78a.1 of the Chapter 78a Regulations, 25 Pa. Code §78a.1, to the extent that it includes “playground owners,” is hereby declared void and unenforceable; and 3. Section 78a.15(g)’s requirement that the Department will consider comments and recommendations submitted by municipalities is declared unconstitutional and unenforceable based on the Supreme Court’s decision in Robinson Township v. Commonwealth, 83 A.3d 901, 984, 1000 (Pa. 2013) (Robinson II), in which it declared Section 3215(d) of Act 13 of 2012, 58 Pa. C.S. §3215(d) – the statutory authorization for this regulatory provision – unconstitutional and enjoined its application and enforcement.
4 Justice Brobson recused himself from the Supreme Court’s consideration of the agencies’ appeal, having participated in the proceedings in the Commonwealth Court below. Former Chief Justice Baer participated in the oral argument but did not participate in the opinion of the Court.
5 Act 13 of 2012, Section 3215(e)(2)
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Reprinted with permission from the June 2023 issue of The PIOGA Press. All rights reserved.
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph Reinhart, Sean McGovern, Gina Falaschi Buchman and Christina Puhnaty)
On February 22, 2023, the Pennsylvania Supreme Court vacated and remanded a Pennsylvania Commonwealth Court decision affirming the Environmental Hearing Board’s (EHB) denial of legal fees to parties challenging environmental permits issued by the Pennsylvania Department of Environmental Protection (PADEP). Clean Air Council v. PADEP, Nos. 73 MAP 2021, 74 MAP 2021, slip op. (Pa. Feb. 22, 2023). In separate suits, environmental groups and landowners challenged permits issued to Sunoco Pipeline, L.P., for the Mariner East 2 pipeline and later sued for legal fees. The EHB ruled that the environmental groups and landowners could not compel reimbursement of their legal fees because such reimbursement is allowed only in cases in which a party’s bad faith in challenging or defending a PADEP permit is established and no such bad faith occurred. The commonwealth court affirmed. The supreme court disagreed, concluding that the bad-faith standard was incompatible with the Pennsylvania Clean Streams Law and that the EHB has taken an overbroad reading of applicable case law to support its position.
Section 307(b) of the Clean Streams Law, 35 Pa. Stat. § 691.307(b), provides that upon the request of any party, the EHB “may in its discretion order the payment of costs and attorney’s fees it determines to have been reasonably incurred by such party in proceedings pursuant to this act.” The supreme court concluded that the Clean Streams Law “neither limits nor guides the [EHB’s] discretion,” but that the EHB has “opted on its own to cabin that discretion.” Clean Air Council, slip op. at 2. It is possible that the supreme court’s decision could result in permittees not only paying to defend legal challenges to their permits, but also paying the legal expenses incurred by the parties challenging their permits. It is yet to be seen, however, how the EHB will apply the supreme court’s decision.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph Reinhart, Sean McGovern, Matthew Wood and Christina Puhnaty)
The Pennsylvania Department of Environmental Protection (PADEP) and Equitrans, L.P. (Equitrans), have reached a settlement regarding the administrative order issued by PADEP on December 8, 2022 (Order). See Stipulation of Settlement, Equitrans, L.P. v. PADEP, EHB Docket No. 2023-003-B (Apr. 12, 2023). As previously reported in Vol. 40, No. 1 (2023) of this Newsletter, PADEP issued the order in response to the November 2022 incident at Equitrans’ Rager Mountain Gas Storage Reservoir (Rager Mountain Facility) in Cambria County, Pennsylvania. The order required Equitrans to, inter alia, conduct mechanical integrity testing of its Rager Mountain storage wells, recondition and plug the wells as needed, and retain a third party to audit “all aspects of Equitrans’ storage field operations.” Equitrans ap-pealed the Order in early January, arguing that PADEP’s jurisdiction over the Rager Mountain Facility was preempted by the federal Natural Gas Act and Pipeline Safety Act, which grant certain exclusive jurisdiction to the Pipeline and Hazardous Materials Safety Administration (PHMSA) and Federal Energy Regulatory Commission (FERC) with regard to interstate natural gas storage facilities.
The April 12 stipulation of settlement between PADEP and Equitrans provides that the Rager Mountain Facility is “subject to the jurisdiction of FERC under the Natural Gas Act pursuant to a certificate of public convenience and necessity, and to the jurisdiction of PHMSA under the Pipeline Safety Act.” The stipulation of settlement further provides that PADEP would rescind its order and that Equitrans would withdraw its appeal and negotiate a final safety order with PHMSA regarding the Rager Mountain Facility.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph Reinhart, Sean McGovern, Gina Falaschi Buchman and Christina Puhnaty)
As previously reported in Vol. 39, No. 2 (2022) of this Newsletter, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule, or RGGI Rule, which links the commonwealth’s cap-and-trade program to RGGI, was published in the Pennsylvania Bulletin in April 2022. See 52 Pa. Bull. 2471 (Apr. 23, 2022). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid.
Three legal challenges were filed in response to the publication of the final rule. On April 25, 2022, owners of coal-fired power plants and other stakeholders filed a petition for review and an application for special relief in the form of a temporary injunction, which was granted. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022); Vol. 39, No. 3 (2022) of this Newsletter. Briefing has been filed and the court heard 30 minutes of oral argument in the case on November 16, 2022. On March 24, 2023, the Supreme Court of Pennsylvania granted requests to dismiss the preliminary injunction because the petitioners had failed to pay the bond required to secure the preliminary injunction. Petitioner Bowfin KeyCon Holdings, LLC, which has an interest in some of the subject coal-fired power plants, filed an appeal of the bond amount in summer 2022, claiming that the bond was infeasible or impossible to pay and asked the court to reduce it to a negligible amount. Despite the end of the preliminary injunction, the court may still make a decision on the merits in the coming months.
The acting Secretary of PADEP filed suit in the Pennsylvania Commonwealth Court against the Pennsylvania Legislative Reference Bureau (Bureau) in February 2022, seeking to compel the Bureau to publish the Environmental Quality Board’s final-form rulemaking for the CO2 Budget Trading Program in the Pennsylvania Bulletin. See McDonnell v. Pa. Legis. Reference Bureau, No. 41 MD 2022 (Pa. Commw. Ct. filed Feb. 3, 2022). By law, the House and Senate each have 30 calendar days or 10 legislative days—whichever is longer—to vote on a disapproval resolution to stop a new rule from taking effect. PADEP argued that the periods should have run simultaneously for the House and Senate, rather than one after the other, and the Bureau’s improper interpretation delayed issuance of the rule. On January 19, 2023, the commonwealth court dismissed the case as moot, as the rule was published in April 2022, without ruling on the merits. See Vol. 40, No. 1 (2023) of this Newsletter.
Additionally, on July 13, 2022, natural gas companies Calpine Corp., Tenaska Westmoreland Management LLC, and Fairless Energy LLC filed a third legal challenge to the rule with arguments similar to those brought in the other two cases. See Calpine Corp. v. PADEP, No. 357 MD 2022 (Pa. Commw. Ct. filed July 12, 2022). Constellation Energy Corporation and Constellation Energy Generation LLC petitioned to intervene in the case, but later filed a joint motion to stay intervention proceedings on October 31, 2022, which the court granted. The stay on the application for intervention remains in place. Briefing in this case has been filed and oral argument was heard on February 8, 2023. This case is still pending.
