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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FNREL Water Law Newsletter
(By Lisa Bruderly & Mackenzie Moyer)
In early 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a technical guidance document entitled “Pennsylvania Function-Based Aquatic Resource Compensation Protocol,” PADEP Doc. No. 310-2137-001 (effective Mar. 1, 2022) (Mitigation Guidance). See Vol. 55, No. 1 (2022) of this Newsletter. On January 7, 2023, PADEP published a notice in the Pennsylvania Bulletin rescinding the Mitigation Guidance for re-evaluation. 53 Pa. Bull. 107 (Jan. 7, 2023).
The Pennsylvania Dam Safety and Encroachments Act, 32 Pa. Stat. §§ 693.1–.27, and its implementing regulations, 25 Pa. Code ch. 105, require a person to obtain a permit from PADEP to construct, operate, maintain, modify, enlarge, or abandon a dam, water obstruction, or encroachment that alters the course, current, or cross section of a body of water. Mitigation Guidance at 1. A mitigation plan is typically required with the permit application, including, as applicable, a plan to compensate for the impact to regulated waters as a result of the project. Id. at 2.
The Mitigation Guidance was meant to provide a standardized system for evaluating functional compensation offsets associated with proposed aquatic resource impacts, determining compensatory mitigation requirements, assisting in identifying measures to minimize proposed project impacts, reducing subsequent compensation requirements, and evaluating compensation proposals. Id. Prior to the Mitigation Guidance, Pennsylvania’s method for determining compensation for losses to aquatic resources was based on acreage and linear feet.
Due to pushback from affected entities, including mitigation banks and permittees, PADEP formed a stakeholder working group to review the Mitigation Guidance. PADEP officially rescinded the Mitigation Guidance “to reevaluate its effectiveness and review potential revisions through stakeholder outreach.” 53 Pa. Bull. at 107. Until new guidance is developed, the previous acre-and-feet method will be used to identify and calculate mitigation needs and requirements.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(By Lisa Bruderly & Mackenzie Moyer)
On January 27, 2023, the Pennsylvania Department of Environmental Protection (PADEP) released the final 2022 Pennsylvania State Water Plan (Plan). The Plan is intended to inform decision making and educate the commonwealth on sustainable use of the commonwealth’s aquatic resources. It identifies regional and statewide water resource priorities and recommends over 100 statewide and legislative actions to address those priorities.
Background
The Water Resources Planning Act of 2002, 2002 Pa. Legis. Serv. Act 2002-220, requires PADEP to collaborate with statewide and regional committees to update the Plan every five years. However, the last State Water Plan was published in 2009.
PADEP identified five main goals for the Plan update:
- A reviewed and updated State Water Plan having the input, guidance, and advice from a repopulated and reinstated statewide committee, six regional committees, and the public.
- Approved and updated critical area resource plans (CARPs) within the Potomac and the Ohio planning areas left unfinished from the 2009 Plan Update.
- Enhanced web-based applications and tools to deliver improved access to water resource information, data, and statistics for educational and water planning purposes.
- Plan provisions to implement applicable water resource-related strategies outlined in the 2018 Pennsylvania Climate Action Plan.
- An updated 2009 State Water Plan Atlas using a web-based GIS application.
The Plan is meant to be a source of water resource data, the latest information, and policy recommendations. It will assist PADEP and other state agencies with developing and implementing policies, programs, and projects that correspond with Pennsylvania’s current and future water needs.
Plan Recommendations
The updated Plan recommends over 100 actions in areas such as flood control, stormwater management, water withdrawal, legacy coal mining impacts, legacy oil and gas wells, drinking water and wastewater treatment, contaminants of emerging concern, and agricultural nonpoint source pollution.
Regarding stormwater, the Plan’s recommendations include: providing a streamlined and more efficient stormwater management program for the regulated community, establishing legislation that allows local authorities, utilities, and management districts to collect “reasonable fees” and “generate sustainable revenues” dedicated to planning, maintaining, improving, and repairing stormwater management infrastructure, and continuing to create opportunities for delegated county conservation districts to implement chapter 102 (Erosion and Sediment Control) and chapter 105 (Dam Safety and Water Way Management) permitting.
Other recommendations in the Plan include establishing an emerging contaminants program, considering regionalization and consolidation of treatment systems to address acid mine drainage from abandoned coal mines, and providing additional funding to identify and address inactive, abandoned, and orphaned wells.
