Pretrial Practice & Discovery
American Bar Association Litigation Section
(By Joseph Schaeffer)
It is essential to follow the necessary steps so that a court has the authority to authorize alternative service of process when that becomes the only remaining option.
Early in 2023, in a class action arising out of the collapse of the FTX cryptocurrency exchange, a Florida judge denied the plaintiffs’ request for alternative service of the complaint on NBA legend (and one-time FTX pitchman) Shaquille O’Neal via social media. The judge held that the plaintiffs had not demonstrated that alternative service complied with Florida law—although perhaps he was simply skeptical that a 7-foot-1-inch, 325-pound former basketball star could not be personally served. Yet in another recent case—this one filed by two Georgia election workers against Rudy Giuliani—a District of Columbia judge granted the plaintiffs’ request for alternative service of a subpoena on Jenna Ellis, a former attorney for President Trump. Freeman v. Giuliani, No. 1:21-cv-03354-BAH (D.D.C. May 10, 2023). Why the difference?
For one thing, District of Columbia law expressly authorizes alternative service. It in fact had been authorized earlier in the same case. And perhaps even more importantly, the plaintiffs established that they had exhausted efforts at traditional service. They had contacted Ellis’s counsel and attempted to negotiate acceptance of service—until, that is, they learned that Ellis’s counsel no longer represented her. They had made multiple attempts at service at Ellis’s last listed address—until, that is, they learned that she had moved to Florida. And they made repeated, and unsuccessful, attempts to locate Ellis in Florida. Finally, the plaintiffs demonstrated that those efforts likely had made Ellis aware of the attempts to perform service. The court thus authorized six methods of alternative service:
- email to Ellis’s former counsel,
- mail to Ellis’s former Colorado address,
- email to Ellis directly,
- direct message via Twitter,
- direct message via Instagram, and
- direct message via Facebook.
See Freeman, supra.
As always, the lesson here for practitioners is to know the governing law and build your record! Though serving process on an uncooperative party can be difficult and time-consuming, it is essential to follow the necessary steps so that a court has the authority to authorize alternative service of process when that becomes the only remaining option.
Joseph Schaeffer is a shareholder with Babst, Calland, Clements & Zomnir, P.C. in Pittsburgh, Pennsylvania.
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© 2023. Service by Direct Message: Making a Record to Serve Parties by Alternative Means, Pretrial Practice & Discovery, American Bar Association Litigation Section, May 16, 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 Edward D. Phillips)
It is important to include key language in cases where a joint tortfeasor is obtaining a pro rata release.
When pretrial settlement negotiations are successful, one of the last crucial considerations in wrapping up the matter is to consider a release agreement that fully protects your client. In some instances, failing to include key language in a release can expose your client to liability long after obtaining an executed settlement agreement and release (SA&R). When sorting through numerous provisions in an SA&R that require modification or when drafting a SA&R from scratch, it is important to include key language in cases where a joint tortfeasor is obtaining a pro rata release.
For example, pursuant to Pennsylvania’s Uniform Contribution Among Tortfeasors Act, 42 Pa.C.S. § 8326, “[a] release by the injured person of one joint tort-feasor, whether before or after judgment, does not discharge the other tort-feasors unless the release so provides, but reduces the claim against the other tort-feasors in the amount of the consideration paid for the release or in any amount or proportion by which the release provides that the total claim shall be reduced if greater than the consideration paid” (emphasis added). Section 8326 encompasses both pro rata and pro tanto releases. Pro rata settlements reduce the final judgment by the settling defendant’s proportional share of the judgment, even where the settlement amount is not the same as the amount determined by the fact finder. Pro tanto settlements reduce the judgment only by the amount paid by the settling defendant(s).
Pursuant to Section 8327,
[a] release by the injured person of one joint tort-feasor does not relieve him from liability to make contribution to another tort-feasor, unless the release is given before the right of the other tort-feasor to secure a money judgment for contribution has accrued and provides for a reduction to the extent of the pro rata share of the released tort-feasor of the injured person’s damages recoverable against all the other tort-feasors
(Emphasis added.)