The state’s future plans for its RGGI regulation remain unclear, but it is unlikely to take action prior to a decision on the merits in the two remaining pending cases. Further information regarding the rule and the history of the rulemaking can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph Reinhart, Sean McGovern, Matthew Wood and Christina Puhnaty)
On March 16, 2023, the Pennsylvania Public Utility Commission (PUC) entered an order (Order) denying a petition for reconsideration (Petition) of its December 8, 2022, implementation order (Implementation Order), under which the PUC asserted jurisdiction over Class 1 natural gas gathering pipelines, including Type R intrastate pipelines, and certain liquid natural gas facilities. To reach this conclusion, the PUC relied on the Gas and Hazardous Liquids Pipelines Act (Act 127), 58 Pa. Stat. §§ 801.101–.1101, and amendments to regulations made in the final Gas Gathering Rule of the Pipeline and Hazardous Materials Safety Administration (PHMSA), 86 Fed. Reg. 63,266 (Nov. 15, 2021) (to be codified at 49 C.F.R. pts. 191, 192). As de-scribed in the Implementation Order, the PUC determined that Type R lines were subject to Act 127 registration and assessment, meaning that as issued, the Implementation Order would have required operators of Type R lines to register with the PUC on an annual basis and pay annual assessments.
In its Petition, the Pennsylvania Independent Oil & Gas Association (PIOGA), a trade association representing Pennsylvania oil and natural gas interests, challenged the PUC’s conclusion. It argued that the PUC had committed an error of law because Type R lines are subject only to annual and incident reporting requirements under 49 C.F.R. Part 191, which governs annual, incident, and other reporting requirements, but not subject to safety requirements under 49 C.F.R. Part 192, which governs minimum federal safety standards. PIOGA contended that because Type R lines are not subject to the Part 192 safety regulations, they do not implicate the PUC’s pipeline safety program. As such, the PUC lacked jurisdiction under Act 127, with its accompanying registration and annual assessment requirements, which apply only to “pipelines, pipeline operators or pipeline facilities regulated under Federal pipeline safety laws.” 58 Pa. Stat. § 801.103.
The PUC rejected PIOGA’s argument, finding that Act 127 defines “Federal pipeline safety laws” as “[t]he provisions of 49 U.S.C. Ch. 601 (relating to safety), the Hazardous Liquid Pipeline Safety Act of 1979 (Public Law 96-129, 93 Stat. 989), the Pipeline Safety Improvement Act of 2002 (Public Law 107-355, 116 Stat. 2985) and the regulations promulgated under the acts.” 58 Pa. Stat. § 801.102. The PUC reasoned that because 49 C.F.R. Subtitle B, Subchapter D, Parts 190—199, were promulgated pursuant to 49 U.S.C. Ch. 601, those Parts were subject to Act 127 and thus fall under the PUC’s jurisdiction. Accordingly, the PUC denied PIOGA’s Petition and determined that Type R pipeline operators must register annually with the PUC and it must maintain a registry of these operators.
In addition to the registration requirements, the PUC clarified two points on assessment and reporting obligations for Type R pipelines. The PUC said that Act 127 assessments apply to “regulated onshore [gas] gathering pipeline miles.” 58 Pa. Stat. § 801.503(b). Because Type R pipelines are specifically excluded from that definition under 49 C.F.R. Part 192, the PUC determined that there is no basis under Act 127 to assess Type R pipeline operators. Regarding reporting, the PUC explained that although it has a duty and the authority under Act 127 to regulate pipeline operators consistent with federal pipeline safety laws, PHMSA intends to enforce the 40 C.F.R. Part 191 reporting requirements for Type R intrastate pipeline operators, meaning the PUC does not need to enforce those requirements at this time.
The Implementation Order, PIOGA’s Petition, and the Order, as well as other related documents, are available at PUC Docket # M-2012-2282031 at https://www.puc.pa.gov/search/document-search/.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph Reinhart, Sean McGovern, Gina Falaschi Buchman and Christina Puhnaty)
In April 2023, the Pennsylvania Department of Environmental Protection’s (PADEP) Energy Programs Office, local partners, and its contractor, Preservation Design Partnership, hosted meetings with leaders and residents of environmental justice (EJ) communities around the state. The meetings were intended as listening sessions to learn how PADEP can assist Pennsylvania’s EJ communities become more sustainable and prepare for the effects of climate change. The meetings also provided information on the Energy Programs Office’s Climate Action for Environmental Justice Communities Program and provided information on additional available resources. Sessions were held in Meadville, Pittsburgh, Scranton, Reading, Harrisburg, Norristown, and Philadelphia, and also provided for virtual attendance. Discussions covered a wide range of topics including fuel source strategies, land use regulations and building codes, infrastructure, and public health.
During its Philadelphia session, the Energy Programs Office representative indicated that PADEP plans to be more intentional about the inclusion of EJ in the Pennsylvania Climate Action Plan, which is updated every three years (the last update was released in 2021). In addition, what they learn from the meetings will inform other program development, such as grants. Lastly, the Energy Programs Office plans to incorporate community feedback from the meetings in the Guide to Climate Action for Environmental Justice Communities that is currently under development. The guide is intended to inform PADEP’s climate action planning to ensure that strategies produce meaningful benefits in EJ communities and adequately prioritize state and federal funding. PADEP anticipates releasing the guide in summer 2023.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph Reinhart, Sean McGovern, Matthew Wood and Christina Puhnaty)
On February 17, 2023, the Clean Air Council (CAC) and the Environmental Integrity Project (EIP) sent a letter to the Pennsylvania Department of Environmental Protection (PADEP) requesting that the agency issue an order to Shell Chemical Appalachia LLC (Shell) to temporarily halt operations at the Shell Polymers Monaca Plant in Beaver County, Pennsylvania (Plant). See Letter from EIP & CAC to PADEP (Feb. 17, 2023). Specifically, CAC and EIP alleged that people living near the Plant had been exposed to volatile organic compounds (VOCs), nitrogen oxide (NOx), and other pollutants emitted in violation of Shell’s plan approval, the federal Clean Air Act, and the Pennsylvania Air Pollution Control Act (APCA). CAC and EIP cited PADEP’s February 2023 notice of violation (NOV) documenting the Plant’s exceedances of the 12-month rolling total emission limitations for VOCs in November and December 2022 and the 12-month rolling total emission limitations for NOx in December 2022, as well as the agency’s December 2022 NOV for the same VOCs emissions violations during September and October 2022. CAC and EIP also highlighted multiple malfunction reports submitted to PADEP by Shell documenting alleged violations of the visible emissions limitations of the Clean Air Act and Shell’s plan approval related to emissions from the Plant’s flares.
