Environmental Alert
(by Sloane Anders Wildman and Amanda Brosy)
On April 13, 2023, the U.S. Environmental Protection Agency (EPA) issued an Advance Notice of Proposed Rulemaking (ANPRM) requesting input on the potential designation of additional categories of per and poly-fluoroalkyl substances (PFAS) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund. The ANPRM follows EPA’s September 2022 Proposed Rule, which, if finalized, would designate two of the most common PFAS as CERCLA hazardous substances and represents another step under the “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024,” a plan for taking an agency-wide approach to address PFAS under EPA’s various statutory and regulatory authorities. EPA will be accepting comments on the ANRPM until June 12, 2023.
What Are PFAS?
PFAS are a group of man-made chemicals identified by signature elemental bonds of fluorine and carbon, which are extremely strong and difficult to break down in the environment. As a result, PFAS are persistent and can withstand high temperatures and highly corrosive environments. While the PFAS family of chemicals includes the commonly known and used PFOA, PFOS, and GenX, there are more than 12,000 other compounds that are also classified as PFAS. PFAS can be present in water, soil, air, and food as well as materials found in homes and workplaces.
PFAS have been manufactured and used in a variety of industries around the globe, including in the United States since the 1940s. Because of their ability to repel water and oil, PFAS are used in many different types of products, including firefighting foam known as “AFFF,” stain-resistant carpets, roofing materials, coatings, food packaging, water-resistant outdoor clothing and gear, nonstick cookware, and boots, among others.
What Is EPA Doing to Address PFAS?
EPA’s PFAS Strategic Roadmap sets timelines by which EPA plans to take specific actions related to PFAS across regulatory programs. As previously reported by Babst Calland in September 2022, among numerous other actions, EPA proposed a rule to designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) – the two most common and well-studied PFAS – and their salts and isomers as “hazardous substances” under CERCLA. EPA currently is reviewing comments received on this Proposed Rule and is expected to finalize these listings this summer.
The ANPRM seeks technical input from industry, environmental groups, Tribes, universities, and business groups that will inform EPA’s decision whether to propose to designate as hazardous substances seven additional PFAS, as well as precursors to PFOA, PFOS and the seven additional PFAS.[1]
EPA is soliciting information concerning mobility, persistence, prevalence, and other characteristics to supplement the existing toxicity data for these compounds. EPA is also requesting information regarding the degradation of these substances through environmental processes such as biodegradation, photolysis, and hydrolysis and whether and how EPA should consider the availability of analytical methods when determining whether to designate precursors as CERCLA hazardous substances. Finally, EPA is requesting information on whether categories of PFAS (i.e., groups of PFAS that share similar characteristics such as chemical structure, physical or chemical properties, mode of toxicological action, precursors or degradants, or co-occurrence) could or could not be designated as hazardous substances. Although CERCLA precludes EPA from taking cost into account in designating hazardous substances, EPA is requesting information on potential direct and indirect costs and benefits of designating any of these compounds as hazardous substances, including, in particular, impacts on small entities.
What Are the Next Steps?
EPA states that it intends to carefully review all comments and information received in response to the ANPRM, after which it plans to supplement the collected information with information that the Agency has obtained independently, to determine whether to proceed with a future rulemaking addressing these additional substances.
With respect to CERCLA liability and enforcement, the ANPRM indicates that EPA is separately developing a CERCLA PFAS enforcement discretion and settlement policy. EPA held two public listening sessions in March and sought written comments on public concerns regarding CERCLA PFAS enforcement/liability. EPA will now review and consider those comments as it develops its policy.
As the federal and state governments take action to address PFAS, Babst Calland attorneys will continue to track these developments and are available to assist you with PFAS-related matters. For further information, please contact Sloane Wildman at 202-853-3457 or swildman@babstcalland.com, Amanda Brosy at 202-853-3465 or abrosy@babstcalland.com, or your client service attorney at Babst Calland.
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[1] The seven additional PFAS are Perfluorobutanesulfonic acid (PFBS), CASRN 375–73–5, Perfluorohexanesulfonic acid (PFHxS), CASRN 355–46–4, Perfluorononanoic acid (PFNA), CASRN 375–95–1, Hexafluoropropylene oxide dimer acid (HFPO–DA), CASRN 13252–13– 6 (sometimes called GenX), Perfluorobutanoic acid (PFBA), CASRN 375–22–4, Perfluorohexanoic acid (PFHxA), CASRN 307–24–4, and Perfluorodecanoic acid (PFDA) CASRN 335–76–2.
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PIOGA Press
(By Ben Clapp and Gina Falaschi Buchman)
On March 22, 2023, Chubb, one of the world’s largest insurance companies, introduced new climate-focused underwriting standards intended to induce reductions of methane emissions from the oil and gas production sector.
Under the new standards, Chubb will continue to offer coverage only to clients that implement evidence-based plans to manage methane emissions including, at a minimum, a leak detection and repair (LDAR) program, elimination of non-emergency venting, and measures to reduce emissions from flaring. These criteria commence immediately, but customers will have time to develop an action plan based on their individual risk characteristics. Chubb has also committed to creating a customer resource center to support oil and gas insureds implementing these requirements.
Chubb also announced that it will immediately cease offering coverage for oil and gas projects in government-protected conservation areas designated by state, provincial or national governments. This will include conservation areas covered by International Union for the Conservation of Nature (IUCN) management categories I-V in the World Database on Protected Areas, which includes nature reserves, wilderness areas, national parks and monuments, habitat or species management areas, and protected landscapes and seascapes. A sixth IUCN category applies to protected areas that allow sustainable use, and Chubb plans to develop standards for projects in category VI areas and for oil and gas extraction projects in certain key zones not currently listed in the World Database on Protected Areas by the end of 2023.
It is unclear how Chubb’s new underwriting criteria will compare with existing and proposed federal and state rules like NSPS Part 60, Subparts OOOO and OOOOa, the proposed NSPS Part 60, Subparts OOOOb and OOOOc, and Pennsylvania’s 2022 Control of VOC Emissions from Unconventional and Conventional Oil and Natural Gas Sources Rules. Compliance with these state and federal standards may satisfy insurers like Chubb, but that is not certainly the case. For example, Chubb has announced that it will require, at minimum, a LDAR program, but it is unclear what the required monitoring frequency will be. Wells with emissions below certain thresholds not currently subject to frequent monitoring under federal or state rules may need additional monitoring to remain insured under Chubb’s criteria. It is also possible that other insurance companies will follow Chubb’s lead in the coming months. Producers should remain alert to notices from their insurance companies to ensure that facilities meet the requirements to remained insured.
This new underwriting policy is an extension of Chubb’s recent efforts to focus more on climate-related activities. The company has already limited coal-related underwriting and investment. Chubb has also launched a new climate business unit, Chubb Climate+, which will offer insurance products and related services to companies developing new technologies that support progress towards a low-carbon economy.
Chubb’s new standards exemplify the expanding and influential impact of Environmental, Social, and Governance (ESG) principles on companies operating in the energy sector. ESG generally refers to a set of factors used to measure the non-financial practices in areas such as sustainability, climate, and resource conservation, and non-environmental areas such as diversity, equity, and inclusion. Consumers, insurers, lenders and investors are placing an increased emphasis on ESG considerations when making business decisions, and regulatory agencies are beginning to take actions aimed at increasing the transparency of regulated companies’ ESG efforts through required disclosures.
