Articles, Alerts & Perspectives

Managing and Supervising the Remote Worker: One Employment Attorney’s Tips

Legal Intelligencer

(by Janet Meub)

On March 19, 2020, in response to the worldwide spread of the novel coronavirus, Pennsylvania Governor Tom Wolf issued an Executive Order  “…Regarding the Closure of All Businesses that are not Life Sustaining,” https://www.governor.pa.gov/wp-content/uploads/2020/03/20200319-TWW-COVID-19-business-closure-order.pdf. Many Pennsylvania workers were essentially locked out of the office. Governors throughout the U.S. issued similar orders, though what workers were deemed “essential” versus “non-essential” differed from state to state. Initially, attorneys in Pennsylvania were non-essential, but Ohio attorneys, for example, were essential! Gradually, businesses reopened, but not all employees returned to the office. We learned from the COVID-19 Pandemic that, for better or for worse, remote working in many employment contexts is here to stay.

Some professions and business models have been more adept at pivoting to remote work than others. Educators have been teaching cyber school and online college and graduate school classes for years. Telemedicine, once a novel way to reach patients in rural, underserved communities without access to hospitals or medical specialists, is now available to anyone with a computer or smart phone.

Many employers have reaped many benefits from remote working. Office space per square foot is no longer a concern with many employers declining to renew long-term, commercial leases. It has been widely reported that employees working from home are putting in longer hours and can be just as productive at home as they were in the office. There is no commute. Data entry at home is the same as data entry at the office – except without the overhead.

No change comes without challenge, however. Remote employment requires employers to re-examine how we manage and supervise employees. Take, for example, the legal profession. The Rules of Professional Conduct governing the legal profession require that “lawyers within a firm make a reasonable effort to establish internal policies and procedures designed to provide reasonable assurances that lawyers in their firm conform to the Model Rules of Professional Conduct. See, 5.1 Responsibilities of Partners, Managers and Supervisory Staff. Additionally, lawyers are responsible for their non-lawyer assistants and staff. Rule 5.3 of the Model Rules states, “Non-lawyers within the firm must be given instruction and supervision concerning ethical aspects of their employment.” Rule 1.0 (c) extends the definition of “law firm” to the legal department of a corporation or other organization. How does a supervising attorney ensure that associate attorneys and support staff are abiding by the rules of professional conduct in a strictly remote or hybrid remote workplace?

In the law firm setting, onboarding of new hires should include an overview of the ethical obligations of the employee. An experienced law firm administrator will review not only the firm’s healthcare benefits, 401K options, and paid time off policy, but he will also remind new attorneys and support staff of their duty to keep client information confidential when they are working away from the office. We hear people talking on their cellphones in elevators, in stores, and on public transportation daily. While many have no qualms discussing the most intimate details of their lives or medical conditions in the grocery store aisle, lawyers owe their clients the duty of confidentiality. Commenting on Facebook midafternoon, “Hope the XYZ deal closes soon, so I don’t miss Chelsea’s cheer team trip to Disney,” is problematic. Many remote-working parents have in-home childcare assistance. Caution should be taken when discussing client information around visitors to one’s home. Keeping sensitive paperwork and conversations regarding client business and legal issues behind one’s closed home office door is common sense, but are all employees compliant?

What can employers in any industry or field do to better manage their remote work force?

Communication

Whether it is the legal profession, a start-up company, a school district or an insurance company, communication through periodic teleconferences or Zoom meetings with departmental groups and/or staff is key to reinforcement of existing policies and education as to new policies and procedures. Virtual meeting fatigue has plagued our national psyche for the past two years. But in the remote environment, Zoom and Teams meetings are a necessary tool to ensure that remote-working supervisors and their direct reports are aware of the current company policies. Uniform application of policies is the goal. Are supervisors approving overtime in a consistent fashion department-wide? Are all supervisees aware of the changes to the company records tracking system?

A company intranet is another way to reach the remote employee. The intranet can be the repository for the employer’s policies and procedures, cafeteria and qualified transportation plan reimbursement forms, fringe benefit offerings, and employee resources. The intranet can also be used to make company-wide announcements, share news, introduce new hires, list possible conflicts of interest, and schedule meetings. Better informed employees are easier to manage.

Mentoring

When working from home, the opportunity to walk down the hallway to speak with a colleague about a perplexing issue is eliminated. Where you once ran into Larry from Underwriting reheating his coffee in the office kitchen, there is only your cat at home. One of the benefits of working in a legal department, law or accounting firm or department of a national corporation as opposed to being a sole proprietor/practitioner, has always been the ability to develop an informal or formal mentoring relationship with a more experienced colleague and learn from others. Brainstorming strategy with a partner or running an idea past your preceptor is invaluable assistance and a built-in safeguard against bad practices. Whether it is best for an employer to assign mentors or encourage employees to pick their own may depend on the nature of the business itself.

Working remotely can be isolating in any business or industry. The importance of establishing mentoring relationships is crucial to the success of any company, especially where the workforce is remote. Not every student is comfortable raising his hand in class. Not every employee is comfortable asking a question in a virtual meeting, exposing inexperience or ignorance on a particular subject to all meeting participants. It is incumbent upon managers and supervisors to create opportunities for employees to check in “one-on-one” to ask questions, seek help, or clarify an assignment. Frequent communication via telephone or virtual meetings fosters an atmosphere of collegiality, collaboration and sharing.

Supervision

With many companies doing away with a physical office all together, it is important to give remote workers the experience of meeting supervisors, managers, and co-workers in person. One is more inclined to pick up the phone to ask a supervisor a question or suggest a new idea if one has had a positive, in-person interaction with that colleague. Employee retention is something we hear about on the news every day. Establishing personal connections with co-workers makes one feel valued and a part of the larger organization. In addition to “one-on-one” meetings via telephone or Zoom, employers should try to have occasional “meet-ups” such as coffee, lunch or happy hour.

“Meeting” with one’s supervisor is less stressful when it is common occurrence. Whether it is a weekly ten (10) minute phone call or a Zoom meeting, touching base at regular intervals is a positive exercise. Company policies, procedures or goals for the project at hand can be addressed and confirmed. A remote employee who is a reluctant to ask questions in a group setting may be more comfortable seeking direction in this forum. Not all supervisors are effective communicators. Being able to reinforce a certain policy or confirm expectations for a particular assignment helps the supervisor and the supervisee. No one will get too far afield from the end goal if there is an open and frequent dialogue.

In the remote work setting, the onus is really on the managers and supervisors to stay actively involved in their direct report’s work – whether it is a bid proposal, a legal brief, or the final proof of a report headed to print. Out of sight can really be out of mind when we do not see each other on a daily basis. Obviously, keeping a regular employee review schedule is just as important in the supervision of remote workers as it is in the traditional office setting. Training one’s employees is not any less critical to the success of the organization when those employees are sitting in their home offices. In fact, managers and supervisors must give the training and educating of remote workers even more attention. Remote workers miss the on-the-job learning that comes from daily exposure to seasoned veterans in their fields in the traditional office setting.

Remote work is here to stay – probably one of the few good things to come from a global pandemic. Attending meetings, conferences, court hearings, concerts, and even church services virtually is certainly not the same experience as being there in person. But, remote work has allowed for many benefits for employers and employees alike. Employers who make the effort to effectively communicate, mentor and supervise remote workers will reap the benefits and ensure continued success in their organizations.

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 jmeub@babstcalland.com or 412-394-6506.

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Reprinted with permission from the September 15, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.

Federal Court Dismisses Challenge to Oil and Gas Unitization Statute

Energy Alert

(by Austin Rogers and Robert Stonestreet)

On Wednesday, September 7, 2022, Judge John Preston Bailey of the federal District Court for the Northern District of West Virginia granted a motion to dismiss a lawsuit challenging the validity of Senate Bill 694, West Virginia’s new oil and gas unitization statute. The statute authorizes the West Virginia Oil and Gas Conservation Commission to issue orders authorizing certain oil and gas interests to be included in what are known as development units, even without the consent of the interest owner, under very narrow circumstances.