CAC and EIP urged PADEP to immediately act using the authority granted to it under the APCA, arguing that the statute allows the agency to issue orders to facilities to cease operations in violation of the APCA, plan approvals, or permits, citing as precedent a stop construction order PADEP issued in 2018 related to incidents during the construction of the Mariner East 2 pipeline. CAC and EIP requested that PADEP issue a similar order to Shell until the company can demonstrate that the Plant can operate in compliance with applicable laws. Prior to submitting their request to PADEP, CAC and EIP also sent Shell a notice of intent to sue the company under the citizen suit provisions of the Clean Air Act and the APCA to compel the Plant’s compliance with applicable requirements. See Notice of Intent to Sue (Feb. 2, 2023).
PADEP responded to CAC and EIP’s allegations in a February 28, 2023, letter in which the agency declined to issue an order to Shell, citing ongoing evaluations and inquiries, but said it would consider CAC and EIP’s letter in evaluating future enforcement actions. See PADEP Response (Feb. 28, 2023). The agency explained that according to Shell, the Plant is still in the commissioning phase, which started in mid-2022, and Shell has represented that the malfunctions and violations during commissioning will not occur during normal operations. PADEP also noted that it had fined Shell, was considering other penalties, and directed Shell to submit an emission exceedance report and mitigation plan examining the causes of, and identifying measures to prevent, the violations and malfunctions, which Shell did on January 30, 2023. Since then, PADEP requested, and Shell provided, additional technical information regarding the mitigation plan. PADEP has also issued Shell four more NOVs and Shell has submitted another malfunction report. For additional information, see https://www.dep.pa.gov/About/Regi onal/SouthwestRegion/Community%20Information/Pages/Shell-Petrochemical-Complex-.aspx.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
Employment and Labor Alert
(by Mychal Schulz)
The West Virginia Supreme Court issued a decision in a closely watched case where the estate of a motorcyclist killed by an employee after she left work, and who was found to have numerous prescription drugs in her system at the time of the accident, sought to impose liability on the employer.
Facts.
Brandy Liggett began her employment with Speedway on September 13, 2015, and she received training while working at a Speedway store on September 13, 14, and 15. On September 15, Ms. Liggett worked the 6 a.m. to 2 p.m. shift. During that shift, her manager, Bobby Jo Maguire, and another employee, Jennifer Wells, observed Ms. Liggett nod off to sleep. Specifically, Ms. Maguire observed Ms. Liggett appearing to fall asleep a couple of times while watching training videos. Ms. Maguire sent Ms. Liggett outside, believing that the fresh air would wake her up, but then Ms. Maguire and Ms. Wells observed Ms. Liggett nodding her head and appearing to fall asleep while standing next to a trash can outside. Ms. Wells remarked to Ms. Maguire that “something was going on” and that “something might be wrong with” Ms. Liggett.
Nonetheless, as Ms. Liggett approached the end of her shift, she was asked if she would work an extra hour as Speedway needed another person from 2 p.m. to 3 p.m. because of a call off. Neither Ms. Maguire nor Ms. Wells could stay, so Ms. Liggett volunteered to stay that extra hour.
At 3 p.m., Ms. Liggett left the Speedway and drove to her son’s middle school to drop off football equipment. Thereafter, she drove home, but on her way home and about five miles from the school, she crossed the center line and struck a motorcycle, killing the driver, Kevin Jarrett. Following the accident, Ms. Liggett tested positive for amphetamines, benzodiazepine, and suboxone, none of which had been prescribed for her. Ms. Liggett pled guilty to driving under the influence causing death, negligent homicide, and driving left of center.
The Lawsuit.
Mr. Jarrett’s estate filed a wrongful death complaint against both Ms. Liggett and Speedway, as Ms. Liggett’s employer. Ms. Liggett’s carrier settled for policy limits, and the case proceeded against Speedway under the theory that Speedway, as the employer, was under a duty to control Ms. Liggett’s conduct and/or or that Speedway’s conduct caused, in part, the accident.
The circuit court denied Speedway’s motion for summary judgment based upon Speedway’s argument that it owed no duty to Mr. Jarrett or the public, and the case proceeded to trial. The jury returned a verdict that placed 70 percent of the fault on Ms. Liggett and 30 percent of the fault on Speedway. After the circuit court determined that the jury did not award sufficient non-economic damages, a second damages-only trial resulted in a verdict of a little over $6.6 million, of which Speedway was liable for a little over $2 million. Thereafter, Speedway appealed the circuit court’s denial of its motion for judgment as a matter of law.
The Issue.
On appeal, the Supreme Court found that the “issue is whether the circuit court erred in concluding that Speedway engaged in conduct that created an unreasonable risk of harm to others, including Mr. Jarrett, thereby triggering a legal duty on the part of Speedway to prevent Ms. Liggett from driving home after work.” Specifically, the Supreme Court noted that “[t]he issue before us is whether . . . Speedway’s conduct relating to Ms. Liggett created a foreseeable risk of harm to others that Speedway had a duty to guard against.” Speedway, No. 21-0215, pp. 9, 15.
In finding that the Speedway did not owe a duty here, the Supreme Court noted that, to have such a duty, Speedway “must have engaged in ‘affirmative conduct, thereafter realize[d] or should [have] realize[d] that such conduct . . . created an unreasonable risk ofharm to another[,] including Mr. Jarrett’” Speedway, No. 21-0215 at 15 (citing to Robertson v. LeMaster, 301 S.E.2d 563 (W. Va. 1983)).
The Supreme Court reasoned:
Speedway’s conduct of allowing Ms. Liggett to continue working her shift and then work an extra hour past her shift and to leave her unsupervised while watching training videos does not constitute “affirmative conduct” that “created an unreasonable risk of harm to another.” Rather, the evidence was uncontroverted at trial that Ms. Liggett arrived for her shift while already under the influence of drugs and then took more drugs at work surreptitiously. There was no evidence that anyone at Speedway contributed to her state of impairment from drugs by either providing or condoning her consumption of them. Aside from the three instances where Ms. Liggett was observed falling asleep, she exhibited no signs of impairment such as glassy eyes or slurred speech, and she worked the remainder of her shift (including the hour of overtime) without incident. Following the accident, Ms. Liggett tested positive for various and sundry prescription medications that she had illegally purchased “off the street” and she pled guilty to various crimes related to the accident, including driving under the influence causing death. Further, although respondent argues that Ms. Maguire either knew, or should have known, that Ms. Liggett was too “exhausted” to drive herself home, thereby suggesting that fatigue contributed to the accident, she points to no evidence indicating that fatigue was found to have caused or contributed to the accident. In allowing Ms. Liggett to drive her own vehicle home after her shift, Speedway “did no more than acquiesce in [her] determination to drive [her] own car.” Indeed, Ms. Liggett testified that she believed she was capable of driving herself home that day, that there were family members she could have called if she needed a ride, that she had money for a cab, and that she would have refused a ride home had anyone from Speedway offered to drive her. The evidence at trial, when viewed in the light most favorable to respondent, failed to demonstrate that Speedway engaged in affirmative conduct that created an unreasonable risk of harm to the motoring public, including Mr. Jarrett. Therefore, Speedway had no duty to exercise reasonable care by preventing Ms. Liggett from driving.
Speedway, No. 21-0215 at 16-19 (citations omitted).