For example, a number of proposed federal agency rules over the past year could make ESG reporting mandatory, including the Securities and Exchange Commission’s proposed Enhancement and Standardization of Climate-Related Disclosures for Investors, which could become the first mandatory ESG reporting requirement for publicly traded U.S. companies. In addition, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration have proposed a rule that would require certain federal suppliers to annually disclose their greenhouse gas (GHG) emissions and climate-related financial risks, as well as set GHG emissions reduction targets, on an annual basis. Whether through exposure to consumer, insurer, lender or investor initiatives, or to new ESG reporting requirements imposed by regulatory agencies, companies operating in the energy sector are likely to face increased scrutiny over ESG-related practices that may, as in the case of the new Chubb standards, require costly operational changes.
Babst Calland’s energy and environmental attorneys continue to track ESG related issues affecting the energy industry. For more information, please contact Ben Clapp at (202) 853-3488 or bclapp@babstcalland.com or Gina Buchman at (202) 853-3483 or gbuchman@babstcalland.com.
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Reprinted with permission from the April 2023 issue of The PIOGA Press. All rights reserved.
Environmental Alert
(by Lisa Bruderly)
Yesterday’s ruling by the U.S. District Court for the District of North Dakota creates a regulatory patchwork across the nation in which the definition of ‘waters of the United States’ (WOTUS), and subsequently, the jurisdiction of the Clean Water Act, now differs by state. For example, West Virginia and Pennsylvania currently having different WOTUS definitions. On Wednesday, April 12, the North Dakota district court granted a preliminary injunction that halted the implementation and enforcement of the Biden administration’s new definition of WOTUS (2023 Rule) in the following 24 states: Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, West Virginia, and Wyoming.
The 2023 Rule became effective on March 20, 2023 in 48 states. A March 19, 2023 preliminary injunction in the U.S. District Court for the Southern District of Texas had already enjoined the new WOTUS definition in Texas and Idaho.
In granting the preliminary injunction, the North Dakota district court had harsh criticism for the 2023 Rule, noting that “the new 2023 Rule is neither understandable nor ‘intelligible,’ and its boundaries are unlimited.” It also stated that the 2023 Rule “raises a litany of other statutory and constitutional concerns.” The district court went further to state that the changing definitions of WOTUS “have created nothing but confusion, uncertainty, unpredictability, and endless litigation.”
At present, the 1986 definition of WOTUS is effective in 26 states and the 2023 Rule is effective in 24 states, creating a nationwide split in how the jurisdiction of the Clean Water Act is interpreted. This split is expected to create further uncertainty as to how the U.S. Environmental Protection Agency (USEPA) and U.S. Army Corps of Engineers (Corps) will delineate WOTUS and permit impacts to WOTUS, especially when, for example, a Corps District includes states with differing definitions.
A third judicial challenge to the 2023 Rule is pending. Last week, the U.S. District Court for the Eastern District of Kentucky denied a motion for preliminary injunction brought by the state and a number of industry groups after determining that they did not currently have standing. The decision is being appealed.
It is unclear whether additional judicial actions will be taken in advance of the highly-anticipated U.S. Supreme Court decision in Sackett v. EPA, which will opine on whether the Ninth Circuit set forth the proper test to determine whether wetlands are WOTUS. The Supreme Court’s decision may significantly affect USEPA’s ability to define WOTUS.
A similar split in the definition of WOTUS occurred when President Barack Obama introduced his administration’s definition of WOTUS in 2015 (referred to as the Clean Water Rule (CWR)). At that time, the North Dakota district court preliminarily enjoined the definition in 13 states, with other judicial actions resulting in the CWR being enjoined in a total of 29 states for a short period of time in 2019. Ultimately, the Trump administration repealed the CWR in its entirety, reverting back to the 1986 definition nationwide.
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.
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The Wildcatter
(By Nikolas Tysiak)
For this month’s edition of the Wildcatter, we have two cases from Ohio that are of interest.
In Tera, LLC v. Rice Drilling D, LLC (2023-Ohio-273; 7th Dist.), the Court of Appeals for Ohio’s 7th district was asked to overturn the significant award of monetary damages in favor of a landowner based on a trespass claim. The lease at issue expressly reserved all the oil and gas rights “in all formations below the base of the Utica Shale,” while production indicated that the wellbores had penetrated the Point Pleasant formation. The trial court found that such penetration violated the reservation language of the lease, resulting in the trespass. The Operators involved appealed on various grounds, conceding that the Point Pleasant formation is now considered a distinct rock formation, but was not considered separate from the Utica Shale at the time the leases at issue were executed in 2013 and 2014, and that the term “Utica Shale” held special meaning at that time in Ohio, allowing for the use of extrinsic evidence (evidence outside the lease document) to interpret the lease. The court of appeals agreed with the trial court that the term “Utica Shale” was entirely unambiguous and that no extrinsic evidence was warranted to interpret the same and upheld the trial court’s decision. The appeals court went on to indicate that some of the factors regarding the calculation of damages required further analysis at trial and remanded to the trial court with some instructions on damages calculations. The key takeaway being, at least at this time, in Belmont County, Ohio, leases covering the “Utica Shale” will not cover the Point Pleasant formation.
In Chartier v. Rice Drilling D, LLC (2023-Ohio-272, 7th Dist.), the Court was once again confronted with a Marketable Title Act issue involving oil and gas. The Court decided that the reservation language within the root-of-title period called for by the Marketable Title Act did not serve to preserve reserved oil and gas for two distinct reasons: first, the underlying reservation at issue arose from a corrective deed that reserved oil and gas from the land, when the same had not been reserved in the original deed subject to correction; and second, a determination that the reservation language was not “specific” under Blackstone v. Moore, and therefore was a “general” reservation not preserved under the Marketable Title Act. Because of these factors, the court of appeals found in favor of the surface owners against the holders of the severed mineral interest. Despite this finding, the decision appears to be of questionable authority. First, the case makes no mention of Erickson v. Morrison, which found that a reference to a reservation only needs to provide notice to a title examiner that a preexisting interest exists and is locatable by a standard title search. Second, the Court appears to ignore the fact that subsequent parties repeated the reservation language from the corrective deed, calling in to question what expectation subsequent grantees realistically had to receive oil and gas rights under the land. Additionally, as of March 9, the case has been accepted for judicial review by the Ohio Supreme Court (case # 2023-0343), so we will continue to track and watch this one.
As always, bring us your feedback and suggestions for any additional topics you want to see covered.
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Reprinted with permission from the MLBC April 2023 issue of The Wildcatter. All rights reserved.