Plaintiffs, who owned mineral interests in property that could potentially be subject to the unitization procedure in SB 694, sought to prevent the statute from becoming effective by claiming that the law, among other things, allows the unconstitutional taking of private property without just compensation in violation of both the United States Constitution and the West Virginia Constitution. Plaintiffs also argued that the statute deprived them of due process in the taking of their property in violation of the Fifth and Fourteenth Amendment of the United States Constitution. The Court dismissed the challenge because (1) the plaintiffs lacked standing and (2) Governor Jim Justice, the sole defendant, has sovereign immunity under the Eleventh Amendment.

With respect to standing, the Court held that the plaintiffs failed to satisfy any of the three requirements: (1) an injury-in-fact; (2) that was traceable to the statute; and (3) that could be redressed by the Court. According to Judge Bailey, the plaintiffs did not suffer an injury in fact because their tract has not been unitized, and no operator has even applied to unitize their mineral tracts under SB 694. Second, the alleged injury is not traceable to the Governor’s conduct because the Governor has no power to enforce SB 694. Finally, plaintiffs failed to show that a favorable ruling against the Governor would provide any redress. To establish standing, a plaintiff must meet all three factors, but here plaintiffs failed to meet a single one.

The Court further held that, even if the plaintiffs had standing, sovereign immunity under the Eleventh Amendment shields the Governor from liability. In general, the Eleventh Amendment prevents states from being sued in federal court without their consent, and this includes state officials being sued in their official capacity. The exception to this general rule allows for suit against a state official when the state official has the ability to enforce the law in question. Here, the Court ruled that Governor Justice has no authority to enforce SB 694 because the law does not specifically allocate any authority to the Governor. Plaintiffs claim that the Governor has the general duty to ensure laws are faithfully executed, and by appointing members of the West Virginia Oil and Gas Conservation Commission, the Governor ensures the law is enforced. The Court pointed to numerous cases, however, which find that sovereign immunity cannot be overcome by (1) the Governor’s general duty to enforce the laws of a state; or (2) the appointment power enjoyed by a Governor.

While the Court dismissed the plaintiffs’ claims, it also granted plaintiffs leave to amend the Complaint by September 20, 2022. The plaintiffs indicated in the briefing on the Motion to Dismiss that they intended to include the West Virginia Oil and Gas Conservation Commission as a defendant. So we anticipate that a new challenge to SB 694 will be filed that names the Commission as a defendant. Plaintiffs also indicated in briefing that they do in fact own unitized mineral interests. Naming the Commission as a defendant coupled with identifying the plaintiffs’ unitized mineral interests will likely overcome the grounds for dismissal cited by the Court in its order.

Please contact either of the following attorneys to learn more: Austin Rogers at arogers@babstcalland.com or 681.265.1368 or Robert Stonestreet at rstonestreet@babstcalland.com or 681.265.1364.

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Significant WOTUS Developments Expected in 2022

PIOGA Press

(By Lisa Bruderly)

Why is the WOTUS Definition Important?

This article is an excerpt of The 2022 Babst Calland Report, which represents the legal perspective of Babst Calland’s energy attorneys addressing the most current business and regulatory issues facing the energy industry. To view the full report, go to reports.babstcalland.com/energy2022-2.

Compliance with federal permitting associated with disturbances to streams and wetlands can be a challenge for large and small pipeline projects, causing delays and increased expenses. The extent of required federal permitting is largely dependent on the definition of “waters of the United States” (WOTUS), which determines federal jurisdiction under the Clean Water Act (CWA).

The definition of WOTUS must be considered anytime there is earth disturbance that may impact a stream or wetland. For example, pipeline construction requires U.S. Army Corps of Engineers (Corps) permitting for impacts from crossing, or otherwise disturbing, federally regulated streams and wetlands. Note that the WOTUS definition is included in 11 federal regulations and affects, not only federal permitting for impacts to regulated streams and wetlands (i.e., Section 404 permitting), but also the applicability of NPDES permitting requirements, federal spill reporting and SPCC plans.

Why is the WOTUS Definition Controversial?

The definition of WOTUS has been hotly contested and frequently changed for more than a decade. Presidents Obama, Trump and Biden have all proposed their own definitions, which largely reflected their agendas for more, or less, stringent regulation. The current definition is actually the definition that was in place prior to the Obama administration. The Corps and U.S. Environmental Protection Agency (USEPA) reverted back to this definition when President Trump’s Navigable Waters Protection Rule (NWPR) was vacated by the U.S. District Court for the District of Arizona in August of 2021.

Frequent changes to the WOTUS definition create uncertainty for the energy industry in trying to identify, avoid and/or mitigate impacts to WOTUS. When the definition changes, a Section 404 permit applicant must reevaluate a project’s impacts under the new definition. This may require adjustments in the type of permit needed, the time it takes to get the permit or the level of public input.

Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the U.S. Supreme Court’s Rapanos v. United States decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding 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.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which was based on the concept of a “significant nexus,” meaning that wetlands should be considered as WOTUS “if the wet-lands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”

In 2022, the on-going debate will continue over the definition of WOTUS. Notably, both the executive and judicial branches of the federal government are expected to weigh in on this definition, without any guarantee that their interpretations will be consistent or that the resulting definition of WOTUS will be any more certain than the current definition.

What Regulatory Changes to the WOTUS Definition Are Proposed?

USEPA and the Corps have already taken the first step to revise the WOTUS definition, as promised by President Biden during his presidential campaign, by publishing a proposed definition in a December 7, 2021 rulemaking (Rule 1). While this proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, it also reflects relevant Supreme Court decisions (e.g., Rapanos) that occurred in the early 2000s.

If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations. Practically speaking, however, the impact is not expected to be significant because, in interpreting the current definition of WOTUS, the Corps has already largely been relying on its 2008 guidance, which reflects Justice Kennedy’s     significant nexus   concept.

A more expansive definition of WOTUS is expected when the Biden administration unveils its second proposed WOTUS rulemaking (Rule 2), planned for publication later this year or early next year. While the language of Rule 2 is yet unknown, as stated in the Fall 2021 Unified Agenda, Rule 2 is expected to reflect “additional stakeholder engagement and implementation considerations, scientific developments, and environmental justice values. This effort will also be informed by the experience of implementing the pre-2015 rule, the 2015 Clean Water Rule, and the 2020 Navigable Waters Protection Rule.”

Also, last month, USEPA’s Science Advisory Board announced that it would be reviewing the proposed rule in light of “important emerging environmental issues,” such as the effects of climate change, whether subsurface water should be included in the definition and the potential impact on EJ areas.

The practical effect of identifying federally-regulated waters based on concepts such as environmental justice and climate change is uncertain. The spotlight on these issues could result in a new WOTUS definition that encompasses many more waters and requires more public engagement for specific projects requiring Corps permitting.

How will the U.S. Supreme Court Weigh in on the WOTUS Definition for Wetlands?

In addition to the Biden administration’s proposed changes to the WOTUS definition, in January 2022, the U.S. Supreme Court signaled that it would weigh in on the WOTUS debate for the first time since 2006, when it agreed to hear the case of Sackett v. USEPA. 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 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 Court, instead, will consider the narrow issue of whether the Ninth Circuit “set forth the proper test for determining whether wetlands are ‘waters of the United States.’”

Many believe the 6-3 conservative majority of the Supreme Court could assert a more narrow interpretation of WOTUS, which would give more discretion to the states. Oral arguments are expected this fall.

What to Watch for in 2022?

The regulatory and judicial developments discussed above set up a potential conflict, where a new (likely more expansive) regulatory definition of WOTUS and a Supreme Court opinion that likely narrows the meaning of WOTUS occur in the same general timeframe.

Pipeline developers and others in the energy industry should watch these developments so that they understand how the WOTUS definition may change and how it may affect their permitting strategies.

Reprinted with permission from the September 2022 issue of The PIOGA Press. All rights reserved.

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Susanna Bagdasarova and Joseph Pope Join Babst Calland

Attorneys Susanna Bagdasarova and Joseph A. Pope recently joined Babst Calland.

Susanna Bagdasarova joins the Corporate and Commercial and Emerging Technologies groups as an associate. She represents business clients in connection with a broad range of general corporate and commercial law matters, including entity formation, corporate structuring, corporate governance, commercial contracts, and mergers and acquisitions, with a focus on the technology sector. Prior to joining Babst Calland, Ms. Bagdasarova was an associate with Jones Day. She graduated summa cum laude from The Pennsylvania State University, The Dickinson School of Law in 2015.