Notably, the estate argued that despite Speedway’s employees seeing Ms. Liggett fall asleep during the training videos and changing garbage cans, and despite the employees thinking that “something was going on” and that “something might be wrong with” Ms. Liggett, Speedway’s supervisor should have either taken her car keys away from her or called either a cab or other family member to take her home. It posited that these “acts of omission” – i.e., its decisions “not to conduct an investigation of Ms. Liggett’s impairment” and “not to fully evaluate [Ms. Liggett] before and after her overtime shift” – represented “affirmative conduct” for which Speedway could be liable. Speedway, No. 21-0215 at 19, n. 17. The Supreme Court rejected this position because the evidence, in its view, “simply did not warrant an investigation or evaluation of Ms. Liggett for drugs and/or fatigue and, thus, a failure to act in this regard did not give rise to a duty on the part of Speedway to protect others by preventing Ms. Liggett from driving home after work.” Speedway, No. 21-0215 at 19, n. 17.
The Impact.
The Speedway decision represents a significant win for employers. An adverse decision would have potentially exposed an employer to liability if the employer – and especially front-line supervisors – failed to sufficiently investigate if an employee appeared “off” or just tired at work, and then gets in an accident on the way home from work. This would have put a significant burden on front-line supervisors to do “something” if she observed an employee who is tired or “off” and would have been an ominous extension of an employer’s duty of care to the general public.
Still, employers still need to be aware of whether circumstances indicate that an employee is under the influence of a drugs or alcohol, and if circumstances indicate that an employee is under the influence, employers must take affirmative steps to prevent the employee from driving a motor vehicle. In Speedway, for example, had the employee slurred her speech or appeared glassy-eyed, the Supreme Court may have found that such circumstances made it reasonably foreseeable that harm would occur if the employee were permitted to drive herself home. In this way, Speedway represents both a win and a cautionary tale for employers.
If you have any questions about the decision made in this case, please contact Mychal S. Schulz at 681.265.1363 or mschulz@babstcalland.com.
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Legal Intelligencer
(by Gary Steinbauer and Christina Puhnaty)
In the nearly decade-long saga to regulate greenhouse gas (GHG) emissions from fossil fuel-fired power plants, the U.S. EPA recently began the rulemaking process for a new set of regulations that would impose restrictions on emission units at new and existing power plants. On May 23, 2023, the U.S. EPA published a proposed rule entitled “New Source Performance Standards for Greenhouse Gas Emissions From New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units; Emission Guidelines for Greenhouse Gas Emissions From Existing Fossil Fuel-Fired Electric Generating Units; and Repeal of the Affordable Clean Energy Rule” (Proposed Rule), starting a comment period that ends on July 24, 2023. 88 Fed. Reg. 33,240 (May 23, 2023). EPA’s Proposed Rule relies heavily on hydrogen co-firing and carbon capture and sequestration (CCS) deployment as part of the decarbonization of the power-producing sector.
In the Proposed Rule, EPA proposes five distinct actions under section 111 of the Clean Air Act (CAA). First, EPA is proposing to amend existing New Source Performance Standards (NSPS) for GHG emissions from new and reconstructed fossil fuel-fired stationary combustion turbine EGUs. Second, EPA is proposing to amend existing NSPS for GHG emissions from fossil fuel-fired steam generating units that undergo a large modification. Third, EPA is proposing emissions guidelines for GHG emissions from existing fossil fuel-fired steam generating EGUs (including coal, oil, and gas-fired steam generating EGUs). Fourth, EPA is proposing emissions guidelines for GHG emissions from the “largest, most frequently operated” existing stationary combustion turbines. Lastly, EPA is proposing to repeal the Affordable Clean Energy (ACE) Rule promulgated by the Trump administration in 2019 because “the emissions guidelines established in ACE do not reflect the Best System of Emissions Reduction (BSER) for steam generating EGUs and are inconsistent with section 111 of the CAA in other respects.” 88 Fed. Reg. at 33,243.
Under section 111 of the CAA, EPA identifies source categories that emit dangerous air pollutants and establishes NSPS for new sources of dangerous air pollutants in that source category, as well as emissions guidelines for certain pollutants from existing sources in that source category. 42 U.S.C. § 7411. In promulgating NSPS and emissions guidelines, EPA must determine the best system of emission reduction (BSER)—taking into account the cost of the reductions, health and environmental impacts, and energy requirements—that is “adequately demonstrated” for the purpose of improving the emissions performance of the covered sources. EPA notes in the Proposed Rule that the agency “may determine a control to be ‘adequately demonstrated’ even if it is new and not yet in widespread commercial use, and, further, that the EPA may reasonably project the development of a control system at a future time and establish requirements that take effect at that time.” The technologies that are “new” and “not yet in widespread commercial use” are CCS and low-GHG fuels/hydrogen co-firing, technologies that could allow steam generating EGUs and stationary combustion turbines to continue producing power with less GHG emissions.
EPA’s reliance on CCS and low-GHG hydrogen in the Proposed Rule is based on Congressional support of these technologies in the 2021 Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law) and the 2022 Inflation Reduction Act (IRA). The IIJA provided more than $65 billion for infrastructure investments and upgrades for clean energy technologies, including low-GHG hydrogen. Several IIJA programs are intended to improve the country’s transmission capacity and pipeline infrastructure, including the Carbon Dioxide Transportation Infrastructure Finance and Innovation Program to provide federal funding to build carbon dioxide (CO2) pipelines. The IIJA also allocated $8 billion for the development of regional clean hydrogen hubs across the United States.
The IRA also increased Internal Revenue Code section 45Q tax incentives for the capture and storage of CO2, including from coal-fired steam generating units and natural gas-fired stationary combustion turbines. This 70 percent increase in credit values equals $85 per metric ton for CO2 captured and securely stored in geologic formations and $60 per metric ton for CO2 captured and utilized or securely stored incidentally in conjunction with enhanced oil recovery. New provisions of the Internal Revenue Code at 45V provide tax credits for clean hydrogen, utilizing a tiered approach based on the estimated GHG emissions from the hydrogen production process.
The agency also notes that many utilities across the country have made public commitments to stop using coal and move towards low-GHG energy generation. Relying on these financial incentives and commitments, EPA concludes that low-GHG hydrogen co-firing and CCS are sufficiently achievable such that the agency can establish these technologies as the BSER for GHGs in the power sector.
EPA dismisses any potential legal concerns with the emerging nature of hydrogen and CCS technologies. More specifically, to show that a system of emissions reduction is “adequately demonstrated” to be an achievable emission limitation, the system must be “one which has been shown to be reasonably reliable, reasonably efficient, and which can reasonably be expected to serve the interests of pollution control without becoming exorbitantly costly in an economic or environmental way.” Essex Chem. Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973), cert. denied, 416 U.S. 969 (1974). In the Proposed Rule, EPA cites Sierra Club v. Costle, 657 F.2d 298, 364 (D.C. Cir. 1981) to justify its reliance on new technology that is not yet in widespread commercial use, stating that EPA may “hold the industry to a standard of improved design and operational advances, so long as there is substantial evidence that such improvements are feasible.” According to EPA and its review of relevant case law, “common sense dictates that the EPA may promulgate a rulemaking that imposes a standard on the sources, but establishes the date for compliance as a date-certain in the future, consistent with the period of time the source needs to install and start operating the control equipment.” 88 Fed. Reg. at 33,273. The Proposed Rule lays out timelines for the implementation and adoption of low-GHG hydrogen co-firing and CCS technologies at regulated emission units that EPA projects will provide sufficient time to manufacture the necessary control equipment and ensure that the necessary infrastructure upgrades are made to support these technologies.