Accordingly, if the settling defendant obtains a release that does not include language expressly stating that it is pro rata release, then the release most likely will be construed to be a pro tanto release. Absent the required pro rata language, if the settling defendant’s proportional share of the judgement is greater than the amount of the settlement, the settling defendant may be exposed to liability for contribution to the other defendants who paid a portion of the settling defendant’s judgment. This wrinkle, however, is easily avoided by careful crafting of the SA&R with state-specific considerations in mind. Do not forget the details, beyond the standard release language, that may be necessary to protect your client.
Edward D. Phillips is an associate at Babst, Calland, Clements & Zomnir P.C. in Pittsburgh, Pennsylvania.
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© 2023. Including a Few Key Words in a Release Can Save Your Client Down the Road, Pretrial Practice & Discovery, American Bar Association Litigation Section, May 15, 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 Lisa Bruderly)
An April 12, 2023, ruling by the U.S. District Court for the District of North Dakota has created 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 rely on different WOTUS definitions to determine Clean Water Act jurisdiction.
This split creates more uncertainty about the extent that a project will impact WOTUS (if at all), what permitting will be required, and how much cost/time will be necessary to obtain appropriate permitting. It also creates inconsistencies from state to state on how the jurisdiction of the Clean Water Act is applied. For example, the Corps may determine that a water is regulated under the Clean Water Act based on the definition of WOTUS effective in one state, while the same water would not be federally-regulated based on the definition of WOTUS effective in another state. It will be difficult for regulating agencies to consistently differentiate between the two definitions, especially when a Corps District regulates WOTUS across states with differing effective definitions.
The nationwide split occurred when 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.
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.”
The 2023 Rule was published as final in the Federal Register on January 18, 2023, (88 Fed. Reg. 3004) and became effective on March 20, 2023 in 48 states. A March 19, 2023, preliminary injunction granted in the U.S. District Court for the Southern District of Texas had already enjoined the new WOTUS definition in Texas and Idaho prior to the definition becoming effective.
A third judicial challenge to the 2023 Rule is pending. In April 2023, the Commonwealth of Kentucky and certain industry groups appealed the decision of the U.S. District Court for the Eastern District of Kentucky, which denied a motion for preliminary injunction to stop the enforcement of the 2023 Rule in Kentucky until May 10, 2023. On May 10, the Sixth Circuit granted an injunction, staying the enforcement of the 2023 Rule in Kentucky, one day after the district court denied the Commonwealth’s motion for an emergency injunction of the 2023 Rule pending the appeal. Therefore, as of May 11, 2023, the 2023 Rule is not effective in Kentucky while the appeal is pending.
As of May 11, 2023, the 2023 Rule is effective in 23 states, while the 1986 definition of WOTUS (which was in effect nationwide prior to the 2023 Rule) is in effect in the remaining 27 states.
The two definitions of WOTUS are conceptually similar, with both being based on the 1986 definition, as interpreted by early-2000s U.S. Supreme Court decisions regarding WOTUS, primarily the seminal Rapanos v. U.S. case. The U.S. Supreme Court in Rapanos identified two tests for determining WOTUS, with the more narrow test being established by Justice Antonin Scalia (i.e., relatively permanent waters and wetlands with a continuous surface connection to such waters), and the broader test being asserted by Justice Anthony Kennedy (i.e., the significant nexus test). Under the 1986 definition, the regulated community and regulators could base their jurisdictional arguments on either the Scalia or Kennedy test for identifying WOTUS. However, because the 2023 Rule codifies both Rapanos tests, it, arguably, requires the more inclusive, significant nexus test to be considered.
It is unclear whether additional judicial actions will occur 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 the 2023 Rule and USEPA’s ability to define WOTUS. The Sackett decision is expected to be issued by early summer 2023.
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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Reprinted with permission from the May 2023 issue of The PIOGA Press. All rights reserved.
Smart Business
(By Adam Burroughs featuring Audra Hutter)
Act 122 was signed into law on November 3, 2022, by Pennsylvania’s former Gov. Tom Wolf. This legislation makes various changes to Title 15 of the Commonwealth’s Consolidated Statutes, also known as the Associations Code. One notable change for businesses in Pennsylvania is the new mandatory Annual Report Filing. This requirement replaces the previous Decennial Report Filing requirement and aligns Pennsylvania with a majority of other states that already require similar annual report filings.
While the form is simple and inexpensive, the consequences of missing the filing date can be significant.
Smart Business spoke with Audra Hutter, an attorney at Babst Calland, about Act 122, the filing change, and what it means for entities doing business in Pennsylvania.