Joseph Pope joins the Corporate and Commercial Group as senior counsel. Mr. Pope’s practice focuses on corporate and transactional matters, including corporate and commercial finance transactions, with a particular focus on transactions involving commercial real estate. Prior to joining Babst Calland, he was a senior attorney with Hergenroeder Rega Ewing & Kennedy. Mr. Pope graduated cum laude from the University of Pittsburgh School of Law in 2008.

Developments in the calculation of an assessment ratio could benefit Allegheny County property owners

Smart Business

(By Sue Ostrowski featuring Peter Schnore)

Commercial property owners in Allegheny County may be able to significantly reduce their real estate tax assessments — and their property taxes — in 2023.

“Real estate taxes are nearly always the largest operating expense for an income-producing property, and an important development in the calculation of the Common Level Ratio for Allegheny County presents a golden opportunity to reduce property taxes,” says Peter Schnore, Shareholder at Babst Calland.

Smart Business spoke with Schnore about what has changed in the assessment ratio, and how commercial property owners can take steps to reduce their property taxes.

What change is impacting commercial Allegheny County property owners?

The Pennsylvania State Tax Equalization Board recently published the Common Level Ratios (CLR) to be used in evaluating the merits of Pennsylvania tax assessment appeals for the 2023 tax year.

The CLR for Allegheny County has dropped significantly since its publication by the state last year — from 81.1 percent to 63.6 percent. This means that if a property was accurately assessed for 2022, all else equal, it will be overassessed by about 27 percent for Tax Year 2023.

A recent court challenge to the 2022 CLR’s calculation, which remains ongoing at the time of publication, appears to have led to the dramatic drop in the CLR for Allegheny County.

What can property owners do to take advantage of this opportunity?

Property owners should find an attorney who is familiar with this area of the law to help them gather evidence to present a strong case for proof of the property’s fair market value.

Allegheny County property owners might also estimate what their property is worth as of Jan. 1, 2023, and multiply that by the 2023 CLR of 63.6 percent to get a sense as to what the property’s assessment could be following an appeal.

If the owner arrives at an estimate that’s less than the property’s current assessment, then a cost-benefit-risk analysis may lead to the conclusion that an appeal is well worth the effort, particularly in light of the fact that the assessment reduction (and resulting tax reduction) may be enjoyed for many years to come, as there is no regularly scheduled countywide reassessment in Allegheny County, or in nearly all of Pennsylvania’s counties.

For reference, assuming an annual tax rate of 3 percent of the assessment, a reduction of 27 percent on a property currently assessed at $10 million would result in annual tax savings of about $81,000.

Annual assessment appeals in Allegheny County must be filed between Jan. 1, 2023, and March 31, 2023, for the 2023 Tax Year. If the owner can present good, clear evidence of the property’s fair market value as of Jan. 1, 2023, a favorable ruling may be made in a matter of months through a favorable decision from the Board of Property Assessment Appeals and Review.

A number of cases require additional time and effort, however, as the taxing jurisdictions can bring their own evidence of the property’s value and put up a fight.

What is the role of an attorney in filing an appeal?

An attorney experienced in Pennsylvania assessment and property valuation law and procedure can help evaluate the merits of an assessment appeal. This may include identifying and working with the appropriate appraiser to provide an opinion of the property’s fair market value and advising the owner whether it makes sense from a financial perspective to file an appeal.

Many attorneys will agree to represent owners on a contingent fee basis, where the fee is a percentage of any taxes saved as a result of an assessment reduction.

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U.S. Environmental Protection Agency Proposes Designating Certain PFAS as Hazardous Substances Under Superfund

Environmental Alert

(By Matthew Wood and Mackenzie Moyer)

On August 26, 2022, the U.S. Environmental Protection Agency (EPA) issued a pre-publication version of its Proposed Rule which would designate two PFAS chemicals as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund (Proposed Rule). Specifically, the Proposed Rule would list 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. This is the first time EPA is making such designations by exercising its authority under CERCLA Section 102, 42 U.S.C. § 9602. Until now, CERCLA has always defined hazardous substances by reference to other statutes (e.g., the Clean Water Act and the Resource Conservation and Recovery Act).

In the Proposed Rule, EPA identified five broad categories of potentially affected entities: (1) PFOA/PFOS manufacturers (including importers and importers of articles); (2) PFOA/PFOS processors; (3) manufacturers of products containing PFOA/PFOS; (4) downstream product manufacturers and users of PFOA/PFOS products; and (5) waste management and wastewater treatment facilities. Potentially affected industries include aviation operations, chemical manufacturing, firefighting foam manufacturers, fire departments and training facilities, polymer manufacturers, and waste management and remediation services.

In the lead-up to issuance of the Proposed Rule, certain entities, such as drinking water utilities, wastewater utilities, and landfill operators, expressed concerns that they could face significant new liabilities for contamination originating from others. In its accompanying announcement, EPA said, without identifying specific industries, that it is “focused on holding responsible those who have manufactured and released significant amounts of PFOA and PFOS into the environment” and intends to use its “enforcement discretion” to “ensure fairness for minor parties who may have been inadvertently impacted by the contamination.” EPA further said that it will continue to engage with impacted communities, wastewater utilities, businesses, farmers, and other parties throughout the consideration of the Proposed Rule.

If finalized, the Proposed Rule will immediately require parties to report to federal, state, tribal, and local authorities, as applicable, releases of PFOA and/or PFOS of one pound or more within a 24-hour period. The Proposed Rule also requires federal agencies to meet the property transfer requirements enumerated in CERCLA § 120(h), 42 U.S.C. § 9620(h), when selling and transferring federally-owned real property. This includes providing notice if PFOA/PFOS (or any other hazardous substance) was stored on-site for a year or more and/or was released or disposed of on-site, in addition to warranting in the property’s deed that remediation has been completed prior to the transfer (and any further necessary remediation will be completed by the United States). Finally, the Department of Transportation will have to list and regulate PFOA and PFOS as hazardous materials under the Hazardous Materials Transportation Act.

More broadly, the federal government is currently limited in how it can respond to PFOA/PFOS contamination in the environment. That is, it may be authorized to clean up PFOA/PFOS when it finds an imminent and substantial danger to public health or welfare. If the Proposed Rule is finalized as written, however, EPA and other agencies with delegated CERCLA authority could have additional remedial options, including to: (1) respond to PFOA/PFOS releases without making an imminent and substantial danger finding; (2) require potentially responsible parties (PRPs) to clean up PFOA/PFOS contamination; and (3) recover cleanup costs from PRPs. Private parties who conduct cleanups consistent with the National Contingency Plan could also recover cleanup costs from other PRPs. Among other things, EPA believes that the Proposed Rule will increase transparency with respect to the scope of PFOA/PFOS releases and allow the government to conduct faster cleanups.

The Proposed Rule’s costs have been targeted by industry stakeholders and for further analysis by the Office of Management and Budget (OMB). Earlier this year, OMB designated the rule as “other significant,” meaning the direct costs of the rule – the reporting requirements – were not expected to exceed more than $100 million. On August 12, 2022, OMB redesignated the rule as “economically significant,” i.e., the rule is expected to impose costs of $100 million or more annually, which requires EPA to conduct a more robust cost-benefit analysis of the indirect and direct costs of the Proposed Rule and issue a regulatory impact analysis (RIA). EPA has not yet issued the RIA, but stakeholders concerned about the Proposed Rule’s costs have conducted their own analyses. For example, a study by the U.S. Chamber of Commerce found that private sector cleanup costs at Superfund sites could cost between $700-800 million a year.

Announcement of the Proposed Rule comes on the heels of EPA’s June 2022 release of interim updated drinking water health advisories for PFOA and PFOS, which are non-regulatory thresholds below which adverse health effects are not expected to occur. EPA lowered the health advisories from 70 parts per trillion (ppt) combined for PFOA and PFOS to 0.004 ppt for PFOA and 0.02 ppt for PFOS. EPA also issued final health advisories for Hexafluoropropylene Oxide (HFPO) Dimer Acid and its Ammonium Salt (GenX chemicals; 10 ppt) and Perfluorobutane Sulfonic Acid and its Potassium Salt (PFBS; 2,000 ppt).