Jumping off the work completed for the 2009 State Water Plan, the 2022 Plan identifies four watersheds as critical water planning areas (CWPAs). CWPAs are areas where existing or future water demands threaten to exceed water availability. These four watersheds are the Marsh and Rock Creek watersheds in Adams County; the Back Creek watershed in Fayette County; and the Laurel Hill Creek watershed in Somerset and Fayette Counties. After a watershed is identified as a CWPA, a CARP is developed. The CARP will identify CWPA-specific recommendations to better manage water-use in the CWPA and ensure future use.
Environmental justice (EJ) and climate change have been top priorities for PADEP, and the Plan complements these priorities. On climate change, the Plan includes and incorporates recommendations found in the 2018 and 2021 Pennsylvania Climate Action Plans. For example, the 2018 Climate Action Plan highlighted opportunities to use stormwater best management practices and water conservation to meet climate change goals. These goals tie nicely with the goals of the State Water Plan and have been incorporated into the Plan. For EJ, the Plan aims at providing educational opportunities and soliciting participation from EJ areas in state water planning processes. PADEP hopes to bring public awareness to the State Water Plan and include vulnerable communities in water-use planning to ensure availability of water resources for all communities into the future.
According to PADEP, the next step is for PADEP and committee members “to reach out to legislative, government, advocacy, and business leaders statewide with information on how they may implement the strategies and actions to benefit all members of their communities.” PADEP, “Pennsylvania State Water Plan,” https://www.dep.pa.gov/Business/Water/PlanningConservation/StateWaterPlan/Pages/default.aspx.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
(By Daniel Bates featuring Justine Kasznica)
Pittsburgh Business Times
One of the first tasks of the Pittsburgh-based Keystone Space Collaborative was commissioning a market report to tally up all the tech companies and organizations from across the region — Pennsylvania, Ohio, and West Virginia — which are receiving funds from NASA or space-related grants from the Department of Defense.
“The numbers of space projects and participants in the region was impressive,” said Justine Kasznica, the industry group’s board chair and a founding member. “We had about 550 participants from across the tri-state region, and this without any dedicated cross-region political championship for the space industry.” Those companies brought more than $2 billion in government funding into the region, the 2021 market report showed. “That number puts us very squarely on the map. It’s a baseline,” she said, “from which to evaluate our future growth.”
With the Keystone Space Collaborative, she hopes to organize and promote space-relevant technology companies across the tri-state region — which are more plentiful and promising than most people realize, Kasznica said.
Kasznica is a tech and corporate attorney, and Chair of the law firm Babst Calland’s Emerging Technology Practice and leading advocate for the region’s space economy.
Leveraging Pittsburgh’s robotics hub.
She has worked with Pittsburgh robotics companies for 14 years. For the last decade, she has served as outside general counsel to Astrobotic Technology, an aerospace robotics company spun out of Carnegie Mellon University that has acquired more than $500 million in NASA contracts and worked on three missions to the lunar surface.
As the Pittsburgh region developed into a robotics hub, it organically gathered the kind of companies whose work is valued by NASA, the DOD and the growing sphere of private spaceflight companies, all of which need more than rockets and rovers.
“Our region brings [together] robotics, advanced technology, advanced manufacturing expertise, material science work, software development, and life sciences research,” Kasznica said. “These are all core pieces of a vibrant future new space economy. So as I look to the future — three to five, or 10 years from now — I really see this region emerging or reemerging at the forefront of the new space economy.”
The global space industry grew to $469 billion in 2021, according to the Space Foundation, and is expected to expand to $1 trillion by 2040.
This growth was not impacted much by the Covid-19 pandemic, and space technology is sheltered during economic downturns, said Kasznica. “Space, because of its historical connection to the public sector and public funding — particularly defense and NASA spending — is somewhat insulated, in terms of its contribution to national security needs.”
Thanks in large part to her work with Astrobotic, Kasznica developed a law practice in space technology. “Over the past decade, I’ve gotten to know and build relationships with a number of space legal mentors, regulatory experts, a community of fantastic industry professionals, folks from NASA, folks from the DOD, and really have immersed myself in the space industry,” she said.
Space industry needs regulatory and commercial legal support.