What is the filing requirement?
Now, every year, organizations must file a report with the Pennsylvania Department of State that includes their business name; jurisdiction; registered office address; the name of at least one director, member or partner; names and titles of the principal officers; principal office address and its Department of State provided entity number.
Filling out the form is relatively simple and will likely be very similar to the forms companies were previously required to fill out every 10 years. There will be a $7 filing fee for businesses, corporations, LLCs, limited partnerships, and limited liability partnerships. There is no fee for organizations that operate for not-for-profit purposes.
Who needs to file and when are the deadlines?
Organizations should receive information and a letter from the Pennsylvania Department of State letting them know that their filing deadline is approaching. However, an excuse of missing an annual filing due to lack of notice from the Department of State will not be an acceptable reason for missing the deadline. The filing dates will be the same every year — for example, corporations will be required to file by June 30, LLCs will need to file by September 30, and other filing entities or foreign filing entities must file by December 31.
Entities that are required to file include:
- Domestic business corporations.
- Domestic nonprofit corporations.
- Domestic limited liability partnerships.
- Domestic electing partnerships that are not limited partnerships.
- Domestic limited partnerships (including limited liability limited partnerships).
- Domestic limited liability companies.
- Domestic professional associations.
- Domestic business trusts.
- All registered foreign associations.
These new annual filings will not be required until 2024, with penalties for missed filings not beginning until 2027.
What are the consequences of not filing?
In 2027, when penalties are levied, the consequence of failing to file will be the commencement of the process of administrative dissolution or cancellation of the business entity. Within six months of a missed deadline, the Department of State will send notice to an organization. If the annual report is not filed after the notice is received, then the Department will start the process of administratively dissolving and canceling the entity.
If an entity is dissolved, it will no longer be able to legally conduct business in Pennsylvania and its name will become available for new entities to claim. As such, if administratively canceled or dissolved, an entity may lose the ability to conduct business in Pennsylvania under their previous name.
A domestic entity can correct the dissolution or cancellation by applying for reinstatement, which would mean filing the reinstatement application, filing the missed annual reports, and paying the fees associated with each. A foreign entity may not simply apply for reinstatement, instead it must submit another Foreign Registration Statement to the Pennsylvania Department of State.
This change is an example of why it’s important to keep up-to-date on state legislation — not just in Pennsylvania, but any state where a company conducts business — because a simple administrative change could have a significant impact on an organization.
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Public Sector Alert
(by Alyssa Golfieri, Anna Hosack and Anna Jewart)
Effective today, municipalities and law enforcement agencies must process record requests seeking criminal history information submitted under Act 134.
On November 3, 2022, Pennsylvania Governor Tom Wolf signed into law Act 134 of 2022, which amended the Criminal History Record Information Act (CHRIA), to implement a new statutory process by which victims of crimes and defendants in certain civil actions can obtain criminal history investigative information gathered by law enforcement agencies (Act 134). Act 134 went into effect today, May 2, 2023, and is the latest of several statutory amendments impacting access to law enforcement records.
The important takeaways:
- Similar to the Pennsylvania Right-to-Know Law (RTKL), which governs access to public records, Act 134 provides a process by which certain individuals may request criminal history investigative information from municipalities and law enforcement agencies.
- Act 134 is not, however, an extension of nor an amendment to the RTKL. Act 134 is an independent statutory scheme implemented to provide crime victims and certain defendants in a civil action a definitive, stand-alone right to access criminal history investigative information—information that is generally not subject to access under the RTKL.
- Unlike the RTKL, where the requester’s identity is not relevant, under Act 134, access to records is completely dependent on the requester’s identity. Act 134 makes an explicit distinction with respect to the right to access information between a crime victim and a defendant. Crime victims are entitled to access before or after a civil action is pending in a Pennsylvania court. Defendants are only entitled to access after a civil action is pending. Without a firm understanding of this distinction, municipalities and law enforcement agencies are at significant risk of disclosing confidential and sensitive criminal history investigative information without proper authority.
- An Act 134 request must include or comply with the following:
- A sufficiently specific description of the information sought.
- A statement by the requester (or the requester’s representative), made subject to the penalties of unsworn falsification to authorities, that the information requested (i) is directly related to a civil action pending in Pennsylvania, or (ii) if the requester is a crime victim, is necessary to the investigation or preparation of a civil action in Pennsylvania.