The Proposed Rule will be published in the Federal Register within the next several weeks, which will start the 60-day public comment period. At the close of the public comment period, EPA also anticipates issuing an Advance Notice of Proposed Rulemaking seeking input on designating other PFAS chemicals as CERCLA hazardous substances.

The Proposed Rule is one of many goals EPA set for addressing all stages of the PFAS lifecycle, as further detailed in the agency’s “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024,” available here. 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 (including preparing and submitting comments on the Proposed Rule). For more information on this development 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 environmental attorneys.

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Attorney Alex Farone Leads Newsletter to Receive a 2022 ABA Award of Achievement

Attorney Alex Farone who is also the Co-Chair of the Allegheny County Bar Association’s Communications Committee of the Young Lawyer’s Division and the Editor and Chief of its “Point of Law” Newsletter led the newsletter to receive a 2022 American Bar Association Award of Achievement. This award is presented to projects submitted by local, state and national ABA YLD Affiliates for well-planned, and executed, programs that contribute significantly to the public and the betterment of the legal profession. Recognition is determined by a jury of their peers.

View the “Point of Law” Newsletter, here.

View the Spring 2022 issue, here.

Who Knows? Timeliness of Objector Appeals of Zoning Permit Approvals

Legal Intelligencer

(By Blaine Lucas and Anna Jewart)

While property rights are often viewed as inherently private, both law and society recognize that there is also a public nature to the use of land.  To this end, the Pennsylvania Municipalities Planning Code (MPC)¹ establishes requirements mandating public notice of and allowing for public participation in the land use decision-making process.  For example, where a landowner requests a variance or special exception from the zoning hearing board, or a conditional use from the governing body, those entities must publish notice of and hold a public hearing on the application.  At that hearing, impacted members of the public may comment on and/or object to the application.  However, land use decisions for what are called “uses by right” are not made by the governing body or the zoning hearing board, but instead are addressed at an administrative level by the municipal zoning officer.  Upon receipt of an application for a use by right, a zoning officer is not required to provide any public notice, public hearing, or public comment period.  As a result, members of the public may not learn of a zoning officer’s approval until the landowner actually commences construction, which could be long after any permit was issued.

The zoning hearing board has jurisdiction over appeals from the determinations of a zoning officer.  53 P.S. §10909.1(3).  An appeal from a determination adverse to the applicant must be filed with the board within 30 days after notice of the determination is issued to the applicant.  53 P.S. §10914.1(b).  In this situation, the appeals deadline is easy to calculate.  However, when an application is granted, individuals who may wish to oppose the application may not have any idea such a decision occurred.  Under Section 914.1(a) of the MPC, no person seeking to reverse or limit such an approval is allowed to file any proceeding before a zoning hearing board later than thirty days after an application for development has been approved, “unless such person alleges and proves that he had no notice, knowledge, or reason to believe that such approval had been given.”  53 P.S. §10914.1(a).  Once a potential objector has either actual or constructive notice of the approval, the thirty-day clock will begin to run.  In other words, rather than formal notice, the event which begins the appeal period for a party objecting to approval of a zoning permit is either actual notice of permit issuance or the existence of circumstances which would give a person reason to believe that approval had occurred.  Pennsylvania Courts have consistently ruled that this is an objective standard that can be ascertained by the presence of construction visible to the public.

The Commonwealth Court recently considered exactly what type of activities are sufficient to constitute constructive knowledge of issuance of a permit.  In Quakertown Holding Corporation v. Quakertown Borough Zoning Hearing Board, No. 542 C.D. 2021 (July 18, 2022), a developer (Developer) was granted building, zoning, and electrical permits (Permits) required to construct a billboard on property that previously was used solely as a retail drug store (Property).  The approvals were granted in January 2017.  In August 2017, after engaging in preconstruction tasks such as marking out the foundation and surveying the area, the Developer commenced excavation on the Property for construction of the billboard.  During August and September the Developer laid rebar and poured multiple levels of concrete foundation.  In October, it began installing electrical conduit, erected an approximately 10-foot-tall cylindrical structure, and installed steel platforms on the foundation.  Throughout September and October, construction materials and vehicles were continually present on the Property, and all activities and structures were visible to the public.  On November 15, 2017, the owner of an adjacent shopping complex (Objector) filed an appeal with the Borough Zoning Hearing Board which, following multiple public hearings between December 2017 and August 2018, determined the Objector had constructive notice of the issuance of the Permits earlier than thirty days prior to its appeal, and therefore the appeal was untimely.  Following appeal by the Objector, the trial court affirmed, and the Objector appealed to the Commonwealth Court.

Before the Commonwealth Court, the Objector raised three issues, the first of which alleged that the trial court erred by finding its appeal to be untimely because substantial evidence did not exist to support the conclusion that the Objector had constructive notice of issuance of the Permits.  In deciding this issue, the Court noted that the timeliness of an appeal and compliance with the statutory provisions which grant the right of appeal go to the jurisdiction of the court to hear and decide the appeal.  Courts therefore have no power to extend the period for taking appeals, absent fraud or a breakdown in the court’s operation through a default of its officers.  The Court considered the application of Section 914.1(a) of the MPC, noting that while either actual or constructive notice suffices to convey the required notice, knowledge, or reason to believe that an approval has been granted, actual notice is not a requirement of the MPC.  Ultimately, the Court found no error in the trial court’s conclusion that the Objectors had constructive notice of issuance of the Permits by October 11, 2017, at the latest, and that the laying of rebar, pouring of three layers of concrete, construction of a 10-foot base and attachment of steel platforms to the foundation would have given a reasonable person cause to believe that permit approvals of some sort had been granted.  Because Objector filed its appeal more than 30 days later, the appeal was untimely.  In light of its disposition of the timeliness issue, the Court did not address the other issues raised by the Objector.

Although the opinion is unreported, Quakertown Holding serves as a reminder to both applicants and potential objectors on how to protect their respective interests.  Potential objectors should note that while the MPC provides some relief from the requirement that appeals be filed within thirty days of a zoning officer’s determination, that relief is not unlimited.  Immediately upon observing any activity on the subject property, a potential objector should contact the municipal zoning officer and inquire as what permits, if any, have been granted.  If the objector questions whether the zoning officer’s determination was correct, he or she should immediately file an appeal with the zoning hearing board.

Conversely, there are several steps applicants can take to avoid late in the game appeals, which, even if ultimately denied as untimely, can result in undue delay and expense.  While, as the Court noted in Quakertown Holding, actual notice is not required by the MPC, an applicant can give nearby property owners actual notice of its receipt of a zoning or other permit approval, thereby triggering the running of the appeals deadline.  If properly executed, providing direct notice can protect an applicant from the risk of commencing construction only to have the relevant permits overturned on appeal.  If actual notice directly to potential objectors is not advisable or feasible, an applicant might also consider whether it should provide a form of more general notice to the public that approval has been received.  For example, placing signage on the property, or publishing a legal advertisement, may aid in establishing an earlier date of constructive notice should an untimely appeal be filed.

Blaine A. Lucas is a Shareholder in the Public Sector Services and Energy and Natural Resources groups of the Pittsburgh law firm of Babst, Calland, Clements & Zomnir.  Anna S. Jewart is an associate in Babst Calland’s Public Sector Services group and focuses her practice on zoning, subdivision, land development, and general municipal matters.

¹ 53 P.S. §§10101 et. seq.

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Reprinted with permission from the August 25, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.

PHMSA Publishes Final Rule Introducing New Requirements for Gas Transmission Pipeline Operators

Pipeline Safety Alert

(by Keith Coyle, Chris Hoidal and Brianne Kurdock)

On August 24, 2022, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a new final rule for onshore gas transmission pipelines (the Rule).  The Rule marks the completion of a three-phase rulemaking process, commonly referred to as the Gas Mega Rule, that began more than a decade ago.  While this part of the Gas Mega Rule is commonly known as the “Repair Rule,” there are numerous other safety provisions that are included in the new regulation that should not be overlooked. The Rule amends or adds various provisions in 49 C.F.R. Part 192 and will become effective on May 24, 2023.

In the Rule, PHMSA added, clarified, or modified the following sections of the natural gas pipeline safety regulations:

• definitions in section 192.3;
• the management of change process;
• corrosion control requirements;
• inspections of pipelines following extreme weather events;
• integrity management provisions;
• integrity management assessment requirements;
• revised repair criteria in high-consequence areas; and
• new repair criteria for non-high consequence areas.