Legal Intelligencer
(by Matt Wood and Mackenzie Moyer)
On March 14, 2023, the U.S. Environmental Protection Agency (EPA) provided a pre-publication version of a proposed National Primary Drinking Water Regulation Rulemaking that would regulate six polyfluoroalkyl substances (PFAS) under the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq (PFAS Rule). The proposed PFAS Rule would establish Maximum Contaminant Level Goals (MCLGs) and Maximum Contaminant Levels (MCLs) for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), two of the most common PFAS – a group of thousands of manmade chemicals used in various consumer, commercial, and industrial manufacturing processes since the 1940s – as individual contaminants. It would also establish a Hazard Index MCL for mixtures containing one or more of perfluorononanoic acid (PFNA), hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA, commonly known as GenX chemicals), perfluorohexane sulfonic acid (PFHxS), and perfluorobutane sulfonic acid (PFBS). Years in the making, the final PFAS Rule will be the first federally enforceable drinking water rule governing PFAS. EPA intends to finalize the PFAS Rule by the end of 2023.
PFAS have been used to make products water-, stain-, and heat-resistant and have been a key ingredient in some aqueous film forming foams (AFFF) used to extinguish flammable liquid fires (e.g., those that might occur on airports or military bases). PFAS are known as “forever chemicals” because they do not break down naturally in the environment. Due to these properties and their ubiquitous nature, PFAS have been found in various environmental media, such as groundwater (including drinking water), plants, animals, and in humans. Toxicity studies suggest that PFAS exposure can lead to adverse health effects.
For PFOA and PFOS, the proposed PFAS Rule sets MCLGs – non-enforceable health-based goals that represent the maximum concentration of a contaminant in drinking water at which there is no known or anticipated negative effect on a person’s health – at 0 parts per trillion (ppt). It sets the enforceable MCLs for PFOA and PFOS, which represent the maximum concentrations allowed in drinking water that can be delivered to users of a public water system and are informed by other factors (e.g., available treatment technologies and cost), at 4 ppt each.
The proposed PFAS Rule takes a different approach for PFNA, HFPO-DA (GenX), PFHxS, and PFBS by proposing regulation of these compounds as a mixture, because of their likely co-occurrence in drinking water, using a hazard index formula. The Hazard Index is calculated by dividing the concentration of each of the four PFAS compounds by its Health-Based Water Concentration (HBWC; 10 ppt for PFNA, 10 ppt for HFPO-DA (GenX), 9 ppt for PFHxS, and 2000 ppt for PFBS) and then adding the results together. A total value greater than 1.0 is an exceedance of the proposed Hazard Index MCL. For a more detailed explanation of the Hazard Index calculation, see EPA’s FAQ for Drinking Water Primacy Agencies, available here.
Prior to EPA’s announcement of the proposed PFAS Rule, the only federal drinking water guidance for PFAS were EPA’s 2022 interim Health Advisories for PFOA (0.004 ppt) and PFOS (0.02 ppt) and final Health Advisories for GenX (10 ppt) and PFBS (2,000 ppt), which are unenforceable standards that identify the concentration of PFOA and PFOS in drinking water at or below which adverse health effects are not expected to occur over a lifetime of exposure.
If finalized, and after a specified implementation period, the proposed PFAS Rule will require public water systems, including those in Pennsylvania, to monitor for each of the six PFAS discussed herein, notify the public of exceedances of the MCLs and/or Hazard Index MCL, and take action to reduce any exceedances in drinking water. Because the Safe Drinking Water Act does not regulate private wells, the proposed PFAS Rule does not apply to private well owners. EPA’s proposed PFAS Rule follows Pennsylvania’s recent adoption of state MCLs for PFOA (14 ppt) and PFOS (18 ppt) in January 2023. If the proposed PFAS Rule is finalized as written, Pennsylvania will have to lower its current MCLs for PFOA and PFOS and adopt standards for PFNA, HFPO-DA (GenX), PFHxS, and PFBS to ensure these standards are as at least as strict as the federal MCLs.
The proposed PFAS Rule is the latest action under President Joe Biden’s plan to combat PFAS pollution (fact sheet available here) and EPA’s 2021 PFAS Strategic Roadmap (available here), under which EPA is taking a “whole-of-agency approach” to address PFAS throughout its lifecycle. Consistent with this approach, EPA engaged in consultations with the public and sought input from other stakeholders, including public webinars, correspondence with the Science Advisory Board, and meetings with state, local, and tribal officials, to develop the proposed PFAS Rule.
To assist financially with addressing PFAS, the Bipartisan Infrastructure Law provides $9 billion to invest in drinking water systems impacted by PFAS and other emerging contaminants. $4 billion is earmarked for investment in Drinking Water State Revolving Funds and $5 billion will be made available to communities as grants through EPA’s Emerging Contaminants in Small or Disadvantaged Communities (EC-SDC) Grant Program, which is intended to promote access to safe and clean water in small, rural, and disadvantaged communities. In February 2023, EPA announced the availability of the first $2 billion of the EC-SDC funding.
The proposed NPDWR rulemaking will be subject to a 60-day public comment period upon publication in the Federal Register. EPA is also holding a public hearing on May 4, 2023, which members of the public can attend and provide verbal comments. More information on the public hearing can be found here.
In addition to the proposed PFAS Rule, EPA is moving to regulate PFAS under other federal programs, including a September 2022 proposal to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The proposed PFAS CERCLA Rule would implement certain reporting requirements for releases of PFOA or PFOS exceeding the applicable reportable quantity and would enhance EPA’s authority to address PFAS in the environment, including potentially reopening long-closed cleanup sites. The comment period for the PFAS CERCLA rule is closed and the rule could be finalized this summer.
In the months since the proposed PFAS CERCLA Rule, stakeholders have raised questions and concerns about how EPA intends to address enforcement for PFAS contamination under CERLCA. In March 2023, EPA held two listening sessions focused on these questions. The agency stated that it intends to focus its CERCLA enforcement on manufacturers, federal facilities, and other industrial parties that are significant sources of PFAS and does not intend to pursue water utilities and publicly owned treatment works, publicly owned and/or operated municipal solid waste landfills, farms that apply biosolids, and certain airports and fire departments. EPA said that it is considering summarizing its PFAS CERCLA enforcement discretion policy in a formal guidance document in the future. More information on the CERCLA enforcement listening sessions can be found here.
Babst Calland’s PFAS Work Group, including both environmental and litigation attorneys, continue to track PFAS technical and legal developments and are available to assist you with PFAS-related matters. For more information on this and other remediation matters, please contact Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other attorneys in this practice.
Matthew C. Wood is Senior Counsel in Babst Calland’s Environmental Group. His practice encompasses a variety of legal matters arising under major federal and state environmental and regulatory programs, with a focus on issues involving government inquiries, environmental investigations, remediation, and related activities.
Mackenzie M. Moyer is an associate in Babst Calland’s Environmental Group. Her practice encompasses a broad range of environmental issues including state and federal permitting and regulatory compliance.
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Reprinted with permission from the April 6, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Smart Business
(By Adam Burroughs featuring Kevin Douglass)
Many business owners are blindsided when a co-owner files a lawsuit against them detailing a list of grievances. When owners form a new business or an owner is added to an existing ownership group, the stakeholders are typically optimistic about the future. Owners often do not discuss or consider the possibility of future differences and may not address them in their written agreements. Consequently, when a disagreement inevitably arises, business owners frequently choose to minimize or completely ignore the dispute until considerable damage is done to the owners’ relationship, which allows these matters to fester and eventually disrupt the business. But with the right preventive approach, these challenges can be identified and resolved quickly and cost effectively.