EPA is also required by section 111(a)(1) of the CAA to take into account the cost of achieving an emission reduction and the extent to which emissions are reduced when determining whether an emission control is the “best system of emission reduction . . . adequately demonstrated.” When considering the cost of low-GHG hydrogen and CCS technologies in the Proposed Rule, EPA considered both the pre and post-IIJA and IRA cost effectiveness, i.e., costs in dollars per metric ton of GHG reduced. See, e.g., Hydrogen in Combustion Turbine Electric Generating Units, Technical Support Document, EPA Docket ID No. EPA-HQ-OAR-2023-0072 (May 23, 2023), https://www.epa.gov/system/files/documents/2023-05/TSD%20-%20Hydrogen%20in%20Combustion%20Turbine%20EGUs.pdf (Hydrogen TSD). When considering the costs of co-firing hydrogen in combustion turbines, for example, EPA recognized three sets of potential costs: (1) the capital costs of combustion turbines that have the capability of co-firing hydrogen; (2) pipeline infrastructure to deliver hydrogen; and (3) the fuel costs related to production of low-GHG hydrogen. Similarly, when evaluating the costs of CCS for new combined cycle units, for example, EPA considered the cost of installing and operating CO2 capture equipment as well as the costs of CO2 transport and storage. See, e.g., Carbon Capture and Storage for Combustion Turbines, Technical Support Document, Docket ID No. EPA-HQ-OAR-2023-0072 (May 23, 2023), https://www.epa.gov/system/files/documents/2023-05/TSD%20-%20GHG%20Mitigation%20Measures%20for%20Combustion%20Turbines.pdf.
The Proposed Rule is expected to garner significant interest by the regulated community, States, and environmental groups. Time will tell whether EPA hits the jackpot on its bet on hydrogen and CCS technologies in its latest suite of CAA regulations aimed at reducing GHG emissions from the power sector.
Gary Steinbauer is a shareholder and Christina Puhnaty is an associate in Babst, Calland, Clements and Zomnir’s environmental group. Their practices focus largely on matters arising under the Clean Air Act, analogous state clean air laws, and their implementing regulations. Contact them at gsteinbauer@babstcalland.com and cpuhnaty@babstcalland.com.
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Reprinted with permission from the June 8, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Litigation Alert
(by Christina McKinley and Alex Farone)
Last week, the United States Supreme Court ruled that litigants can appeal a summary judgment ruling based on a purely legal issue without filing a post-trial motion to preserve the issue. The unanimous decision authored by Justice Amy Coney Barrett in Dupree v. Younger resolved a significant split among the Circuit Courts of Appeal on this issue. No. 22-210.
For trial practitioners, particularly those who litigate within multiple circuits, Dupree will be a welcome relief, as the ruling comports with the majority of circuits, the Rules of Civil Procedure, and common sense. It will remove one more obstacle from perfecting the appellate record, and it will promote consistency among the circuits. Nevertheless, out of an abundance of caution, counsel should take care to renew their arguments in a post-trial motion even on “legal” summary judgment issues when there may be a question as to whether the issue is “purely legal.”
Prior to Dupree, the First, Fourth, Fifth, Eighth, and Eleventh Circuits had held that when a party is dissatisfied with any summary judgment ruling, that party must file a post-trial motion for judgment as a matter of law, re-raising the issue in order to preserve it for a possible appeal. In contrast, the remaining circuit courts required this preservation exercise only for summary judgment issues decided on factual grounds. With Dupree, the Supreme Court sided with the majority of circuits, drawing a procedural distinction between factual and legal summary judgment determinations. Dupree provides much needed clarity in this procedural arena, where previously, an unwary litigant risked waiver of appellate review if it thought (sensibly) that re-raising a legal issue denied at summary judgment would have been futile.
Requirements of the Federal Rules
Federal Rule of Civil Procedure 56(a) provides that a district court may enter summary judgment on a claim or defense if (1) there is no genuine issue as to any material fact, and (2) the movant is entitled to judgment as a matter of law. Summary judgment motions decided on the first portion of the rule—whether the plaintiff has produced sufficient evidence for a reasonable factfinder to determine that they have met the elements of their claim—are considered factual issue rulings. These types of summary judgment rulings are based on the facts developed at the time of the motion. After a denial of summary judgment, the case moves forward and an additional factual record is established based on presentation of evidence at trial. Because the facts continue to develop leading up to and during trial, the summary judgment factual determinations are rendered stale and moot. As such, if it is dissatisfied with the ultimate determination from a factual standpoint, a party must file a post-trial motion under Federal Rule of Civil Procedure 50 to confirm whether there was sufficient evidence in the trial record to support the verdict.
By contrast, summary judgment determinations based on purely legal issues are made when the facts relating to a dispositive legal issue are not in dispute, and lead the court to find in favor of one party as a matter of law. For example, if the facts of a case are not in dispute as to when a certain negligent act occurred and that the plaintiff was immediately aware of the act and the harm that followed, then whether the lawsuit was timely filed within the statute of limitations period is a purely legal issue that could dispose of the case at summary judgment, regardless of whether factual disputes remain as to liability. Prior to Dupree, in a minority of circuits, a defendant who lost a purely legal argument at summary judgment was required to file a post-trial motion to raise the same issue again in order to preserve the issue for appeal, despite no developments at trial to change the court’s analysis or determination on the legal issue. The majority of circuits instead would not have required this post-trial motion to re-assert a pure legal argument raised previously on summary judgment.
Dupree Resolves the Circuit Split
In Dupree, the Supreme Court held that the rationale underlying the requirements for a renewed post-trial motion on sufficiency of the evidence does not support a requirement for a renewed post-trial motion based on a “purely legal” summary judgment determination. Dupree came before the Court after the Fourth Circuit declined to hear a requested appeal that the case should have been dismissed for failure to exhaust administrative remedies. Inmate Kevin Younger was assaulted by corrections officers while being held in pretrial detention. He pursued a civil rights claim under 42 U.S.C. § 1983 against several prison officials including former lieutenant Neil Dupree. Dupree argued at the summary judgment stage that Younger had failed to exhaust his administrative remedies as required by the Prison Litigation Reform Act. The district court denied summary judgment, stating that there was “no dispute” that the prison system had internally investigated the assault, thereby satisfying the exhaustion requirement. At trial, Dupree did not present any evidence relating to the exhaustion defense. After the jury found Dupree liable and awarded Younger $700,000 in damages, Dupree did not file any post-trial motion to re-raise his exhaustion defense. For this reason, the Fourth Circuit dismissed the appeal. The Supreme Court vacated the Fourth Circuit’s determination, holding that it was error to require a purely legal issue resolved at summary judgment to be renewed in a post-trial motion in order to preserve the issue for appeal.
The Court held that a summary judgment motion is sufficient to preserve legal claims, because pure questions of law are not affected by future developments in the case at trial. Requiring a litigant to renew its summary judgment motion on a purely legal issue in a post-trial motion to the district court is a rote and “empty exercise,” the Court reasoned, because a trial has no impact on the legal issues underlying a case.