Definitions and Standards Incorporated by Reference

PHMSA added new definitions referenced in the new regulations,  including close interval survey, distribution center, dry gas or dry natural gas, hard spot, in-line inspection (ILI), in-line inspection tool or instrumented internal inspection device, and wrinkle bend. Furthermore, the definition of transmission pipelines was revised to include a “connected series” of pipelines to clarify that transmission pipeline can be downstream of other transmission pipelines, and to allow operators to voluntarily designate their pipelines as transmission lines.

The rule also incorporates by reference two NACE standards, NACE SP0204-2008 and NACE SP0206-2006, for stress corrosion cracking direct assessments and internal corrosion direct assessments. These new IBR standards support the new corrosion amendments to the Rule.

Management of Change

PHMSA extended management of change requirements to onshore gas transmission pipelines not currently subject to integrity management requirements.  The Agency also amended the existing management of change process in § 192.911(k) to codify specific attributes listed in ASME/ANSI B31.8S, section 11.

Operators of all onshore gas transmission pipelines must now evaluate and mitigate any significant changes that pose a risk to safety or the environment through a management of change process.  The process must include the reasons for the change, the authority for approving changes, an analysis of the implications, the acquisition of required work permits, and evidence documenting communication of the change to affected parties, time limitations, and the qualification of staff.  Although the Gas Pipeline Advisory Committee had recommended a two-year phased in compliance period, the Agency mandated an 18-month time frame to incorporate the management of change process for pipelines in non-HCAs.  For pipeline segments not covered by Subpart O, operators must implement this management of change process by February 26, 2024.  Operators may seek a technically justified extension of this deadline of up to one year through the section 192.18 notification process.  PHMSA specifically noted that these changes do not apply retroactively and do not cover gathering or distribution pipelines.

Corrosion Control and Related Construction Requirements

The Rule amends numerous corrosion control requirements for onshore gas transmission pipelines, addressing the monitoring and remediation, if needed, of both external and internal corrosion.  The Agency issued new requirements to conduct pipe coating assessments soon after construction, determine protective coating strength, survey for interference currents, and monitor gas streams for internal corrosivity. In conjunction with the enhanced corrosion monitoring for internal and external corrosion, PHMSA established new corrosion control remediation criteria and timelines to correct deficiencies found. PHMSA acknowledged that these new construction and corrosion control requirements do not apply to gathering or distribution pipelines.

Pipe Coating

PHMSA added new construction requirements concerning the installation of pipe in a ditch (section 192.319).  If a construction project involves 1,000 feet[1] or more of continuous backfill length along the pipeline, the operator must promptly (but not later than six months after placing the pipeline in service) perform an above-ground indirect assessment to identify any coating damage using direct current voltage gradient, alternating current voltage gradient, or other technology.  If an operator chooses to use alternative technology, it must notify PHMSA at least 90 days in advance and seek a letter of no objection through the process described in section 192.18.  An operator must repair any severe coating damage within six months after the pipeline is put in service (or as soon as practicable after obtaining the necessary permits).  The operator must retain records documenting the coating assessment findings and repairs for the life of the pipe.

PHMSA made similar modifications to section 192.461 requiring an onshore gas transmission operator to conduct an above-ground indirect assessment if the backfill length of a repair or a replacement project is 1,000 feet or more.  The operator would need to conduct the assessment promptly but no later than six months after the backfill.  The operator may also notify PHMSA of its intent to use alternative technology by following the process in section 192.18.  The operator must develop a remedial action plan within six months of completing the assessment and repair any severe coating damage within six months of the assessment or as soon as practical upon obtaining the necessary permits.  The operator must retain records of the assessment findings and remedial actions for the life of the pipe.

Interference Surveys and Remediation

PHMSA amended section 192.473 to require interference surveys for pipelines subject to stray currents.  Currently, an operator with a pipeline subject to stray currents must have a program to minimize the detrimental effect of these currents.  An operator with such a pipeline will now have to conduct an interference survey to quantitatively determine the presence and level of interference currents.  PHMSA provides in the Rule that an interference survey must be conducted when the monitoring indicates a significant increase in stray current or when new potential stray current sources are introduced.  An operator must analyze the results of the survey to determine the cause of the interference and develop a remedial action plan to correct any deficiency if the current is greater than or equal to 100 amps per meter squared or if it impedes the safe operation of the pipeline or if it may cause a condition that would adversely impact the environment or the public.  The operator must complete the remediation promptly but no later than the earlier of (1) 15 months of completing the survey or (2) as soon as practicable but not to exceed six months after obtaining the necessary permits.

Cathodic Protection Remediation

Although operators already have a general obligation under § 192.465(d) to promptly remediate any corrosion control deficiencies discovered during cathodic protection (CP) monitoring, PHMSA has now added a requirement for onshore gas transmission operators to develop a remedial action plan for both localized/non-systemic and widespread/systemic corrosion control deficiencies found by the CP monitoring within six months of discovery.  The operator must complete the remedial action promptly but no later than the earlier of (1) the next inspection or test interval; (2) within one year, not to exceed 15 months, or (3) as soon as practicable, not to exceed six months after obtaining any necessary permits.

For areas where an annual test station reading indicates inadequate cathodic protection below the required levels in Appendix D, operators must investigate the geographical extent and causes of the low CP levels to determine whether there is systemic/widespread or non-systemic/localized areas of deficient CP.  Operators must conduct close interval surveys (CIS) to delineate the pipe segments requiring CP remediation.  The CIS must be conducted with the protective current interrupted unless it is impractical to do so for technical or safety reasons.  An operator must promptly remediate pipe segments with insufficient cathodic protection, and, following the remediation, confirm the restoration of sufficient cathodic protection.

Internal Corrosion Monitoring and Mitigation

While section 192.477 includes requirements to monitor for internal corrosion if corrosive gas is transported, PHMSA is now adding requirements to continually monitor the gas stream for corrosive constituents.  The Rule requires operators to develop a monitoring and mitigation plan for pipelines that transport gas with corrosive constituents.  The Rule includes specific content requirements for the plan including an obligation to evaluate the gas monitoring data and review and adjust the plan, if necessary, once each calendar year (not to exceed 15 months).

Remedial Measures

Finally, the Rule amends § 192.485, requiring operators to determine whether remedial measures for general or localized corrosion pitting are necessary by calculating remaining pipe wall thickness using the analysis of predicted failure pressure requirements in § 192.712.  While the addition of §192.712 was part of the first phase of the Mega Rule, which focused on MAOP Reconfirmation, this revision to § 192.485 clarifies that determination of remaining strength of pipe in corroded areas must be completed and documented in accordance with § 192.712 for all transmission pipelines, not just those lines that are reconfirming their MAOP.

PHMSA expanded section 192.712 to include dents and other mechanical damage.  The expanded analytical requirements will include evaluation of dent and other mechanical damage that could cause a stress riser, exceed the critical strain threshold, or otherwise degrade the integrity of the pipeline.

Inspections and Remedial Action Following Extreme Weather Events

Similar to the requirements for hazardous liquid pipeline operators, PHMSA has now expanded continuing surveillance requirements for an operator to perform an initial inspection following extreme weather events. Numerous examples of extreme weather events are listed and include geohazards such as earthquakes, river channel migration, and landslides. The operator must conduct the inspection 72 hours after it reasonably determines that the affected area can be safely accessed by personnel and equipment and the equipment and personnel are available.  The Rule also requires operators to take prompt remedial action discovered during the inspection.

Integrity Management

A significant portion of the Rule focuses on the integrity management (IM) program requirements in 49 C.F.R. 192 Subpart O.  The Rule prescribes new or amended requirements for identifying and analyzing threats, performing direct assessments, repairing pipelines, and implementing preventive and mitigative measures (P&MM).

Threat Identification and Data Integration

PHMSA has added certain pipeline attributes from ASME/ANSI B31.8S directly into the pipeline safety regulations.  Current IM regulations require operators to conduct a risk assessment using the identified threats to determine what additional P&MM are needed to ensure the safe operation of the pipeline.  Operators must begin to integrate all pertinent data elements starting on May 24, 2023, with all available attributes integrated by February 26, 2024. An operator may request an extension of up to one year by submitting a notification to PHMSA at least 90 days before February 26, 2024, in accordance with § 192.18.