“Even companies with just one owner eventually must deal with succession questions, so no business owner is completely immune from dealing with co-owners or the prospect of future owners,” says Kevin Douglass, shareholder at Babst Calland.
Smart Business spoke with Douglass about conflict resolution among business owners.
What can trigger disagreements among owners?
One common trigger is finances. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. In contrast, if the business begins to struggle, owners’ compensation, distributions and benefits may need to be decreased, and tough decisions made about the company’s direction.
Other reasons for conflict can include a change in an owner’s level of commitment or job performance, an owner’s desire for more authority and input into company management, or conflicting business strategies. Changes in an owner’s personal life may also spark controversy, such as the involvement of a new family member or owner in the business, changes in an owner’s personal finances or simply the advancing age of the company’s primary manager(s).
What are the risks of ignoring owner disagreements?
Owner disagreements can spill over into a business’s operations and finances. Employees, lenders, customers, vendors and others can easily become aware of, and even embroiled in, the drama. They may be confused about which owner is in charge. If left unchecked, the reputation and health of the business may be threatened. Just as significantly, relationships on a professional, personal and family level may be permanently impacted, if not addressed thoughtfully and with sensitivity.
Some owners resort to litigation to obtain the satisfaction they believe they are entitled to, but the expense, stress and distraction of litigation is rarely the best route to resolve differences.
How can owners resolve their underlying issues quickly?
Do not ignore the issue. Instead, take the necessary steps to resolve potential conflicts as efficiently as possible.
Take the time to understand your legal and strategic options. Consult with an independent attorney who can objectively assess the strength of your position, as well as your goals, risks and opportunities. The company attorney’s primary obligation is to act in the best interest of the business, and therefore, may not be in the best position to give an owner personal legal advice.
After fully vetting an owner’s situation, finding a solution may include answering difficult questions. Do the owners share the same vision for the company’s future? Does the ownership, compensation or governance structure need to be redefined? Are new leaders and investors needed? Do the owners want to continue in business together, or separate via a buyout? Should the business be sold? Should a strategic or succession plan be developed, and if so, what should it look like?
Any resolution of issues involving owner conflict should strive to satisfy, or at least account for, the concerns of all owners and interested parties — even if they involve the buyout of an owner. Although litigation can be an effective way to resolve a dispute as a last resort, owners should seriously explore more cost-effective options to address conflict and strive to develop workable solutions that ensure the protection and preservation of the business.
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Energy Alert
(by Robert Stonestreet and Kip Power)
Five days after upholding a water quality certification issued by the state of Virginia for the Mountain Valley Pipeline (MVP), the same three-judge panel of the federal Fourth Circuit Court of Appeals vacated a similar certification issued by the state of West Virginia. Sierra Club, et al. v. West Virginia Department of Environmental Protection and MVP, Appeal No. 22-1008 (April 3, 2023). Under § 404 of the federal Clean Water Act (CWA), construction activities directly impacting “jurisdictional waters,” such as placing a pipeline through or under a stream, require a “dredge and fill” permit issued by the Corps of Engineers. Before a § 404 permit may take effect, states in which such activities take place must issue a certification under § 401 of the CWA stating that the proposed activities will not violate state water quality standards (assuming compliance with specified conditions). The 34-page opinion identifies four reasons why the panel believes the § 401 certification issued by the West Virginia Department of Environmental Protection (Department) for MVP was “arbitrary and capricious.”
First, the Court concluded that the Department failed to adequately explain why the agency believed MVP’s past permit violations will not continue to occur. According to the Court, the Department was required to impose conditions intended to reasonably assure that “no violations of any applicable water standards would occur” (emphasis in original) and the agency failed to explain how the conditions of the certification would do so. In particular, the Court stressed that even a finding that the MVP project will present “no significant adverse aquatic impacts” does not necessarily show that narrative water quality standards will not be violated (e.g., the prohibition against discharges that cause or contribute to “suspended solids”). Further, despite the Department’s previous assessment of over $569,000 in penalties against MVP for violating permit requirements and water quality standards, the Court rejected arguments that enforcement of existing standards would be sufficient. In light of the “highly deferential” standard applied when evaluating § 401 determinations, delving into the details of the Department’s interpretation and application of its state-specific narrative standards is remarkable to say the least.
Second, the Department did not include a specific condition in the § 401 certification requiring MVP to comply with the terms and conditions of two documents: (1) a general stormwater management permit applicable to certain construction activities associated with oil and gas development (Stormwater Permit); and (2) a “stormwater pollution prevention plan” reflecting specific practices to manage stormwater discharges from areas disturbed by pipeline construction (SWPPP). The Court rejected the Department’s position that the agency has inherent authority to enforce the Stormwater Permit and SWPPP against MVP, and thus including a provision in the § 401 certification requiring compliance with those documents would be redundant. In doing so, the Court seemed to suggest that any state environmental requirement that is not explicitly identified in a § 401 certification may be “preempted” by federal law that governs the authorization of natural gas pipelines.
Third, the Court faulted the Department for citing stormwater management standards published by the federal Environmental Protection Agency (EPA) applicable to activities in upland areas as support for the requirements that were imposed on MVP’s in-stream construction activities. The Department observed that EPA’s standards were “nearly identical” to the standards set forth in the Stormwater Permit, and that it viewed the EPA standards as applicable to both upland and in-stream activities. Nevertheless, the Court held that the Department’s § 401 certification must be struck down due to the absence of “a more thoroughly reasoned analysis to place beyond doubt that it had made a rational connection between EPA’s [stormwater standards] for upland construction and the certification of MVP’s in-stream construction.”
Lastly, the Department did not conduct location-specific reviews to determine whether MVP’s stream crossing construction activities would degrade water quality. Also known as “anti-degradation review,” the CWA generally requires a determination that construction activities in or near streams will not degrade water quality. The Department reasoned that location-specific evaluations were not required because compliance with the Stormwater Permit and SWPPP would prevent water quality degradation, or at least limit any degradation to temporary conditions. The Court observed that such a conclusion would be reasonable if the Department had required compliance with the Stormwater Permit and SWPPP as conditions of the certification. Nonetheless, because the Department failed to include such conditions in the § 401 certification, its reliance on the SWPPP and the Stormwater Permit was deemed to be arbitrary and capricious.
The April 3, 2023 ruling constitutes the third opinion issued by the Fourth Circuit in the past five years concerning CWA § 401 certification actions by the Department. In 2018, the Court ruled that the Department did not follow the proper procedures to waive its authority to issue an individual CWA § 401 certification for MVP. In 2020, the Court precluded the Corps of Engineers from certifying MVP’s eligibility for a “nationwide” CWA § 404 dredge and fill permit because the Department, according to the Court, lacked the authority to modify a previously issued general § 401 certification for the “nationwide” § 404 permits to incorporate provisions addressing pipelines like MVP.