The Court also rejected arguments that this ruling would be practically unworkable because the line between factual and legal questions allegedly can be “vexing.” In practice, the appellate courts can easily separate factual and legal issues in the majority of instances.
If you have questions about the Dupree decision, or federal or state court appeals in general, please contact Christina Manfredi McKinley at 412.394.5432 or cmckinley@babstcalland.com or Alexandra G. Farone at 412.394.6521 or afarone@babstcalland.com.
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Smart Business
(By Adam Burroughs featuring Alyssa Golfieri)
There are common pitfalls related to zoning and land use that can occur in real estate transactions. When acquiring a property with the intent to develop, redevelop, or continue an existing use, there are simple, inexpensive steps buyers can take to get ahead of and navigate these issues during the due diligence process.
“Local regulation and municipal cooperation can be a big hurdle,” says Alyssa E. Golfieri, a shareholder at Babst Calland. “But the zoning due diligence process doesn’t have to be complicated and can be started before buyers execute a letter of intent.”
Smart Business spoke with Golfieri about zoning and land use due diligence in real estate transactions.
What documents need to be acquired, reviewed and analyzed?
Before a buyer’s due diligence period expires, the buyer should confirm what, if any, zoning, land use and condemnation-related matters are or were pending, initiated, or approved that affect the subject property. Relying on the seller to provide relevant zoning and land use records is a major pitfall buyers fall into. It is rare that a seller can produce such records, especially when the seller isn’t the original developer. Buyers should take advantage of their state’s public disclosure laws because it is an easy, inexpensive process that can yield significant results. Submit the records request early in the process because municipalities have a generous range of time for response.
What should buyers know about existing permits and approvals?
Failure to confirm conditions or obligations that are imposed through existing permits and approvals is a common pitfall for buyers. Buyers need to understand what permits and approvals exist for the property and use as early as possible because they often contain conditions or ongoing obligations that become the buyer’s responsibility upon closing. Such permits and approvals could include conditional use approvals, special exception approvals, variances, special permits, land development/site plan approval, certificates of occupancy, and business licenses.
Inspections are a very common condition or obligation that trips up deals. Some municipalities tie inspection requirements to business license registrations or renewals, some tie it to the transfer of a certificate of occupancy, some impose it as a condition to approval, and other stricter municipalities require it upon a mere change in ownership.
Once buyers confirm the universe of conditions and obligations, including inspection obligations, they can proactively develop a plan with their sellers for addressing any identified issues.
What should buyers know about new approvals?
The biggest pitfall for buyers purchasing property for a new use or development is failure to confirm that local zoning regulations allow the property to be used and developed in the manner that the buyer intends. If acquiring property for purposes of a new development, prior to the expiration of its due diligence period, a buyer needs to confirm that the buyer’s proposed use is permitted in the underlying zoning district; the buyer’s proposed site development fits on the property within the confines of current bulk and area zoning regulations; and what, if any, supplemental zoning regulations are applicable. Most zoning regulations are available online, so buyers can do this analysis before executing a letter of intent.
In a similar vein, if acquiring an already-developed property or business, a buyer needs to confirm that the use is permitted in the underlying zoning district, and all existing structures and improvements comply with current bulk and area zoning regulations. If the answer is no to either of the foregoing questions, the use, structure, or improvement is nonconforming, and it is the property owner’s burden to prove such nonconformity is legal and permitted to continue. The easiest way to do this is producing municipal permits, approvals, and authorized site plans. Hence, collecting and becoming knowledgeable of existing zoning and land use documents related to the property, from the seller and the municipality, is a critical step in real estate transactions.
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GO-WV
(By Christina Manfredi McKinley and Keith Coyle)
On May 16, 2023, the D.C. Circuit issued a decision vacating in its entirety a challenged piece of a rule related to safety valve requirements for gas gathering lines. That decision, GPA Midstream Association and American Petroleum Institute v. United States Department of Transportation and Pipeline and Hazardous Safety Administration, held that the agency violated the Administrative Procedure Act and acted arbitrarily and capriciously when it failed to explain, let alone consider, why the rulemaking’s safety standard would practicable and make sense for regulated gathering lines until issuing the final rule, when there could be no peer review or public comment.
In 2020, PHMSA published a notice of proposed rulemaking to comply with a Congressional directive to the agency to consider the use of valve, or automatic shutoff technology, on gas transmission lines. But the notice of proposed rulemaking and risk assessment said nothing about the costs and benefits of applying the standard to gathering pipelines. Nevertheless, because of certain pre-existing rules, new or replaced regulated gathering lines would have been subject to the proposed standard unless expressly carved out by the rule.
As such, in their comments to the proposed rule, the Petitioners sought an exemption for gathering pipelines. Among other things, they argued the risk assessment lacked the cost-benefit data needed to justify applying the rule to gathering pipelines. Knowing these objections, PHMSA proceeded with the rulemaking anyway. In the final rule’s preamble, PHMSA addressed some of the objections. It pointed out that the proposed rule never said regulated gathering lines would be exempt—which is correct because the proposed rule said nothing at all—and it included some data about gathering lines in the final rule’s risk assessment. Yet it made no attempt to quantify the benefits for gathering lines.
Petitioners sought review in the D.C. Circuit. The crux of Petitioners’ arguments was that by simply asserting that the analysis for transmission lines was applicable to gathering lines after the fact, PHMSA deprived the public of the right to participate in the notice and comment process, contrary to law. In fact, there are good reasons that gathering and transmission lines might be treated distinctly, and by short-circuiting the process, PHMSA ignored those distinctions.
The D.C. Circuit agreed. It vacated the final rule as applied to gathering lines, faulting PHMSA for failing to follow the process required of it under the APA and the Pipeline Safety Act. As the D.C. Circuit concluded, “‘the Government should turn square corners in dealing with the people.” Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1909 (2020). The PHMSA did not turn square corners here. It cut corners to the prejudice of the petitioners, the administrative process, and thus the public.”
Keith Coyle and Christina Manfredi McKinley of Babst Calland represented the petitioners in this challenge. The case is No.22-1148.
Click here, to view the article online in the June issue of Go-WV News.
GO-WV
(By Lisa Bruderly)
On May 25, 2023, the U.S. Supreme Court issued a highly-anticipated decision that significantly narrows the extent of wetlands within the definition of “waters of the United States” (WOTUS), and, therefore, within the jurisdiction of the federal Clean Water Act (CWA). Under the majority opinion in Sackett v. EPA, the Court held that “waters” are limited to “only those relatively permanent standing or continuously flowing bodies of water” that are described as “streams, oceans, rivers, and lakes” and to “adjacent” wetlands that are “indistinguishable” from those bodies of water. Therefore, a wetland is only a WOTUS (and subject to CWA jurisdiction) if: (1) the adjacent body of water is a WOTUS (i.e., “a relatively permanent body of water connected to a traditional interstate navigable water”); and (2) the wetland has a “continuous surface connection” with that water “making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” As Justice Samuel Alito stated: Federally regulated wetlands “must be indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA. . . . Wetlands that are separate from traditional navigable waters cannot be considered part of those waters, even if they are located nearby.”