The industry’s legal needs can be complex. “I saw a real need for sophisticated regulatory and commercial legal needs by the space companies,” Kasznica said. “They have export control issues. They have regulatory issues. They have a slew of sophisticated commercial issues. But many of these are nascent companies with limited resources.”
New companies in the expanding field may not be able to afford the kind of legal expertise bought by longtime aerospace and defense contracting giants. This is a need Kasznica and Babst Calland are addressing, she said.
“We now have a team of lawyers who are training up … to really be able to offer a much better value at the same sophistication, same ability to problem solve, but at a rate that is commensurate with this region’s expectations.”
Keystone Space Collaborative is the centerpiece.
The Keystone Space Collaborative, of which Babst Calland is a founding sponsor, provides networking opportunities, advocacy and promotion and an “ecosystem map,” which is especially valuable because the space technology industry is supported through relationships with universities, military research institutions and federal agencies. The Keystone Space Collaborative hopes to strengthen those bonds.
Last year, the group held its first annual conference, which brought more than 250 participants to Pittsburgh, including NASA administrators, the Pennsylvania governor and senators and congressional representatives from the tri-state region. Excitement is already building for this year’s conference, to be held in Pittsburgh on June 1st and 2nd.
“We are catching a wave,” Kasznica said, “and I think, because of the crossover to other sectors that this region is known for, the space industry really has an opportunity here.”
The space economy has gone through “a paradigmatic shift,” she said. “The cost of access to space has decreased by tenfold, thanks, in part, to some of the commercial players like SpaceX, Blue Origin and the like.” This
has “created an opportunity in low Earth orbit for commercialization of new technology.”
The environment of low Earth orbit offers a test lab for new technologies, particularly in material science, advanced manufacturing techniques and biotech, said Kasznica. “The in-space development of organoids and other biomaterials, the study of cellular structures as well as new drug development are just a few examples
of R&D activities that can benefit from this unique space environment,” said Kasznica, “The anticipated commercialization of low Earth orbit will create a tremendous opportunity that amplifies the industry beyond just the traditional space aspects of it, and this region is well positioned to take advantage of this opportunity.”
Though her focus has widened, Kasznica said that the client that started her on this path, Astrobotic, will play a prominent role in the industry’s future. “I see Astrobotic as a critical linchpin and an anchor for the region,” she said. “It has been a classic emerging technology success story.” She noted the company went from “literally two” employees to a team of more than 200.
She is helping the company create a permanent campus on Pittsburgh’s North Side that will house the larger Keystone Space Innovation Center and AFWERX/SPACEWRX Innovation Hub, which will serve as a focal point for convening and engaging the region’s space and defense innovation technology entrepreneurs.
It will be a space industry hub, Kasznica said, the kind that fosters creative synergy. “Those of us who study the innovation economy know that innovation clusters are born and are best nourished and grown with like-minded adjacent companies working collaboratively together, having those coffee stand conversations and being able to interact with one another. The greatest innovations and growth happens within clustered environments.”
Kasznica shared a vision of the site, which could act as a capitol for the tri-state region’s space economy.
“Crystal ball: 10 years from now, you go down to the North Side, and you sip a space-themed coffee drink while preparing an investment pitch deck, or scheduling on-site business development meetings with various space companies both from Pittsburgh and outside of the region, while your kids are visiting the Moonshot Museum and Carnegie Science Center and learning about how they can someday participate in the new space economy. What I see is a vibrant diverse community built around space and defense innovation.”
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Business Insights is presented by Babst Calland and the Pittsburgh Business Times.
Environmental Alert
(By Christopher (Kip) Power and Robert Stonestreet)
On February 10, 2023, 12 separate civil actions were filed (by more than 20 individual plaintiffs) in the U.S. District Court for the Northern District of West Virginia, challenging the construction and operation of the Black Rock Wind Farm (BRWF) located in Grant and Mineral Counties, West Virginia. Defendants include the developer of the facility, Clearway Energy Group, LLC, and its wholly-owned subsidiary, Black Rock Wind Force, LLC. Presumably seeking to satisfy the statute of limitations on one or more of plaintiffs’ common law causes of action, the complaints allege that they were filed exactly one year after the BRWF began operation.