Internal Corrosion Direct Assessment and Stress Corrosion Cracking Direct Assessment

The rule addresses direct assessments by incorporating NACE SP0204-2008 and NACE SP0206-2006 by reference.  These standards concern stress corrosion cracking direct assessment and internal corrosion direct assessment, respectively.

Repair Criteria

Finally, the Rule provides a robust overhaul of current repair criteria regulations.  The Rule applies integrity-related repair criteria to pipelines not subject to the integrity management requirements in Subpart O.  Repair criteria for immediate conditions, which include certain crack, dent, and corrosion anomalies, are identical to those in Subpart O (as revised by the final rule and summarized in the chart below).  Operators of non-Subpart O pipelines have two years to repair “one-year conditions,” which vary slightly from those in Subpart O, and must monitor certain conditions.  The Rule requires operators to use these repair criteria when making permanent repairs on transmission lines located outside of HCAs.

The chart below provides a high-level summary the new requirements:

Other Considerations

In accordance with 49 C.F.R. § 190.335, any interested party may seek reconsideration of the rule by filing a petition with PHMSA by September 23, 2022.  Petitions for judicial review must be filed no later than 89 days after the regulation is prescribed.

For a more detailed assessment or to discuss the implications of the final rule, please contact Keith Coyle at 202.853.3460 or KCoyle@babstcalland.com, Chris Hoidal at 202-853-3455 or CHoidal@babstcalland.com, or Brianne Kurdock at 202.853.3462 or BKurdock@babstcalland.com.

[1] PHMSA stated in the preamble that §§ 192.319 and 192.461 apply to segments “greater than 1,000 feet in length” but used “1,000 feet or more” in the rule text.

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Attorney Casey Coyle Joins Babst Calland

Attorney Casey Alan Coyle recently joined Babst Calland as a shareholder and member of its Litigation Group. Mr. Coyle will be based in Harrisburg, Pa.

Mr. Coyle concentrates his practice on appellate law and complex commercial litigation.  He frequently represents clients in state and federal appellate courts, with a particular emphasis on appeals before the Pennsylvania Supreme Court.  Over his career, he has represented either a party or an amicus curiae in 15 appeals before the Pennsylvania Supreme Court.

Mr. Coyle has also successfully petitioned the Pennsylvania Supreme Court to grant review of an appeal—commonly known as “allocatur”—on six different occasions.  In addition, he has presented oral argument before the U.S. Court of Appeals for the Sixth Circuit, Pennsylvania Supreme Court, Pennsylvania Commonwealth Court, and Pennsylvania Superior Court.  Before entering private practice, Mr. Coyle served for over two years as a law clerk for the Honorable Thomas G. Saylor, Chief Justice Emeritus of the Pennsylvania Supreme Court.

“We’re very pleased to have Casey as part our Litigation team. He is a highly accomplished litigator representing clients in matters pending before state and federal appellate courts,” said Donald Bluedorn, Babst Calland’s Managing Shareholder. “Casey’s proven experience and track record in appeals before the Pennsylvania Supreme Court will be an invaluable contribution to our Firm, and most importantly for our clients.”

Mr. Coyle also regularly represents businesses in disputes pending before state and federal trial courts.  His practice has focused on cases involving theft of trade secrets, non-competition/non-solicitation agreements, shareholder litigation, emergency injunctions, breach of contract, and breach of fiduciary duties.  In addition, he has represented clients in matters brought before the Pennsylvania Commonwealth Court as part of its original jurisdiction.

“I look forward to serving the expanding needs of my clients and working with a well-respected legal team who shares my values, experience, and philosophy, and a proactive approach to business-focused problem-solving and client service,” said Coyle.

Prior to joining Babst Calland, Mr. Coyle was a partner at Eckert Seamans Cherin & Mellott, LLC. He is a 2009 graduate of Temple University Beasley School of Law.

The Inflation Reduction Act Reinstates Superfund Petroleum Excise Tax

Environmental Alert

(By Jean Mosites and Amanda Brosy)

On August 16th, President Joe Biden signed the Inflation Reduction Act of 2022 (the Act) into law. The Act, as part of a larger budget reconciliation package, provides roughly $370 billion in investments in energy and climate reform geared towards lowering greenhouse gas emissions by 40 percent, based on 2005 levels, by 2030.

Among other things, the Act resurrects a long-expired Hazardous Substance Superfund Trust Fund (Superfund) excise tax on oil and petroleum products, effective as of January 1, 2023. In 1980, Congress had established the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA is commonly referred to as “Superfund”. It allows EPA to clean up contaminated sites. It also requires the parties responsible for the contamination to either perform cleanups or reimburse the government for EPA-led cleanup work. When there is no viable responsible party, Superfund gives EPA the funds and authority to clean up contaminated sites.

The purpose of the petroleum excise tax is to replenish the Superfund, which provides the federal government with resources to respond to environmental threats related to hazardous substances not otherwise addressed by responsible parties. The petroleum excise tax applies to crude oil received at a U.S. refinery (which tax must be paid by the operator of the refinery) and to petroleum products entering the U.S. for consumption, use, or warehousing (which tax must be paid by the person importing the product into the U.S. for any of those purposes). In addition, if any domestic crude oil is used in or exported from the U.S., and before such use or exportation no tax was imposed on such crude oil at the refinery (as described above), then a separate tax is imposed. That tax would be paid by the person using or exporting the crude oil, as the case may be.

The tax rate is 16.4 cents per barrel on crude oil and petroleum-product imports, indexed to the inflation rate. This is an increase from the rate of 9.7 cents that applied the last time this petroleum excise tax was effective over 25 years ago. It is estimated that the tax will raise $11.7 billion in revenue over 10 years, until the tax is set to expire on December 31, 2032.

The reinstatement of the Superfund excise tax on oil and petroleum products marks the resumption of two of the three original Superfund taxes that were allowed to expire in 1995 (the third was an environmental income tax). As previously reported by Babst Calland, a separate Superfund excise tax on chemical feedstocks was reinstated with the adoption of the federal Infrastructure Bill last November. The reinstatement of these Superfund taxes, with attendant revisions and new provisions, has raised and will raise a multitude of tax implications, questions and uncertainties that are beyond the scope of this alert. The IRS has issued and will continue to issue guidance regarding the applicability of the tax to taxable substances.

Babst Calland’s environmental attorneys continue to track Superfund developments and their implications for industry as developments occur in the coming months. If you have questions or need additional information, please contact Jean Mosites at (412) 394-6468 or jmosites@babstcalland.com or Amanda Brosy at (202) 853-3465 or abrosy@babstcalland.com.

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Three Babst Calland Attorneys Named as 2023 Best Lawyers® “Lawyers of the Year”, 31 Selected for Inclusion in The Best Lawyers in America®, and 11 Named to Best Lawyers® “Ones to Watch”

Babst Calland is pleased to announce that three lawyers were selected as 2023 Best Lawyers “Lawyer of the Year” in Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2023 Best Lawyers “Lawyer of the Year” include:

Blaine A. Lucas, Litigation – Land Use and Zoning “Lawyer of the Year” in Pittsburgh, Pa.

Timothy M. Miller, Oil and Gas Law “Lawyer of the Year” in Charleston, W. Va.

Mychal Sommer Schulz, Litigation – ERISA “Lawyer of the Year” in Charleston, W. Va.