The Sackett litigation involves Michael and Chantell Sackett, who have been unable to build a house because the U.S. Environmental Protection Agency (USEPA) and the U. S. Army Corps of Engineers (the Corps) determined that a wetland on their Idaho property was a WOTUS, requiring CWA Section 404 permitting. Both the U.S. District Court for the District of Idaho and the Ninth Circuit sided with the Agencies’ WOTUS determination, citing the “significant nexus” test introduced by Justice Anthony Kennedy in his concurring opinion in the U.S. Supreme Court’s seminal Rapanos v. U.S. decision. Under the “significant nexus” test, a wetland is broadly considered to be a WOTUS if it, alone or in combination with similarly situated lands in the region, significantly affects the chemical, physical and biological integrity of navigable waters.
On appeal, the U.S. Supreme Court agreed to examine whether the Ninth Circuit set forth the proper test to determine whether the Sacketts’ wetlands are WOTUS. The Court disagreed with the Ninth Circuit and, instead, upheld the plurality opinion of Rapanos (drafted by Justice Antonin Scalia), which stated that WOTUS should be limited to relatively permanent bodies of water connected to traditional interstate navigable waters and wetlands with a close physical connection to those waters, such that they are indistinguishable from those waters.
The Court’s majority opinion in Sackett was written by Justice Samuel Alito, with concurring opinions written by Justices Thomas, Kavanaugh and Kagan. The Justices unanimously agreed that the wetlands on the Sacketts’ property were not WOTUS and that the “significant nexus” test should not be used to determine federally regulated wetlands. Justice Clarence Thomas’ concurring opinion focused on the meaning of “navigable,” and appeared to advocate for an even more narrowed scope of federal regulation. The two other concurring opinions disagreed with the majority regarding the meaning of “adjacent” and asserted that adjacent wetlands should also include wetlands that are “close to, neighboring or not widely separated” from the covered water. Justice Brett Kavanaugh stated that adjacent wetlands mean “more than adjoining wetlands and also includes wetlands separated from covered waters by man-made dikes or barriers, natural river berms, beach dunes or the like.”
The Sackett ruling has immediate, practical consequences. With the elimination of the “significant nexus” test, the extent of wetlands considered to be WOTUS will markedly decrease, thereby decreasing the need for Corps permitting for land development, pipeline construction and other earth disturbance activities. In addition, the Court’s ruling will likely provide more certainty to the regulated community, as to which wetlands are regulated. Generally speaking, a “continuous surface connection” (or the lack of one) is easier to identify than a “nexus” that was often subjectively determined. However, as acknowledged by the majority, “temporary interruptions in surface connection may sometimes occur because of phenomena like low tides and dry spells.” The Court also seemingly acknowledged and addressed a potential “loophole” for federal regulation by noting that “a landowner cannot carve out wetlands from federal jurisdiction by illegally constructing a barrier on wetlands otherwise covered the CWA.”
Even though Sackett pertains directly to wetlands, it also calls into question the tests used for determining whether “waters” are WOTUS. By rejecting the “significant nexus” test, the Court has effectively weighed in on the appropriate (and more narrow) test for determining whether streams and other waterbodies are federally regulated (i.e., whether the waterbody is relatively permanent).
While Sackett narrowed federal regulation of wetlands, it is important to note that state stream/wetland and earth disturbance laws may still apply to specific projects and development. Typically, states broadly define the waters under their jurisdiction. For example, the West Virginia regulations define “water” to include “any and all water on or beneath the surface of the ground.” In light of the broad-reaching implications of Sackett, states may seize this opportunity to develop and/or strengthen their stream and wetland permitting programs.
Other WOTUS Developments
The Sackett decision comes just two months after the Biden administration’s new definition of WOTUS (2023 Rule) became effective. The 2023 Rule defines WOTUS using both the Justice Scalia test for relatively permanent waters and adjacent wetlands, as well as the Justice Kennedy “significant nexus” test. The Biden administration expressed concern that the “Supreme Court’s disappointing decision” would take the country “backwards” with regard to the protection of water quality. In a statement issued just after the publication of the Sackett decision, President Biden stated: “My team will work with the Department of Justice and relevant agencies to carefully review this decision and use every legal authority we have to protect our Nation’s waters for the people and communities that depend on them.” We will be watching to see how USEPA and the Corps react in light of Sackett.
The 2023 Rule has already faced three judicial challenges in Texas, North Dakota and Kentucky. These challenges have resulted in a nationwide split in the current definition of WOTUS, with 23 states using the 2023 Rule and 27 states relying on the WOTUS definition that was in effect prior to the 2023 Rule (i.e., the 1986 definition as influenced by the U.S. Supreme Court decisions from the 2000s, especially Rapanos). As a result, West Virginia and Pennsylvania, for example, currently rely on different WOTUS definitions to determine federal CWA jurisdiction.
Even without the extensive changes associated with Sackett, this nationwide split creates inconsistencies on how CWA jurisdiction is applied from state to state. A water may be regulated under the CWA based on the effective WOTUS definition in one state, while the same water would not be federally-regulated under the WOTUS definition effective in another state.
One thing is certain, the landscape for determining federally-regulated waters is changing again, and the regulated community must stay abreast of these changes.
Babst Calland will continue to stay up-to-date on the developments related to WOTUS and the Clean Water Act, in general. If you have any questions or would like any additional information, please contact Lisa Bruderly at (412) 394-6495 or lbruderly@babstcalland.com.
Click here, to view the article online in the June issue of Go-WV News.
GO-WV
(Brianne Kurdock, Jim Curry, Gary Steinbauer, Lee Banse)
On May 5, 2023, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released the pre-publication version of a notice of proposed rulemaking (NPRM) titled “Gas Pipeline Leak Detection and Repair.” PHMSA published the NPRM in response to section 113 of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (PIPES Act). Section 113 of the PIPES Act directed PHMSA to promulgate final regulations by December 27, 2021, requiring operators of gas transmission, distribution pipelines, and certain gathering lines to conduct leak detection and repair programs.
PHMSA proposes to amend 49 CFR Parts 191, 192, and 193 to: increase the frequency of leakage survey and patrolling requirements; introduce leakage survey and repair requirements for liquefied natural gas (LNG) facilities; require grading and repairs of leaks; reduce the use of blowdowns and intentional venting; impose design, configuration, and maintenance requirements for relief devices to reduce emissions; expand reporting requirements; and require that Type A, B, and C gathering lines submit geospatial pipeline location data to the National Pipeline Mapping System (NPMS). PHMSA proposes a six-month effective date for this rulemaking.
Comments on the NPRM are due on July 17, 2023.
Scope
Among other notable features of the proposal, the scope of this NPRM extends beyond the Section 113 congressional mandate by including Type C gathering lines, underground natural gas storage facilities, and LNG facilities. The statutory mandate was limited to regulated gathering lines in a Class 2, 3, or 4 location, and new and existing gas transmission and distribution pipelines. The NPRM also includes provisions intended to avoid overlap with existing Environmental Protection Agency (EPA) leak detection and repair (LDAR) regulations at 40 CFR Part 60, Subpart OOOOa, and EPA’s proposed regulations that would be codified at 40 CFR Part 60, Subparts OOOOb and OOOOc. The scope of these anti-overlap provisions is unclear, and the provisions could prove difficult to implement from a practical perspective.