The BRWF was authorized by an “Order Granting a Site Certificate” issued by the West Virginia Public Service Commission (PSC) on November 19, 2019. (As noted in that Order, Clearway Energy also owns the Pinnacle Wind Farm in Mineral County, West Virginia.) The application filed with the PSC sought approval to construct up to 29 wind turbines (each with a nameplate capacity between 3.6 MW and 5.8 MW), to be mounted at a hub height of 352.6 feet. Due to an existing 110 MW interconnection limit in Black Rock’s proposed agreement with PJM Interconnection LLC (the regional transmission organization that coordinates the movement of wholesale electricity for West Virginia and 12 other states), only 23 turbines were authorized to be constructed by the PSC Order.
Plaintiffs assert that the operation of the 23-turbine BRWF has “substantially and unreasonably” affected the “serenity, ambience, wildlife viewing and aesthetic nature” of their real property, and that it has harmed their “personal mental, emotional and physical wellbeing” in a variety of ways. Though the complaints do not mention it, it appears that virtually all the conditions identified as the cause of plaintiffs’ alleged injuries (excessive noise, vibration, shadow/light flicker, acoustic energy, and impaired viewsheds) were addressed in studies and testimony submitted by Black Rock to the PSC, and by the PSC Order. The PSC Order noted that, as of the date of its issuance, the owners of approximately 60 of the 193 occupied dwellings located within a one-mile radius of the facility had entered into or were negotiating “Neighbor Agreements” with Black Rock. The PSC also noted that existing wind turbines were visible in five of the nine viewpoints used in the analysis of the project’s potential visual effects.
Each of the 12 complaints is virtually identical except for the identity of the plaintiffs and the respective properties at issue. Each complaint asserts two claims. First, the complaints allege that the BRWF constitutes a nuisance. Under West Virginia law, there are two types of nuisance claims. A private nuisance is a substantial and unreasonable interference with the private use and enjoyment of another’s land. West Virginia law also recognizes claims for public nuisance, which is a claim alleging that certain conduct adversely impacts the public at large. Public nuisance claims generally cannot be asserted by private citizens unless they can demonstrate a “special injury” they suffered that is different than the alleged impact of the condition on the general public.
A bill is currently pending before the West Virginia Legislature that would restrict the scope of public nuisance claims. Senate Bill 572 would prohibit public nuisance claims based on an action or condition “that is permitted, authorized, approved, or mandated by a statute, ordinance, regulation, permit, order, rule, court order, or other similar measure issued, adopted, promulgated, or approved by a federal, state, or local governmental entity.” If passed, Senate Bill 572 would not likely affect the nuisance claims against the BRWF, because those claims appear to be for private nuisance (impacts on just the named plaintiffs’ properties) rather than a public nuisance (impacts on the public at large).
The second claim in the complaints alleges that the defendants were negligent in “siting, constructing and operating” the BRWF, knowing that the sound generated by the turbines would cause various physical ailments to nearby residents, including headaches, dizziness, rapid heartbeat, sleeplessness, and other adverse conditions. Although they may not be enough to prevent the claim from being heard, the studies submitted for purposes of obtaining the PSC Site Certificate for the BRWF will presumably also be important in evaluating the merits of this claim.
The complaints request entry of an injunction order to abate the nuisance (which would presumably require the BRWF to cease operations) and an award of damages to compensate the plaintiffs for diminution of value of their properties and their personal injuries. Responses to the complaints will be due within 21 days after the named defendants are formally served with them.
For questions about renewable energy projects in West Virginia, and the defense of common law or statutory claims based on alleged environmental impacts, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, or Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com.
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The Wildcatter
(By Nikolas Tysiak)
Welcome back, I hope everyone had an excellent holiday season. As always, the period covering December and January is usually the slowest time of year regarding judicial and legislative activity, and this year is no exception. Just one case of interest from Ohio, and some minor administrative code revisions in Pennsylvania.
Ohio Public Works Commission v. Barnesville, 2022-Ohio-4603. The village of Barnesville, OH, purchased about 104 acres of land as an “open space” project in connection with the Clean Ohio Conservation Fund, which is administered by the Ohio Public Works Commission (“OPWC”) in 2002. As part of the deal, OPWC required that Barnesville take deeds for the lands with certain covenants and restrictions, including a limitation on the use of the purchased lands, restricting the use of the property for the stated purposes, and empowering the OPWC to enforce the covenants and restrictions with various penalties attached. Barnesville subsequently leased the oil and gas under the lands at issue to Antero Resources in 2012, without the consent of OPWC. The Ohio Supreme Court found that the actions of Barnesville in regard to the oil and gas rights violated the transferability restriction imposed by the OPWC, overruling the 7th District Court of Appeals. However, the Supreme Court also determined that the lease to Antero violated the use restriction imposed by OPWC as part of the overall transaction and affirmed the appropriateness of injunctive relief in enforcing such restrictions, including an injunction deeming the oil and gas lease unenforceable. Consequently, the Supreme Court affirmed the decision of the 7th District Court of Appeals’, remanding the case for further consideration, accordingly.