- Submitted to the municipality or law enforcement agency via personal service or certified mail with receipt. Requests submitted via e-mail do not trigger a municipality’s or law enforcement agency’s obligation to respond under Act 134.
- Act 134 requests must be responded to within 60 days from the date of receipt of the request or by the date identified by the requester, whichever is later.
- Act 134 exempts from disclosure certain personal information, including without limitation, social security numbers, driver’s license numbers, financial information, telephone numbers, and e-mail addresses.
- Act 134 authorizes municipalities and law enforcement agencies to redact or deny access to requested information under certain circumstances. For example, an Act 134 request may be redacted or denied if the release of the requested information would endanger a person or public safety, adversely affect an investigation or ongoing prosecution, relates to law enforcement’s use of confidential informants, or would identify a third-party victim of child abuse, domestic violence, or sexual abuse.
Due to the complexities of Act 134 and its interplay with the RTKL, municipalities and law enforcement agencies should consult their legal counsel immediately upon receipt of any request for criminal history investigative information in order to avoid the improper disclosure of sensitive or confidential information. If you have questions about how Act 134 will impact your organization, please contact Alyssa E. Golfieri at 412-773-8701 or agolfieri@babstcalland.com, Anna R. Hosack at 412-394-5406 or ahosack@babstcalland.com, or Anna Skipper Jewart at 412-253-8806 or ajewart@babstcalland.com.
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Environmental Alert
(by Matt Wood and Mackenzie Moyer)
West Virginia is one among many states developing new laws and regulations related to per- and polyfluoroalkyl substances (PFAS). On March 28, 2023, Governor Jim Justice signed House Bill 3189, also known as the PFAS Protection Act (the Act), into law. Broadly, the Act is intended to identify sources of PFAS discharged into waters used for public drinking water and sets forth certain duties and obligations related to public water systems, water treatment systems, and facilities that use PFAS compounds.
The Act is a direct response to Senate Concurrent Resolution 46, passed in 2020, which required the West Virginia Department of Environmental Protection (WVDEP) and the West Virginia Department of Health and Human Resources to initiate a public source-water supply study to sample PFAS for all community water systems in the state. Community water systems are public water systems that pipe water for human consumption to at least 15 service connections used by year-round residents or that regularly serve at least 25 residents. Subsequently, the state agencies contracted with the United States Geological Survey (USGS) to sample and analyze for 26 PFAS compounds from 279 sites consisting of public water systems, including schools and daycares that operate their own water systems. USGS published the final report summarizing the study in July 2022.
PFAS Study Results and Contemporary Federal Actions
The study found that 13 percent of the sampled sources (37/279) exceeded 70 parts per trillion (ppt) for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS) combined, the then-current health advisory established by the U.S. Environmental Protection Agency (USEPA) in 2016. PFOA and PFOS are the most studied PFAS chemicals. Health advisories are unenforceable, non-regulatory thresholds below which adverse health effects are not anticipated to occur over a lifetime of exposure. In June 2022, USEPA published updated interim health advisories for PFOA (0.004 ppt) and PFOS (0.02 ppt) and final health advisories for hexafluoropropylene oxide dimer acid and its ammonium salts (HFPO-DA, commonly known as GenX; 10 ppt) and perfluorobutane sulfonic acid (PFBS; 2,000 ppt). When compared to the updated, interim PFOA and PFOS health advisories, 49 percent (137/279) of sampled sources exceeded these thresholds. Such exceedances on their own do not create obligations for drinking water systems to take action to address PFAS.
At the same time that the West Virginia legislature was developing House Bill 3189, USEPA was moving to regulate PFAS compounds in drinking water at the federal level. For example, on March 14, 2023, USEPA announced a proposed National Primary Drinking Water Regulation setting maximum contaminant levels for six PFAS compounds. More information about the proposed regulation is available at USEPA’s website here. In August 2022, USEPA proposed designating PFOA and PFOS as hazardous substances under CERCLA and the agency is considering applying the same designation to six other PFAS compounds. The West Virginia legislature cited these and other actions as background to passing the Act.