While the Court’s decision will likely cause further delay in completing MVP, the identified deficiencies do not appear insurmountable. Bolstering compliance requirements and enforcement incentives should be sufficient to address MVP’s violation history. Simply including a condition in a new § 401 certification requiring compliance with the Stormwater Permit and SWPPP should address two of the four deficiencies. Lastly, “a more thoroughly reasoned analysis” explaining the connection between EPA’s stormwater standards for construction in upland areas and MVP’s in-stream construction should address the last deficiency.
Five days earlier, the same three judge panel issued an opinion upholding such a certification for MVP issued by the Virginia State Water Control Board, at the recommendation of the Virginia Department of Environmental Quality (VADEQ). Sierra Club, et al. v. State Water Control Board, et al. and MVP, Appeal No. 21-2425 (March 29, 2023). In that decision, the Court determined that the Water Control Board’s decision to certify a Corps’ authorization under CWA § 404 for the pipeline’s 236 surface water crossings in Virginia was neither arbitrary nor capricious. Among other reasons, the Court noted that the VADEQ had conducted a thorough public comment process and prepared a detailed “Final Fact Sheet,” addressing all major issues raised by commenters. VADEQ had explained its individual consideration of each crossing (something not required by state law) and its determination that the location of the pipeline represented the “least environmentally damaging practicable alternative.” As the Court explained, the Board and VADEQ were simply required to show that they had “considered the relevant data and provided a satisfactory explanation for their conclusion.” The record demonstrated that it had done so, and none of the Petitioners’ arguments was sufficient to support a contrary determination under the deferential standard of review that applies.
If you have any questions about these decisions or the Clean Water Act in general, please contact Robert M. Stonestreet at rstonestreet@babstcalland.com or 681-265-1364 or Christopher B. “Kip” Power at cpower@babstcalland.com or 681-265-1362.
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The Legal Intelligencer
(by Alex Farone, Janet Meub and Steve Silverman)
The National Labor Relations Board (NLRB) recently announced the return of a wide-sweeping ban on severance agreements that contain provisions that effectively silence certain employees. On February 21, 2023, the NLRB issued its decision in McLaren Macomb, 372 NLRB No. 58, reinstituting its pre-2020 precedent that severance agreements cannot contain: (1) confidentiality agreements precluding the employee from discussing the terms of the severance; and (2) non-disparagement clauses.
In McLaren, a Michigan hospital laid off eleven employees early in the COVID-19 pandemic after federal regulations prohibited the hospital from performing outpatient procedures or allowing nonessential employees to work in the building. The hospital offered these eleven employees a severance agreement that included a non-disparagement clause and a provision not to disclose the terms of the severance agreement. However, the NLRB determined that the severance agreement violated the National Labor Relations Act (NLRA) due to the inclusion of these provisions.
The Board reasoned that offering severance agreements containing broad confidentiality or non-disparagement clauses has a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 rights under the NLRA to engage in protected concerted activity, which constitutes an unfair labor practice in violation of Section 8(a)(1). Under the NLRA, employers are prohibited from interfering with, restraining, or coercing employees who exercise their rights to engage in protected concerted activities, such as discussing the terms and conditions of their employment for the purpose of mutual aid and protection. According to the Board, the confidentiality and non-disparagement clauses in McLaren had a potential chilling effect on the employees’ exercise of their rights, because employees must waive certain Section 7 rights in order to receive the benefits of the severance agreement.
This decision marks a return to long-standing Board precedent that was overturned in 2020. In Baylor University Medical Center, 369 NLRB No. 43 (2020), the Board shifted its focus from analyzing the text of a severance agreement to the circumstances under which an employer offered the agreement. The Baylor Board reversed years of precedent to hold that severance agreements containing broad confidentiality requirements did not violate the NLRA, as long as they were not mandatory or coercive, applied only to post-employment activities, and were free of allegations that the employer committed a separate unfair labor practice discriminating against the employee. Several months later, in IGT d/b/a International Gaming Technology, 370 NLRB No. 50 (2020), the Board applied the same reasoning to severance agreements containing non-disparagement clauses. The McLaren Board criticized the rulings in both Baylor and IGT for failing to articulate any policy considerations that would justify their “severely constricted view” of employees’ Section 7 rights, and squarely overruled them in favor of reinstating broader protections for employees.
The McLaren ruling applies to all private employers—with or without unionized workforces—covered by the NLRA, as it is based on both Sections 7 and 8 of the Act. It does not, however, apply to all employees. The NLRA only applies to “employees” as defined by the Act, which specifically excludes independent contractors and supervisors. Whether an employee is a “supervisor” involves a fact-specific analysis beyond review of the job title in question. The NLRA states that a “supervisor” is:
Any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.
NLRA, Section 2(11). Some of these terms have been subject to additional definitional analysis through Board decisions. The Supreme Court has further determined that employees who are even higher in the management structure but who may not meet the NLRA definition of “supervisor” are also excluded from coverage of the Act. These workers are considered “managerial employees”—executives who formulate and effectuate management policies by expressing and making operative decisions of the employer. See NLRB v. Bell Aerospace Co. Div. of Textron Inc., 416 U.S. 267 (1974). So, McLaren‘s limitations likely will not apply to severance agreements offered to any supervisory or managerial employee.
The McLaren ruling is effective immediately, but there was no discussion as to whether the decision retroactively invalidates existing severance agreements containing these confidentiality and non-disparagement clauses. This is unlikely, as such retroactive application could be challenged as a violation of the U.S. Constitution’s Article I provision protecting the freedom to contract. Further, the six-month statute of limitations for unfair labor practice charges should render any severance agreement executed more than six months before McLaren (i.e., severance agreements effective prior to August 21, 2022) presumptively valid.
So, what are the implications of the McLaren decision on employers?
- As many employers are more likely to offer severance agreements to employees whom they would consider supervisory or managerial, employers are encouraged to consult legal counsel prior to including non-disparagement or broad confidentiality provisions in severance agreements for these employees to analyze whether they would fit the definitional NLRA exemption.
- Risk-averse employers should cease offering severance agreements containing non-disclosure and non-disparagement clauses to nonsupervisory employees, at least for the time being. Per McLaren, the very act of offering severance agreements with these broadly worded prohibitions, even if the employer has no intention of legally enforcing them, is itself now a violation of the NLRA. The safest practice is to take this approach until further clarification and advisory memoranda from the Board’s General Counsel is made available.
- A more robust approach would be for an employer to augment the offending provisions of its standard severance agreement with a broad disclaimer stating that nothing in the agreement should be interpreted as waiving the employee’s Section 7 rights under the NLRA or prohibiting the employee from participating in protected concerted activity, participating in the Board’s investigative process, or filing an unfair labor practice. There is no guarantee that the Board would uphold a confidentiality or non-disparagement clause containing such a proviso, but this is a viable middle ground approach that arguably demonstrates recognition of and attempted compliance with the NLRA’s prohibition on interference with employees’ Section 7 rights.
- Along with providing a disclaimer, an employer could tailor their standard confidentiality and non-disparagement provisions to address the specific issues the Board identified in the agreement in McLaren. The Board took issue with the fact that the non-disparagement clause (1) was not limited to matters regarding past employment, (2) extended to statements made concerning the employer’s parents, affiliated entities, officers, directors, employees, agents, and representatives, and (3) had no temporal limitation. The Board criticized the confidentiality clause because it applied to disclosure of the terms of the agreement to any third person other than a spouse, legal counsel, tax advisor, or court/administrative agency when compelled, which prohibits discussion with former coworkers who could be faced with deciding whether to accept a similar severance agreement and with union representatives. Creating caveats in severance agreements that address the Board’s concerns of overbreadth could result in provisions that may pass scrutiny under McLaren.