Pennsylvania has amended several administrative code sections regarding VOC emissions control requirements arising custody transfer from the wellhead to transmission or storage. See 25 Pa. ADC § 129.121 – 129.140. Additionally, there were revisions to the permits required in the disturbance of waterways and watersheds. See 58 Pa. ADC § 51.61.
There is nothing else to report this time. Until next time, we are always interested in hearing from the membership, so please do not hesitate to reach out to us.
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Reprinted with permission from the MLBC February 2023 issue of The Wildcatter. All rights reserved.
Legal Intelligencer
(by Ben Clapp and Gina Falaschi Buchman)
On January 12, 2023, U.S. Environmental Protection Agency (EPA) published a notice of public comment period in the Federal Register requesting “Public Comment on EPA’s National Enforcement and Compliance Initiatives for Fiscal Years 2024-2027.”[1] Though EPA is charged with the enforcement of many environmental statutes, like any agency with limited resources, it must prioritize enforcement efforts. Every four years, EPA reviews its priorities and sets new enforcement and compliance initiatives for which it establishes specific goals and a comprehensive strategy.[2]
Over the years, EPA has used various names for these initiatives. The program started as the National Priorities. In 2010, the program was changed to the National Enforcement Initiatives in response to stakeholder feedback that the term “National Priorities” implied that EPA’s many other enforcement activities were of lesser significance programmatically or environmentally. From 2010 to 2018, the program was known as the “National Enforcement Initiatives,” but EPA decided to “evolve the National Enforcement Initiatives program into a National Compliance Initiatives (NCIs) program by providing states and tribes with additional opportunities for meaningful engagement, by developing and applying a broader set of compliance assurance tools, and by aligning the NCIs with the Agency Strategic Plan measures and priorities.”[3]
On December 20, 2022, EPA released a memorandum entitled “Updated Policy for EPA’s Enforcement and Compliance Initiatives” which explains that “[w]hile criminal enforcement and civil enforcement (judicial and administrative) remain the key tools to address serious noncompliance, hold polluters accountable and create general deterrence, EPA also uses informal enforcement and compliance tools to advance the national initiatives. To reflect this comprehensive approach, the national initiatives will now be known as National Enforcement and Compliance Initiatives (NECIs).”[4]
The December 2022 memorandum also sets forth three criteria to be used to evaluate initiatives to be included in the Fiscal Years 2024-2027 NECIs: (1) EPA will consider whether there is a serious need to address the issue and whether it is a widespread environmental violation. EPA will aim to address noncompliance that has a significant adverse impact on the environment and public health, particularly in environmental justice communities. (2) EPA will consider whether federal enforcement can make a difference, that is, will it be effective in holding polluters accountable and leveling the playing field. (3) EPA will consider whether the NECI aligns with the EPA’s FY2022-2026 Strategic Plan to concentrate enforcement resources to contribute towards the broader goals of the agency.[5] Two of the agency’s goals – Goal 1: Tackle the Climate Crisis and Goal 2: Take Decisive Action to Advance Environmental Justice – apply to all program areas. Strategic Plan Goal 3: Enforce Environmental Laws and Ensure Compliance reemphasizes the role of the NECIs. The memorandum also states that NECIs should be evaluated as to whether they can support media-specific goals in the Agency’s Strategic Plan such as Goal 4.1 – Improve Air Quality and Reduce Localized Pollution and Health Impacts.