WVDEP and Facility Obligations Under the PFAS Protection Act
The Act obligates WVDEP to take certain actions based on the presence and concentration of PFAS compounds in raw and/or treated water. For every raw water source where USGS detected any of four listed PFAS (PFOA, PFOS, PFBS, or GenX) above the practical quantitation limit (PQL) and above EPA’s applicable health advisory, WVDEP must write a PFAS action plan to identify and address the PFAS sources. The PFAS action plans are due by July 1, 2024. For each raw water source where USGS detected any of the four listed PFAS above the method detection level (MDL), above EPA’s applicable health advisory, and below the PQL, the Act requires WVDEP to sample the finished, treated water at the associated public water system by the end of 2023. For each public water system where any of the four listed PFAS is detected in finished water above the MDL and above EPA’s applicable health advisory, regardless of the concentration in relation to the PQL, the Act requires WVDEP to prepare a PFAS action plan to identify and address sources of PFAS for the public water system’s raw water source(s). For these, the first 50 plans must be completed by the end of 2025 and the remaining plans must be completed by the end of 2026.
As set forth in more detail in the Act, developing the PFAS action plans requires WVDEP to coordinate with affected public water systems and consult with applicable governmental agencies, organizations representing West Virginia public drinking water systems, and other entities with knowledge applicable to identifying and addressing PFAS sources. The Act also directs WVDEP to recommend changes to applicable statutes and/or rules to address the sources of PFAS compounds and to report on its activities annually to the Joint Legislative Oversight Commission on State Water Resources.
The general PFAS approach for federal and state agencies is to obtain the occurrence and exposure data from drinking water systems and take action to reduce and eliminate the sources of PFAS to such systems. The latter component can be seen in the second part of the Act, which requires all facilities that discharge to a surface water under a West Virginia/National Pollutant Discharge Elimination System permit, or to a Publicly Owned Treatment Works under an industrial pretreatment program, and that manufacture or knowingly use or have used one or more PFAS chemicals in their production process since January 1, 2017, to report such use to WVDEP by no later than December 31, 2023. Facilities subject to the reporting requirement must begin quarterly monitoring of the self-reported PFAS chemicals within six months of notification to WVDEP. The Act also requires WVDEP to modify a facility’s applicable permits to require monitoring for the self-reported PFAS chemicals.
The Act does not create any new obligations for either public water systems or publicly owned treatment systems. Looking toward the future, after USEPA finalizes Clean Water Act water quality criteria for any PFAS, WVDEP must propose criteria no more stringent than USEPA’s established criteria in the next regular legislative rulemaking cycle. The Act will be effective on June 8, 2023.
As the federal and state governments continue to take multiple actions to address PFAS across many program areas, Babst Calland attorneys continue to track these developments and are available to assist you with PFAS-related matters. For more information on this development and other remediation matters, please contact Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, or Mackenzie M. Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.
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Legal Intelligencer
(by Casey Alan Coyle, Anna Jewart and Anna Hosack)
In December 2022, the Pennsylvania Supreme Court issued its opinion in Central Dauphin School District v. Hawkins, 286 A.3d 726 (Pa. 2022), the latest in a line of cases considering the intersection of the federal Family Educational Rights and Privacy Act, 20 U.S.C. §1232g (“FERPA”), and the Pennsylvania Right-to-Know Law, 65 P.S. §§67.101-67.3104 (“RTKL”). The majority held that, while the school bus surveillance video at issue constituted an “education record” under FERPA, the school district was nonetheless required to release the video under the RTKL, following redaction of students’ personally identifiable information (“PII”). Hawkins has clear implications regarding the treatment of school surveillance videos under FERPA and the RTKL. However, Hawkins raises several questions, including whether a non-public record can “become” public through redaction, and therefore, be subject to disclosure under the RTKL.
RTKL
The RTKL is the state open records law. It requires state and local government agencies, including public school districts, to provide access to “public records’ upon request, subject to certain exceptions. The statute broadly defines a “public record” as a record of a Commonwealth or local agency that is not exempt under one of 30 enumerated exemptions, not protected by a privilege, and “not exempt from being disclosed under any other Federal of State law or regulation or judicial order or decree.” A record in the possession of an agency is presumed to be a public record unless, inter alia, “the record is exempt from disclosure under any other Federal or State law or regulation or judicial order or decree.” The RKTL also contains a disclaimer: “Nothing in this act shall supersede or modify the public or nonpublic nature of a record or document established in Federal or State law, regulation or judicial order or decree.” Notably, the RTKL includes a provision mandating redaction of exempt information, Section 706. Critically, however, Section 706 does not apply to all records, but only those determined to be a “public record,” “legislative record,” or “financial record.”