Key aspects of the NPRM include:
Increased Leakage Surveys and Patrols
With the exception of distribution pipelines located within business districts, PHMSA proposes to increase the frequency of leakage surveys and right-of-way patrols for pipeline facilities and introduces these requirements for Type B and C gathering pipelines. PHMSA proposes that transmission operators conduct right-of-way patrols every 45 days with a minimum of 12 patrols each calendar year. The proposal reflects a significant expansion of the current obligations.
PHMSA proposes to expand the leakage survey obligation to all valves, flanges, meters, regulators, tie-ins, and launcher and receiver facilities. Further, the NPRM would restrict leakage surveys that exclusively use human senses to offshore pipelines below the waterline, or, with the prior approval of PHMSA, onshore transmission and gathering lines located outside of high consequence areas or in Class 1 or 2 locations. For all other leakage surveys, an operator must deploy leak detection technologies that meet PHMSA’s proposed detection sensitivity requirements. The proposed frequencies for the leakage surveys vary based on the type and location of the pipeline, valve, flange, tie-in or launcher and receiver facility.
Development of Advanced Leak Detection Programs
PHMSA proposes to require that operators develop a written Advanced Leak Detection Program (ALDP). Operators would need to develop procedures that specify how they intend to perform leakage surveys, as well as pinpoint and investigate leaks. Among other requirements, operators would need to identify the leak detection technology they intend to use in their programs after considering several prescribed factors, and an operator’s ALDP must select a leak detection device that is capable of detecting and pinpointing all leaks that have a sufficient release rate to produce a reading of 5 parts per million when measured from a distance of 5 feet or less from the pipeline or within a wall-to-wall paved area. It is not clear whether this leak detection device sensitivity threshold is practicable or consistent with existing EPA LDAR regulations.
Leak Grade and Repair Requirements
PHMSA proposes stringent leak grade and repair regulations that would require operators to classify and repair all detected leaks on their pipeline systems. Operators would need to determine whether detected leaks qualify as grade 1 (most severe), grade 2, or grade 3 (least severe) based on pre-defined narrative criteria or specified percentages of the lower explosive limit (LEL). For a grade 1 leak, an operator would be required to take immediate and continuous action to repair the leak upon detection. A grade 2 leak would need to be repaired within 6 months of detection, but an operator must also re-evaluate the leak every 30 days until the repair is complete. In addition, an operator would be required to develop procedures to prioritize grade 2 leak repairs, and a grade 2 leak located on a transmission line or Type A gathering line in an HCA, or a Class 3 or 4 location would require repair within 30 days. A grade 3 leak would need to be repaired within 24 months of detection, and re-evaluated every 6 months until the repair is complete, unless the operator replaces the pipeline segment containing the leak within 5 years of detection. The proposal would establish post-repair inspection and leak repair verification requirements, provide for the downgrading and upgrading of leak classifications, and allow an operator to request that PHMSA extend the regulatory deadlines for completing for repairs. We note that PHMSA’s proposed leak grading scheme is not an approach adopted by EPA in its LDAR regulations, which generally include a concentration-based leak definition above which a repair is required.
Exceptions for Compressor Stations
PHMSA would not apply the proposed leakage survey, patrolling, ALDP, leak grade and repair, and personnel qualification requirements to compressor stations on gas transmission or gathering lines if the compressor station is already subject to the EPA’s LDAR standards. More specifically, compressor stations would be exempt from these proposed PHMSA requirements if they are subject to EPA’s methane detection monitoring and repair requirements under 40 CFR Part 60, Subparts OOOOa or OOOOb, or relevant standards in an EPA-approved State Plan or Federal Plan that is at least as stringent as EPA’s proposed requirements at 40 CFR Part 60, Subpart OOOOc. The EPA “requirements” PHMSA references as being in place under 40 CFR Part 60, Subparts OOOOb and OOOOc are the subject of a proposed rulemaking by EPA, and they have not been promulgated in final form. Furthermore, EPA’s proposed greenhouse gas emission guidelines under 40 CFR Part 60, Subpart OOOOc, if finalized, would generally apply to compressor stations constructed prior to November 15, 2021, but these emission guidelines would be implemented directly by states after what could be a lengthy EPA review and approval process.
Reporting
PHMSA is proposing to amend Part 191 to require operators to report estimated emissions attributed to leaks, other estimated emissions from stationary sources, and the number and grade of leaks an operator detects and repairs.
PHMSA is also introducing a new large-volume gas release report that would require an operator to report within 30 days an unintentional or intentional release of 1 million cubic feet or more from a gas pipeline facility.
The NPRM would also require operators to submit data about offshore gas gathering lines, and Type A, Type B, and Type C gas gathering lines to the National Pipeline Mapping System. This provision exceeds the existing statutory mandate for NPMS.
Mitigating Emissions from Venting
To limit methane emissions caused by venting events such as blowdowns and tank boil-off, the NPRM would require operators of gas transmission, Type A gathering, regulated offshore pipelines, and LNG facilities to choose from a list of emission reduction methodologies, such as routing gas to a flare stack or reducing the operating pressure of a line prior to venting. Operators would be required to document the methodologies they choose and describe how the chosen methodologies reduce emissions.
Design, Configuration, and Maintenance of Pressure Relief Devices
The NPRM would require a documented engineering analysis to demonstrate that new, replaced, relocated, or otherwise changed pressure relief and limiting devices on Part 192-regulated pipelines have been designed and configured to minimize unnecessary releases of gas. Operators must also develop operations and maintenance procedures to assess pressure relief devices as well as procedures to provide for the repair or replacement of the devices, if necessary.
Qualifications
The NPRM would require personnel that conduct leakage surveys, leak grading, and leak investigations on certain facilities to be operator qualified under Part 192, subpart N.
LNG Facilities
PHMSA proposes to require operators to conduct quarterly leakage surveys of equipment or components at LNG facilities that contain methane or LNG. The surveys would require use of leak detection equipment capable of detecting a methane leak that produces a reading of at least 5 parts per million when located within 5 feet of the equipment being surveyed.
PHMSA would require LNG facility operators to develop procedures to eliminate leaks and minimize releases of gas, conduct leak surveys and address any methane leaks according to their maintenance procedures or abnormal operating procedures.
PHMSA also proposes that LNG operators adopt blowdown and boiloff emission reduction methodologies from a PHMSA-proposed list. PHMSA’s list includes use of a flare or isolation of smaller piping segments, but also would allow operators to propose their own “alternative method,” if the operator can demonstrate it would reduce emissions by 50% as compared to taking no emission mitigation measures.
Underground Natural Gas Storage Facilities
The NPRM proposes to amend Sec. 192.12(c) to require operator procedural manuals to include procedures for eliminating leaks and minimizing releases of gas from storage facilities.
For a more detailed assessment of how this NPRM could affect specific asset profiles, please contact Brianne Kurdock at bkurdock@babstcalland.com, Jim Curry at jcurry@babstcalland.com, Gary Steinbauer at gsteinbauer@babstcalland.com or Lee Banse at lbanse@babstcalland.com.
Click here, to view the article online in the June issue of Go-WV News.