While the EPA is preparing for the next four-year cycle, it is still enforcing under the current set of National Compliance Initiatives for Fiscal Years 2020-2023. The agency is currently focused on six NCIs where the enforcement program has the lead for the agency and a seventh priority area, where the enforcement program is contributing to the EPA’s goal of reducing childhood lead exposure. The six current NCIs are:
- Creating Cleaner Air for Communities by Reducing Excess Emissions of Harmful Pollutants from Stationary Sources;
- Reducing Hazardous Air Emissions from Hazardous Waste Facilities;
- Stopping Aftermarket Defeat Devices for Vehicles and Engines;
- Reducing Significant Noncompliance with National Pollutant Discharge Elimination System Permits;
- Reducing Noncompliance with Drinking Water Standards at Community Water Systems; and
- Reducing Risks of Accidental Releases at Industrial and Chemical Facilities.
EPA’s list of proposed NECIs for Fiscal Years 2024-2027 were selected using the three criteria explained above. EPA is soliciting comment on whether to continue, modify, or conclude the six initiatives from the FY 2020-2023 cycle. EPA notes that it is planning to continue the following four existing initiatives into the FY 2024-2027 cycle: (1) Creating Cleaner Air for Communities by Reducing Excess Emissions of Harmful Pollutants. EPA plans to continue this initiative with a focus on processes for which widespread noncompliance continues to be identified: flares, storage tanks, wastewater treatment, and incineration/combustion. (2) Reducing Risks of Accidental Releases at Industrial and Chemical Facilities. EPA plans to continue this initiative because EPA has found that many regulated facilities are not adequately managing risks they pose to surrounding communities. (3) Reducing Significant Non-Compliance in the National Pollutant Discharge Elimination System (NPDES) Program. EPA will continue and expand this initiative to include municipal permittees that are covered under a general permit, as unlawful discharges from such facilities can cause significant adverse impacts to overburdened communities. (4) Reducing Non-Compliance with Drinking Water Standards at Community Water Systems. EPA proposes to continue this initiative because, while progress has been made working with States in improving Safe Drinking Water Act compliance, further improvement is needed. EPA has also proposed to return the following two initiatives to the standard “core” enforcement program: (1) Reducing Toxic Air Emissions from Hazardous Waste Facilities and (2) Stopping Aftermarket Defeat Devices for Vehicles and Engines as significant improvement has been made and there is increased awareness of the issues.
EPA also specifically solicited comment on two potential new NECIs: (1) Mitigating Climate Change. This initiative would seek to combat climate change through a focus on reducing non-compliance with the illegal import, production, use, and sale of hydrofluorocarbons pursuant to the American Innovation and Manufacturing Act of 2020, excess emissions from sources within certain industrial sectors, and non-compliance with other requirements such as mobile source, fuels, and methane regulations. (2) Addressing PFAS Contamination. This initiative would focus on implementing the commitments under the EPA’s 2021–2024 Per-and Poly-fluoroalkyl substances (PFAS) Strategic Roadmap.[6] EPA also sought comment on two additional areas being considered for possible development as NECIs: (1) Reducing Exposure to Lead and (2) Addressing Coal Combustion Residuals (CCR). EPA noted that while both topics are significant enforcement priorities, resource constraints limit the number of NECIs that can be pursued.
Maintaining an awareness of the NECIs as they are developed and implemented can help the regulated community understand where EPA has identified significant nationwide noncompliance. With this knowledge, companies can identify aspects of their operations that fall within the ambit of the NECIs and evaluate internal compliance programs as appropriate. Additionally, companies should be aware that EPA will sometimes prepare updated guidance documents related to components of the NECIs in an effort to assist the regulated community in complying with the underlying environmental laws and regulations. EPA will accept comments on the proposed NECIs until March 13, 2023 on the Federal e-rulemaking portal (www.regulations.gov).
________________
[1] Public Comment on EPA’s National Enforcement and Compliance Initiatives for Fiscal Years 2024-2027, 88 Fed. Reg. 2093 (Jan. 12, 2023), available at https://www.govinfo.gov/content/pkg/FR-2023-01-12/pdf/2023-00500.pdf.
[2] Memorandum from Susan Parker Bodine to Regional Administrators, FY 2020-FY2023 National Compliance Initiatives, (June 7, 2019), available at https://www.epa.gov/sites/default/files/2019-06/documents/2020-2023ncimemo.pdf.
[3] Memorandum from Susan Parker Bodine to Regional Administrators, Transition from National Enforcement Initiatives to National Compliance Initiatives (Aug. 21, 2018), available at https://www.epa.gov/sites/default/files/2018-08/documents/transitionfromneitonci082118.pdf.