FERPA
FERPA is a privacy statute for student education records. An “education record” is defined as those records files, documents, and other materials which: (1) contain information “[d]irectly related to a student;” and (2) are “[m]aintained by an educational agency or institution or by a person acting for such agency or institution.” FERPA serves the dual purpose of ensuring parents and students have access to education records, while protecting student and parent privacy by prohibiting disclosure of students records without consent. FERPA achieves these objectives by conditioning federal funding to public school districts and other educational agencies or institutions upon compliance with its regulations. FERPA makes education records exempt from disclosure, subject to limited exceptions. One such exception is parental consent. Another is where the educational agency or institution, in its discretion, elects to release a record after the removal of all PII, “provided that the educational agency or institution or other party has made a reasonable determination that a student’s identity is not personally identifiable.”
Hawkins
Hawkins involved a school bus video. The video shows an incident occurring primarily between a student and a parent of another student while surrounded by other students on a school bus located on school district property. After receiving reports of the incident, the district conducted an investigation that resulted in disciplinary action against both students and staff. No parental consent for the release of the video was ever provided.
A Commonwealth Court panel held the video did not constitute an “education record” under FERPA, and thus, was subject to disclosure under the RTKL. The Pennsylvania Supreme Court subsequently issued its opinion in Easton Area School District v. Miller, 232 A.3d 716 (Pa. 2020), holding that a school bus video—factually analogous to the one in Hawkins—qualified as an education record under FERPA. The plurality opinion in Easton Area also discussed the issue of redaction but did not reach a majority on the issue.
In the wake of that ruling, the Supreme Court vacated the order in Hawkins and remanded for additional proceedings consistent with Easton Area. On remand, a Commonwealth Court panel affirmed the trial court on different grounds: although the video constituted an “education record” under FERPA, it was still subject to disclosure under the RKTL because “redacting students’ images removes any argument that the video is a public record and exempt under Federal law or regulation, and thus removes any argument by the [s]chool [d]istrict that it is exempt under [the RTKL.]”
The Supreme Court affirmed on further review. The majority held education records in a school district’s possession are presumed public and the district has the burden to prove the record is exempt by a preponderance of the evidence. The majority also held that the video in question is an education record, but that education records are not categorically exempt from disclosure under the RTKL. Rather, only a students’ PII within an education record is exempt. The majority further held the district did not meet its burden of proving it lacked the capacity to redact the video. Finally, while acknowledging that FERPA’s regulations define PII to include “[i]nformation requested by a person who the educational agency or institution reasonably believes knows the identity of the student to whom the education record relates,” the majority held that it “lack[ed] sufficient context to reverse the fourth consecutive directive to disclose the video” in reliance on that provision.
Justice Mundy authored a concurring and dissenting opinion. While agreeing with various of the majority’s conclusions, including that the video is an education record under FERPA, Justice Mundy disagreed with the majority’s “creation of a presumption that school districts have the ability to redact students’ personal identifiable information from video, imposing the costs of such redaction on districts, and its apparent diminishment of students’ privacy interest in their educational records.”
Unanswered Questions
While likely intended to resolve the uncertainty created by the plurality opinion in Easton Area, Hawkins arguably has created more questions than answers for school solicitors and other RTKL practitioners. They include, but are not limited to, the following:
- Burden of proof: The majority opined in a footnote that, to satisfy its burden of providing records are exempt under the RTKL, the district “must do more than baldly state it lacks the ability to redact them.” However, the district had not only submitted an affidavit attesting that it lacked the technological capability to redact the video, but also offered testimony to the same and the requester offered no contrary evidence. If unrefuted testimony is not sufficient to satisfy an agency’s burden of proof, then what is? Is Justice Mundy correct that the majority “essentially creates a presumption that school districts will never be able to meet their burden to show they lack the ability to redact the video, or any other media, to remove identifiable student information?”
- In camera review: Along these same lines, the majority ordered redaction of the video in Hawkins even though neither the Office of Open Records, common pleas court, Commonwealth Court, nor the Supreme Court reviewed the video, in camera, to determine whether redaction could remove all PII from the recording. What role, if any, does in camera review play to assess the feasibility of redaction of a record following Hawkins?