- When determining risk tolerance and how to proceed, consider these factors: (1) the deterrent value of your existing confidentiality and non-disclosure provisions; (2) whether your industry or company is at particular risk of scrutiny from the NLRB; (3) the likelihood of whether McLaren will be upheld; and (4) the likelihood that your former employees would challenge their severance agreements by filing an unfair labor practice.
- Finally, employers should review their employee handbooks (preferably annually) to ensure that their policies do not violate the NLRA.
The McLaren decision is a return to the employee-friendly pre-Baylor days. While the effects are immediate, it remains for the courts to enforce. This decision may be appealed, but in the meantime, employers should consider changing their severance agreement practices if they wish to avoid an unfair labor practice charge. Contact a Babst Calland employment and labor attorney to assist in evaluating the legal risk inherent in your existing severance agreements and in carefully crafting disclaimers that address the McClaren reasoning.
Alexandra Farone is an associate in the Litigation and Employment and Labor groups of Babst Calland. Ms. Farone’s employment and labor practice involves representing corporate clients, municipalities, and individuals on all facets of employment law, including restrictive covenants, discrimination claims, human resources counseling, grievances, and labor contract negotiations. Please contact her at 412-394-6521 or afarone@babstcalland.com.
Janet Meub is senior counsel in the Litigation and Employment and Labor groups of Babst Calland. Ms. Meub has significant experience in the areas of employment and labor law, professional liability defense, insurance coverage and bad faith litigation, toxic tort litigation, nursing home negligence, and medical malpractice defense. She has a diversified practice that includes defending employers, healthcare providers, law enforcement and other professionals, and non-profits, at all levels of civil litigation through trial. Contact her at 412-394-6506 or jmeub@babstcalland.com.
Steve Silverman is a shareholder in the Litigation and Employment and Labor groups of Babst Calland. Mr. Silverman devotes a significant amount of his practice to the defense and prosecution of theft of trade secret and non-compete suits. Contact him at 412-253-8818 or ssilverman@babstcalland.com.
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Reprinted with permission from the March 30, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Environmental Alert
(by Sean McGovern and Amanda Brosy)
On March 23, 2023, Acting Pennsylvania DEP Secretary Richard Negrin spoke at length about his views on environmental justice (EJ) during the House Appropriations Committee hearing on DEP’s FY 2023-24 budget request. Among other things, Acting Secretary Negrin discussed the importance of taking an expansive approach to environmental justice (EJ), noting that in the past, EJ issues were framed in terms of race, and impacts on communities of color. While he acknowledged that systemic racism and discussions about race are an important part of EJ, he stated that EJ “is not just an issue for those of us who are people of color. It’s an issue for the poor and rural” as well. Specifically, Acting Secretary Negrin mentioned that he considers residents near the site of the Norfolk Southern train derailment, and residents impacted by a leaking abandoned natural gas well outside of Pittsburgh, to be EJ communities. As he noted, this is a broader interpretation of EJ than the Biden administration has espoused.
Acting Secretary Negrin also announced that he had named Fernando Treviño to the new position of Special Deputy Secretary for Environmental Justice. According to Acting Secretary Negrin, Mr. Treviño has acted as a “community engagement professional” for a number of years, last serving as the Regional Political Director for the National Democratic Redistricting Committee. Previously, Mr. Treviño served as the Deputy Executive Director of the Mayor’s Office of Immigrant and Multicultural Affairs in Philadelphia. Mr. Treviño graduated from the UANL School of Law in Mexico, and later received a Certificate on International and Comparative Law from Temple University’s law school. Mr. Treviño will be supported by additional EJ staff in DEP offices throughout the Commonwealth. Acting Secretary Negrin indicated that he plans to place an EJ coordinator within “every single regional office of DEP across the entire state, in six of our offices, full-time employees.” Two coordinators will serve as “floaters,” tasked with targeted outreach to the Asian and Latino communities, respectively.
The Acting Secretary’s comments are all in accordance with the Commonwealth’s efforts to bolster its EJ efforts over the last several years. Starting in 2021 with Governor Tom Wolf’s adoption of an executive order formally establishing the Office of Environmental Justice (OEJ) within DEP, to today, as DEP works to update the state’s existing 2004 EJ Policy, EJ issues continue to be a priority for DEP. With the Biden administration steadily funding EJ grant programs for state governments and community groups, this trend shows no sign of subsiding (see Babst Calland’s recent article in PIOGA regarding EJ for more details).
Babst Calland’s energy and environmental attorneys continue to track environmental justice developments and their implications for industry.
For more information, contact Sean McGovern at 412-394-5439 or smcgovern@babstcalland.com or Amanda Brosy at 202-853-3465 or abrosy@babstcalland.com.
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The American College of Environmental Lawyers (ACOEL)
(By Donald C. Bluedorn II)
Unless you have been hibernating this winter, you know about ChatGPT, the artificial intelligence chatbot that rolled out late in 2022. Its developer, OpenAI, describes ChatGPT as follows:
We’ve trained a model called ChatGPT which interacts in a conversational way. The dialogue format makes it possible for ChatGPT to answer followup questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.
Or, for those of us who remember watching Star Trek, ChatGPT functions a lot like the computer on the Starship Enterprise – you ask it to do something, and it does it. People have experimented with ChatGPT to write computer code, draft poems, write term papers, and create visual art, among many others.
Recently I experimented with ChatGPT, in an effort to not be that “senior” lawyer who in the early 1990’s said, “I don’t need to learn this new email thing . . . .” More specifically, I asked ChatGPT to do two things:
- Draft a short purchase and sale agreement for a 65-acre coal-fired power plant; and
- Prepare a five-page memorandum on the definition of “Waters of the US.”
The results were surprising but instructive.
First, ChatGPT’s purchase and sale agreement was so basic, and so vanilla, that it would be useless to a lawyer hoping to prepare the document in a real transaction. This surprised me because I had heard and read so many glowing reviews about ChatGPT that I anticipated a fulsome work product. It is quite possible, if not likely, that much of this is attributable to “user error.” If I spent more time describing the project and setting forth my anticipated parameters, I expect I would have received a better product. Nonetheless, I deemed my initial effort with ChatGPT a failure.
ChatGPT’s 5-page memorandum on the “Waters of the US” was surprisingly good. Now make no mistake about it – the draft would not pass muster as a writing assignment in even the most basic of environmental law courses, much less as an actual piece of legal work product.
Nevertheless, it provided a basic level of understanding of the issues and it provided a surprisingly sound foundation for such a memorandum. I could easily imagine checking the referenced statements and citations in the draft (unfortunately ChatGPT already has developed a fearsome reputation for confidently stating a “fact” when it is wrong), and then performing supplemental research and analysis to fill out the picture. If I were a new lawyer tasked with preparing such a memorandum and I did not already have a good starting place, the draft would have saved me a surprising amount of time at the outset. So, at least in that sense, I deemed my second effort with ChatGPT a conditional success.