[4] Memorandum from Lawrence E. Starfield to Regional Administrators, “Updated Policy for EPA’s Enforcement and Compliance Initiatives” (Dec. 20, 2022), available at https://www.epa.gov/system/files/documents/2022-12/necimemo.pdf.
[5] EPA, FY2022-2026 Strategic Plan, (March 2022) available at FY 2022-2026 EPA Strategic Plan.
[6] EPA, PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024, available at https://www.epa.gov/system/files/documents/2021-10/pfas-roadmap_final-508.pdf.
Ben Clapp is a shareholder of Babst Calland. Mr. Clapp’s transactional work, which straddles the Firm’s Environmental and Corporate practice areas, consists of advising clients on the environmental components of complex deals, including identifying and analyzing significant environmental liability and compliance issues arising in connection with mergers and acquisitions, asset sales, project financings, and corporate restructurings, and working to resolve, manage, allocate or mitigate these environmental risks in the client’s best interest. Contact him at 202-853-3488 or bclapp@babstcalland.com.
Gina Falaschi Buchman is an associate in the Environmental Group of Babst Calland. Ms. Falaschi provides advice to clients in the energy, transportation, and technology sectors regarding compliance with state and federal environmental regulations. She has assisted companies with disclosure of regulatory violations to state and federal agencies and has counseled clients in negotiations with the U.S. Department of Justice, U.S. EPA, and California Air Resources Board. Contact her at 202-853-3483 or gbuchman@babstcalland.com.
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Reprinted with permission from the February 16, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
The American Oil & Gas Reporter
(By Lisa Bruderly)
The U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers have issued a new definition of “waters of the United States” (WOTUS), which becomes effective on March 20. The regulated community is watching this new definition of WOTUS because it will determine federal jurisdiction under the Clean Water Act.
For example, projects involving oil or natural gas development or pipeline construction require federal permitting for impacts from crossing, or otherwise disturbing, WOTUS. Generally speaking, the more impacts to such federally regulated streams and wetlands, the more complicated, expensive and lengthy the Corps Section 404 permitting.
In addition to determining the scope of federal permitting for the dredging/filling of streams and wetlands, the WOTUS definition also determines the scope of several other federal regulations, including regulations associated with National Pollutant Discharge Elimination System permitting, Spill Prevention, Control and Countermeasure plans and federal spill reporting. Although WOTUS is not defined in the CWA, the WOTUS definition appears in 11 different federal regulations.
Overview And Background
The agencies have promoted this final rule as establishing a “durable definition” that will “reduce uncertainty” in identifying WOTUS. However, this definition does not appear to provide much-needed clarity. Rather, generally speaking, the new definition codifies the approach that the agencies already have been informally utilizing to determine WOTUS, for example, relying on the definition of WOTUS from the late 1980s, as interpreted by subsequent U. S. Supreme Court decisions (such as the 2006 case, Rapanos v. United States). Challenges to the new definition are already underway.
The definition of WOTUS has been debated for nearly two decades, starting with several U. S. Supreme Court cases, which addressed the meaning of the 1980s WOTUS definition. This 1980s definition is very brief and is open to much interpretation because it does not include any defined terms. As discussed further below, rather than providing clarity, the U.S. Supreme Court decisions introduced additional uncertainty by offering more than one test for determining WOTUS.
Subsequently, Presidents Obama and Trump each introduced their own WOTUS definitions. President Barack Obama introduced the Clean Water Rule (CWR) in 2015, and President Donald Trump introduced the Navigable Waters Protection Rule (NWPR) in 2020.
Not surprisingly, the CWR entailed a broader interpretation of WOTUS, based heavily of Justice Anthony Kennedy’s significant nexus test in Rapanos, while the NWPR was based heavily on Justice Antonin Scalia’s “relatively permanent waters” test in Rapanos. Both the CWR and the NWPR were immediately and significantly challenged. Neither rule remains in effect.
Current Status
The Biden administration published its draft definition of WOTUS on Dec. 7. The final rule was published in the Federal Register on Jan. 18. The agencies’ approach to interpreting WOTUS relies heavily on both of the frequently discussed tests identified in the Rapanos decision. In Rapanos, Justice Scalia issued the plurality opinion, which held that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters” (such as adjacent wetlands).