- Discretion: The majority found that “it is clear Section 706 of the RTKL mandates agencies . . . to redact exempt information and does not give them discretion in this regard.” But FERPA’s regulations state the opposite. The regulations vest an educational agency or institution with the discretion to release an education record upon de-identification only following a “reasonable determination that a student’s identify is not personally identifiable.” The district in Hawkins never made such a determination. To the contrary, it asserted that de-identification was not feasible because, even in redacted from, the requester and the public would know exactly which student’s face has been redacted from the video. Is a “reasonable determination” from a district that “a student’s identity is not personally identifiable” a requirement for disclosure of an education record under the RTKL? Or does the RKTL supersede FERPA in this regard? And if the latter is true, how can that be reconciled with the disclaimer set forth in Section 306 of the RTKL?
- Loss-of-federal-funding exception: Easton Area involved the loss-of-funding exception to disclosure under the RTKL. The plurality determined that, to implicate this exception, an agency must establish that it has a “policy or practice” of “releasing,” “permitting the release of,” or “providing access to” protected education records or personally identifiable information, adding that such language “necessary denotes repeated or systematic violations of student privacy, as opposed to singular or exceptional instances.” By mandating the disclosure of education records in redacted form, did Hawkins establish a statewide policy or practice of providing access to education records to implicate this exception? If not, what more is required to trigger the same with respect to education records?
- Scope of holding: At minimum, education records are now subject to a right of access, via redaction, under the RTKL. Arguably, however, the rationale of Hawkins extends to all non-public, exempt records of a Commonwealth or local agency. How will future courts interpret Hawkins? Will they limit the holding to the context of education records? Or will courts follow Hawkins’ lead and determine that only certain information within a record—as opposed to the record itself—is non-public, thus triggering redaction under Section 706 to entire categories of records previously considered non-public?
Given these unanswered questions, school districts and other Commonwealth and local agencies should proceed cautiously when addressing RTKL requests until the subsidiary issues raised by Hawkins are resolved.
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Casey Alan Coyle is a shareholder at Babst Calland Clements and Zomnir, P.C. and Co-Chair of the firm’s Appellate Practice Group. He is also a former law clerk to Chief Justice Emeritus Thomas G. Saylor of the Pennsylvania Supreme Court. He represented Central Dauphin School District in its appeal to the Pennsylvania Supreme Court in Hawkins. Contact him at 267-939-5832 or ccoyle@babstcalland.com.
Anna S. Jewart is an associate at the firm and focuses her practice on land use and general municipal law. Contact her at 412-253-8806 or ajewart@babstcalland.com.
Anna R. Hosack is an associate at the firm and focuses her practice primarily on municipal and land use law. Contact her at 412-394-5406 or ahosack@babstcalland.com.
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Reprinted with permission from the April 20, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
Christina Manfredi McKinley, a shareholder in Babst Calland’s Litigation, Energy & Natural Resources, and Environmental groups, was selected by The Legal Intelligencer as a “2023 Lawyer on the Fast Track” in Pennsylvania.
A graduate of The Catholic University of America Columbus School of Law, Ms. McKinley continually strives to provide business-oriented solutions to her clients and routinely serves as a general advisor, counseling clients on day-to-day legal and business matters on any number of issues. Her business-focused, proactive approach to problem-solving allows her to provide solutions to clients in a variety of industries. Her experience spans a wide range of industries, including manufacturing, retail, energy, chemicals, and environmental.
As a litigator who focuses on complex commercial matters, Ms. McKinley’s trial practice encompasses all phases of litigation, from early alternative dispute resolution through post-trial motions. She has concentrated experience in complex purchase agreement and commercial contracts disputes, protection of competitive interests (e.g., Lanham Act, unfair competition, tortious interference, trade secret protection, restrictive covenants), technology disputes (e.g., software services and license agreements), and corporate governance.
The Legal Intelligencer asked the Pennsylvania legal community to submit nominations for the annual Lawyers on the Fast Track honors. After reviewing their results, a six-member judging panel composed of evaluators from all corners of the legal profession and the state selected 29 attorneys as the 2023 Lawyers on the Fast Track. This recognition is only given to attorneys under the age of 40 who have demonstrated excellence in four categories: development of the law; advocacy and community contributions; service to the bar; and peer and public recognition.
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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