OpenAI is quite open and transparent about many of the limitations in ChatGPT. Among other express limitations, it states on its website that “ChatGPT sometimes writes plausible-sounding but incorrect or nonsensical answers. Fixing this issue is challenging . . . .” And of course the entire field of artificial intelligence is growing at a tremendous rate, so we can expect to see significant improvements in ChatGPT and similar products in the foreseeable future. Nevertheless, even in its current iteration it would be a mistake to dismiss ChatGPT as a viable tool for the environmental lawyer, particularly in the correct circumstances and with appropriate controls.
And with that final note, “Beam me up, Scotty . . . .”
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Reprinted with permission from the March 23, 2023 ACOEL Blog.
Pretrial Practice & Discovery
American Bar Association Litigation Section
(By Jessica Barnes)
A proposed antitrust class action was recently dismissed because of the plaintiffs’ serious failures to comply with the court’s orders regarding discovery.
Interpretations of the extent of a responding party’s obligations to certain discovery requests likely vary by lawyer. One thing that most if not all lawyers would agree with, however, is that a party producing more than 99 percent of its documents after the close of fact discovery is improper, which is what occurred this week in a case out of the U.S. District Court for the Western District of Tennessee.
In American Spirit and Cheer Essentials Inc, et al. v. Varsity Brands, LLC, et al., No. 2:20-cv- 02782-SHL-tmp (W.D. Tenn. Mar. 21, 2023), there were numerous discovery disputes among the parties. Between seeking documents excluded from discovery via protective order, producing documents in a form that was in violation of the mutually agreed upon electronically stored information (ESI) protocol, outright lack of production and responses, failing to maintain and provide lists of search terms used in collecting documents, attempts to serve hundreds of subpoenas, and producing documents either immediately before or after the deposition of a relevant witness, the court described the history of discovery in this matter as “long, complex, and tortured[.]”
The court faced a first round of motions to dismiss in this case, which were granted in part and denied in part. The most critical aspect in the court’s actions here is that it specifically warned the plaintiffs that “willful failure to cooperate in discovery could lead to dismissal of plaintiffs’ case under Rules 37(b) and 41(b).”
Then later came another round of motions to dismiss. The plaintiffs responded, not contesting the defendants’ factual allegations of discovery violations, but arguing that the alleged discovery failures did not meet the legal standard to justify dismissing the case. In evaluating the arguments, the court highlighted that under Federal Rule of Civil Procedure 37, the court may impose sanctions on a party who fails to obey a court order to provide discovery, and such sanctions may include dismissal of the action. In addition, Federal Rule of Civil Procedure 41 permits involuntary dismissal of a case if the plaintiff fails to comply with the federal rules or a court order.
Accordingly, the court went through the four factors to consider when a party moves to dismiss a case under these two rules. First, the court found that while the defendants did not show an intent to thwart judicial proceedings from the plaintiffs, they did show that the plaintiffs’ conduct did amount to reckless disregard. Second, the court found that the plaintiffs’ actions prejudiced the defendants, who expended significant time, money, and effort to obtain plaintiffs’ documents. Furthermore, the defendants conducted depositions that were largely unusable because they were unable to inquire into important topic sources from the documents. Third, the court found that its previous explicit warning, that their behavior in discovery could lead to dismissal of the plaintiffs’ case, weighed in favor of dismissal. Lastly, the court found that lesser sanctions were insufficient to protect the integrity of the judicial process. Thus, the court dismissed the plaintiffs’ claims with prejudice.
Overall, this case is an example of how discovery misconduct, if severe enough, can cost the client its entire case. While disputes over the burden and proportionality of specific discovery requests will continue across the board, let this case be a lesson that neglecting discovery obligations can result in a plaintiff’s worst-case scenario: dismissal.
Jessica Barnes is an associate at Babst, Calland, Clements & Zomnir P.C. in Pittsburgh, Pennsylvania.
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© 2023. No Reason to Cheer—Case Dismissed Due to Severe Discovery Violations, Pretrial Practice & Discovery, American Bar Association Litigation Section, March 22, 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.
Pretrial Practice & Discovery
American Bar Association Litigation Section
(By Joseph Schaeffer)
Parties that act with civility in litigation are more likely to be seen as credible than those that do not.
Most lawyers are likely to have encountered an appeal to “civility.” But what is civility? It is a nebulous concept that escapes easy definition and is most often identified by its absence. Take, for example, a motion to strike a summary judgment response that was recently filed in a case pending in the U.S. District Court for the Northern District of Alabama. Whithworth v. Mezrano, No. 2:20-cv-00756 (N.D. Ala. Jan. 13, 2023). The underlying infraction? Perhaps the plaintiff relied on a sham affidavit? Or perhaps the plaintiff included scandalous and impertinent material of no relevance to the case? No, none of those things. The plaintiff had filed her opposition brief at 5:15 p.m.—15 minutes after the 5:00 p.m. deadline.
The district court was not amused. Finding no prejudice to the defendants from the plaintiff’s 15-minute delay, it denied the motion, but not before taking counsel to task for a pettiness that represented a further lowering of the bar for professionalism in an already contentious case. The defendants’ attempt to take advantage of their opponent’s mistake thus backfired by damaging their own credibility with the district court.
The defendants’ error here was thinking that every infraction deserves a remedy. The defendants would have done better to let such a trivial delay pass by unremarked and count on the district court identifying it on its own. Or if commentary were truly necessary, the defendants should at least have acted proportionally—noting the issue briefly in reply, rather than seeking what would presumably be a case-dispositive sanction for such a minor issue.
Arguments in litigation are colored by the behavior of the parties presenting them, and parties that act with civility in litigation are more likely to be seen as credible than those that do not. Avoiding petty fights over minor rules infractions accordingly not only avoids needless expense, but it is also good litigation strategy, too.
Joseph Schaeffer is a shareholder with Babst, Calland, Clements & Zomnir, P.C. in Pittsburgh, Pennsylvania.
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© 2023. More Than a Buzzword: Why “Civility” Can Be Sound Litigation Strategy, Pretrial Practice & Discovery, American Bar Association Litigation Section, March 21, 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.
PIOGA Press
(By Amanda Brosy and Sean McGovern)
This article provides an update on the recent developments in environmental justice (EJ) policy and funding at the federal level, as well as forthcoming updates to Pennsylvania’s own EJ Policy, which could have tangible impacts on Pennsylvania’s regulated community.
Federal Background
Executive Action
Since Day One of taking office, the Biden administration has made EJ a priority. For example, on January 20, 2021, President Biden signed Executive Order 13985 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which directs federal agencies, including EPA, to “assess whether underserved communities and their members face systemic barriers in accessing benefits and opportunities available pursuant to those policies and programs.” E.O. 13985 then directs agencies to develop plans to overcome these barriers. Two more executive orders on EJ followed in January 2021, including 14008 (Tackling the Climate Crisis at Home and Abroad), which required the integration of EJ considerations into federal agency processes. Notably, E.O. 14008 established the Justice40 initiative, which sets the goal that 40 percent of the overall benefits of certain federal investments flow to disadvantaged communities, and it established an EJ screening tool to highlight disadvantaged communities that are “marginalized, underserved, and overburdened by pollution.”