In addition, 31 Babst Calland lawyers were selected for inclusion in the 2023 edition of The Best Lawyers in America (by BL Rankings), the most respected peer-review publication in the legal profession:

• Chester R. Babst – Environmental Law, Litigation – Environmental
• Donald C. Bluedorn II – Environmental Law, Water Law, Litigation – Environmental
• Dean A. Calland – Environmental Law
• Matthew S. Casto – Commercial Litigation
• Frank J. Clements – Corporate Law
• Kathy K. Condo – Commercial Litigation
• James Curry – Energy Law and Oil and Gas Law
• Julie R. Domike – Environmental Law, Litigation – Environmental
• Kevin K. Douglass – Natural Resources Law
• Christian A. Farmakis – Corporate Law
• Leonard Fornella – Admiralty and Maritime Law
• Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Water Law, Litigation – Environmental
• Steven M. Green – Energy Law
• Lindsay P. Howard – Environmental Law, Litigation – Environmental
• Blaine A. Lucas – Energy Law, Land Use and Zoning Law, Municipal Law, Litigation – Land Use and Zoning
• John A. McCreary – Labor Law – Management
• Janet L. McQuaid – Environmental Law
• James D. Miller – Construction Law and Litigation – Construction
• Timothy M. Miller – Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental
• Jean M. Mosites – Environmental Law
• Christopher B. Power – Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory
  Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal
• Joseph K. Reinhart – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental
• Bruce F. Rudoy – Mergers and Acquisitions Law, Corporate Law
• Charles F.W. Saffer – Real Estate Law
• Mychal Sommer Schulz – Litigation – ERISA
• Mark D. Shepard – Commercial Litigation, Bet-the-Company Litigation, Litigation – Environmental
• Steven B. Silverman – Information Technology Law, Commercial Litigation
• Laura Stone – Corporate Law
• Robert M. Stonestreet – Environmental Law, Energy Law, Commercial Litigation
• David E. White – Construction Law, Litigation – Construction
• Michael H. Winek – Environmental Law

11 Babst Calland lawyers were also named to the 2023 Best Lawyers: Ones to Watch in America list which recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States:

• Mary H. Binker – Corporate Law and Real Estate Law
• Katrina N. Bowers – Energy Law and Environmental Law
• Carla M. Castello – Commercial Litigation, Litigation – Labor and Employment and Mass Tort Litigation / Class Actions – Defendants
• Nicholas M. Faas – Administrative / Regulatory Law and Government Relations Practice
• Marc J. Felezzola – Commercial Litigation and Litigation – Construction
• Alyssa Golfieri – Land Use and Zoning Law and Municipal Law
• Sean R. Keegan – Commercial Litigation and Litigation – Labor and Employment
• Jennifer L. Malik – Land Use and Zoning Law and Municipal Law
• James D. Mazzocco – Litigation – Environmental and Transportation Law
• Joshua S. Snyder – Commercial Litigation and Energy Law
• Benjamin R. Wright – Commercial Litigation and Construction Law

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

Not Just Another WARNing About the Economy

Legal Intelligencer

(By Stephen A. Antonelli)

Is the country heading toward a recession?  Are we already there?  If so, for how long will it last?  Or, will we narrowly avoid a recession and instead see a mere economic slowdown as we (hopefully) put the global pandemic in our collective rearview mirror?

The answers to these questions are unclear.  Inflation and interest rates are rising, yet the economy added 528,000 new jobs in July and unemployment is at a pre-pandemic level of 3.5 percent.  Moreover, by the time you read this, the Inflation Reduction Act may have been signed into law.  As a result, the opinions of actual economists and other experts in the field differ as to the likelihood, timing, and duration of a recession.  I will therefore certainly not attempt to offer a prediction of my own.  I will, however, note that employers of all sizes must be mindful of the law if and when they are forced to make the difficult decision of reducing their workforce.

The Worker Adjustment and Retraining Notification (WARN) Act is one such law.  The WARN Act was enacted in 1988 in an effort to ensure advance notice to employees in cases of qualified plant closings and mass layoffs, thereby providing employees with sufficient time to prepare for the transition into a new job.  It requires larger private employers to give advanced notice of plant closings or mass layoffs to their employees (or their unions, if applicable) as well as to state agencies that assist impacted workers and the local government of the impacted area.  Specifically, the Act requires employers with 100 or more full-time employees (or 100 or more full- and part-time employees who work a combined 4,000 hours per week) to provide written notice 60 days in advance of a facility or plant closure or a mass layoff.

A facility or plant closure occurs if an employer discontinues a facility, plant, or operating unit, whether permanently or temporarily, in a manner that affects at least 50 employees at a single site of employment, A mass layoff, on the other hand, occurs if a reduction in force is not the result of a facility or plant closure, but is instead the result of an employer laying off: 500 or more full-time employees at a single site of employment; or laying off 50-499 full-time employees if the number of layoffs equals 33 percent of the employer’s active workforce at the single site of employment.  The employer’s “single site of employment” is defined loosely, and may consist of a single building, an office or group of offices within a building, or a group of buildings on a campus or in an industrial park.  For workers whose primary duties require travel, or for those who are stationed away from headquarters, the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for purposes of the Act.  Although not specifically addressed by the applicable regulations, this same rationale will likely apply to employees who have transitioned to a remote work arrangement during the past two and a half years.

The WARN Act also applies if a closure or mass layoff occurs as the result of a sale of all or part of a business, even in the event of an asset only sale.  The party responsible for providing the notice is determined by the timing of the closure or mass layoff relative to the sale.  The seller is responsible for the notice if the closure or mass layoff occurs before the sale becomes effective.  The buyer, on the other hand, is responsible for providing the notice if the closure or mass layoff occurs after the sale becomes effective.

When providing employees with a WARN Act notice, employers should be sure to prepare the notice in a manner that will be easily understood by its intended audience.  The notice must indicate: the anticipated date of the job loss; whether the job loss is anticipated to be permanent; whether it will impact an entire work location; and whether the impacted employee has the ability to take the job of a less senior employee who will not be impacted.  The notice must also must provide impacted employees with contact information of a company representative who will be able to provide additional information about the closure or mass layoff.  The notice must be in writing and may be delivered using any reasonable delivery method designed to ensure delivery at least 60 days before the separation from employment.  Employers may not, however, simply include the notice in each employee’s paycheck or pay envelope.

For a unionized workforce, rather than providing the notice to individual employees, employers must notify the bargaining representatives of impacted employees.  In addition to the information required by a notice to individuals, when notifying a union, employers must also provide a list of the names and job titles of each impacted employee.  The Act does not supersede the terms of a collective bargaining agreement that provide for additional notice or additional rights in the event of closure or mass layoff.  Furthermore, employers should be aware of the fact that a number of states have enacted their own “mini-WARN” laws that provide additional protections to employees.  Pennsylvania does not have a mini-WARN law, but neighboring states such as Maryland, New York, New Jersey, and Ohio have enacted such laws.

In the event that an employer is not able to determine the exact date the closure or mass layoff will occur, WARN regulations allow employers to identify in their written notice a two-week window during which the closure or mass layoff will occur.  In some instances, an employer may need to extend the date of a closure or mass layoff.  If such a need arises, the employer must provide a new notice if the date of the closure or mass layoff extends for 60 days or more beyond the 14-day period announced in the original notice.  If the extended closure or layoff date is postponed for less than 60 days, less formal notice will suffice.

Upon receipt of a WARN notice, a state agency or Rapid Response Dislocated Worker Unit will coordinate with the employer to provide on-site information to the impacted employees about employment and retraining services that are designed to help them find new jobs.  These services often include: general information about the labor market and recent hiring trends; job search and placement assistance; or training, whether entrepreneurial, on-the-job, or in the classroom.

In some instances, employers are unable to provide 60 days’ notice in advance of a plant closing or mass layoff due to unforeseen circumstances such as a natural disaster or business circumstances beyond the company’s control (such as a global pandemic, arguably).  In those instances, employers may qualify for an exception to the 60-day notice rule.  In the event of a plant closure, if a company is actively seeking capital or business and reasonably believes that compliance with the 60-day rule would preclude its ability to obtain such capital or business, and the new capital or business would allow the employer to avoid or reasonably postpone a shutdown, the company may be excused from the 60-day rule.  With each of these three situations, employers must provide as much notice as possible and they must state in their written notice the reason why it failed to provide the requisite 60 days’ notice.

Employers who violate the WARN Act may be ordered to pay impacted workers’ wages and benefits for the period of the violation, for up to 60 days and a civil money penalty not to exceed $500 for each day of the violation.  Violating employers may also be ordered to pay the attorneys’ fees and costs of employees who successfully sue the employer.  As a result, if the economic outlook calls for your organization to make the difficult decision of a closure or mass layoff, be sure to consult with counsel in advance of announcing the decision.

Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers in all phases of labor and employment law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling. Contact him at santonelli@babstcalland.com or 412-394-5668.

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Reprinted with permission from the August 18, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.