Justice Kennedy, however, advanced a broader WOTUS interpretation in his concurring opinion, which was based on the concept of a “significant nexus” (for instance, wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical and biological integrity of other covered water”). President Biden’s new definition directly quotes and codifies these tests as regulations that may be relied upon to support a WOTUS determination.
While this new WOTUS definition may not be, conceptually, a significant change to how the agencies regulate streams and wetlands, the new definition may expand the agencies’ interpretation of a wetland that is “adjacent” to a WOTUS, through its lengthy discussion of adjacent wetlands in the final rule’s preamble.
The new definition also may expand how the agencies determine whether a water body will “significantly affect” a WOTUS, by providing a definition of “significantly affect,” which enumerates five factors to assess and five functions to consider in evaluating whether a potentially unregulated water will have a “material influence” on a traditionally navigable water.
Factors include distance from the traditionally navigable water, hydrologic factors and climatological variables. Functions include contribution of flow and retention and attenuation of runoff. Both the factors and the functions are broad and open to interpretation, which may lead to the agencies asserting jurisdiction over more water bodies. The new definition also codifies that the effect of the potentially regulated water must be evaluated alone “or in combination with similarly situated waters in the region,” which likely will broaden how the agencies evaluate the potential regulation of ephemeral and isolated water bodies.
Supreme Court And Congress
Publication of this definition, at this time, is likely a preemptive move by the agencies in advance of the Supreme Court’s impending decision in Sackett v. EPA, a case in which the court will, again, weigh in on the definition of WOTUS.
In Sackett, landowners in Idaho have had a long-standing challenge to an administrative order issued against them for allegedly filling wetlands without a permit. The Sacketts assert that Justice Kennedy’s significant nexus test in Rapanos is not the appropriate test to delineate wetlands as WOTUS, and that, under the test identified by Justice Scalia, the wetlands on their property are not WOTUS.
In 2021, the U.S. Court of Appeals for the Ninth Circuit ruled against the Sacketts’ position and held that the “significant nexus” test in the Kennedy concurrence was the controlling opinion from Rapanos. The Sacketts petitioned the U.S. Supreme Court to consider whether Rapanos should be revisited to adopt the plurality’s test for wetland jurisdiction under the CWA. However, the Supreme Court instead will consider the narrow issue of whether the Ninth Circuit “set forth the proper test for determining whether wetlands are WOTUS.”
Some have speculated that the U.S. Supreme Court’s opinion may support a narrower interpretation of WOTUS than the agencies have been implementing. For example, if the court narrows or eliminates the “significant nexus” test, the decision will create even more uncertainty in identifying WOTUS and may invalidate the Biden administration’s definition. The Sackett opinion is expected by this summer.
In a letter dated Jan. 30, 25 Republican governors asked President Biden to delay implementation of the new WOTUS definition until the U.S. Supreme Court issued the Sackett decision. The governors oppose the new definition and claim that it is, among other things, ill-timed, burdensome and overbroad. The governors assert that delaying implementation of the new definition until after the issuance of the Sackett decision will minimize the number of changes to the definition in a short time. The governors stated that multiple revisions would “impose an unnecessary strain on farmers, builders and every other impacted sector of the American economy.”
Consistent with the sentiments of the Republican governors, in early February, Republican members of Congress, led by Senator Shelley Moore Capito, R-W.V., and representatives Sam Graves, R-Mo., and David Rouzer, R-N.C., announced that they intended to use the Congressional Review Act to formally challenge the new WOTUS definition through a joint resolution of disapproval. The hearing was held on Feb 8.
The CRA provides Congress a mechanism to vote to disapprove agency rules that go beyond the authority Congress granted to federal agencies and to send the resolution to the president, who can approve or veto the resolution. If passed, the joint resolution of disapproval could invalidate the rule and prohibit an agency from issuing a rule that is in substantially the same form without further congressional authorization. President Biden is expected to veto any such joint resolution of disapproval.
Consistent with Obama’s CWR and Trump’s NWPR, the new WOTUS definition already has been challenged in the U.S. District Court of the Southern District of Texas by Texas and 18 industry groups, including the American Petroleum Institute, claiming that the new definition is “unworkable” and in conflict with the CWA (see accompanying story, page 30). These challenges may result in the stay or vacatur of the new definition. If this occurs, the agencies may, again, revert back to the current WOTUS definition.
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Republished with permission from the February issue of The American Oil & Gas Reporter.