Last month, President Biden signed Executive Order 14091 (Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which builds upon the Administration’s prior “equity-related Executive Orders by extending and strengthening equity-advancing requirements for agencies, and [positioning] agencies to deliver better outcomes for the American people.” Among other things, E.O. 14091 addresses equity-focused leadership, embedding equity in government-wide processes, and the creation of economic opportunities in rural communities.
US EPA Continues to Refine its EJ Agenda
In response to the directives in EO 13985, US EPA released its Equity Action Plan in April 2022, to “take decisive action to advance environmental justice and civil rights.” US EPA has released formal EJ planning documents since 2010, including its most recent EJ 2020 Action Agenda, and the Equity Action Plan builds on this past work. One of the Equity Action Plan’s priorities is the development of “a comprehensive framework for considering cumulative impacts in relevant US EPA decisions,” which would be applied across US EPA’s programs and activities. The Equity Action Plan describes the issue of cumulative impacts in the context of federal, state, and local permitting decisions:
For decades, EPA, state environmental regulators, and local zoning officials have made decisions that contributed to the disproportionate pollution burden on people of color and underserved communities across the country, such as decisions to site and permit new industrial facilities in ways that concentrate them within these communities. Communities overburdened by pollution often raise concerns about the cumulative impacts of these individual environmental management decisions on public health and quality of life.1
According to US EPA, addressing cumulative impacts is a priority because multiple sources have identified it as “critical to achieving equitable and just outcomes across US EPA programs.”2 In the short-term, US EPA plans to develop a framework for considering cumulative impacts in relevant US EPA decisions, and produce guidance that will operationalize this framework. US EPA intends to identify and promote uses of the cumulative impacts framework in multiple contexts, including permitting, compliance monitoring and enforcement, cleanups, and rulemaking. The cumulative impacts framework will likely factor into permit conditions, mitigation, and potential denial of permits.
The concept of “cumulative impacts” is not new. Various federal environmental statutes including the National Environmental Policy Act (NEPA), the Clean Water Act (CWA), and the Resource Conservation and Recovery Act (RCRA) and associated regulations already incorporate consideration of cumulative impacts in some form or another. What is new, however, is US EPA’s commitment to weaving a comprehensive analysis of cumulative impacts throughout its decision-making. Speaking of decision-making, in Fall 2020 New Jersey adopted its new EJ Law, which provides that various types of permits shall be denied when the Department of Environmental Protection determines that approval would “cause or contribute to adverse cumulative environmental or public health stressors.”3
Pennsylvania Developments
Over the past several years, Pennsylvania has reevaluated its own EJ policies and programs. In October 2021, Former Governor Wolf adopted Executive Order 2021-07 which formally established the Office of Environmental Justice (OEJ) within the Department of Environmental Protection (DEP). E.O. 2021-07 directed OEJ to revise the state’s EJ Policy (which was drafted in 2004 but had gone unchanged since then) to, among other things, develop statewide definitions of “Environmental Justice Area” and “cumulative environmental impacts.” DEP is in the home stretch of the revision process now, having released a draft of the revised Policy in Spring of 2022 for public comment. DEP received over 1,200 public comments on the draft and is currently compiling a comment response document, as well as an updated draft. It is anticipated that the updated draft will be released early this year, in conjunction with key announcements from the Shapiro administration. Notably, the current draft did propose to apply cumulative impacts analysis broadly to agency decisions going forward.
As the public awaits the finalized EJ Policy update, DEP continues to update and otherwise populate the Environmental Justice Areas Viewer 4 with data used to identify potential EJ areas. The Viewer includes data on health, educational levels, and waste generators, and a third party has been retained to provide additional data such as transportation, income, and employment rates. Certain data is updated “nightly from Monday – Friday.” Accordingly, it is possible that the Viewer will show you outside of an EJ Area one day and inside of one the next.
Federal Funding
Following clear and consistent directives from President Biden, EJ funding is more robust as a result of the 2022 Inflation Reduction Act (IRA). Through the IRA, Congress made about $3 billion in funding available for EJ grants. The Administration has developed the following EJ grant programs:
- On January 10, 2023, the Administration announced the availability of $100 million via EPA’s Environmental Justice Collaborative Problem-Solving (EJCPS) Cooperative Agreement Program and the Environmental Justice Government-to-Government (EJG2G) Program. The EJCPS program will provide an estimated $30 million in funding directly to com-munity-based nonprofit organizations (and partnerships of these organizations). The EJG2G program will provide $70 million in funding, $20 million of which will be for state governments to be used in conjunction with community-based organization partners.
- On February 23, 2023, the Administration announced the availability of $550 million via the EPA’s new Environmental Justice Thriving Communities Grantmaking Program (EJ TCGM). The program will fund 11 entities to serve as “grantmakers” to community-based projects that reduce pollution. The selected grantmakers will develop a process to allow organizations that historically have faced barriers to receiving funding more seamlessly apply for grants that address environmental harms and risks.
Most recently, the Biden administration’s proposed Budget would provide US EPA almost $1.8 billion across numerous programs in support of environmental justice efforts, in addition to $91 million for technical assistance for communities working to advance equity and justice. While passage of the Budget as proposed is far from guaranteed, it does further demonstrate the current Administration’s persistence in funding EJ efforts.
Takeaways
As both US EPA and states like Pennsylvania work to develop updates to their respective EJ policies and programs, it is difficult to say exactly how these changes will impact the regulated community with plans for activities in potential EJ areas. What is clear is that funding will continue to be dispersed by the federal government to both states and local community-based organizations to support EJ initiatives. This, coupled with further refinements to the scope and definition of EJ Areas and cumulative impacts by federal and state agencies, means that members of the regulated community who may be planning to conduct activities in possible EJ Areas should keep cognizant of this evolving landscape.
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1 E.O. 13985 Equity Action Plan: U.S. Environmental Protection Agency (April 2022), at p. 4 (available at https://www.epa.gov/system/files/documents/2022-04/epa_equityactionplan_april2022_508.pdf).
2 Id. at 6
3 N.J.S.A. 13:1D-160.4(a)(3)(c).
4 Available at: PA Environmental Justice Areas.
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Reprinted with permission from the March 2023 issue of The PIOGA Press. All rights reserved.
(By Paul Gough)
Three advocates for Appalachian hydrogen and carbon capture buildouts said Pennsylvania and the tri-state region will need to focus on permitting and other legal hurdles ahead of the potential projects that are likely coming over the next several decades of the energy transition.
Jim Curry and Kevin Garber, attorneys at Babst Calland, and Michael Docherty, executive director of Appalachian Energy Future, spoke during a webinar on policy and regulatory issues surrounding hydrogen and carbon capture and storage, which the Biden administration is promoting as a solution to reducing the reliance on fossil fuels in energy, electricity production and heavy industry like metal and chemical manufacturing.
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Smart Business
(By Adam Burroughs featuring 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.”
Smart Business spoke with Fennell about 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 A.I. (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, 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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