The Inflation Reduction Act Bolsters Efforts at the Federal Level to Tackle Climate Change and Promote Clean Energy Solutions

Firm Alert

(By Jim Curry, Sean McGovern, Gina Falaschi and Varun Shekhar)

On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (the Act) into law, calling it “one of the most significant laws in our history.” The United States House of Representatives passed the Act on August 12 along party lines. This vote followed the Senate’s August 7 passage of the bill, also along party lines, with Vice President Kamala Harris casting the tiebreaking vote. In addition to $369 billion in energy security and climate investments, the bill also includes $64 billion to expand Affordable Care Act subsidies for two years and various tax measures, including a corporate alternative minimum tax of 15% and $80 billion to increase enforcement efforts at the Internal Revenue Service (IRS).

The vast majority of the $369 billion allocated for energy security and climate investments in the Act comes in the form of tax credits. The biggest portion of these is for clean energy tax credits ($161 billion). Some of these are modifications or extensions through 2024 of existing tax credits, such as electricity production from renewable resources. In particular, the current Section 45 production tax credit would be enhanced for renewable electricity production projects using domestic steel and other components. The Act also includes significant tax credits for carbon capture and sequestration (CCS) and clean energy production. The Act extends and increases the tax credit under Section 45Q of the IRS code for CCS, creates a new tax credit under Section 45V for the production of clean hydrogen (up to $0.60 per kg, depending on the GHG emissions associated with production), and creates a new tax credit under Section 45U for production of zero-emission nuclear power. The Act also establishes a new technology-neutral tax credit under Section 45Y for facilities producing electricity with net-zero-GHG emissions, placed in service after December 2024.

The Act further allocates substantial funding for clean energy manufacturing tax credits. This includes the manufacture of both clean energy equipment (e.g., the production of domestic manufacture of solar panels, wind turbines, batteries, and critical mineral processing equipment) as well as for the construction of clean technology manufacturing facilities.

Regarding air and greenhouse gas emissions, the Act appropriates funding to support EPA regulatory programs targeting hydrofluorocarbons (HFCs), as well as reductions of other greenhouse gases (GHGs) under Section 115 of the Clean Air Act (CAA) (relating to international air pollution). The Act would also create the “Greenhouse Gas Reduction Fund” to provide grants to states, local agencies, and tribal authorities for deployment of zero-emission technologies. In addition, the Act appropriates funding for numerous grant programs administered by EPA, including, among others, air toxics fenceline air monitoring, and expanding criteria pollutant monitoring networks. These programs could eventually have significant impacts on the stringency of regulation under the CAA potentially through revisions to National Ambient Air Quality Standards or National Emission Standards for Hazardous Air Pollutants through residual risk and technology reviews.

The Act further appropriates nearly $1 billion to EPA for facilitating regulatory programs associated with methane emissions monitoring and reducing methane emissions from petroleum and natural gas systems. In addition, the Act establishes a fee on excess waste methane emissions over a defined threshold based on the amount of natural gas or oil set to sail from a facility. The fee is assessed at a $900 per ton rate, applicable to many industries, including oil and gas production, gas processing and compression, underground natural gas storage, and onshore gas gathering and transmission. This fee increases by $300 in subsequent years.

Clean vehicle funding includes $1 billion to the EPA to award grants and rebates for medium and heavy-duty vehicles with zero-emission vehicles and $60 million in funding to EPA for grants, rebates, and loans to reduce diesel emissions in low-income and disadvantaged communities. The Act also provides $2 billion to retool existing auto manufacturing facilities to manufacture clean vehicles.

A focus area of the Act is environmental justice. The Act appropriates nearly $3 billion in block grants to community-based nonprofit organizations in disadvantaged communities for various climate-based projects, including but not limited to investing in low- and zero-emission technologies, community-based air pollution monitoring, and mitigating risks from climate change. In addition, the Act makes further tax credits available for qualifying electricity generating projects placed in environmental justice communities. The Act’s expansion of criteria pollutant monitoring networks is also designed to focus on low income and disadvantaged communities.

The Act also reinstates a Superfund tax on certain crude oil received at U.S. refineries and imported petroleum products, amending the tax from 9.7% to 16.4%, and indexing the tax for inflation.

The Act is the latest in a series of developments at the federal level that both enhance and curtail climate change efforts. The passage of the Act comes in the wake of the Supreme Court’s June 30th ruling in West Virginia v. EPA, which held that the EPA did not have authority to impose a regulatory scheme that requires shifting power generation from coal to natural gas and renewable or other zero-emitting sources. The Court’s ruling held that Congress would have needed to grant this authority specifically to an agency. Here, Congress is taking a more direct approach at climate action and renewables at the legislative level with tax credits, direct funding, and other incentives for clean energy.

The Act also joins the SEC’s March 2022 proposed rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which includes a new subpart to Regulation S-K of the SEC’s regulations (17 C.F.R. Part 229) that would require a registrant to disclose climate-related risk information in its registration statements and periodic reports. 87 Fed. Reg. 21334. These disclosures would include material effects of climate-related risk on the company, the company’s process for identifying and managing climate-related risk, information regarding publicly set climate-related targets or goals, and the company’s greenhouse gas emissions. Id. While the stated purpose of the proposed rule is to provide standardized and material information regarding climate risks to investors, in practice, the proposed rule will incentivize greenhouse gas emissions reductions. The SEC’s proposed rule and the Act both highlight the emerging trend towards an approach to climate change outside of the confines of EPA regulation, where such efforts have historically been undertaken. This approach is consistent with President Biden’s “Whole-of-Government Approach” to the climate crisis espoused in the first days of his presidency in Executive Order 14008 Tackling the Climate Crisis at Home and Abroad. 86 Fed. Reg. 7619.

While the Act is a significant step towards funding climate change and clean energy efforts at the federal level, the long-term implications of this legislation are still unclear. The programs authorized and funded by this legislation will be developed by the various federal agencies over the coming years, and Babst Calland will continue to monitor these developments. Please contact Jim Curry at (202) 853-3461 or jcurry@babstcalland.com, Gina Falaschi at (202) 853-3483 or gfalaschi@babstcalland.com, Sean McGovern at (412) 394-5439 or smcgovern@babstcalland.com, or Varun Shekhar at (202) 975-1390 or vshekhar@babstcalland.com if you have any questions or need assistance.

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20 People to Know in Energy: Jean Mosites, environmental attorney, shareholder, Babst Calland

Pittsburgh Business Times

(By Ethan Lott)

Jean Mosites is one of Pittsburgh’s most well-known experts in energy and environmental law and a shareholder in Babst Calland’s Environmental, Energy and Natural Resources Group. Her legal expertise and advice has been instrumental for Babst Calland’s clients in energy who are navigating the complexities of the Marcellus Shale development and the myriad regulations in Pennsylvania that surround it.

What do you see as the biggest opportunities for the energy industry right now?

One current opportunity is for oil and gas producers to enhance our country’s energy security and independence by building and maintaining a steady supply of fuel. Production, however, is only one part of the necessary steps in getting products to market. Support is needed to ensure that transmission and refining capabilities are available for long-term reliability of supplies.

What’s your biggest concern for the energy industry right now?

The difficulty of getting product to market as permits and approvals for transmission are challenged, blocked or overturned. This situation affects not only consumers in the region and in the United States, but in the world. Blocking natural gas production in the region reduces energy options for the poorest at home and abroad.

What are some of the major legal issues involving natural gas producers in Pennsylvania?

As environmental law evolves, a major legal issue for natural gas producers is keeping track of new laws, regulations, policies and procedures. The changing nature of the law presents a challenge for businesses that need certainty for long-term planning. New permit requirements related to air emissions or new listings of endangered species, for example, affect operational, regulatory and financial decisions regarding the development of natural gas assets in Pennsylvania.

What is one issue that your clients would like to see changed in Pennsylvania in terms of natural gas law?

Clients seek certainty and consistency in the legal and regulatory framework within which they operate. I am not aware of one issue that all clients would like to see changed, but it would be good for the energy industry, the public and the commonwealth to have a common commitment to the development of reliable energy sources in the commonwealth within a practical regulatory framework that protects the environment while balancing the undisputed need for fossil fuels.

How much do you think the market, with a greater desire for lower carbon footprint among some investors, will drive energy choices?

The desire for a low carbon footprint is increasing among investors, industry and the public. The desire drives innovation, which we are seeing every day.

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